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TMI Blog2013 (4) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law, the Id. CIT(A) has erred in deleting the addition of ₹ 53,59,150/- made by the A.O. on account of disallowance of subcontractor expenses, without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of ₹ 5,54,980/- made by the A.O. on account of disallowance of labour expenses, without appreciating the facts of the case. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of ₹ 12,85,000/- made by the A.O. on account of disallowance of hiring charges, without appreciating the facts of the case. It is, therefore, prayed that the order of the CIT (A) be set aside and that of the assessing officer be restored." 2. The first ground is in respect of addition of ₹ 53,59,150/-. 3. During the course of assessment proceedings, on perusing the subcontract bills, the A.O. noted that most of the bills were self made vouchers except in 4 cases. He also noted that an employee named Atulbhai M Multani was on the payrolls of the assessee till March 2006 & was also mentioned as sub-contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee inter alia submitted that he had completely discharged the onus of proving sub-contract by not only giving the names, address, PAN numbers in confirmation of sub-contract but also copy of I T returns, bank statements and even TDS details in respect of the payments made. The assessee further submitted that in the current year, its gross profit as well as net profit has increased substantially as compared to the earlier year and, therefore, decision of awarding subcontract work cannot be doubted. With respect to Atulbhai M Multani, the assessee submitted that he was not an employee of the assessee but had been paid supervising and consultancy charges in respect of an independent work and was not connected with the sub-contract work of ₹ 10.98,880/- paid to him. Ld. CIT(A) after considering the submissions of the assessee, deleted the addition made by the A.O. by holding as under: "I have considered the facts of the case, the findings of the AO as also the submissions made by the appellant. First of all, it is seen that during the year under consideration the gross profit of the appellant has increased from 4.50% to 7.14% and the net profit before appropriation has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that it cannot be a ground for disallowing 25% of the total sub contract expenses. Hence, considering the fact that the book results of the appellant have improved considerably during the current year as compared to the earlier years and that the appellant has fully discharged the onus of proving the sub contract expenses and the AO has no proper ground or corroborative evidences for making ad-hoc disallowance of 25% out of the total sub contract expenses, I am of the view that the ad-hoc disallowance of ₹ 53,59,150/- @ 25% out of sub contract expenses as made by the AO is incorrect and the same is hereby deleted. In the result the first ground of appeal of the appellant in respect of ad-hoc disallowance out of sub contract expenses is allowed." 4. Aggrieved by the aforesaid order of Ld. CIT(A), the revenue is in appeal before us. 5. Before us, Ld. D.R. submitted that the A.O. in his assessment order has clearly mentioned that the net profit of the assessee is only 0.6% and therefore, the finding of Ld. CIT(A) that the book results have improved as compared to earlier year, is factually incorrect. He further submitted that most of the sub-contractors bills were self mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of proof of payment before A.O. Ld. CIT(A) and also before us. Ld. CIT(A) while deleting the addition has given finding that the book results of the assessee have improved considerably during the current year as compared to the earlier year and the assessee has fully discharged the onus of proving the sub-contract expenses. He has further held that the A.O. has not brought any tangible evidence on record to prove that the expenses were not genuine and has made ad-hoc disallowance of 25% and the aforesaid finding of Ld. CIT(A) could not be controverted by the revenue by bringing any contrary material on record. Further, the assessee has also discharged its onus by submitting names, addresses and PAN of the contractor before the A.O. as well as before Ld. CIT(A). With the details made available by the assessee to the A.O., he has also not summoned any of the subcontractor to verify the genuineness of contracts. In view of these facts, we are of the view that no interference is called for in the order of Ld. CIT(A) and thus, this ground of the revenue is dismissed. 8. The 2nd ground is in respect of the addition of ₹ 5,54,980/- on account of labour expenses. 9. On ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant itself, I hold that the ad-hoc disallowance of ₹ 5,54,980/- @ 5% out of labour charges, as made by the AO is incorrect and hence, the same is deleted. In the result the second ground of appeal of the appellant in respect of ad-hoc disallowance @ 5% out of labour payment is allowed." 10. Aggrieved by the order of Ld. CIT(A), the revenue is now in appeal before us. 11. Before us, Ld. D.R. relied on the order of the A.O. whereas on the other hand, Ld. A.R. submitted that the A.O. had made ad-hoc disallowance without pointing out a single voucher to be bogus. He further submitted that on identical facts in assessee's own case for the assessment year 2005-06, the lump sum disallowance was deleted. He further submitted that the revenue has not preferred appeal against the said order of Ld. CIT(A) and, therefore, the said view has been accepted by the revenue. He also placed on record a few labour bills at pages 196- 211 to prove that the complete details of names and addresses along with nature of work done by them was mentioned on the vouchers. He further submitted that the profit position has improved and normally labour charges depend on the nature of work done. He thus s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any disallowance unless the expenditure is found to be non genuine which the Id. AO has not been able to do. Accordingly, I hold that the disallowance of hiring charges of ₹ 12,85,000/- is incorrect and hence, the same is deleted. In the result the third ground of appeal of the appellant in respect of disallowance of entire hiring charges is allowed." 15. Before us, the Ld. D.R. relied on the order of the A.O. whereas the Ld. A.R. relied on the order of Ld. CIT(A). The Ld. A.R. placed on record copy of bills in respect of hiring charges at page 213-214 of the paper book. He further submitted that the assessee has deducted TDS in case of S M Sheladia and thus he had complied with the TDS provisions. Ld. A.R. further submitted that S M Sheladia was engaged for transportation of material and also for hiring of vehicles and thus payments were made to the same party on two different counts. He thus supported the order of Ld. CIT(A). 16. We have considered the rival submissions and perused the material on record. Ld. CIT(A) has given a finding that A.O. has not brought any material on record to prove that the expenses is non genuine in nature.. Nothing has been brought on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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