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TMI Blog2020 (10) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(Appeals) was correct in deleting the addition. Addition on account of mismatch in work in progress - CIT-A deleted the addition - HELD THAT:- AO arrived at a conclusion by selecting some particular sites and taking recourse to reverse calculation on the basis of subsequent years profitability. On the facts on records, AO failed to consider specifies of each project. The facts such as escalation in some projects, were not considered. In the case of amount of escalation, there is no corresponding expenditure against the same and therefore, it would not have any impact on WIP. AO has not considered the figures and accounts of all the sites. Adoption of accounts of subsequent years cannot be the basis for calculating work in progress of the year. In view of our above observations, we do not find any reason to interfere with the findings of the Ld. CIT(Appeals). Addition on account of labour payment - AO disallowed 5% of the entire site expenses - HELD THAT:- Ground of the Revenue was against restricting of disallowance to 5% of labour charges by the Ld. CIT(Appeals). However, with the order of the Tribunal [ 2017 (12) TMI 1780 - ITAT PUNE] this 5% disallowance on la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he work includes laying of pipelines for raw water, potable water, sewage and ash slurry, excavation and welding, guniting of pipes, buildings and dam walls, construction of bridges, driving of piles, fabrication of pipes etc. 3. The assessee company filed its return of income for the assessment year 2010-11 at ₹ 5,82,63,820/-. The Assessing Officer vide order dated 31.03.2013 assessed assessee‟s total income at ₹ 24,44,01,229/- with the addition of ₹ 18,61,37,409/-. The said addition consists of addition on account of suppression of Debtors at ₹ 5,32,44,990/-, Work in progress ₹ 7,32,73,273/- and disallowance on account of labour charges at ₹ 2,96,19,146/-. 4. Ground No.1 in the Revenue‟s appeal pertains to the deletion of addition made by the Assessing Officer on account of suppression of debtors amounting to ₹ 8,32,44,990/- by the Ld. CIT(Appeals). 5. During the assessment proceedings, the Assessing Officer noticed that during the year under consideration, the assessee undertook 30 projects but debtors were reflected in only of the projects viz. RRWS Scheme for Shegaon Town aided by the Central Government UIDSSNT. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Ld. CIT(Appeals) that the assessee gets works from Government Department/ contracts for escalation projects. The assessee has a contracting division and also a manufacturing division. Major manufacturing products of the assessee are consumed for the assessee‟s contracting divisional works. That further, the Assessing Officer has not doubted the sales and the turnover have not been disputed by the Assessing Officer. 7.1. The Ld. AR further submitted that when sales are not doubted, turnover has also not been disputed, the debtors are arising from sales only, in such scenario; there cannot be any addition on understatement of debtors. The Assessing Officer has rejected the books of accounts and again coming to the books of account after pointing out differences in respect of sundry debtors. The Assessing Officer has also estimated 5% of payments. So, on estimation addition has been made whereas the assessee has given all the details of bills etc. so there has been an actual payment. 8. The Ld. CIT(Appeals) on this issue has held as follows:- 7.2 I have considered the facts of the issue as mentioned in the assessment order as well as in the submission filed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It has been brought on facts that as a matter of practice, no Government Department issues any confirmation, an issue which has been raised by the Assessing Officer. The Assessing Officer has just made an estimated calculation and actual figures of various deductions such as TDS, Works contract Tax, Security deposit, royalty, Secured Advances (EMD), and Retention money has not been considered. These facts were not refuted by the Ld. DR at the time of hearing. The Assessing Officer resorted to some strange calculation finding out mismatch in the account of sundry debtors in view of the accounts derived at for the subsequent assessment year. When the Assessing Officer is accepting the turnover, sales are not disputed and the Assessing Officer has also not considered the actual figure of various deductions as afore-stated, in such scenario, we are of the considered view that the Ld. CIT(Appeals) was correct in deleting the addition on this issue. Therefore, there is no need for any interference with the findings of the First Appellate Authority. Thus, Ground No.1 raised in appeal by the Revenue is dismissed. 10. Ground No.2 pertains to the deletion of addition made by the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the addition made by the Assessing Officer is on the basis of profit calculation made by the assessee in subsequent assessment year 2011-12. The Assessing Officer has considered only 17 projects out of 30-35 projects undertaken by the assessee and has held that there is an understatement of WIP. This sort of exercise, if allowed, gives absurd business results. 15. The Ld. CIT(Appeals) on this issue has held as follows: 8.7. I have carefully considered the contention of the appellant. In the lights of the facts submitted, I am of the view that the AO while passing the order has not considered thoroughly the facts in totality. As stated supra, the appellant providing its services exclusively to various Government Departments/undertakings and the turnover has been taken as reflected in Form No.26AS. There is no suppression of turnover and the same has not been disputed by the Assessing Officer as well. The Assessing Officer has based her conclusion by selecting some particular sites and by taking recourse to reverse calculation on the basis of subsequent years profitability, the A.O has failed to consider specifics of each project. The facts such as escalation in some pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the Ld. CIT(Appeals) has restricted the disallowance at ₹ 25,14,015/- of the additions made by the Assessing Officer on account of labour payment at ₹ 2,96,19,146/-. 18. The facts on this issue are that Assessing Officer found that the assessee had incurred labour expenses to the tune of ₹ 59,23,82,931/- under the head 'site expenses'. The said expenditure works out to 75% of the total expenses incurred during the relevant year. The Assessing Officer noted that during financial year 2008-09, the said expenditure was ₹ 37.30 crores which was 61.9% of the total expenses of that particular year. The Assessing Officer, therefore asked the assessee to produce documents in support of such claim of expenses. The Assessing Officer noted that the assessee had produced self-made vouchers. The Assessing Officer further found that some of the vouchers did not bear the signatures of the recipient, the handwriting on the vouchers appeared to be same and the vouchers appeared to be fabricated. Accordingly, the Assessing Officer disallowed, on ad-hoc basis, 5% of the expenditure and added an amount of ₹ 2,96,19,146/- to the income of the assessee. ..... 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