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TMI Blog2011 (12) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... pur 2. M/s. New Modern Stone Supply, NB Complex, Pratapnagar, Bypass, Udaipur. 3. M/s. Mateshwari Gitti Supplier, Titardi, Jaisarnand Road, Udaipur. 4. M/s. Mahaveer Material Supplier, Pratapnagar Chouraha, Sukher Highway, Udaipur. 5. M/s. Bharat Enterprises, Dabok Choraya, Airport Road, Udaipur. 6. M/s. Shivam Enterprises, Dabok Main, Airport Road, Udaipur. 7. M/s. Tirupati Building Material Suppliers, Dabok Chouraha, Airport Road, Udaipur. 8. M/s. Shreeji Building Material, Airport Road, Bus Stand, Bedwaas, PO: Zinc Smelter, Debari. 9. M/s. Puja Welding Work, E-Class, Pratapnagar, Udaipur 10. M/s. Shree Hingraj Fabricators, Village Odwadia, P.O. Gudli, Teh. Mavli, Distt. Udaipur. 11. M/s. Jai Laxmi Construction, Vill. Namri, Bedwas, Pratapnagar Road, Udaipur. The AO has mentioned the name of the suppliers, bill numbers and dates as under:- 1. Puja Welding Work Bill No. 423 dated 15th July. 2. Puja Welding Work Bill No. 465 dated 18th Aug. 3. M/s. Rahul Enterprises Bill No. 2024 dated 27th Aug.. The AO has also discussed construction labour charges in the assessment order from page Nos. 9 to 17. The month-wise payment of various civil works is as under:- Month Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not stop on the festivals as Diwali, Holi, Idd, Raksha Bandhan and National Holidays. The assessee has also written any name he remembers such as: Bhagwan Lal, Bheru Lal, Bhuri Lal Mukut Behari, Ram Bihar Yamuna Das, Ganga Das. During December, 2004 and January, February and March, 2005, the assessee had. not purchased the sand, bricks, gitti etc. The AO has questioned the genuineness as to what 125 karigars/mistries were doing continuously for four months without taking a break in single day or without any material. The assessee has shown the payment to the following persons with a narration "as paid to Mr. towards civil work." APRIL 2004 NAME PRATAP VENA RAM LEHRI RAM SHABBI R GOPI LAL NAND LAL 12240 AMOUNT 15400 12960 18720 16400 18920 16390 TOTAL 111030 MAY 2004 NAME HEMJI POKHAR DHANNA GAMETI KESHAV CHANDAN MAL KANHIYA BHURA AMOUNT 16020 17035 18065 18500 16500 19665 16380 TOTAL 122160 JUNE2004 NAME BHOLA RAM VARDICHND HOMA HENSRAJ KESUJI PRABHULAL AMOUNT 18885 19345 14435 18165 18611 19400 TOTAL 108841 JULY 2004 NAME DEVI LAL MEENA UDAI LAL MEENA GANESH RAGHAV MEENA DALCHAND RATAN NARAIN AMOUNT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,50,78,302/- wereot fully vouched by acceptable vouchers/bills. The AO, theefore, disallowed 50% of the expenditure. 9. The assessee has shown total addition in factory building during the year after 1-9-2004 at ₹ 2,50,08,048/- out of which ₹ 1,74,68,897/- for labour, material supply. ₹ 1,74,68,897/- were excluded for calculation of depreciation allowable. The AO, therefore, disallowed depreciation @ 5% being 1/2of 10% at ₹ 8,73,445/-." 5. Detailed submissions were filed before ld. CIT (A) which has been tabulated in the order of ld. CIT (A) in para 10 and 11 at pages 15 to 22 are as under :- "The AR has submitted in this regard that the AO has treated the entire labour payment of ₹ 46,81,086/- as bogus. He has taken genuine addition to building at ₹ 75,39,151/- only. The AO has not clarified as to how the building can be constructed without spending single rupee on labour. The AO has resorted to many assumptions, our replies thereto as under:- a) Same employee was entrusted the responsibilities of preparing wage sheet throughout the year. There is nothing bogus about it b) People in rural areas sometimes write "ji"after their signatures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes are given on page no.8 of A.O.'s order are prepared by one or two persons.Handwriting on these bills also seems to be same The bils are placed at Page B-1 to B-35 of A.O.'s order .your goodself will observe upon perusal of the bills that neither they have been prepared by one or two persons nor the handwriting is the same. B) Format of these bills is approxiamately common.(Page no. 8 of AO order) On perusal of bills your goodself will observe that format is not common. At the same time we would like to add that throughout the country the bill contain information,like Name of the buyer,Bill No,Quantity Rate amount ,Total and there is nothing which can lead theA.O. to conclude that all bills are bogus. Without prejudice to our above contention we submit that most supplier are from same area and it is quite possible the bill could have been printed at the same prinring press. C) rates of brick are same during 4 months.(AO, order at page 20) These are governed by the various factors and merely prices remaining same do not make bill bogus. d) There are spelling mistakes on Bills is written as (Page-21),Material is written as materiel in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has treated Karigar as Mistri, Veldar as Karigar and Mazdoor as Veldar and accordingly calculated the ratio by adding up Karigar and Mistri and calculating Veldar against them. Had he treated Karigar as Karigar, Veldar as Veldar and Mazdoor as Mazdoor then there would not have been any distortion. v) At all construction sites constructions workers work for part of the day as per their needs and there is nothing unusual of their work for half day, 1/4`x' day in that. vi) Although construction workers are casual workers, who work for some days, leave, rejoin and so on and there is no legal bar that more than 100 construction workers can be changed every month. AO has further observed that attrition rate should be Nil, because assessee has shown as ₹ 250/- per day per Mistry which is just double of the market rate. This is also not correct, because even the Veldar is not available at ₹ 125/- per day. The market rate of Mistri/Karigar is at least ₹ 250/- per day. AO has not disclosed his source of information of the rate of Mistri/Karigar being at ₹ 125/-. vii) From the bills at pages B-1 to B-35, it would be observed that the bills have been prepared by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly recorded U/s 131. Shri Rahul Sharma confirmed that both the parties had supplied cement and also furnished copy of account of Bobra Industries Ltd. in the books of Raj Builders and Bharat Enterprises. e) Techno Creations Shri Ajay Sabla proprietor of Techno Enterprises got his statement recorded U/s 131 and confirmed that he had done designing and supervision work he also confirmed having received a payment of ₹ 135000/-. The appellant company is engaged in manufacturing of Single Super Phosphate fertilizer for last ten years. During the year under consideration, the appellant has made addition of ₹ 2,15,79,771/- to the factory building. The break up of this expenditure is as under:- a) Labour payment - ₹ 46,81,086/- b) Materials purchased (gitti, sand, bricks)- ₹ 52,48,660/- c) Other materials purchased. ₹ 1,50,78,302/- (Which includes opening Work-in-progress of Rs.34,28,277/-) d) 50% of this expenditure in `c' above - treated as bogus. ₹ 75,39,151/- The break up of other materials purchased as under:- i) Opening assessed Work-in-Progress on 1.4.04 - ₹ 34,28,277/- ii) Payments to Jai Laxmi Construction -(treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintained and the bills are entered in the ledger. The inward register contains the details as entry number and date, supplier's name, items and rate, quantity and vehicle number also for the whole year. No deficiency has been found in all the registers mentioned above. As far as procedural irregularities/lacuna/lapses ' are concerned i.e. entries made by the same person on the same date, signature of the labours affixing" "and names wrongly written, no labour thumb impression (signature in all cases) and no revenue stamp affixed on the bills of payment more than ₹ 5,000/-, no doubt there are some irregularities but the moot point that construction of factory building has. been done or,has not been dealt with by the AO. He has nowhere. Mentioned about the construction of the factory building whether incomplete or complete. He has also not made any physical inquiry on the spot to verify about the exact condition.of the, factory building. Instead the AO has opted for theory part and devoted his precious time by collecting bills and vouchers, wage sheets and analyzing them in various manners and even arrived at a ratio of cement, bricks, gitti, reti and mistries and lab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building on some procedural irregularities and presumption is not justified. It is to be mentioned here that the AO has disallowed total labour payment of ₹ 46,81,086/-which means that the construction of factory building even in part was completed without any labour payment. The AO also made disallowance of ₹ 52,48,660/- claimed for material supply, gitti, cement sand etc and ₹ 75,39,151/- as other material supply. Here also the position is same as discussed on the point of labour payment. The AO has brought nothing on record-to show that the appellant has not incurred expenditure on labour payment and. for purchase of material. Therefore, the AO was not justified in disallowing depreciation on building. The disallowance is deleted. 14. The sixth ground of appeal relates to disallowance of ₹ 20,96,267/- out of interest paid to bank. 15. This ground is consequential to ground No.5 above. Following the discussion made for disallowance of depreciation on building, the AO disallowed the bank interest on the amount not utilized for construction. As the disallowance out of depreciation on building has already been deleted, here also the same facts involved, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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