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TMI Blog2022 (9) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the staff members remain uncorroborated and therefore, as a necessary corollary, we agree with the finding of the AO that the cash so found short has been utilized for non-business purposes. Further, where the taxing authorities have applied average rate of 12% on such funds being utilized for non-business purposes, we do not find any infirmity in the said finding of the CIT(A) and the same is hereby confirmed and the ground of appeal taken by the assessee is dismissed. Addition u/s. 40(a)(ia) - whether Shri Shah Nawaz who besides being an employee of the assessee company has worked as a contractor and got paid for such services or not? - HELD THAT:- Basis the said statement, the AO has held that no tax has been deducted at source on amount of Rs. 30 lacs paid by the assessee company during the year to Shri Shah Nawaz, accordingly, 30% of the amount was disallowed invoking provisions of section 40(a)(ia) - The assessee is challenging the said statement of Shri Shaw Nawaz and has raised various contentions before the lower authorities and which have again been reiterated before us. The contentions so advanced are however not backed by any corroborative evidence to dislodge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 10.81% is reduced, the physical stock comes to Rs. 672.61 lacs and difference is only Rs. 6.63 lacs. It was further submitted that the direct expenses such as job work cartage, freight inward, fabrication material were omitted to be taken as part of trading account and where the same taking into consideration amounting to Rs. 10.94 lacs, the stock as per books will be excess by Rs. 4.31 lac which is very negligible keeping in view the percentage of total stock found and which could be due to minor difference in gross profit during the period as compared to last year. The submissions so filed by the assessee were considered but not found fully acceptable to the AO. As per the AO, there is a difference of Rs. 4,31,000/- as excess stock admitted by the assessee after proper reconciliation and excess stock is to be treated as unexplained investment u/s. 69 of the Act and which was brought to tax in the hands of the assessee. 4. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) and reiterated the submissions made before the AO. As per the Ld. CIT(A), the AO has accepted the reconciliation of stock submitted by the assessee during the assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid findings of the Ld. CIT(A) and therefore, we do not see any justifiable basis to interfere with the finding of the Ld. CIT(A) and the same is hereby confirmed and the ground of appeal taken by the assessee is dismissed. 8. Ground No. 2 relates to sustenance of addition of Rs. 2,92,875/- out of total addition of Rs. 12,59,466/- made by the AO u/s. 36(1)(iii) of the Act. 9. In this regard, briefly the facts of the case are that during the course of search, cash of Rs. 7,40,050/- was physically found and as per the books of account prepared till 31.10.2017, cash in hand of the business comes to Rs. 1,12,37,807/- and accordingly assessee was issued a show cause as to why the said sum should not be brought to tax. In response, the assessee submitted that the books of account were not updated and as per the updated books of account as on 31.10.2017, cash in hand comes to Rs. 31,80,670/- and it was submitted that remaining cash was with the officers of the company in safe custody and the Sr. employees for the purpose of meeting routine and day to day petty expenses. The reply so filed by the assessee was considered but not found acceptable to the AO. As per the AO, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case are that the AO during the course of assessment proceeding issued a show cause on the basis of statement of Shri Shah Niwaz Rehman recorded during the course of search as to why the provisions of section 40(a)(ia) r.w.s. 69C should not be invoked. In response, the assessee submitted that it deals in wide variety of readymade products and sales are dependent upon choice of the customers and additional work like alteration, fitting and embroidery work is also requested by its customers for which workers are hired on casual basis. As per assessee, the amounts of expenses incurred in the form of casual wages are debited to embroidery expenses account and expenses relating to material used are debited to fabrication material account. Further the payment is made based upon the work allotted and their performance and not accounted for/recorded in the salary register. It was also submitted that Shri Shah Nawaz was an employee of the assessee company who was an experienced hand in this kind of work and supervised the casual workers to ensure the quality of work and to maintain the proper record. However, Shri Shah Nawaz was not a contractor and these workers were not hired by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that in the said statement Shri Shah Nawaz clearly admitted that he works on contract and he is a contractor having 20 to 25 Karigar and given the fact that the assessee has not been able to rebut the statement of Shri Shah Nawaz, the AO has rightly held that there was nothing to prevent Shri Shah Nawaz to act as a contractor apart from employment and therefore, the disallowance made by the AO was upheld. Against the said findings, the assessee is in appeal before us. 14. During the course of hearing, the Ld. AR submitted that Shri Shah Nawaz was an employee and not a contractor. It was submitted that merely basis his statement, the addition has been made by the AO and which has been sustained by the Ld. CIT(A). It was submitted that the causal wages is paid to workers and the month-wise worker-wise details are on record and which has not been considered by the lower authorities. It was submitted that there is no default which has been committed by the assessee as the individual payment to workers fall below the threshold prescribed under section 194C of the Act and provisions of section 40(a)(ia) has been wrongly by the AO and upheld by the Ld. CIT(A). 15. Per contra, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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