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TMI Blog2018 (1) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... )-I, New Delhi relevant to assessment year 2008-09. 2. The grounds raised in this Appeal read as under:- 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the additions made under the heads wages and salary, site preparation, shuttering material, machinery maintenance, sanitary and plumbing material, cartage inwards, freight cartage and transport expenses (Rs. 1,39,77,399/-) u/s. 40(a(ia) without establishing the genuineness of the additional evidence produced during the appellate proceedings. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the additions made under the heads wages and salary, site preparation shuttering material, machinery maintenance, sanitary and plumbing material, cartage inwards, freight cartage and transport expenses (Rs. 1,39,77,399/-) u/s. 40a(ia) by relying upon the documents produced during the appellate proceedings as additional evidence even though the AO has raised concerns about their genuineness. 3. That the appellant craves for the permission to add, delete or amend grounds of appeal or at the time of hearing of appeal. 3. The b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved to issue notice again and again to the assessee on the same address, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records. 6. We have heard Ld. DR and perused the relevant records, especially the impugned order. The grounds raised by the Revenue are common and identical i.e. relating to genuineness of the additional evidence produce during the appellate proceedings on the basis of which the Ld. CIT(A) has deleted the addition of ₹ 1,39,77,399/- under the heads wages and salary, site preparation, shuttering material, machinery maintenance, sanitary and plumbing material, cartage inwards, freight cartage and transport expenses, u/s. 40(a(ia) of the Act. On this issue, we find that the assessee during the appellate proceedings has filed the additional evidences vide his letter dated 17.1.2011 stating therein as under:- I (Assessee) was not given proper opportunity of being heard as my counsel requested for an adjournment on 13.12.2010 but the AO without considering the request passed the assessment order on 14.12.1010 through reasonable time was still available. I (Assessee) was prevented by suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be admitted. On going through the facts of the case, it was obvious that the fate of addition made by the A.O hinges critically on the additional evidence submitted by the assessee. Furthermore, there is substance in assessee s submissions before the Ld. CTI(A) that given the type of evidence required by the AO, he could have been given one more opportunity to the assessee to file the evidence before passing the assessment order. 6.4 In addition to above, we find that the judgement of Bombay High Court in the case of Prabhavati S. Shah vs CIT (1998) 231 ITR 1 Bombay is extremely important in this case wherein it has been held that restrictions placed on assessee by Rule 46A to produce additional evidence do not affect powers of Appellate Assistant Commissioner (AAC) u/s 250 of the Income Tax Act. In this case, summons were issued to creditors of assessee from whom he had taken loan. These summons came back unserved and loan amount was treated as undisclosed income. Before AAC assessee sought to produce documentary evidence which was refused to be entertained. It was held that AAC should have admitted evidence in exercise of power u/s 250(5). 6.5 Keeping in view of the above s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other hand proceeded to reject the salary/wages register on the ground that the evidence must have been fabricated. In order to substantiate the same, the A.O stated that at some instances sex of the employee had been mentioned instead of rank and vice-a-versa. In the rejoinder to the remand report the appellant submitted that the A.O had no basis to prove that the evidence in the form of wages register was fabricated. Furthermore, it was submitted that mentioning of sex instead of rank and vice-a-verse was a clerical mistake and should not be given undue importance. The staff of the appellant working in Kathua District of J K where this project was undertaken was not very educated and there was every likelihood of committing such a mistake. I agree with the contentions of the appellant. The wages/salary which were disallowed were in respect of workers/employees engaged in a project in a Kathua district of J K. The appellant by producing the wages/salary register could substantiate the fact that there was no employee/worker whose income was above the income limit in respect of which TDS provisions are applicable. The A.O's observations that the evidence in the form of wages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial, sanitary material and for maintenance of machinery. On a perusal of the details given in support of these expenses, the A.O found that out of total expenses of ₹ 54,28,055/-, the appellant gave additional evidence in respect of ₹ 16,69,317/-. Out of this amount, 53% of the expenses were incurred in cash and were not support by vouchers. On this basis, the A.O held that 53% of the total expenses cannot be treated as genuine, which means that 47% of the total expenses amounting to ₹ 25,52,185/- were adequately supported and hence need to be allowed. I agree with the detailed examination of expenses done by the A.O and accordingly an amount of ₹ 28,78,870/- is disallowed out of a total amount of ₹ 54,28,055/- disallowed on account of sanitary material, machinery maintenance, shuttering and plumber material. The appellant accordingly gets a relief of ₹ 25,52,185/-. d) F,G,H - These represent disallowance on account of carriage inward(Rs. 5,63,150/-), legal and professional charges (Rs. 1,23,664/-) and accounting charges (1,20,000/-). As regards carriage inward, the appellant submitted that it represented payment to drivers for transporta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to tempo/truck operators and the amount paid was less than that subject to TDS provisions. The A.O's observations that this evidence may have been created and modified subsequently does not have any basis to bank upon. Furthermore, details of Freight, cartage and transportation reveals that no one was paid in excess of ₹ 20,000/- in one instalment and ₹ 50,000/- in the aggregate. Considering these facts, the disallowance to ₹ 6,58,412/- on account of freight cartage and transport expenses is hereby , allowed. 8.6 Hence, after a careful consideration of the facts of the case together with the submissions of the appellant, the remand report of the A.O and the rejoinder to the remand report I hold that the A.a erred in making the addition of ₹ 1,43,06,704/- by invoking provisions of Section 40(a)(ia) of the Income Tax Act. Since the details given by the appellant in the voluminous paper book along with other evidence make it crystal clear that in most of the cases, TDS Provisions were not applicable, the A.O by invoking provisions of Section 40(a)(ia) of the Income Tax Act erred in making addition to the extent of ₹ 1,43,06,704/-. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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