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2019 (11) TMI 1114 - AT - Income TaxDisallowance of 50% of the outstanding wages - CIT-A by rejecting the books of accounts and adopting the net profit rate of the earlier years - HELD THAT:- In this case the learned CIT – A did not look at the books of accounts as it were not produced before him or neither had he asked assessee to produce them. For the purpose of rejection of the books of accounts, the assessing officer/CIT A is required to show some latent, patent and glaring defects in the books of accounts. When the books of accounts produced before the learned assessing officer, even he did not mention any defects in the books of accounts and accepted the book results and made ad hoc addition of 50% of the outstanding wages, then we fail to understand that how the learned CIT – A estimated the net profit of the assessee rejecting the books of accounts. Assessee has produced the complete muster roll, attendance register and the Ledger accounts before the assessing officer. AO has not seen details of discharge of the above liability on account of the outstanding labour wages in subsequent year. According to us to decide about the allowability of the outstanding the wages payable it is necessary for AO to examine whether this liability exist or not, as the learned assessing officer himself has allowed the labour expenditure debited to the profit and loss account, this option is now not available with him. Therefore, only option left with AO is to verify whether such liability has been discharged by the assessee in subsequent year or not. As AO has not given his comments on this aspect, then questioned by the bench to the learned authorised representative, he readily agreed that such an evidences can be produced before the assessing officer. DR also agreed that if such outstanding wages is paid in subsequent year, it could not be disallowed. Therefore, to determine the allowability with respect to the genuineness of the outstanding wages it is necessary to verify whether such expenditure have been paid in the subsequent month or not. We set aside the whole issue back to the file of the learned assessing officer to examine payment of such wages in the subsequent month. The assessee is directed to produce the relevant information before the learned assessing officer. AO may examine such detail and if found in accordance with the law, to delete the addition. If such payments are not made in the subsequent year, he may give an adequate opportunity to the assessee to prove its case. After that, the AO may decide in accordance with the law. Accordingly, ground number 1 – 3 of the appeal of the assessee is allowed for statistical purposes with above direction. Grant of credit of tax deduction at source on mobilization advances - HELD THAT:- On careful consideration of the above issue it is apparent that the amount of tax deduction at source is eligible for credit to the assessee in the year in which the income pertaining to such tax deduction at source is offered for taxation. Admittedly mobilization advances not been shown by the assessee as its income therefore we do not find any infirmity in the order of the learned CIT – A to that extent.
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