2012 (10) TMI 1138 - AT - Income Tax

Summary

Issues involved:
The judgment involves issues related to addition of cash received u/s 68 of the Act, deletion of addition of bogus purchases u/s 41(1) of the Act, and deletion of addition of labor wages u/s 37 of the Act.

Addition of Cash Received u/s 68 of the Act:
The Revenue challenged the deletion of addition of Rs. 75,000 made by the Assessing Officer in respect of cash received u/s 68 of the Act. The Ld. CIT(A) deleted the disallowance stating that the payment was reflected in an earlier year and was received out of business expediency. The Tribunal upheld the decision, noting that the explanation offered by the assessee was satisfactory and accepted under the commercial expediency, confirming the order of Ld. CIT(A).

Deletion of Addition of Bogus Purchases u/s 41(1) of the Act:
The Revenue contested the deletion of addition of Rs. 29,19,323 on account of bogus purchases u/s 41(1) of the Act. The Ld. CIT(A) found that the assessee had bills and evidence of purchases, payments were made by cheques, and TDS was deducted. The Tribunal agreed that the AO's assumption of bogus purchases lacked basis, and cessation of liability and bogus purchases should not be clubbed together. The Tribunal confirmed the order of Ld. CIT(A) as the assessee had substantiated the genuineness of the creditors.

Deletion of Addition of Labor Wages u/s 37 of the Act:
The Revenue appealed against the deletion of Rs. 16,55,246 in labor wages u/s 37 of the Act. The Ld. CIT(A) observed that the Assessing Officer disallowed 20% of labor wages as non-business expenditure without sufficient basis. The Tribunal noted that the AO's estimation lacked justification and that the books of account were not rejected. Therefore, the Tribunal confirmed the order of Ld. CIT(A) in reducing the disallowance from 20% to 5% and dismissed the Revenue's appeal.

Separate Judgment by Judges:
The CO by the assessee was dismissed for want of prosecution as no one appeared on behalf of the assessee, following the decision of a co-ordinate Bench. The appeal of the Revenue was dismissed, and the CO of the assessee was also dismissed for lack of prosecution.