2013 (10) TMI 788 - HC - Income Tax

Addition made on account of unverifiable expenses made to subcontractors Addition of Rs. 53,59,150/- - Held that - Book results of the appellant have improved considerably during the current year as compared to the earlier years and that the appellant has fully discharged the onus of proving the sub contract expenses and the AO has no proper ground or corroborative evidence and making ad-hoc disallowance of 25% out of the total sub contract expenses - Ad-hoc disallowance of Rs.53,59,150 @ 25% out of sub contract expenses as made by the AO is incorrect and the same is hereby deleted Decided against the Revenue.

Summary

Issues:
- Appeal against deletion of addition of Rs.53,59,150/- on account of unverifiable expenses to subcontractors.
- Appeal against deletion of addition of Rs.12,85,000/- under section 37 of the Act for hiring charges.

Analysis:
1. Deletion of Addition of Rs.53,59,150/-:
- The appellant challenged the deletion of this addition by the CIT(A) and ITAT. The AO disallowed 25% of subcontractor expenses, adding Rs.53,59,150/- to the income. However, both CIT(A) and ITAT found no doubts on the genuineness of subcontractors. The CIT(A) noted an increase in the appellant's profit and accepted evidence provided, including subcontractor details, TDS, and payment proofs. The CIT(A) reasoned that the AO failed to prove the expenses were non-genuine. The ITAT confirmed this finding, emphasizing the concurrent factual findings by both authorities.

2. Deletion of Addition of Rs.12,85,000/- for Hiring Charges:
- The appellant contested the deletion of this addition by the CIT(A) and ITAT. Both authorities found sufficient evidence, including bills and TDS records, supporting the hiring charges. The findings were based on an appreciation of the evidence presented. The Court upheld these findings, concluding that no substantial question of law arose. Therefore, the appeal against the deletion of this addition was dismissed.

In conclusion, the High Court dismissed the appeal as no substantial question of law was found in the case. The Court upheld the decisions of the CIT(A) and ITAT regarding the deletion of additions for subcontractor expenses and hiring charges, based on the evidence presented and the absence of doubts on the genuineness of the expenses.