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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
1 ITA No. 133/CT K/ 2017 Asse ssment Year : 20 12- 201 3
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No. 133/CTK/2017 Assessment Year : 2012-2013
Anil Contractors Pvt Ltd., Vs. DCIT, Corporate Circle 1(1), Plot No.N-1/93, IRC Village, Bhubaneswar. Nayapali, Bhubaneswar. PAN/GIR No.AACCA 6611 N (Appellant) .. ( Respondent)
Assessee by : S/Shri P.S.Panda/K.K.Agrawalla, AR Revenue by : Shri Piyush Kolhe, CIT DR
Date of Hearing : 28 /02/ 2018 Date of Pronouncement : 5 /03/ 2018
O R D E R Per Pavan Kumar Gadale, JM This is an appeal filed by the assessee against the order of the
CIT(A)-1, Bhubaneswar dated 15.11.2016 for the assessment year
2012-2013.
The appeal filed by the assessee is delayed by 19 days. The
assessee has filed condonation petition dated 26.2.2018 alongwith
affidavit explaining the reasonable cause for not filing the appeal within
the stipulated date. Before us, ld A.R. reiterated the explanation as
stated in the condonation petition. We, on perusal of the condonation
petition and after hearing the parties, are convinced that the assessee
was prevented by sufficient cause in filing the appeal before the Tribunal.
2 ITA No. 133/CT K/ 2017 Asse ssment Year : 20 12- 201 3 Hence, we condone the delay and proceed to dispose of the appeal after
hearing both the sides.
At the outset, ld A.R. submitted that he is not pressing Ground No.4
of appeal but made endorsement to the grounds of appeal filed before the
Tribunal. Therefore, we dismiss Ground No.4 of appeal as not pressed.
Ground No.1 of appeal is general in nature and hence, requires no
separate adjudication.
Ground No.2 of appeal relates to confirming the addition of
Rs.1,09,28,643/- being 20% claim of total wages.
Ground No.3 of appeal relates to confirming the addition of
Rs.4,68,75,863/- on account of purchase expenses. Both the grounds are
taken together for our consideration.
The facts in brief are that the assessee is deriving income from
contract business. During the course of assessment proceedings, the
Assessing Officer found from the P&L account that the assessee had
debited an amount of Rs.5,46,43,213/- on account of wages expenses.
The Assessing Officer asked the assessee to produce the ledger account of
such expenditure. From the ledger copy filed by the assessee, the
Assessing Officer found that all the expenses on account of wages were
made in petty cash. To verify the genuineness of the expenses, the
Assessing Officer asked the assessee to produce the register in respect of
labour payments and original bills/vouchers for other expenses. The
3 ITA No. 133/CT K/ 2017 Asse ssment Year : 20 12- 201 3 assessee did not produce the same. For want of documentary evidences
in support of the above substantial expenses incurred on wages, the
Assessing Officer disallowed a sum of Rs.1,09,28,643/- being 20% of the
total claim of Rs.5,46,43,213/-.
Similarly, the Assessing Officer found from the P&L account that the
assessee had debited an amount of Rs.23,43,79,317/- on account of
purchase expenses. The Assessing Officer asked the assessee to produce
the ledger account of such expenditure. From the ledger copy filed by the
assessee, the Assessing Officer found that all the expenses on account of
purchases were made in petty cash. To verify the genuineness of such
expenses, the Assessing Officer asked the assessee to produce the ledger
copy along with original bills/vouchers. The assessee failed to do so. For
want of documentary evidences in support of the huge expenses claimed
as purchase expenses, the Assessing Officer deemed it proper to disallow
Rs.4,68,75,863/- being 20% of the total purchases of Rs.23,43,79,317/-.
On appeal, the CIT(A) confirmed the disallowance made under the
heads “wages expenses” and purchase expenses” observing that no
evidence was also produced before him to suggest that the wage
expenses were actually incurred for the purpose of business.
Before us, ld A.R. of the assessee submitted that the assessee is in
contract business and the wages were to be paid in cash. Ld
A.R. submitted that the only ground for making the adhoc disallowance
that the assessee has claimed huge expenses aggregating to
4 ITA No. 133/CT K/ 2017 Asse ssment Year : 20 12- 201 3 Rs.5,46,43,213/-under the head” wage expenses” and Rs.4,68,75,863/-
“purchase expenses” and the Assessing Officer has not identified
particular claim of expenses but made adhoc disallowance.
Ld D.R .supported the order of the lower authorities.
We have heard the rival submissions, perused the orders of lower
authorities and materials available on record. We find that the Assessing
Officer has made adhoc disallowance of 20% of total claim on the ground
that the assessee did not produce the original bills and vouchers and on
first appeal, the CIT(A) confirmed the same. In the contract business, the
assessee was compelled to make the cash to the labourers at the work
sites, which are mainly in the remote areas. Ld A.R. submitted that for
carrying out the work, the assessee made payments at various places for
laying the roads. We also find that the Assessing Officer has not
doubted the genuineness of expenditure under both the heads of
expendiure but restricted the disallowance for want of original bills and
vouchers. Ld A.R. submitted a chart for the earlier four financial years
i.e. from 2008-09 to 2011-12, wherein, the percentage of claim of wages
has been consistently maintained. In the said financial year, the assessee
has disclosed higher turnover and made mechanism of operation work
and made investment in fixed assets and claimed depreciation, which is
not disputed by the Assessing Officer. Further, the wage claim of the
assessee on comparison with has worked out to less than 1/3rd from the
earlier assessment years. We find that the Assessing Officer has done
5 ITA No. 133/CT K/ 2017 Asse ssment Year : 20 12- 201 3 verification based on the available information and facts and as the
assessee could not furnish complete details, the Assessing Officer made
addition on estimate basis. We, considering the factual aspects and
percentage of wages paid on the turnover from the earlier years, the
disallowance made by the Assessing Officer is slightly on higher side and
the Assessing Officer has not doubted the genuineness of the wages paid
to labours and purchase of materials and accepts the facts of incurring the
expenditure in the course of business operation. We also observe that
the assessee should have maintained proper bills and vouchers for the
works and cannot submit the information on piece-meal. Therefore, we
are of the considered view to meet the ends of justice, the estimation
made by the Assessing Officer is restricted to 10% of total claim made by
the assessee under wages and purchase and we modify the order of the
CIT(A) Accordingly.
In the result, appeal filed by the assessee is partly allowed.
Order pronounced on 5 /03/2018.
Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Cuttack; Dated 5 /03/2018 B.K.Parida, SPS
6 ITA No. 133/CT K/ 2017 Asse ssment Year : 20 12- 201 3 Copy of the Order forwarded to : 1. The Appellant : Anil Contractors Pvt Ltd., Plot No.N-1/93, IRC Village, Nayapali, Bhubaneswar 2. The Respondent. DCIT, Corporate Circle 1(1), Bhubaneswar. 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack