TMI Blog2011 (7) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... the absence of assessee's furnishing the required details and pointing out specific mistakes, if any, in the computations in Tax Audit Report quantitative details and computations in the assessment order, no relief will be admissible. Disallowance of expenses by invoking the provisions of Section 40(a)(ia) - Held that:- Since the certificates under section 197(1) on from 15 AA, as produced by the assessee, covered payments upto Rs. 30,00,000 and the total payments aggregated to Rs. 67,33,740 - Therefore, it is not the complete absence of certificates u/s 197(1) but monetary limitation on the quantum of payments on these certificates, which is the basis of disallowance. Brokerage payment - Provisions of Section 40(a)(ia) - Tax has not been deducted at source - Held that:- No specific arguments were advanced in support of this grievance - In any case, having perused the orders of the authorities below on the issue and in the absence of anything to demonstrate infirmity in the stand so taken, confirm the action of the CIT(A) on merits as well - No interference is called for - Thus the appeal is dismissed. - ITA No. 371 and 370/Mum/2011 - - - Dated:- 29-7-2011 - Pramod K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain incriminating documents were found and statements were also recorded. When search was conducted at the residence of Kantilal K Gada at 10/A, 501/502 Gopal Nagar, Bhiwandi, cheque books, pay in slips and books of accounts held by various persons have been found and seized. When Kalpesh Gada was confronted with this seizure, he stated that "these are the accounts of the so called job workers, operated by us for the purpose of inflating the expenses". These accounts, used for siphoning off the amounts as wages, were maintained in branches of Abhudaya Cooperative Bank Limited and Syndicate Bank. Kalpesh Gada further admitted that though he is showing income from labour work received from Appu Textile Mills - admittedly a group family concern, the actual work is done by the said firm itself and the payments are show to have been made to him only to inflate the expenses. It was also accepted that similar exercise was also conducted by other group concerns, and that no job work is outsourced by any of the manufacturing concerns, and that the grey cloth shown to have been manufactured through outsourcing is actually made with the help of the infrastructure of the concern claimed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net profit disclosed by the assessee in all these years in exceptionally low between 0.5% to 2%, and that the assessee has not produced any stock register for verification. The Assessing Officer adopted the labour charges allowable at Rs. 1.50 per meter, as admitted by the assessee in the statement, provided for a further Rs. 1.50 per meter for other incidental expenses such as transport, power and all related expenses, computed the production quantities on the basis of the tax audit report figures in the absence of the stock records, and computed the allowable labour charges by multiplying the production quantity in meters with Rs. 3 per meter. The balance claim was disallowed. As against a claim of Rs. 1,29,40,629 on account of labour charges in the assessment year 2004-05, an amount of Rs. 30,82,893 was disallowed. Similarly, out of Rs. 67,33,740 claimed as having been spent on labour charges in the assessment year 2005- 06, an amount of Rs. 20,57,946 was disallowed. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The CIT(A) affirmed the action of the Assessing Officer by observing as follows: The argument of the AR is heard and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n figures adopted in the tax audit report. Learned counsel has also submitted that the actual rate of payment of labour charges is not Rs. 6.50 per meter as adopted by the Assessing Officer but much less than that. When, however, we asked him to identify the bills or evidences which substantiate the factual contentions embedded in his arguments to this effect, learned counsel could not do the same. It was also pointed out to the learned counsel that, as noted by the Assessing Officer, stock records were not produced before him, and this factual observation of the Assessing Officer has neither been challenged in appeal before the CIT(A) nor controverted even in the statement of facts on record. The statement of the learned counsel regarding availability of stock records before the Assessing Officer is thus not borne out of the material on record, and, therefore, we cannot proceed on the basis that the stock statements were indeed produced before the Assessing Officer. As there was no contemporaneous record of quantities, we need not be guided by the stock registers which were not available at that point of time. We, must, therefore uphold the action of the authorities in principle. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the CIT(A) with the directions as above. 8. Ground No. 1 in the both the appeals is thus allowed for statistical purposes in the terms indicated above. 9. In ground no. 2 in the assessment year 2005-06, the assessee has raised the following grievance: On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the AO's action in disallowing the expenses amounting to Rs. 37,33,740 by invoking the provisions of Section 40(a)(ia) of the Income Tax Act, 1961. 10. Learned counsel submits that the certificates under section 197(1) were made in respect of the above payments, but these certificates are misplaced and he cannot, therefore, produce the certificates before us. He, however, submits that in the event of the matter being restored to the file of the Assessing Officer, he will furnish copies of the certificates. We are unable to see any merits in this submission. In the first place, the disallowance has been made only to the extent of Rs. 37,33,740 since the certificates under section 197(1) on from 15 AA, as produced by the assessee, covered payments upto Rs. 30,00,000 and the total payments aggregated to Rs. 67,33,740. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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