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2015 (11) TMI 182 - AT - Income TaxDisallowance of 10% of purchases - CIT(A) deemed it proper to sustain the disallowance at 2% of the purchases - Held that:- No justification to interfere with the order of the CIT(A). So far as the Revenue’s appeal is concerned, the CIT(A) has already recorded that the GP as well as NP of the year under consideration is better than the preceding year which was accepted by the Revenue. Therefore, the Revenue should not be aggrieved because of reduction in the disallowance by the CIT(A). So far as the assessee’s cross-objection is concerned, the assessee itself has stated before the CIT(A) that “Without prejudice to the submission made there is a possibility of purchases from unauthorized dealers and in that case, some lumpsum disallowance may be made”. In view of above admission on the part of the assessee, the disallowance restricted at 2% of the purchases cannot be said to be unreasonable or unjustified. We, therefore, deem it proper to sustain the order of the CIT(A) and reject the Revenue’s appeal - Decided in favour of assessee in part Delay in the deposit of TDS - Addition on account of payment of job charges as per provisions of section 40(a)(ia) - Held that:- In the case under appeal before us, the TDS was deposited before the due date for filing of the return. The Assessing Officer has given the chart in page no.2 of the assessment order from which it is evident that the TDS was deposited on 30.05.2005 which was much before the due date for filing of the return. See M/s JK. CONSTRUCTION CO.case [2013 (2) TMI 54 - GUJARAT HIGH COURT] - Decided in favour of assessee. 20% disallowance out of wages u/s 40A(3)- Held that:- dmittedly, for applicability of Section 40A(3), it is essential to establish that there was payment exceeding ₹ 20,000/- in cash for the wages. In the case under consideration before us, the Assessing Officer has no where pointed out any specific item of payment, which was exceeding ₹ 20,000/-. He merely presumed that all the cash payments would be exceeding ₹ 20,000/-. The disallowance u/s 40A(3) cannot be made on the basis of presumption. As not a single payment in cash exceeding ₹ 20,000/- for wages have been pointed out; therefore, in our opinion, Section 40A(3) is not applicable. we find that in Assessment Year 2008-09 the CIT(A) while deleting the disallowance out of wages u/s 40A(3) have sustained lump-sum disallowance of ₹ 5,00,000/- out of wages and such disallowance have been accepted by the assessee. Therefore, for the sake of consistency, we sustain the disallowance out of wages at ₹ 5,00,000/-. Penalty levied u/s 271(1)(c) - CIT(A) deleted penalty - Held that:- AO disallowed 10% out of the purchases. On appeal, the same was reduced to 2% of the purchases. Thus, the disallowance was sustained on the basis of estimate only. So far as the assessee is concerned, it has produced the confirmation from all the sellers and has also produced the sales vouchers issued by them and the evidence of the payments having been made by cheque. None of these evidences produced by the assessee were found to be incorrect, false or fabricated. Merely because the seller party was not found available at the address given by them in their sale bill, some disallowance on estimate basis may be justified; but that is not sufficient to levy the penalty u/s 271(1)(c) of the Income-tax Act. None of the parties from whom the assessee has claimed to have purchased the goods denied having sold the goods to the assessee. Therefore, the purchases from those parties have not been found to be false or bogus. So far as the penalty proceedings are concerned, the assessee has duly substantiated the purchases claimed to have been made by it by producing confirmation of seller parties as well as vouchers, and details of payment made through banking channel. In the above circumstances, in our opinion, the CIT(A) rightly held that the assessee is not liable to be penalized u/s 271(1)(c), merely because part of the disallowance on account of unverifiable purchases was sustained by the CIT(A) and eventually by us. Similarly, for lump-sum disallowance out of wages, no penalty u/s 271(1)(c) is liable to be imposed. The Assessing Officer had made the disallowance u/s 40A(3) amounting to ₹ 49,94,612/-. While deciding the quantum appeal, we have given the finding that the disallowance u/s 40A(3) is not called for because there is no evidence of cash payment of ₹ 20,000/- each to any worker. Though we have sustained the lumpsum disallowance out of wages at ₹ 5,00,000/- out of total wages payment to workers of ₹ 2,49,73,063/-; however, for such lump-sum disallowance out of wages on the basis of presumption, no penalty u/s 271(1)(c) is leviable. Therefore, we uphold the order of the CIT(A) in this regard and dismiss the appeal filed by the Revenue.
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