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TMI Blog2011 (5) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... e, thus, decide the question of law No. 1 in favour of the assessee and delete the penalty imposed under section 86(10) of the Act. While ascertaining whether there is a tax deficiency or not, the question of bona fide on the part of the assessee is completely alien and irrelevant. Once the tax deficiency is found, sub-section (12) thereof comes into play, as per which, the penalty is leviable on the said amount of tax deficiency. Question of law No. 2 is thus decided in favour of the Revenue and against the assessee thereby maintaining the penalty under section 86(12) of the Act. X X X X Extracts X X X X X X X X Extracts X X X X ..... penses on account of labour/services and whether the assessee had been able to prove the said expenses. The assessee had shown justification for the aforesaid labour/services expenses by submitting a note before the OHA (which appears at pages 71 to 74 of the paper book). In para 9 thereof, the labour/services as per rule 3(2) are mentioned. It shows that the appellant had debited the profit and loss account with expenses on account of wages, salaries and works expenses, equipment hiring charges, depreciation, etc., and this profit and loss account is the centralized account which relates to all India operation of the appellant. The total expenditure on account of wages, salaries and works, etc., is ₹ 11,83,11,570. From this expenditure to Delhi sales for second quarter is allocated in proportion arriving at a figure of ₹ 23,58,549.55. In a similar manner, some of the other expenditure incurred on account of machinery finance charges, staff welfare, motor car running and mtc. expenses and motor car finance charges are proportionally assigned to Delhi sales and in this manner, figure of ₹ 28,61,765 is arrived at. This would show that no specific details in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract of civil work establishing facts corroborated by the books of accounts supporting the claim of the appellant for deduction of the amount claimed as expenses incurred towards labour, services and works expenses. Thus when the appellant could not substantiate its claim of deduction of the labour, services and works expenses on the basis of the books of accounts then the appellant can claim deduction only as per the table to the proviso to rule 3(2). 16. It is to be noted that the bank statement filed by the appellant during hearing before the learned OHA only showed withdrawal of cash from the bank. It was for the appellant to establish that the cash so withdrawn from the bank was spent towards labour, services and works expenses for which it had claimed deduction of ₹ 28,61,765 under rule 3(2) and that the proviso to rule 3(2) of the Rules was not applicable. It is not the case of the appellant that it did establish that all the cash withdrawals were spent towards labour, services and works expenses for executing this very work contract to qualify for deduction under rule 3(2)." The aforesaid findings are findings of facts arrived at by the OHA as well as the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deceptive in a material particular or the assessee omits from a return furnished under this Act any matter or thing without which the return is false, misleading or deceptive in a material particular. As noted from the facts above, the assessee had filed the return in accordance with section 5(2) of the Act as it is engaged in the business of construction activities on contract basis. As per this provision, it was permissible for the assessee to disclose the net turnover after excluding the charges towards labour, services and other like charges subject to such conditions as may be prescribed. It is because of this reason that the assessee had shown a turnover of ₹ 15,36,120 after deducted labour/services charges as well as other like charges. Though there is an omission in not showing the gross turnover, the fact remains that when default assessment notice was issued to the assessee, he explained the expenses incurred on the aforesaid accounts. It is also noted above that the assessee had maintained the centralized books of accounts, particularly, profit and loss account, which the assessee is supposed to do as per the normal accounting practice. The assessee had allocate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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