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TMI Blog2016 (2) TMI 1378X X X X Extracts X X X X X X X X Extracts X X X X ..... esent matter . - Jayant Patel And S. Sujatha, JJ. For the Appellants : E I Sanmathi, Adv For the Respondents : Smt Jinita Chatterjee Sri S Parthasarathi, Advs ORDER The present appeal is directed against the Order dated 24.07.2009 passed by the Income Tax Appellate Tribunal, Bangalore Bench 'B', Bangalore Bench 'B', Bangalore, [hereinafter referred to as 'Tribunal', for short] in ITA Nos.67 68/Bang/2010, by raising the following substantial questions of law. 1. Whether under the facts and circumstances of the case, the tribunal was right in law in restricting the addition to 1.6% in respect of an expenditure which is of such nature as covered by section 37(1) of the income tax Act, 1961? 2. Whether under the facts and circumstances of the case, the tribunal right in law in restricting the addition to 1.6% in respect of wages instead of 10.3% and 6.6% adopted by the assessing authority respectively for the Assessment Years 2002- 03 and 2003-04, when the onus to prove the genuineness of expenditure claimed has not been discharged by the assessee ? 2. We have heard Mr. E.I. Sanmathi, learned Counsel for the Appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Commissioner of Income Tax (Appeals) {'Appellate Commissioner' for short}. 2. The assessee is involved in Stevedoring operations of vessels and carrying on loading and unloading work at the port; assessee has engaged labour force from New Mangalore Port Trust ('NMPT' for short), registered cargo Handling Workers Administrative Wing (RCHWAW); the payment to the labour so engaged would be made by cheques to NMPT and in turn NMPT would disburse the wages to the workers. Case of the assessee is that as the registered labour force at NMPT did not agree to work beyond the limit fixed by them, the assessee had engaged the services of the private workers and had made payment in cash to the extent of ₹ 1,17,59,931/- and through cheques to sub-contractors to the extent of ₹ 2,70,70,745/-; the payments were made through self made vouchers. According to the assessee, loading and unloading operations were carried out by it by making the following payments: (a) ₹ 2,53,29,660/- through cheque to NMPT Workers' Union. (b) ₹ 2,70,70,745/- to sub-contractors who brought the workers privately to the port for the purpose of unload ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eques, summons under Section 131 of the Income Tax Act issued to all the subcontractors mentioned in the assessment order and their statements recorded on oath by the Assessing Officer also came to be examined. It came to be noticed by the Appellate Commissioner that all the subcontractors have stated that they have carried loading and unloading work at the port for the assessee by engaging private labour and they have further confirmed the bill. All these labour contractors are assessed to tax and they have filed returns belatedly declaring the above labour contract proceeds and offered income to tax under Section 44-AD of the Act. However the Appellate Commissioner, on facts has found that the vouchers issued to the sub-contractors and payments made to them are highly suspicious in nature. The details collected from the assessee were made available to the Financial Advisor and Chief Accounts Officer, NMPT, Mangalore for getting reports. The details received from NMPT, Mangalore when compared with the details which the assessee has made available before the Appellate Commissioner fully tallied with each other in terms of date, item and quantity in metric tons. In other words, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number, cell phone number etc., On perusal of their bank account records, it is observed by the Appellate Commissioner that when the payment by cheque was made, the amount was withdrawn by cash on the same day or on the next day. 6. In addition to the same, the Tribunal, on facts has found that the Appellate Commissioner did not find availability of any big labour force which can be engaged by assessee or any other cargo handling concern for the business. It is found that NMPT labour is so organized and strong that they would not allow any private sub-contractors to carry on the work and receive the huge payments as indicated by the assessee in this case. It is also found by the appellate Commissioner that even the nature of work and infrastructure available at NMPT port does not require engagement of huge labour force of the nature indicated by assessee. Most of the cargo handling process was mechanized and therefore the requirement of labour force was minimum. On these amongst other grounds, as set out in detail in his order, the appellate Commissioner disallowed the sum of ₹ 2,70,70,745/- which was allowed by the Assessing Officer. 7. The Appellate Tribunal while ..... X X X X Extracts X X X X X X X X Extracts X X X X
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