A.R.CONSTRUCTIONS,GUNTUR vs. THE DEPUTY COMMISSIONER INCOME TAX, CIRCLE-2(1), GUNTUR

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON’BLE ACCOUNTANT MEMBER ITA No. 97/VIZ/2018 (Asst. Year : 2010-11) M/s. A.R. Constructions, vs. DCIT, Circle-2(1), D.No. 7-105, Near Sivalayam, Guntur. Tadepalli, Guntur. PAN No. AALFA 7577 R (Appellant) (Respondent) Assessee by : Shri G.V.N. Hari – Advocate. Department By : Smt. Suman Malik – Sr.DR Date of hearing : 02/04/2019. Date of pronouncement : 05/04/2019. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Guntur, dated 01/02/2018 for the Assessment Year 2010-11. 2. The only ground for adjudication in this appeal relates to addition in respect of Rs. 8.00 lakhs. 3. In the assessment order, the Assessing Officer has observed that the assessee is executing civil contract works. On verification of the books, the assessee had debited an amount of Rs.1,81,21,680/- to the profit & loss account under the head

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‘labour wages paid’, which were evidenced by self made vouchers. These are not amenable for verification. Considering the nature and quantum of expenditure and facts and circumstances of the case, it was proposed to disallow an amount of Rs. 8.00 lakhs, but the assessee agreed for disallowance of Rs. 4.00 lakhs only. Though, the assessee had not accepted proposed disallowance, the Assessing Officer felt that disallowance of Rs. 8.00 lakhs on the expenditure debited is reasonable. Hence, an amount of Rs.8.00 lakhs is disallowed and added to the income returned. 4. On appeal, ld. CIT(A) confirmed the order of the A.O. 5. On being aggrieved, assessee carried the matter in appeal before this Tribunal. 6. We have heard both the sides, perused the material available on record and orders of the authorities below. 7. In this case assessee is executing civil contract works and he made certain payments to the labour, which is evidenced by self made vouchers. According to the Assessing Officer, those vouchers are not amenable for verification and proposed for disallowance of Rs. 8.00 lakhs, but assessee has accepted for Rs.4.00 lakhs. However, the Assessing Officer not agreed with the assessee and made the addition of Rs. 8.00 lakhs. Before us, ld.counsel for the assessee has submitted that disallowance of

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Rs.8.00 lakhs is an excessive, therefore he prayed that disallowance to the extent of Rs. 4.00 lakhs is reasonable and justifiable. On the other hand, ld. Departmental Representative has strongly supported the orders of the authorities below. We find that disallowance made by the Assessing Officer of Rs. 8.00 lakhs is highly excessive. In our opinion, in the interest of justice, we restrict the disallowance to the extent of Rs. 4.00 lakhs. Ordered accordingly. 8. In the result, appeal filed by the assessee is partly allowed. Order Pronounced in open Court on this 05th day of April, 2019.

Sd/- sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) Accountant Member Judicial Member Dated: 05th April, 2019. vr/- Copy to: 1. The Assessee - M/s. A.R. Constructions, D.No. 7-105, Near Sivalayam, Tadepalli, Guntur. 2. The Revenue – DCIT, Circle-2(1), Guntur. 3. The Pr.CIT, Guntur. 4. The CIT(A)-1, Guntur. 5. The D.R., Visakhapatnam. 6. Guard file. By order

(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.