Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “D”, BENCH KOLKATA
Before: SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAINI, AM
O R D E R
Per Dr. Arjun Lal Saini, AM:
The captioned appeal filed by the Assessee, pertaining to assessment year 2013-2014, is directed against the order passed by the ld. Commissioner of Income Tax(Appeals)-Durgapur, in Appeal No.47/CIT(A)/DGP/2016-17, dated 12.08.2016, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 31.03.2016.
This appeal is time barred by 11 days. The Assessee has filed an application along with affidavit explaining the reasons for delay. The assessee has explained the reasons satisfactorily for condonation of delay, therefore, we condone the delay of 11 days in filing the appeal and appeal is admitted and heard on merit.
2 Ma Kali Enterprise 3. Brief facts of the case qua the assessee are that M/s Ma Kali Enterprise( here-in-after called the assessee), filed its return of income on 1.10.2013 declaring gross total income at Rs.5,16,040/-. The assessee firm is a labour contractor and supplied labour to their clients M/s Nilkanth Ferro Ltd. during the financial year 2012-2013. Later on, Assessee’s case was selected for scrutiny u/s.143(3) of the Act and the AO has completed the assessment by making addition on account of labour charges as bogus expenses at Rs.36,98,891/- 4. Aggrieved from the order of AO, the assessee filed an appeal before the CIT(A), who has confirmed the addition made by the AO. The Ld. CIT(A) observed that the expenses on account of payment of overtime wages has not been supported with adequate evidences, and there is no confirmation of labour payments. The statement of director of M/s Nilkanth Ferro Ltd. denying such extra wages payment and has denied to allow extra working payment. The assessee has also not filed to substantiate his extra labour payment with satisfactory material. The working hour certification is also not supported by the assessee. The ld CIT(A) held that assessee could not prove its extra working hours which claim was also contradicted by the company who has taken service of the assessee rather it was denied of having in any extra work and the director of contractee also stated that no 3 Ma Kali Enterprise payment was made for extra work as per the contract. This way ld. CIT(A) has confirmed the addition made by the AO. 5. Not being satisfied with the order of the CIT(A), the assessee is in appeal before us on the following grounds of appeal :-
1. That how far the Assessing Officer is correct and the Commissioner (Appeals) has sustained the decision of the said order in affirming the disallowance of the Labour charges to the extent of Rs 3698891/- as bogus expenses on presuming the non- compliance of the provisions of Employees State Insurance.
2. That how far the Assessing Officer is correct and the Commissioner (Appeals) has sustained the decision of the said order in affirming the presumption of the Net Profit ratio is 39.82% of the turnover as presumed by the Assessing Officer which is not correct when the books of accounts were audited and the Tax Audit was done by the Tax Auditor and submitted before these authorities.
3. That your petitioner craves leaves to add alter amend modify the grounds of Appeal on or before the hearing of the case.
6. Ld. Counsel has submitted before us that ld. CIT(A) has erred in confirming the disallowance of the Labour charges to the extent of Rs 3698891/- as bogus expenses on presuming the non-compliance of the provisions of Employees State Insurance. Books of accounts of the assessee were audited and the Tax Audit was done by the Tax Auditor and Tax audit report was submitted before the Income Tax Authorities. Ld. Counsel also submitted that the liability to deduct TDS was on the principal of M/s. Nilkanth Ferro Ltd. and assessee is only a sub-contractor, therefore the ESI and PF provisions did not apply to him, therefore, without rejecting 4 Ma Kali Enterprise the books of accounts of the assessee the disallowance made by the AO and confirmed by the ld. CIT(A) is not justified.
On the other hand, ld. DR for the Revenue has primarily reiterated the stand taken by the AO, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
Having heard rival contentions and perused the material on record, we are of the view that there is no merit in the submissions of the assessee. As the ld. Counsel for the assessee has pointed out that the liability to deduct TDS was on the principal of M/s Nilkanth Ferro Ltd. and the assessee was merely a sub-contractor and, therefore, do not require to observe the provisions of ESI and PF and TDS, we agree on this principle but we have observed that assessee has not proved the genuineness of the payment either before the AO or before the ld CIT(A). Apart from this, it is not an ad hoc disallowance made by the AO therefore the arguments of the ld counsel that without rejecting books of accounts, the AO cannot make addition, is not tenable. That is, there is no need to reject the books of account. The overtime register was not authenticated by M/s Nilkanth Ferro Ltd. The director of M/s Nilkanth Ferro Ltd has stated that no overtime wages was paid.