2015 (1) TMI 775 - AT - Income Tax

Dis allowance of labour charges for repairing of vehicles - Held that - The authorities below have given a finding on fact which is not controverted by the assessee by placing any contrary material on record. Moreover, the assessee has not placed any evidence on record proving the nature of repairs on vehicles carried out by the assessee and even no description of the vehicles is given. Hence, we do not find any reason to interfere with the order of the ld.CIT(A), same is upheld. - Decided against assessee. Disallowance of carting charges on estimated basis - rejection of filing of additional evidence - Held that - CIT(A) has not considered the remand report stating that qua the carting expenses of ₹ 1,23,35,232/-, the amount towards carting charges was only ₹ 84,03,989/- out of which, a sum of ₹ 25,38,518/- was paid by the assessee through cheque and remaining amount of ₹ 58,65,471/- was paid by cash through vouchers which were verified by the AO as per books of accounts. Hence, we are of the considered view that the ld.CIT(A) was not justified in sustaining the addition when the AO himself has pointed out that there was wrong entry of some of the amount paid by cheque and amount paid by cash through vouchers were verified as per the books of accounts. Moreover, the ld.CIT(A) has failed to appreciate the fact that the AO has not rejected the books of accounts by invoking the provisions of section 145(3) of the Act. Therefore, we hereby direct the AO to delete the addition made on account of carting expenses. - Decided in favour of assessee.

Issues Involved:

1. Deletion of addition of Rs. 14,54,520/- on account of contract receipts as income from undisclosed sources.
2. Confirmation of addition of Rs. 3,53,770/- on account of labour charges for repairing of vehicles.
3. Confirmation of addition of Rs. 3,53,031/- on account of labour charges for repairing of vehicles.
4. Rejection of additional evidence sought to be filed under Rule 46A of the I.T. Rules.
5. Confirmation of addition of Rs. 12,31,000/- made on estimated basis @ 10% of total expenses for carting.

Detailed Analysis:

1. Deletion of Addition of Rs. 14,54,520/- on Account of Contract Receipts as Income from Undisclosed Sources:

The Revenue's appeal contested the deletion of Rs. 14,54,520/- by the CIT(A). The AO had made this addition due to discrepancies in TDS certificates. The CIT(A) examined the assessee's explanations and found them satisfactory, noting that the discrepancies were due to various reasons such as testing charges deducted by the department, excess amounts shown, and clerical errors in TDS certificates. The CIT(A) directed the AO to withdraw any excess TDS credit given. The Tribunal upheld the CIT(A)'s findings, noting that the Revenue did not provide contrary evidence. Thus, the ground raised by the Revenue was rejected, and the deletion was upheld.

2. Confirmation of Addition of Rs. 3,53,770/- on Account of Labour Charges for Repairing of Vehicles:

The assessee's appeal contested the confirmation of Rs. 3,53,770/- by the CIT(A). The assessee argued that the expenditure was genuine and supported by vouchers and witness testimony. However, the authorities below found the evidence unconvincing and considered the person produced as bogus. The Tribunal found no contrary evidence from the assessee and upheld the CIT(A)'s order, confirming the addition.

3. Confirmation of Addition of Rs. 3,53,031/- on Account of Labour Charges for Repairing of Vehicles:

The assessee also contested the confirmation of Rs. 3,53,031/- on similar grounds as the previous issue. The authorities below found the evidence provided by the assessee to be unconvincing and ingenuine. The Tribunal upheld the findings of the authorities below, noting that the assessee failed to provide any material evidence to support its claim. Thus, the addition was confirmed.

4. Rejection of Additional Evidence Sought to be Filed Under Rule 46A of the I.T. Rules:

This issue was interlinked with the confirmation of the addition of Rs. 12,31,000/- on estimated carting charges. The assessee argued that the CIT(A) arbitrarily rejected additional evidence and failed to consider the remand report where the AO had verified the expenditure. The Tribunal noted that the AO had verified the carting charges and found that only Rs. 84,03,989/- was the correct amount after adjusting for wrongly debited amounts. The Tribunal found that the CIT(A) did not consider the verified evidence and remand report properly. Hence, the Tribunal directed the AO to delete the addition, allowing this ground of the assessee's appeal.

5. Confirmation of Addition of Rs. 12,31,000/- Made on Estimated Basis @ 10% of Total Expenses for Carting:

The AO had disallowed Rs. 12,31,000/- on an estimated basis due to the assessee's failure to provide detailed addresses, PANs, confirmations, and vouchers. The CIT(A) upheld this disallowance. However, the Tribunal found that the AO, in the remand report, had verified the carting expenses and found them to be Rs. 84,03,989/- with proper vouchers. The Tribunal noted that the CIT(A) failed to consider this verification and the fact that the AO did not reject the books of accounts under section 145(3) of the Act. Therefore, the Tribunal directed the AO to delete the addition, allowing this ground of the assessee's appeal.

Conclusion:

The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal, directing the deletion of the addition related to carting expenses while upholding the other additions confirmed by the CIT(A).

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