2013 (4) TMI 734 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition on account of disallowance of subcontractor expenses.
2. Deletion of addition on account of disallowance of labour expenses.
3. Deletion of addition on account of disallowance of hiring charges.

Summary:

1. Deletion of Addition on Account of Disallowance of Subcontractor Expenses:
The first issue pertains to the addition of Rs. 53,59,150/- made by the A.O. on account of disallowance of subcontractor expenses. The A.O. questioned the genuineness of the subcontractor payments, noting that most bills were self-made vouchers and raised concerns about specific subcontractors, including Atulbhai M Multani. The A.O. disallowed 25% of the subcontract expenses as unverifiable. The Ld. CIT(A) deleted the addition, stating that the assessee had fully discharged its onus by providing complete details, including names, addresses, PAN, confirmations, IT returns, and bank statements of the subcontractors. The Ld. CIT(A) noted that the A.O. did not bring any evidence to prove the expenses were non-genuine. The Tribunal upheld the Ld. CIT(A)'s decision, finding no reason to interfere as the revenue could not provide contrary material.

2. Deletion of Addition on Account of Disallowance of Labour Expenses:
The second issue involves the addition of Rs. 5,54,980/- on account of labour expenses. The A.O. disallowed 5% of the total labour expenses, citing unverifiable vouchers and inflated expenses. The Ld. CIT(A) deleted the addition, noting that the facts were identical to the previous assessment year (2005-06), where a similar disallowance was deleted, and the revenue did not appeal against that order. The Tribunal upheld the Ld. CIT(A)'s decision, as the revenue could not controvert the findings.

3. Deletion of Addition on Account of Disallowance of Hiring Charges:
The third issue concerns the addition of Rs. 12,85,000/- on account of hiring charges. The A.O. disallowed the entire hiring charges due to the lack of log books and other details. The Ld. CIT(A) deleted the addition, stating that the expenses were supported by bills, ledger accounts, and TDS returns, and the A.O. did not prove the expenses were non-genuine. The Tribunal upheld the Ld. CIT(A)'s decision, noting that the revenue did not provide any material to prove the expenses were non-genuine.

Conclusion:
The Tribunal dismissed the appeal of the revenue, upholding the Ld. CIT(A)'s decision to delete the additions on account of disallowance of subcontractor expenses, labour expenses, and hiring charges.