9911796707
TMI Blog2020 (12) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of the contact work executed by the assessee. In this view of the matter ratio from Hon ble Bombay High Court in the case of Nikunj Eximp Enterprises P. Ltd. [ 2013 (1) TMI 88 - BOMBAY HIGH COURT] and several other case laws are applicable, that 100% disallowance in such cases is not permissible. Accordingly, assessee has done purchases from grey market. In our considered opinion 12.5% disallowance in this case would meet the end of justice. We direct accordingly. On similar reasoning we disallow 12.5% of the labour expenditure in this regard. Disallowance under section 40(a)(ia) - HELD THAT:- We note that this issue was also remanded by the learned CIT(A) to the AO, but we note that the Assessing Officer has not properly examined t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terials, corresponding sales would not have been possible. 3. In the facts and circumstances of the case and in law, the Learned CIT(A) has erred in upholding the disallowance of purchases of ₹ 21,19,723/- being purchase of steel pipes made from M/s Asian Steel, disregarding the fact that the said party is not even being declared a hawala dealer by the sales tax department and without consumption of materials, corresponding sales would not have been possible. 4. In the facts and circumstances of the case and in law, the Learned CIT(A) has erred in upholding the disallowance of ₹ 10,99,818/-in respect of labour charges paid to Siddharth Constructions. 5. In the facts and circumstances of the case and in law, the Learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s notice the AO had listed all the concerns where the notices under section 133(6) could not be served and the assessee was directed to establish the identity of such persons and also to establish the genuineness of the transactions with these persons. Thereafter the AO again issued a show cause notice to the assessee dated 01/03/2013 mentioning that there has been no response to the earlier notice from the assessee/In response the assessee could only claimed that it is not able to locate the purchase parties due to change of addresses but claimed that it has the ledger accounts of all the suppliers. 6. The AO examined the reply of the assessee threadbare. The AO noted that in respect of M/s Paras Sales Corporation the assessee has no supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plier has responded to the same and has categorically denied having carried out any transactions with the assessee. The AO confronted the assessee with this fact but there was no response from the assessee. Accordingly the AO held that the purchase of ₹ 21,19,7237- is also bogus and the same was added to the income of the assessee. 8. The AO also noted that the assessee has claimed to have made purchases or had made Labour payments to the following two concerns also: SI. No. Name the Party Nature of Expense Amount (Rs.) Remarks of postal authorities 1 M/s Swastik Metals Purchases 5,00,004 Not Known 2 M/s Siddharth Constructions Labour 10,99,8187- Not known The AO noted that notices under section 133(6) issued to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nship. The AO also noted that the assessee admittedly does labour contract work and the payment to these 127 persons was in the nature of a sub-contract only. Accordingly the AO disallowed the expense of ₹ 1,10,44,091/- and made an addition to total income of the assessee. 10. Upon assessee's appeal as regards the disallowance of alleged bogus purchases and labour expenses, learned CIT(A) referred to several case laws. He even referred to the case from Hon'ble Jurisdictional High Court in the case of Nikunj Eximp Enterprises P. Ltd. (372 ITR 619) and noted that when sales are not doubted 100% disallowance cannot be done. Despite noting so and despite the fact that the sales in case of the assessee or the consumptions are not bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was required to provide materials and labour. No discussion whatsoever is there in the orders of the authorities below regarding the disallowance of the contact work executed by the assessee. In this view of the matter ratio from Hon'ble Bombay High Court in the case of Nikunj Eximp Enterprises P. Ltd. (supra) and several other case laws are applicable, that 100% disallowance in such cases is not permissible. We further note that the decision of Hon'ble Bombay High Court relied upon by learned CIT(A) in the case of Shoreline Hotel Pvt. Ltd. (supra)was in connection with confirmation of the order by the ITAT in connection with learned CIT order under section 263 of the I.T. Act. Furthermore, the decision of N.K. Proteins Ltd.(250 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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