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TMI Blog2012 (10) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in confirming the action of the Dy. CIT for invocation of section 145(3) of the act ignoring the facts that books are audited and no defects have been pointed out by the auditors. 2. The Lr. CIT (Appeals)-IV, Surat has erred in sustaining G. P. addition of Rs.5,20,000/- out of G.P. addition of Rs.12,81,376/- made by the Dy. CIT on estimated and adhoc basis only on the ground of records pertains to labour payment is not up to his satisfaction. The Lr. CIT (Appeals)-IV, Surat has also erred in arriving at G. P. difference of Rs.3,81,546/- in M/s. Jay Bhavani Enterprise. 3. The assessee is an individual engaged in the business of supplying water, supplying labour for house-keeping and civil construction contractor filed his return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill and remuneration, basis of majuri payments, address of the majors, etc. 4. Majuri payment register is incorrect due to unexplained variatioin in majuri paid, non-genuine signatures of the claimed labourers. 5. Apart from the above defects, it was also found that the wage labour registers maintained and produced during the assessment proceedings exhibited unexplained variations in wages disbursed to various labourers. There was no description of the nature of work undertaken by any worker or the skill level of any worker, which could logically explain and lay a reasonable foundation for any difference in wages received by various workers. Further, the signature of the claimed recipients varied greatly over the months, making it impossi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r print out and cannot be said as primary evidence. The authenticity of labour payment is therefore not established. The appellant has also not been able to dislodge the findings of the A. O. that the quantum of labour is not found directly related to quantum of work. The explanation given in this regard that payment had to be made when there was shut down or additional wages during festive seasons is vague and not borne by records produced before me. In any case similar situation would exist in preceding year also. At the same time, there appears to be truth in the claim that labour would be paid on the basis of their skill and experience. However, this does not explain the defects in the wages register as to its unverifiability due to un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears, it is estimated that income from Jay Bhawani Enterprises is under reported by Rs.5,00,000/-. Similar exercise for Dimple Enterprises would show that income is lower by Rs.20,000/-. There is no reason to estimate income in regard to Jay Bhawani Water Supply where gross profit margin has gone up. Therefore addition of Rs.5,20,000/- is retained. Appellant gets relief accordingly. This ground is partly allowed." 7. The learned AR hotly contested before us stating that the addition made by the learned AO and further confirmed by the learned CIT(A) was based on assumption and presumption and, therefore, the same may be deleted. The learned AR further stated that the assessee had maintained the books of accounts meticulously and further the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts. Further, it is a glaring fact that the assessee had declared very low GP for the relevant assessment year compared with the preceding two assessment years. Though we are in conformity with the findings of the learned CIT(A) and the learned AO, taking a lenient view considering the nature of business of the assessee, we are of the opinion that the GP of 9% will suffice instead of 6.88% declared by the assessee. Accordingly, we sustain an addition of Rs.3,50,000/- which is based on the following working: 9% - 6.88% = 2.12%. 2.12% of Rs.1,65,33,549/- = Rs.3,50,511/- rounded off to Rs.3,50,000/-. Accordingly, addition to the extent of Rs.3,50,000/- is confirmed. Accordingly, both the grounds raised by the assessee are disposed off. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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