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TMI Blog2012 (9) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction expenses to Rs.21,33,385/- (25% of Rs.85,33,538/-) by following the decision of the Tribunal for the assessment year 2006-07 which was rendered on different facts. 2. During hearing of this appeal, the learned Senior DR, Shri R.A. Verma, defended the assessment order by making the assertions which are identical to the ground raised by explaining that in the assessment year 2006-07 ad hoc allowances were made wherein the Assessing Officer did not point out any discrepancy in the expenditure vouchers whereas during the impugned assessment year, the addition was made on the basis of specific inquiries establishing non-existent sub-contractors especially when the assessee could not produce such sub-contractors to prove their id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld and based on old rates. (iv) That the above major factors reduced the profit in comparison to immediate preceding year but more from the assessment year 2006- 07. Which is about 4.17% as against shown this year at 4.6%." 4. In view of the above reply of the assessee, the learned Assessing Officer was of the view that since the assessee has shown work in progress on estimate basis, no proper bills and vouchers were produced justifying the valuation of work in progress, closing stock, vouchers are prepared on plain paper on which no addresses are mentioned, having no sales tax number and the payments were made in cash or cheque by way of self prepared vouchers, called information under section 133(6) of the Act from certain creditors whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. The appellant was accordingly confronted by AO as to why these creditors should not be treated as unexplained as they were not verifiable. The AO has reproduced the explanation offered by the appellant in this behalf but the AO was not satisfied and the appellant was required to file further details like Bank Account, details of Cheques etc. in support of genuineness of payment made in subsequent years. The AD has observed that such payments were made by bearer cheques and were supported by self prepared vouchers on which parties' signature were obtained. The appellant offered further explanation in this behalf but the AO was not satisfied and disallowed the amount of expenses claimed in the name of all such 10 contractors at Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it was emphasized that at the most disallowance out of over all expenses may be at 25% of the total disallowances as maintained by Hon'ble ITAT for Asstt. Year 2006-07 and even if such disallowance is maintained, the net profit rate would improve by nearly 8% or so and the net profit rate would become about 5.60% against 5.2% disclosed by the appellant and would be still higher even if similar disallowances were upheld for earlier Asstt. Year 2007- 08. 4.2.2 It has to be noted that though t h e AO has made disallowances out of construction expenses after conducting outside enquiries and issue if letters u z s 133(6) and has made further verification about payment made in subsequent year but the fact remains that these enquiries were cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall in the category of expenses not fully verifiable for want of complete details and evidences. Hence considering the net profit margin disclosed by the appellant and the findings of Hon'ble ITAT in appellant's own case for earlier year, the disallowance of construction expenses is restricted to 25 of the amount disallowed i.e. Rs.21 ,33,385/- and balance disallowance is deleted." 6. If the arguments advanced by the learned counsel from both the sides and the facts mentioned in the impugned order as well as observation of the learned Assessing Officer are kept in juxtaposition and analysed, we find that the impugned addition was made by the Assessing Officer on the plea that the sub-contractors, appearing as creditors in the balance shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts of Rs.20,09,90,959/-, 5.19% against Rs.31,63,97,992/- and 4.80% from Rs. 32,07,13,221/-. If these figures are analysed, the total turnover steeply increased in comparison to assessment year 2006-07. Even otherwise, the inquiries were conducted by the A.O. nearly about after 2 ½ years from the end of the relevant financial year, therefore, the labour contractors cannot be expected to be available at the given address after lapse of such period because they keep on shifting as per the availability of the work. The Tribunal for the assessment year 2006-07 after considering the circumstances restricted the disallowance to 25% of the disallowed amount. In view of these uncontroverted facts, we find no infirmity in the stand of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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