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TMI Blog2010 (12) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the case and materials available on record. 3. The assessee being individual is a labour contractor of Food Corporation of India(FCI) and S.E Railway(SER). During the assessment proceedings the AO noted that following expenditure were debited to the P and L account on account of salary and wages :- Contractee Particulars Amount (Rs.) F.C.I Contract A/c Handling Labour Charges 11,39,200 Casual labour a/c 24,48,700 Labour without P.F a/c 74,85,941 Incentive to Labour 4,15,200 SER Contract A/c Labour charges 20,26,038 Incentive to Labour 1,17,217 1,36,32,296/- 3.1 With reference to F.C.I contract work the assessee only produced the copy of wage sheets of handling labour charges. 3.2 With reference to other expenses no wage sheets were furnished or produced before the AO. No corroborative evidence for payments were also submitted. The AO, therefore, concluded that the expenditure debited under the head 'casual labour', 'labour without PF' and 'incentive to labour' were unverifiable. 3.3 With reference to contract work with SER, the AO noted that the wages register submitted was new and there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied. The Assessee produced Wages Payment Register for (1) Handling Labour and (2) Casual Labour duly certified by the Inspector of Food .Corporation-of-india-during- .the-course of-hearing. The Xerox copy of the same are lying with the Assessing Officer who accepted the payments made on account of handling charges wholly, but disallowed Rs. 73,454/- i:e. 3% of the payment made on Account of wages paid to casual labour without any cogent reason. This may please be deleted. B) Disallowance under the head Labour without P.F.: The Labour without P.F. a/c - in case of F.C.I - are the labour charges paid for engaging labour for urgent and immediate requirement through different Agency I Group Leader / Sardar / Mates convened from outside but locally - the names and addresses of those persons were submitted before the Ld. Assessing Officer. During the course of Scrutiny for the Assessment Year 2004-2005, the matter was verified by the Inspector of Income Tax, Purulia. The report submitted by the Inspector affirms the requirement of such payments as necessary and incidental to the business but the labours could not produce any documentary evidence in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and umbrellas other items are also required to be given to such labours so that they may be available at call." 5.1 The ld.CIT(A) deleted the addition by holding as under :- 6(i) 3% disallowances in respect of payment related to SER contracts viz. Labour Charges and Incentives to labours Rs. 20,26,038/- and Rs. 1,17,217/- respectively From the above referred discussion, it is clear that the A. 0. has made the addition without bringing on record any concrete material. The only reason given by him in respect of the disallowance out of the work related to SER contracts was that the various registers submitted before him appears to be new without any soiling. In this regard. the, Appellant inter alia appears to be correct that the assessee produced the labour payment register kept and maintained neatly and that instead of appreciating the same, Ld. A. 0. not only made the impugned disallowance, but also treated it with uncalled for remarks as "it appeared to be new without any soiling"; that the A.0. again disallowed Rs. 2,31,145/- on account of labour charges (SER) paid through Shanti Mondal under the head 'B' u/s. 40(a)(ia) r.w.s. I 94C and not disputed the genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and without any basis. Moreover, the books of accounts were also audited, hence the A. 0. could not had made any addition without pin pointing any defects/discrepancy, and bogusness or non-genuine expenditure etc. in the books of accounts which he failed. Therefore he was not justified in making the addition. 3(v) 3% Disallowance related to F.C.L contracts payments viz, casual labour Rs. 24,48,470/; Labour without P.F. Rs. 74,85,491/- and Incentives to labourers Rs. 4,15,2001- The payments in respect of handling charges and casual labour payments related to FCI are subject to EPF deduction and contribution and hence there is no possibility of any hanky panky in the expenditure. Moreso, when all the expenditures found duly certified by the Inspector of F.C.I. in this regard. No particular defects, discrepancy, bogusness or non-genuineness or any abnormalit under any head has been detected by A.O. in the audited books, the registers and the vouchers Hence in these circumstances, I am agreeable to AIR that the disallowance made under this head wa wholly unjustified. The Appellant has also produced all the registers and debit vouchers as proof o payments etc. before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the registers, debit vouchers etc. in my considered view, no disallowance was called for in the facts and circumstances of the case, moreso when the A.O. failed to establish that the expenditures were not for the purposes of business, not incidental to business, not during the course business and not for the business exigency. Hence the A. 0. was not incurred justified in making the addition. This ground of appeal is therefore allowed." 5.2 With reference to disallowance of Rs.11,37,455/- u/s.40(a)(ia) it was submitted before the ld.CIT(A) that no payment amounting to Rs.6,40,000/ - was made to Sri Patho Mondal. Only an amount of Rs.1.50 lakh was paid to Sri Patho Mondal on a/c of truck hire charges. He was entitled to receive the hire charges of the truck as and when the same was let out to the assessee. Therefore, he cannot be treated as the sub-contractor of the assessee. 5.3 With reference to payment of Rs.3,81,145/- made to Mrs. Shanti Mondal, it was contended by the assessee before the ld.CIT(A) that she was paid truck hire charges on different dates amounting to Rs.1.50 lakh and labour charges of Rs.2,32,145/- on various dates. Mrs. Shanti Mondal was owner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g cash drawn by the assessee from his proprietorship concern, M/s Mondal Constructions and deposited in the said saving bank account. Subsequently, this amount has been returned back to the M/s. Mondal Construction. The impugned saving bank account was not disclosed in the balance sheet of proprietorship concern, M/s. Mondal Constructions, but in the personal statement of the proprietor filed with the return of income. 6.3 The ld.CIT(A) found that the said account was disclosed and filed in the personal balance sheet of the proprietor along with return of income. He also held that the AO has failed to verify and establish that the peak credit amount mentioned in the bank account was unexplained. He, therefore, deleted the impugned amount. 7. Aggrieved the revenue has filed appeal before the Tribunal. 8. Before us the ld.DR relied on the order of the AO in support of ground nos.1 to 3 taken by the revenue. With reference to ground no.1 it was submitted by him that the AO has clearly mentioned that the details were not furnished before him. However, the ld.CIT(A) has held that such documents were produced before the AO. Thus, it was contended by him that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of M/s. Mondal Constructions, the proprietorship concern of the assessee, there is no evidence on record to support the above submission of the assessee. It is noticed that the said account was opened only on 5-8-04. There were cash deposits of Rs.8 lakh on various dates during the relevant previous year. The assessee has not filed any evidence in the shape of cash book of proprietorship concern showing that the impugned amount came out of assessee's proprietorship concern, M/s. Mondal Constructions and the amounts were also returned back to the said concern subsequently. As such in the balance sheet of the proprietorship concern as on 31-3-05, which is available at APB page 55, there is only drawing of Rs.60,000/- by the assessee from his proprietorship concern. There is no details of any other withdrawals and repayment made to the proprietorship concern by the individual. It is noted by us that the assessee has not given details of explanation filed by him before the AO with reference to his query on this account. In the above circumstances, we are constrained to hold that the ld.CIT(A) was not justified in deleting the impugned addition. We, therefore, reverse the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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