SHRI BHARAT DHANPAL PATIL,SINDHUDURG vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2 , KOLHAPUR

This appeal by the assessee against the order dated 26-11-2018 passed by the Commissioner of Income Tax (Appeals)-2, Kolhapur [‘CIT(A)’] for assessment year 2010-11.

Ground Nos. 1 and 5 raised by the assessee are general in nature, hence, require no adjudication.

Ground Nos. 2 and 3 raised by the assessee challenging the action of CIT(A) in confirming the addition made on account of payment of labour charges paid to Malati V. Deshpande and Sumati D. Patil.

Heard both the parties and perused the material available on record. We note that during the assessment proceedings, the AO found that the assessee inflated expenditure without obtaining bills. The summon u/s. 131 of the Act was issued to Malati V. Deshpande for verification of genuineness of labour charges of Rs.7,25,000/-. The said Malati V. Deshpande did not attend before the AO, but however, made submission stating her inability to attend his office being old age suffering from knee problem. As it is emanating from the assessment order that she filed copy of computation, on an examination of said computation of income, the AO opined that she has not offered any contractual receipt in her return of income and rejected the contention of the assessee the payment of labour charges to the said Malati V. Deshpande. In respect of other addition of Rs.7,50,000/- regarding labour contractor i.e. Sumati D. Patil appeared before the AO and answered each and every objections queries raised by the AO in respect of providing labour for loading/unloading of metal stone from stone crusher to the site of work except the name of the site, number of work supplied etc. According to the AO that she did not maintain any books, bills/vouchers and no return of income file. The AO treated her as that she was not engaged in such providing labour and payment shown by the assessee held as non-business purpose.

The AO added the said two amounts of the total income of the assessee. We note that the CIT(A) discussed the issue on hand at para 6.2 of the impugned order. It was contended before the CIT(A) all the payments to the said two persons were paid through bank by making TDS.

Ground No. 4 raised by the assessee challenging the action of CIT(A) in confirming the disallowance of Rs.5,51,350/- paid on account of supervision charges.

The AO asked the assessee details of supervision charges during the course of assessment proceedings. The assessee submitted chart of payment made towards supervision charges. According to the AO that the assessee conveniently paid supervision charges to each person below Rs.20,000/- and the said payment made to various persons i.e. 36 persons. The assessee stated on every work site of road construction a responsible person is required to look after the work done, to locate and provide the required material for labour, service, transport, vehicle etc. The duty of the said supervisor to get the work done in the proper manner and time. The work sites of assessee are located at various places and the assessee appointed suitable supervisor at such various places and paid depending on the duration/quantum of work to the said 36 persons. According to the AO, there were no such sites where the assessee is carried out by the assessee and for not giving reasons for discontinuation of each person every time, to avoid the TDS provisions made supervision charges to every person below Rs.20,000/-. The CIT(A) observed that no details of sites and evidences regarding employing such persons on regular basis were furnished by the assessee. The said payments were made in vouchers prepared by the assessee and for not establishing the nature of work the CIT(A) confirmed the order of AO. We note that the assessee did not file any evidences rebutting the finding of AO and the CIT(A) before this Tribunal. The assessee filed written submissions before the CIT(A) inter alia stating that the receipts under the contract works is of Rs.9,00,00,000/- and supervision charges paid to 36 persons on different sites required to be allowed on the basis of above said work done involving Rs.9,00,00,000/-. The AO and the CIT(A) was of the opinion that the assessee made these payments only to avoid TDS as well as rigors of the provisions u/s. 40A(3) of the Act and no evidences showing establishing the assessee paid such amount to 36 persons on different locations. Therefore, as discussed above, we find no evidences in respect of the contention raised by the assessee before the AO and the CIT(A) even before in support of grounds raised

In the result, the appeal of assessee is dismissed.