2014 (11) TMI 678 - AT - Income Tax

Admission of additional evidence - Held that - Disallowance of labour expenditure claimed to have been paid to M/s. Gurukrupa Bricks and Rajshree Construction respectively was disallowed as the assessee failed to furnish the bills of the parties - the arguments of the revenue that additional evidences were accepted by the CIT(A) in violation of Rule 46A is also not correct as the CIT(A) has stated that the assessee did not have enough time in filing the required documents and therefore, he has admitted the additional evidences after calling for a remand report from the Assessing Officer revenue could not point out any error in this finding of the CIT(A) Decided against revenue. Expenses out of material supply disallowed Held that - The CIT(A) called for a remand report from the AO and in the remand report, the AO merely stated that the additional evidences filed before the CIT(A) by way of bills of M/s. Shree Sahajanand Traders, M/s. Shree Ambica Cement Products and M/s. Pooja Packaging should not be admitted as they were additional evidences filed by the assessee - The AO has not mentioned anything on the merit of the addition on the basis of the additional documents submitted by the assessee - as there was no adverse comment of the AO on the bills of the parties filed before the CIT(A) on which the CIT(A) has called for a remand report from the AO, the CIT(A) deleted the additions - additional evidences were accepted by the CIT(A) in violation of Rule 46A is also not correct as the CIT(A) has stated that the assessee did not have enough time in filing the required documents - Representative could not point out any error in this finding of the CIT(A) Decided against revenue. Disallowance out of transportation charges Held that - The disallowance was made by the AO on account of the difference between the bill amount (Rs.1,64,450/-) and charges paid (Rs.96,050/-) to M/s. Sanjay Tempo Service towards the expenses incurred for transportation - The CIT(A) called for a remand report from the AO and in the remand report, the AO merely stated that the additional evidences filed before the CIT(A) by way of bills M/s. Sanjay Tempo Service should not be admitted as they were additional evidences filed by the assessee - as there was no adverse comment of the AO on the bills of the parties filed before the CIT(A) on which the CIT(A) has called for a remand report from the AO, the CIT(A) deleted the additions revenue could not point out any error in this finding of the CIT(A) Decided against revenue. Expenses out of labour payment disallowed Held that - The assessee submitted before the CIT(A) that the labour payments incurred by the assessee were of two types - The CIT(A) called for a remand report from the AO who requested the CIT(A) to enhance the disallowance from 8% to 20 to 25% on the ground that the payments were made by self-made vouchers only and also that information has been received from his counter-part that certain bogus and fraudulent agreements have been made by the assessee which will lead to re-opening of the case u/s 147 of the Act - no material has been brought to show that labour charges was not the amount of wages paid by the assessee directly to its employees and no material has been brought to show that the assessee was liable to deduct the tax at source on the aforesaid labour charges either u/s 194C or 192 of the Act - No material has been brought on record to show that the payment of labour charges was not genuine or was not supported by vouchers - In absence of any such material being brought by the Revenue, the ordero f the CIT(A) is upheld Decided against revenue.

Issues Involved:
1. Disallowance of Rs. 3,11,785/- out of labour payment.
2. Disallowance of Rs. 2,43,879/- out of material supply expenses.
3. Disallowance of Rs. 68,400/- out of transportation charges.
4. Disallowance of Rs. 25,60,000/- out of labour payments.

Issue-wise Detailed Analysis:

1. Disallowance of Rs. 3,11,785/- out of labour payment:
The Assessing Officer (AO) disallowed Rs. 3,11,785/- due to the assessee's failure to furnish bills for payments made to Gurukrupa Bricks and Rajshree Construction, and due to discrepancies in the amount paid to Innamul Huk. The CIT(A) deleted this disallowance, citing the genuineness of the expenditure and the fact that the AO did not provide adverse comments on the additional evidence submitted by the assessee. The Tribunal upheld the CIT(A)'s decision, noting that the AO's objections were procedural rather than substantive, and confirmed the deletion of the disallowance.

2. Disallowance of Rs. 2,43,879/- out of material supply expenses:
The AO disallowed Rs. 2,43,879/- for the non-furnishing of bills from Shree Sahajanand Traders, Shree Ambica Cement Products, and Pooja Packaging. The CIT(A) deleted this disallowance after the assessee provided the necessary bills and the AO failed to comment on the merits of the additional evidence. The Tribunal confirmed the CIT(A)'s decision, agreeing that the expenditure was genuine and that the AO's objections were procedural.

3. Disallowance of Rs. 68,400/- out of transportation charges:
The AO disallowed Rs. 68,400/- due to discrepancies between the bill amount and the amount paid to Sanjay Tempo Service. The CIT(A) deleted this disallowance, accepting the assessee's explanation and the supporting bills. The Tribunal upheld the CIT(A)'s decision, noting that the AO did not provide substantive objections to the additional evidence and confirming the genuineness of the expenditure.

4. Disallowance of Rs. 25,60,000/- out of labour payments:
The AO made a lump-sum disallowance of Rs. 25,60,000/- due to non-deduction of TDS on labour payments. The CIT(A) deleted this disallowance, noting that the payments were made to employee labourers below the threshold for TDS, and that the books of account and vouchers were in order. The Tribunal upheld the CIT(A)'s decision, finding no evidence that the payments were not genuine or that TDS provisions were applicable. The Tribunal also dismissed the AO's procedural objections and confirmed the deletion of the disallowance.

Conclusion:
The Tribunal dismissed the Revenue's appeal on all grounds, confirming the CIT(A)'s deletions of the disallowances for labour payments, material supply expenses, and transportation charges. The Tribunal found that the AO's objections were procedural and not substantive, and that the expenditures were genuine and supported by adequate evidence.

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