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TMI Blog2015 (10) TMI 2791X X X X Extracts X X X X X X X X Extracts X X X X ..... industrial operation. The percentage of wages to the gross receipt is consistent with that returned in the preceding assessment year, except for marginal increase. In the subsequent assessment year also, the Assessing Officer has accepted the wages paid, except a minor disallowance of 70,000/-. Under these circumstances, in our considered opinion, the ad-hoc disallowance is not sustainable When confronted in this regard that there has been a marginal increase in the percentage of wages to the gross receipt and the fact that wages are not 100% verifiable, the learned Counsel of the assessee agreed for a small disallowance. We also find that one of the pleas in support of the deletion of the addition taken by the learned Counsel of the assessee relied upon the learned CIT(A) is the fact that in the subsequent assessment year the payment of wags was accepted by the Assessing Officer, except for the minor disallowance of 70,000/- - Disallowance of wags to the extent of 1 lac will meet the ends of justice. Accordingly, we modify the order of the learned CIT(A) and hold that the disallowance to the extent of 1 lac out of wage expenses is sustainable and accordingly, the disallowance of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h credit. 5. Whether in law on facts & circumstances of the case, the CIT(A) was justified in admitting additional evidence in violation of Rule 46A of the I.T. Rules, 1962. 6. The order of the Ld. CIT(A) is erroneous both in law and on facts. 7. Any other ground that may be adduced at the time of hearing." Apropos Ground No.1 : Deletion of addition of ₹ 5,66,753/- on account of unexplained capital. 3. The assessee, in this case, is an individual, deriving income from supply of labours for industrial operation. This addition is based upon the Assessing Officer's finding that the assessee has shown deposits in the capital account of ₹ 5,66,753/- in addition to the profit of the year. Since no explanation regarding the source of deposit was offered, the amount involved was added to the assessee's income. The assessee made elaborate submissions and furnished additional evidences before the learned CIT(A). The learned CIT(A) obtained remand report from the Assessing Officer. In the remand report, the Assessing Officer admitted that "the assessee has explained the details of the source of capital introduced during the year under consideration". On the basis of this ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted that in the subsequent year the Assessing Officer has accepted the claim of wages of ₹ 98,39,167/- subject to minor disallowance of ₹ 70,000/-; hence holding that without rejecting the books of accounts of the assessee, the Assessing Officer could not make ad-hoc disallowance from the wage payment. Hence, the learned CIT(A) deleted the addition. 9. Against the above order, the Revenue is in appeal before us. 10. The learned Departmental Representative submitted that the assessee has not maintained proper record and vouchers for the wages paid; hence, he submitted that the Assessing Officer has rightly made the disallowance. Per contra, the learned Authorized Representative submitted that the assessee has maintained proper vouchers. He submitted that in the line of assessee's business proper printed vouchers cannot be expected in all the cases. The learned Counsel submitted that assessee's profit ratio was 2.97% in the preceding assessment year and it is 3% in the present assessment year. He submitted that though he admitted that there has been a marginal increase in the percentage of wages to the gross receipts. In the immediately preceding assessment year it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) observed that the Assessing Officer has stated that the appellant has shown unsecured loans from various person at ₹ 4,70,000/; that confirmations of these persons or copies of their account have not been filed; that all the persons are from the same family/community; that all the loans are below ₹ 20,000/- except from Shri G R Nishad which is of ₹ 2,00,000/-; that no details have been filed in this case also; that since the genuineness of the creditors of their creditworthiness has not been provided, the amount of ₹ 4,70,000/- is added as unexplained cash credit u/s 68. 13. Upon assessee's appeal, the learned CIT(A) has deleted the addition, by holding as under:- "28. I have carefully gone through the assessment order and submissions of the appellant. I do find force in the submission of the appellant that the fresh loan taken during the year under consideration amounting to ₹ 2,00,000/- pertains to Mr. G.R. Nishad only. The other unsecured loans were brought forward from the preceding years Balance Sheet. Thus, the addition is not warranted during the year under consideration. As regards fresh loan of ₹ 2,00,000/- taken during the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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