I. S. LEATHER,KOLKATA vs. ACIT, CIR-25, KOLKATA, KOLKATA

The only issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of estimated wages and estimated expenses at 10% amounting to Rs.4,70,000/- under the head wages and Rs.2.5 lacs under other expenses.

I have heard rival submissions and gone through facts and circumstances of the case. I find that the assessee has claimed trading and manufacturing expenses at Rs.47,50,281/- under the head wages and also trading expenses i.e. general expenses, carriage inward expenses etc. amounting to Rs.25,16,092/-. The AO estimated the disallowance under both the heads at 10% i.e. Rs. 4.70 lacs and Rs. 2.50 lacs only on the basis that some of the vouchers of expenses are self made vouchers. The Cit(A) also confirmed the action of AO on same reasoning but reasoning given in respect to wages reads as under: “I have carefully considered the observation made by the AO in the assessment order and submission filed by the authorized representative of the appellant. I found that appellant failed to full detail of labourers whom wages were paid at the time of assessment proceedings as well as appellate proceedings. The wages paid by the appellant seems excessive and unreasonable and fully not verifiable. Therefore, considering the above observation and facts of the case I am of the view that the action of the AO is as per law to make the addition of Rs.4,70,000/- out of wages. Hence, I confirm the addition made by the AO of Rs.4,70,000/- out of wages. This ground is not allowed.”