BOLLINENI DEVELOPERS LIMITED,HYDERABAD vs. DCIT., CIRCLE-1(1), HYDERABAD

On the other hand, the learned Sr. AR supported the orders of the learned CIT (A) and submitted that, the appellant could not furnish any evidences except a self-made muster roll of daily wage workers and a cash payment voucher. The muster roll maintained by the assessee is not supported by attendance register and it is not verifiable. Therefore, the Assessing Officer, after considering the relevant fact has rightly made 30% adhoc disallowance of expenditure and the same has been upheld by the learned CIT (A). Therefore, he submitted that the order of the learned CIT (A) should be upheld.

We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. Admittedly, the appellant is a company and maintaining regular books of account for its business. It is also not in dispute that, the books of account maintained by the appellant are Page 3 of 6 audited by an Accountant. The Assessing Officer did not reject the books of account before making the adhoc disallowance of 30% of site maintenance expenditure. The Assessing Officer made adhoc disallowance only on the ground that, the expenditure is supported only by an internal self-made voucher and not amenable for verification. Except this, there is no observation with regard to the incorrectness in the claim made by the assessee towards site maintenance expenditure. Even before the learned CIT (A), the assessee has explained the expenditure with relevant muster roll maintained for this purpose and cash payment vouchers and argued that the appellant is carrying out works at 2 sites by employing daily wage workers and paid them wages on the basis of muster roll. The learned CIT (A) rejected the explanation of the assessee once again on the very same ground that they are supported only by self-made vouchers. In our considered view, in case of expenditure incurred by the assessee which is nothing but wages payment to daily wage workers, except muster roll and cash payment vouchers, the assessee cannot maintain any other evidences as claimed by the Assessing Officer. In case of payment of wages, only evidence that can be placed before the authorities is muster roll and the supporting attendance register. In the present case, the assessee has furnished the muster roll which contains the details of wages paid to various workers and the signatures of said employees. Therefore, in our considered view, when the assessee has furnished said evidences, the Assessing Officer ought not to have made 30% adhoc disallowance of expenditure for want of Page 4 of 6 evidence. At the same time, the assessee is also not fully supported its expenses with relevant evidences except furnishing a muster roll prepared for this purpose with signature of the employees. Further, no other evidence including attendance register of the employees was furnished in support of the claim of the assessee. Since the assessee is also failed to substantiate the expenditure with relevant evidences, in our considered view, a reasonable amount of disallowances needs to be made towards the site maintenance expenditure. Therefore, considering the facts of the case and also evidences furnished by the assessee, in our considered view, disallowance of 10% of the expenditure incurred under the head site maintenance expenditure would meet the ends of justice. Thus, we direct the Assessing Officer to make 10% disallowance of expenditure incurred under the head “Site Maintenance Expenditure”. We order accordingly.