ANIL CONTRACTORS PVT. LTD.,BHUBANESWAR vs. DCIT, CIRCLE-1(1), BHUBANESWAR

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.

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.

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.

separate adjudication.

Rs.1,09,28,643/- being 20% claim of total wages.

Rs.4,68,75,863/- on account of purchase expenses. Both the grounds are

taken together for our consideration.

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/-.

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.

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.

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.

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