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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the assessee against the order dated 22.04.2013 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11.
The various grounds raised
by the assessee are as under: “1. The grounds of appeal that follow are all independent and without prejudice to each other.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in rejecting additional evidences produced by the appellant during the CIT (A) proceedings.
3. That on the facts ana in the circumstances of the case and in law, the learned CIT (A) erred in non-consideration of real income and denial of substantial justice by not deciding the allowability of the labour charges paid of Rs 23,54,367/- on merit.
4. That, on the facts and in the circumstances of the case and in law, the learned AO in the remand report erred in considering the labour charges paid to Raj products
2 M/s. Billets Elektro Werke Ltd. of Rs 3,84,027/- and M/s J K Engineering of Rs 2,43,265/- incurred as unexplained expenditure on the grounds of non-compliance of notices issued to those parties' u/s 133(6) without appreciating the fact that the said labour charges were supported by proper documentation and proper TDS was deducted on the same. Above can be summarized as under: Assessing Officer CIT (A)
Out of the total Labour charges considered as bogus of Rs 23,54,367/- during the Assessment Proceedings • Rs 17,27,075 Genuiness accepted by the AO as per remand report Rejected on basis of additional evidence not accepted • Rs 6,27,292 Not Accepted by the AO
5. That, on the facts and in the circumstances of the case and in law, your appellants pray that the learned CIT(A) be directed to examine the evidence submitted for claim of labour charges and decide allowability on basis of merit.
6. Your appellant craves leave to add, alter, amend or vary all or any of the above grounds as and when the occasion arises.”
The only effective ground raised by the assessee is ground No.2, 3, & 4 and remaining are general in nature and need no adjudication.
The issue raised in 1st ground of appeal is against the order of Ld. CIT(A) rejecting the additional evidences produced by the assessee during the appellate proceedings.
The facts in brief are that the assessee could not produce some evidences in the assessment proceedings and AO made the addition for the want of evidences on account of labour charges to the tune of Rs.23,54,367/-. The said labour charges were treated as unexplained by the AO on account of the notices under section 133(6) of the Act being returned unserved.
In the appellate proceedings, assessee filed the copies of the invoices of the labour charges which were sent by the Ld. CIT(A) to AO for verification. The AO in the remand proceedings called upon the assessee to provide all these evidences besides issuing notices under section 133(6) dated 14.12.2015 and 10.03.2016 to six parties. Out of the six parties, four parties duly complied with the notices issued under section 133(6) and furnished all the details like copies of form No.16, confirmation of accounts, ITRs, P&L Accounts etc. and AO found the payments made by the assessee were in order. However, in respect of two parties Raj Products and J.K. Enterprises the notices issued under section 133(6) were returned unserved and the assessee could not provide the correct addresses to these parties. However, the Ld. A.R. vide letter dated 30.05.2016 furnished the form No.16A, ledger accounts of the assessee, ITRs, copies of two parties along with copies of bank statements of M/s. J.K. Engineering and finally submitted remand report on 03.10.2017. The Ld. CIT(A) dismissed the appeal of the assessee despite the fact that AO has duly stated that the some part of the labour charges to the tune of Rs.17,27,075/- were verified and found in order.
After hearing both the parties and perusing the material on record and the remand report, we observe that the AO has verified the labour charges as genuine to the extent of Rs.17,27,075/- in the remand report submitted before the Ld. CIT(A) dated 03.10.2017. Thus, in our opinion, there is no dispute at all with respect to Rs.17,27,075/- being labour charges paid to four parties and accordingly same were ordered
4 M/s. Billets Elektro Werke Ltd. to be deleted. So far as the payment to two parties are concerned i.e. Rs.3,84,027/- to Raj Products and Rs.2,43,265/- to J.K. Engineering, we observe that the same could not be verified as the assessee could not provide the correct addresses of the said parties and therefore the notices under section 133(6) were not served. However, we note that the AO has provided the copies of invoices, TDS certificate in from 16A, ledger copy of Raj Products, ITRs, balance sheet P&L Account, however, could not provide the details in respect of J.K. Enterprises as the party has shifted the address and new address was not available with the assessee. Under these circumstances, we are of the view that the entire labour payment can not be disallowed. Yes, we do agree with the contentions of the Revenue Authorities that said payments could not be verified but indelible fact as is coming out of the records before us is that the said parties were labour contractor and were paid labour for executing the works. Under these circumstances, we are of the view that a lump sum disallowance of 30% of total payments to these parties i.e. Raj Products Rs.3,84,027/- and J.K. Engineering Rs.2,43,265/- would be reasonable disallowance. Accordingly, we direct the AO to add Rs.1,88,188/- to the income of the assessee and the remaining addition is order to be deleted.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 14.05.2019.