2023 (10) TMI 1192 - AT - Income Tax

Genuineness of labour and material creditors - On opportunities provided by the AO, the assessee has failed to produce the required evidence in support of the expenditure claimed by the assessee - HELD THAT - As found from the remand report of the Ld. AO that the assessee has produced confirmation letters from Eight Labour Groups out of the 17 Labour Groups. AO in his remand report also stated that these confirmation letters provided before the CIT(A) as additional evidence are similar to the one given before the AO and hence requested the Ld. CIT(A) to reject the admission of the additional evidence. We also find that there is no merit in the argument of the Ld. AR that the assessee was not given adequate opportunity to submit the additional evidence before the Ld. AO. AO has provided various opportunities to the assessee as detailed in the assessment order. As the assessee has failed to discharge the onus cast on it by providing material evidence with respect to labour payments and material payments even before us, we find that the Ld. CIT(A) has rightly sustained the addition made by the Ld. AO and therefore we find no infirmity in the order of the Ld. CIT (A) and hence no interference is required in the order of the Ld. CIT(A). Request of the assessee to estimate the income by rejecting the books of accounts rejected - HELD THAT - The assessee being a Private Limited Company is necessarily subjected to Audit under Companies Act and was also covered by the provisions of section 44AB - AO has rightly not considered the request of the assessee to estimate the income by rejecting the books of accounts. Since the books of accounts have not been rejected and the income is not estimated by the Ld AO, and therefore the plea of the assessee that the additions made on account of labour creditors are liable to be deleted could not be accepted. Additions u/s. 40(a)(ia) - assessee has failed to deduct the tax at source - HELD THAT - We find that it is not in dispute that the assessee is under obligation to deduct tax at source on various payments as envisaged in the Act. In the instant case, the assessee has failed to deduct the tax at source thereby disallowance U/s. 40(a)(ia) is warranted. Appeal of the assessee is dismissed.

Summary

Issues Involved:

1. Rejection of additional evidence by CIT(A).
2. Confirmation of additions made by the AO regarding sundry creditors.
3. Disallowance under Section 40(a)(ia) of the Income Tax Act.
4. Request to reject books of accounts and estimate income.

Summary:

1. Rejection of Additional Evidence by CIT(A):

The assessee argued that the CIT(A) unjustifiably rejected additional evidence, specifically confirmation letters for 8 out of 17 labor creditor groups, which were not provided during the assessment due to voluminous records. The CIT(A) had sought comments from the AO, who recommended rejecting the additional evidence, citing sufficient opportunities were already given to the assessee during the assessment. The Tribunal found no merit in the assessee's claim that adequate opportunity was not provided and upheld the CIT(A)'s decision.

2. Confirmation of Additions Made by the AO Regarding Sundry Creditors:

The AO added Rs. 1,61,61,069/- for AY 2013-14 and Rs. 6,98,71,035/- for AY 2014-15 to the total income, as the assessee failed to substantiate the existence of certain credit liabilities. The CIT(A) confirmed these additions, and the Tribunal found no infirmity in this decision, noting that the assessee failed to provide material evidence to support the claimed expenditures.

3. Disallowance under Section 40(a)(ia) of the Income Tax Act:

The AO disallowed Rs. 24,15,012/- for AY 2013-14 and Rs. 94,77,602/- for AY 2014-15 under Section 40(a)(ia) due to the assessee's failure to deduct tax at source. The CIT(A) upheld these disallowances. The Tribunal agreed, stating that the assessee was obligated to deduct tax at source and failed to do so, thus warranting the disallowance.

4. Request to Reject Books of Accounts and Estimate Income:

The assessee requested the AO to reject the books of accounts and estimate income at 8%. However, the AO did not reject the books of accounts, as the assessee, being a Private Limited Company, was subjected to audit under the Companies Act and Section 44AB of the Income Tax Act. The Tribunal upheld the AO's decision, dismissing the assessee's grounds for estimating income and deleting additions made on account of labor creditors.

Conclusion:

The Tribunal dismissed both appeals filed by the assessee for AY 2013-14 and AY 2014-15, upholding the decisions of the CIT(A) and the AO. The Tribunal found no merit in the arguments presented by the assessee and confirmed the additions and disallowances made by the Revenue Authorities.