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TMI Blog2021 (11) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... to be disallowed by invoking sec. 40(a)(ia) of the Act and partly allowed the appeal of the assessee - CIT(A) has passed the order after considering the overall facts of the case in granting partial relief to the assessee, which we affirm. No contrary facts were brought to our notice to take other view. In the result the ground No 1 of the appeal is dismissed. Estimation of income on bogus purchases - CIT-A Confirmed addition to the extent of 3% - HELD THAT:- AO failed to appreciate that no sale is possible in absence of purchases. The AO made additions of the entire purchases, without appreciating the facts that the assessee has shown sales, which is not disputed by the AO. The ld CIT(A) restricted the addition to the extent of 3% by following the decision in case of Atul Kumar ( assessee in connected appeal), wherein the ld. CIT(A) relied on the order of Anil Amritlal Chahawala. In our view the disallowances restricted by ld CIT(A) is sufficient to prevent the possibility of the revenue leakage, which we affirms.- Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 3.32 crore, purchases of ₹ 22.68 lacs and unexplained investment of ₹ 5.25 lacs. The AO during the assessment noted that notice under section 143(2) was issued to the assessee on 23.09.2008, the notice was returned back by the postal authority with remarks "No identification of the person hence returned back to sender". Thereafter, the AO send notices another address at 102, Tirupati Complex, Vijalpore, Navsari. The same was also returned back with remark "left. The AO thereafter again send notice under section 142(1) at the entries at B/9, Bhavaniprasad Society, Bhavani Mata Road, Amboli-Andheri-West, Mumbai, Maharashtra-400058. The notice was again returned back unclaimed. The AO noted that the assessee is avoiding assessment proceedings. The AO deputed Ward Inspector to carry out inquiry on the address given by the assessee on the return of income as that the 59/B, 1st Floor, Six-O-Avenue, Station Road, Navsari. Nowhere about the assessee could be found. The AO thereafter proceeded ex parte proceeding and decided to made addition under section 144 on the basis of details available. 4. On the basis of report furnished in Form No.3CD, the AO noted that assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) on the amount where TDS was not effected. During the appellate proceeding this issue was discussed with the ld. AR. The Ld. AR was in agreement that sec. 40(a)(ia) is a overriding provision and the payment made to subcontractors attracts this provisions of the Act. It was also accepted by the Ld. AR that the appellant had not deducted tax at source for the payment made to the sub-contractors. In view of this, the expenditure claimed by the appellant towards the payment made to the sub-contractors to the extent of the amount where tax was not deducted at source is confirmed. However, in the interest of justice and fairness, the AO is directed to work out the actual amount to be disallowed by invoking sec. 40(a)(ia) of the Act. The appellant shall furnished to the AO the details of labour charges paid to individual parties within 10 days from the receipt of the order to assist the determination of disallowable amount." 6. On addition of purchase of diamond of ₹ 22,68,521/-, the ld. CIT(A) directed to adopt three per cent of Gross Profit and granted partial leave to the assessee by passing the following para no.8.1 of the ld. CIT(A) order: 8.1 DECISION: I have carefully con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same time we must be sensitive to the prevailing prices for labour and other costs in that case and the case in hand. Definitely, the costs have been more in recent years than the earlier years because of various factors such as inflation, tax implication and the gap between demand & supply, cost of raw material, labour etc. Therefore, in the interest of justice and keeping in view of the smallness of the business carried out by the appellant, the AO is directed to adopt 3% GP and compute the taxable income of the appellant." The AO is directed to follow the direction given above in this case as well. Thus, the appellant gets part relief in this ground of appeal." 7. Aggrieved by the order of ld. CIT(A), the Revenue has filed present appeal before Tribunal. 8. Notice of hearing of appeal was served to the assessee on the address given in the Form-36. Initially counsel for both the assessee appeared and sought adjournment for several years. However, on the 11th January 2021 the ld AR for the assessee submits that he is withdrawing his authority form these appeals. The ld AR for the assessees also submits that he has already informed the assessee by way of registered letter, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ashish Enterprises and purchase of ₹ 22,68,512/- was taxed protectively in the hands of assessee and substantively in the hands of the respective parties who claimed labour expenses. 11. We find that during the appellate stage the assessee furnished certain submissions. The ld CIT(A) after considering the submission of the assessee on the issue of disallowances under section 40(a)(ia) held that as per the submissions furnished by the assessee it is clear that the appellant has not deducted tax at source even though the payments made to the sub-contractor were in excess of ₹ 50,000/-, thereby attracting provisions u/s 40(a)(ia). Thus the AO should have taken recourse of the provisions u/s 40(a)(ia) on the amount where no TDS was made. It was held that during the appellate proceeding this issue was discussed with the ld. AR of the assessee, who was in agreement that sec. 40(a)(ia) is overriding provision and the payment made to sub-contractors attracts this provisions of the Act and that he that the assessee had not deducted tax at source for the payment made to the subcontractors. Therefore, the expenditure claimed by the assessee towards the payment made to the sub-co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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