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TMI Blog2016 (4) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... g outstanding of ₹ 3,70,20/- and about the remaining parties, it is stated by the assessee that it is not possible for the assessee to trace these creditors since period of nine years has elapsed and many of them have closed their business and others have disposed of their records. But the assessee has not brought even this evidence on record that when and how the amount was paid by the assessee to these creditors as per the records of the assessee and what is the last available address of these creditors along with PAN so that the department could have located these creditors. Regarding the five parties for whom confirmation have been submitted by the assessee also, the Ld. CIT(A) has noted that creditworthiness of these creditors was not established. Still, the CIT (A) has made an addition of only ₹ 15 Lacs and not of the entire amount of Creditors. No infirmity in the order of Ld. CIT(A) on this issue - ITA No.460/LKW/2015 - - - Dated:- 24-2-2016 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER For The Appellant : Shri Abhinav Mehrotra, Advocate For The Respondent : Shri A.K. Singh, CIT DR ORDER PER A. K. GAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade, can be added and even otherwise proper evidence was furnished, to confirm such creditors. 6. That the Ld. Commissioner of Income Tax, Appeals has further erred in law as well as on facts in disallowing 50% out of labour expenses i.e. 11,50,000/- and 15 Lac towards Creditors without appreciating real facts of the case and without evaluating the evidence put on record for verification. The Ld. Commissioner while disallowing the labour charges Creditors relied on the order dt. 14/11/2013, of the Ld CIT (AJ. The Ld. CIT(A) failed to point out any expenditure which was excessive and non for business. 7. That the Ld. Commissioner of Income Tax, Appeals has further erred in law as well as on facts in not appreciating that the Gross Profit Rate was better as compared with the previous year from 3.71% to 4% and thus there was no room for any disallowance out of labour expenses. 8. That the Ld. Commissioner of Income Tax, Appeals has further erred in law as well as on facts in not appreciating that once the G. P. Rate has been accepted in the assessment order, the disallowance out of wages would disturb the accepted gross profit rate and will lead to absurd results. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported the order of CIT (A). He also submitted that the issue regarding the power of Ld. CIT(A) for making enhancement is covered in favour of the Revenue and against the assessee by the judgment of the Hon ble Allahabad High Court rendered in the case of CIT Vs. Kashi Nath Candiwala (Supra), copy available on pages 82 to 84 of the assessee s paper book and in particular, our attention was drawn to Para 7 of this judgment where Hon ble Allahabad High Court has duly considered the judgment of the Hon ble Apex Court rendered in the case of CIT Vs. Nirbheram Daluram (Supra), and also another judgment of the Hon ble Apex Court rendered in the case of Jute Corpn. of India Ltd. Vs. CIT (Supra) and after considering these two judgments of the Hon ble Apex Court, it was held that the power of the appellate Assistant Commissioner is coterminous with that of the Income Tax Officer and he can do what the Income Tax Officer can do and also direct him to do what he has failed to do. 6. We have considered the rival submissions. In the present case, we have to decide two aspects of the matter. First aspect is this that whether the enhancement made by the Ld. CIT(A) is proper and valid in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r wages of ₹ 23,81,620/- for being excessive and non -for-business expenditure. Adequate opportunity was provided in the present proceedings to the appellant substantiate the said claim. 4.3.2 Upon careful perusal of the submissions, I find that the onus has not been discharged by the appellant fully to establish the identity of parties/labourers along with evidence of payment of labour charges as held in the case of CIT Vs S.G. Exports (P H) 336 ITR 2. In the instant case, the appellant has merely submitted photocopies of ledger account, which are made on 'tally' software alongwith copy of hand written month wise attendance register of labourers. The perusal of the same, indicates some thumb impressions against the cash payments, but the identity of these persons stated to be labourers, has not been established with any supporting evidence. It has been merely submitted that payments for rate contracts of civil works of military, factories oil factories, public sector are duly approved by respective departments. No confirmation has been furnished in this regard. The cash payments further cast doubt on the veracity of the entire claim of labour charges. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the requirement of details of sundry creditors since the first appeal proceedings started in September 2013, however the complete evidence is not available till date in spite of adequate opportunities provided for same. Therefore, the submission, that letter has been written to parties to confirm the credit balance is not justifiable. Clearly, except a few Shri Narain Sewa! Dixit for amount of ₹ 63,400/-and Mahesh Pratap Singh for amount of ₹ 92,250/-, there is no cogent evidence with the appellant to substantiate the genuineness of all sundry creditors payable The appellant has admitted to the same, as is also evident from the submission vide letter dated 24.03.2015 as reproduced below: further, to this we state that It is not possible for us to trace all the sundry creditors since a period of nine years have elapsed and many of them have either closed their business and others have disposed off their record. 4.4.1 In view of the above facts of the case, it is clear that the appellant has not discharged his onus of proving the genuineness, identity and creditworthiness of all the sundry creditors payable except the two amounts of ₹ 92,250/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by way of cash, we feel that some disallowance out of labour charges is justified. Now the question is about the quantum of disallowance. We feel that if the preceding year is considered as a guiding factor, the labour charges should be 22.69% of Receipts of ₹ 90.35 Lacs as in that year and as a result, the labour charges for the present year comes to ₹ 20.50 as against claimed by te assessee of ₹ 23.82 Lacs. We have already noted that since this is not a case of the assessee that any assessment of such preceding or succeeding year was completed u/s 143 (3) and in the absence of that, such preceding or succeeding year cannot be a guiding factor. Considering te facts in totality, we feel that in the facts of the present case, disallowance of ₹ 5.95 lacs being 25% out of labour charges will meet the ends of justice. We hold accordingly. 8. Now we decide the issue regarding addition made by the Ld. CIT(A) of ₹ 15.00 lakh out of sundry creditors. In this regard, we find that the amount of sundry creditors appearing in the balance sheet of ₹ 27.76 lakh is without including unpaid expenses ₹ 16.64 lakh. Party wise list of such sundry credito ..... X X X X Extracts X X X X X X X X Extracts X X X X
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