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TMI Blog2018 (8) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... 962 Rules. The learned CIT(A) erred in not admitting additional evidences and in estimating profits despite having all evidences before it to compute income as per provisions of the 1961 Act r.w.r. 46A of the 1962 Rules. In our considered view and in the interest of substantial justice to both the parties in exercise of our powers u/s 254(1) of the 1961 to pass such orders as deem fit, the matter is restored to the file of the AO for fresh/de-novo framing of assessment by AO on merits in accordance with law after admitting all the evidences filed by the assessee . - I.T.A. No.5482/Mum/2014 And CO. No.141/Mum/2018 - - - Dated:- 31-7-2018 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri. Dinesh R. Shah For The Revenue : Shri. V. Justin ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the Assessee, being ITA No. 5482/Mum/2014 for assessment year(AY) 2010-11 and Cross Objections(CO) bearing no. 141/Mum/2018 for AY 2010-11 filed by the Revenue, are both directed against the appellate order dated 31.07.2014 passed by learned Commissioner of Income-tax (Appeals)-30, Mumbai (hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts as well as by the Assessing Officer and the First Appellant Authority. 4. The Revenue has raised following grounds of Cross Objections filed with the tribunal :- 1. On the facts and circumstances of the facts the CIT(A) has erred in restricting the disallowance of expenses claimed under the head labour charges (Mukadam) (Rs. 1, 28, 93, 6I5/- labour charges (Rs. 8, 75, 773/-) to the extent of 15% of the net profit (before deducting remuneration to the partners) ignoring that the books of accounts of the assessee were audited by the Chartered accountant and the assessing officer did not reject the books of accounts. 2. On the facts and circumstances of the facts the CIT(A) has erred in not appreciating that with regard to the claim of labour charges (Mukadam) and labour charges expenses, requisite details and supporting documentary evidences were not filed by the assessee and thus had failed to discharge the onus cost on it in terms of provisions of section 37(1) of the I. T. Act 1961. 3. Without prejudice the above, the CIT(A) erred in holding that provisions of 40(a)(ia) are not applicable towards labour charges (Mukadam) - ₹ 1, 28, 93, 615/- cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umala 3341742 Rajesh Kumar Prajapati 403256 Ram Bhagat Goud 500800 R V Joga 332623 Shah Jahan Shaikh 260717 Sheshrao Gawali 113 6500 S P Dubey 13000 Vijay Shankar Tiwari 508947 Vinod Misra 892010 V Murugan 397080 Total 12893615 Despite being asked by the AO to furnish the details during the course of assessment proceedings u/s 143(3) r.w.s. 143(2) of the 1961 Act conducted by the AO, the assessee did not furnish name, address, PAN, amount paid and details of services rendered with regard to labour charges(Mukadam). The AO observed that in the absence of details furnished, the assessee has failed to discharge its onus, and in absence thereof no further enquiry could be made and it could not be proved that these expenses were incurred wholly and exclusively for the purposes of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddresses, PAN, amount paid and services rendered by the labour and the assessee failed to prove that the services were rendered wholly and exclusively for the business of the assessee and the expenses were genuine, whereby the AO observed as under:- 5.1 In the profits loss account for the year ending 31.3.2010 assesseee has debited ₹ 8, 75, 7737- on account of labour charges. During the course of hearing vide order sheet noting dated 21.11.2012 assessee was asked to furnish names, address, PAN, amount paid and services rendered with regard to the labour charges. Assessee was given opportunity to furnish the details vide order sheet noting dated 5.12.2012, 17.12.2012, 24.12.2012, 7.1.2013, 15.1.2013, 28.1.2013, 4.2.2013, 11.2.2013, 15.2.2013. Inspite of providing ample opportunities, assessee failed to furnish the details of labour charges. Any claim of expenditure is allowable if it is incurred wholly and exclusively for the purpose of business. Secondly, in the case of labour charges the assessee has to prove that services have been rendered by them for its allowability. However, the assessee has failed to discharge its burden of proving the fact that the expenditures c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which led to rejection of application filed by the assessee for admission of an additional evidences u/r 46A of the 1962 Rules. On merits, the learned CIT(A) observed that assessee is engaged in business of trenching and cable laying. The assessee furnished copy of agreement before learned CIT(A) for carrying out work of OSP services as per BOQ for Tata Teleservices( Maharashtra) Ltd. . The learned CIT(A) observed that scope of work including supply of materials and the assessee has earned gross revenue of ₹ 8, 33, 34, 739/- from Tata Teleservices (Maharashtra) Ltd. and it is not possible to carry out such work without expenditure on labour and learned CIT(A) went ahead and estimated profits of the assessee firm to be tune of 15% of the turnover, before deducting remuneration payable to partner, vide appellate order dated 15.04.2013 passed by learned CIT(A). The assessee on its part had declared profit @ 9% of the total turnover before claiming deduction of remuneration of ₹ 45, 94, 483/- paid to partner which got enhanced to 15% by appellate orders of learned CIT(A). The learned CIT(A) also held vide appellate order dated 15-40-2013 that under these situations, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by Revenue . No affidavit has been filed and even no reasons for aforesaid delay whatsoever has been filed to justified and explain the causes of this delay of 930 days in filing CO late beyond the time stipulated u/s 253(4). The said delayed filing of CO by Revenue late by 930 days beyond time stipulated u/s 253(4) is not supported by any application nor affidavit for filing late this CO by Revenue for condoning delay in late filing of this CO is filed by Revenue. No explanations or justifications are submitted by Revenue in its CO or even in pleadings before the tribunal as no reasons whatsoever are furnished for such late filing of CO by Revenue. The appeal is statutory right which emanate from the 1961 Act and is to be exercised with in the framework of statute. There is no vested right in filing appeal/CO except as provided by statute. The 1961 Act itself provided for period of 30 days from the date of receipt of notice for filing the CO. The Revenue has participated in appellate proceedings since September 2016 but in the middle of 2018 only this CO has been filed on 30-05-2018 without any explanation, justification or reasons for this substantial delay of 930 days and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... htra) Ltd. . The assessee paid labour charges to Mukadam to the tune of ₹ 1, 28, 93, 615/-. The assessee had claimed that payments towards labour charges were made through Mukadam to following parties as under:- Name Amount (Rs) Ashok Kumar Sharma 581768 E Velumalai 263957 Guddu Rajbha 313173 K Vasantha 179500 Laxman Maruti Shinde 509769 L S Rajpal 791147 M D Abdul Khayer 464712 M DShafiul Islam 496544 Mohammed Raffi 796821 Mulla Abu Tahir 543149 N Nityanand Nadar 166400 Priya Swami Perumala 3341742 Rajesh Kumar Prajapati 403256 Ram Bhagat Goud 500800 R V Joga 332623 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical grounds as in the opinion of learned CIT(A) no evidence to support justification for not filing evidence before the AO could be filed by the assessee. The assessee had on the other hand contended that it was due to illness of its partner incharge of taxation and accounts as well illness of the close relative of said partner, the details could not be furnished during assessment proceedings before the AO. The assessee has also submitted that its accountant left the organisation which was another reason for non production of details/evidences before the AO during assessment proceedings which was also disbelieved by learned CIT(A). Be it as may be but the fact remains that the assessee has claimed to have come forward with all the necessary evidences to justify its stand and corroborate that the expenses are bonafide, genuine and incurred wholly and exclusively for the purposes of its business. These evidences got discarded by learned CIT(A) on technical grounds and these evidences never saw day of light with respect to their evaluation/verifications on the touchstone of merit by Revenue. The rules of procedure are subservient to substantive law to serve justice and not to s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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