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2017 (11) TMI 1345 - AT - Income TaxDisallowance of labour charges - Held that:- According to the AO, certain bills were not signed and the payments were made mostly in cash, therefore, he made an estimated disallowance of 10% which comes to ₹ 1,08,799/-. The Ld. CIT(A) was also not convinced with the assessee’s aforesaid pleas and according to him, it was a bogus claim. We do not subscribe to such a finding for the simple reason that the AO could not make a finding that the entire claim was a bogus claim. The assessee has produced labourers who has been questioned by the AO and the AO only found fault with certain bills/vouchers and, therefore, made an estimated disallowance of ₹ 1,08,799/-. We note that the AO has not rejected the books of account and has simply made the addition based on few defects in few vouchers. The AO’s justification to make estimation appears to be the expenditure is excessive, which action of the AO cannot be sustained without any material to suggest that the assessee’s claim is not correct or bogus when the labourers were produced before him. The genuineness of the claim on account of labour charges cannot be discarded without any material to make an adverse finding. We do not find any such reason other than an arbitrary disallowance of 10% which cannot be sustained and, therefore, we direct deletion of the same. Amount from savings bank account of Union Bank of India - Held that:- When the cash flow statement along with the statement of bank account from 01.02.2008 to 06.03.2008 stands reconciled, therefore, the assessee has been able to explain the cash deposited in the bank account and, therefore, the addition u/s. 68 of the Act was not warranted. The authorities below on surmise and conjecture have disbelieved the sales of gold as well as the money transferred from one branch to another branch of the assessee, which have been explained before us. The authorities below without conducting proper enquiries have simply disbelieved the evidence furnished before them and has made the addition which cannot be sustained in the eyes of law and, therefore, we are inclined to allow this ground of appeal of the assessee.
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