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TMI Blog2017 (8) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... contracts, but stated to be disallowed the entire expenses relating to ready mix contract business. This fact was not supported by any tangible evidence. The assessee has to maintain the acquittance register for payment of salaries and deduct PF/ESI etc. to establish the genuineness of salaries. In this case assessee has not produced any evidence with regard to payment of salaries and contribution to PF/ESI etc. Therefore we don‟t find any infirmity in the order of the Ld.CIT(A) and the same is confirmed. On this ground, appeal of the assessee is dismissed. Disallowance of 10% of labour charges - Held that:- It is undisputed fact that the assessee has failed to furnish the registers and muster rolls relating to the payment of labour charges and did not produce any evidence before us also. The assessee did not produce the details of payment of PF, ESI etc., in support of the labour employed. Therefore, we do not find any reason to interfere with the order of the CIT(Appeals) and the same is upheld. The appeal of the assessee on this ground is dismissed. Addition towards the creditors for expenses - Held that:- The assessee did not submit the details and confirmations fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 40A(3) of the I.T. Act, where the assessee incurred such expenditure in respect of which the payment is made to a person in aggregate exceeds ₹ 20,000/-, is not an allowable expenditure. Therefore, it is the obligation on the part of the assessing officer to identify each payment which exceeds ₹ 20,000/- per day and make the disallowance. In this case, no such exercise has been done by the assessing officer. Instead, the assessing officer disallowed the entire cash payments. Therefore, we set aside this ground to the file the assessing officer to identify the payments made in cash or otherwise than by a crossed cheque exceedingRs.20,000/- per day per person and disallow the resulting amount after giving opportunity to the assessee to explain the reasons for making such payments. Accordingly, this issue is remitted to the file of the assessing officer. Disallowances under the various heads including some balance sheet items as well as the expenses - Estimation of income reasonably - Held that:- The assessee has maintained the books of accounts which are audited by the qualified CA. As per 44AB of the IT Act, the assessee is required to maintain the regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 12,63,637/- and furnished evidence for proof of payment of ₹ 8,73,605/-. Therefore AO made the addition of the remaining amount and the Ld. CIT(Appeals) has confirmed the addition made by the assessing officer. During the appeal hearing also the assessee did not produce any evidence to show that the balance amount of ₹ 3,90,032/- was paid by the assessee before due date of filing return of income. The sales tax payment required to be allowed on actual payment basis as per section 43B of IT Act. During the appeal hearing also, the assessee did not furnish any evidence. Therefore, we do not find any infirmity in the order of the Ld.CIT(Appeals) and the same is upheld. This ground of appeal is dismissed. 5. Ground No.4 is related to the addition of ₹ 25,23,182/- towards staff salaries. During the assessment proceedings, the assessing officer noticed that the assessee debited a sum of 25,23,182/- towards staff salaries which was disallowed with the following observation. In P L account, the assessee has debited an amount of ₹ 26,41,346/- towards staff salary for Engineering and Contractors concern and an amount ofRs.21,03,040/- towards staff sala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was ₹ 7,84,94,244/-. Therefore, assessee argued that without the payment of salaries, the assessee would not have carried out the contract works and declared the turnover of ₹ 7,84,94,244/-. 7. On the other hand, Ld. DR argued that the assessee has maintained the books of accounts and it is the obligation on the part of the assessee to prove the genuineness of the expenditure. The assessee did not produce any vouchers and the evidence for the payment of salaries. There is every possibility of claiming double deduction since the assessee is carrying on two different divisions. The Ld. DR vehemently opposed for any relief to the assessee. 8. We have heard the rival submissions and perused the material placed on record. The assessee is carrying on two divisions i.e. RMC and the civil contracts. The AR argued that the assessing officer has allowed the entire expenditure relating to the civil contracts, but stated to be disallowed the entire expenses relating to ready mix contract business. This fact was not supported by any tangible evidence. The assessee has to maintain the acquittance register for payment of salaries and deduct PF/ESI etc. to establish the genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year or the earlier years and debited to the P L account but remained outstanding without making the payment. The assessee was following mercantile system of accounting and debited the expenditure on accrual basis, however, it is the duty of the assessee to prove that the outstanding expenses were not paid outside the books of accounts and the same are genuine. The assessee did not submit the details and confirmations from the respective sundry creditors for expenses. The Ld. A.R argued that the income is admitted on estimation basis and the expenditure also required to be allowed on estimation basis following the matching concept. This argument is not acceptable since the assessee has to establish the genuineness of expenditure as well as outstanding amount. The assessee failed to substantiate the genuineness of outstanding amount with the tangible evidence such as confirmation from the creditors, details of party wise outstanding with names, addresses and the amount outstanding with PAN No. etc. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A). However, with respect to the bonus outstanding, the assessee required to submit the details wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect the assessing officer to verify the outstanding expenses and the labour charges and decide the issue a fresh on merits. Accordingly this issue is remitted back to the file of the assessing officer and kept open to decide afresh. The appeal of the assessee on this ground is allowed for statistical purposes. 13. Ground No.8 is related to the disallowance made u/s 40(A)(3) of Income tax act. The assessing officer disallowed a sum of ₹ 20,94,917/- towards cash payments exceeding ₹ 20,000/-. The Ld.CIT (Appeals) confirmed the addition as under : 5.3 I have considered the pleas raised in this regard. The provisions contained in section 37 is clear that the assessee is required to prove that the expenses claimed are incurred wholly and exclusively for his business. The assessee has filed its return and declared income with reference to audited results of his books of account. Therefore the burden lies on the assessee to prove the income declared in the return is correct. As the assessee has failed to prove, the assessing officer is justified in making disallowance wherever adequate proof was not adduced. Further it is noted that the assessee has not made any alte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out the defects the assessee is asking for estimation of income and this attitude should not be allowed. Non furnishing of the required information at the time of assessment proceedings should not conform undue benefit by estimating the income instead of making the assessment as per the books of accounts. 14.3. We have heard the rival submissions and perused the material on record. The assessee has maintained the books of accounts which are audited by the qualified CA. As per 44AB of the IT Act, the assessee is required to maintain the regular books of accounts and the income is to be computed in accordance with the books of accounts maintained. As rightly argued by the AO, the assessee is requesting for estimation of income when the AO detected the defects in the books of accounts and failed to furnish the necessary evidence in support of its claim and the same is not permissible. Therefore, we do not find any merit in argument of the Ld.AR to resort for estimation of income. Accordingly, this ground of appeal is dismissed. 15. In the result, the appeal filed by the assessee is partly allowed. The above order was pronounced in the open court on 30th Jun 2017. - - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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