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TMI Blog2012 (7) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that in view of the reasons cited in the Affidavit, the assessee was prevented by sufficient cause from filing the appeal in time and therefore condone the delay of 26 days. The appeal is accordingly admitted for hearing and disposal. O R D E R 2. This appeal by the assessee is directed against the order of the CIT(A), Hubli for the A.Y. 2005-06 dt.19.3.2010. 3. The facts of the case, in brief, are as under : 3.1 The assessee, a firm mainly engaged in the business of Plaster of Paris (POP) work, filed its return of income for the A.Y. 2005-06 on 2.2.2006 declaring income of Rs.13,513. A survey u/s. 133A of the I.T. Act, 1961 (hereinafter referred to as 'the Act') was conducted at the assessee's premises on 29.4.2004 in the period relevant to A.Y. 2005-06 and therefore the case was taken up for scrutiny. The A.O. after examining the case completed the assessment by an order u/s.143(3) of the Act on 27.11.2007 determining the income of the assessee at Rs.16,86,677 and in doing so made the following additions to the income and disallowance of expenditure to the income declared by the assessee : i) Disallowance of excess claim of wages Rs. 1,88 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee challenged the action of the learned CIT(A) in confirming the disallowances of Rs.1,88,819 and Rs.50,000 under the head 'wages' disregarding the explanation it furnished. 6.2 The facts as emanate from the record are that the assessee debited wages amounting to Rs.9,95,059 in the profit and loss account, all payments being made in cash. The A.O. on verification of the ledger account of wages and cash book found that the total wages paid were only Rs.8,06,140 as listed on page 4 of his order. On being asked by the A.O. to explain the variation between actual payments and wages claimed as deduction in the profit and loss account, the assessee vide letter dt.10.9.2007 submitted that the mistake in accounts was due to some problem in the computer and claimed that the labor expenses claimed by it were reasonable as they were 30.29% of gross receipts. The assessee subsequently filed a revised extract of wages wherein the difference of Rs.1,88,919 was sought to be incorporated by passing a single entry as 'cash payment to labours' on 31.3.2005. The A.O. on further examination found that the assessee was unable to relate this claim of wages of Rs.1,88,919 claimed to have been paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt period had claimed payments for wages amounting to Rs.9,95,059, all in cash. It is also a fact on record that on examination of the ledger account for wages debited that there was a difference of Rs.1,88,919, as the cash book reflected that the wages debited therein was only Rs.8,06,140 as on 31.3.2005 as against the deduction of Rs.9,95,059 claimed in the profit and loss account. It is also a matter of record that it is only after an explanation was called for by the A.O. from the assessee in this regard that the assessee claimed that the difference was due to a computer error and passed a single entry of Rs.1,88,919, the amount of the discrepancy detected, with the narration 'cash payment to labourers' as on 31.3.2005. We find from the record that the assessee was unable to co-relate this entry of Rs.1,88,919 as on 31.3.2005 with any material evidence nor produce details such as number of workers paid, rate of wages paid, and nature of work executed by those labourers. We also find that the assesssee's contention that its wage bill is reasonable as it is 30.29% of gross receipts has no relevance to the issue for the basic reason that this does not explain a factual discrepancy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s.40A(3) of the Act to Rs.59,019 (20% of Rs.2,95,096) granting the assessee relief of Rs.5,981. 7.3 The learned counsel for the assessee submitted that the assessee was forced to make payment of freight charges in cash to the extent of Rs.326596 as the goods were delivered in its premises at odd hours and truck drivers insisted for cash payments to meet contingency expenses such as fuel, maintenance, etc. The learned counsel also sought the refuge of Rule 6DD(4) to strengthen his argument. He also placed reliance on the finding of the co-ordinate bench of the Tribunal in the cases of M/s. Haryana Plywood Vs. ITO in ITA No.208 & 209/Bang/2009 dt.19.3.2010 and in its own case for A.Y. 2004-05 in ITA No.914/Bang/2010 dt.10.2.2012. 7.4 The learned D.R. supported the findings of the A.O. and the learned CIT(A) and sought confirmation of their findings and action. 7.5 We have heard both parties, perused and carefully considered the submissions, material on record and the orders of the A.O. and the learned CIT(A). It is an undisputed fact that goods carriers / trucks are prohibited from entering city limits during day time and accordingly such vehicles will reschedule the timings to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation that the papers found in the course of survey action are estimates not bills and filed a revised ledger account wherein it incorporated bills in respect of 4 parties amounting to Rs.2,88,538 as on 31.3.2005. 8.3 The assessee subsequently claimed some more receipts, amounting to Rs.2,67,044 as on 31.3.2005 with the narration 'cash in hand being contract work done' in order to tally the contract receipts of Rs.30,72,820. The A.O. on examination found these entries as of no substance (i) as they were not found in the books of accounts impounded in the course of survey and (ii) these entries were made in the books as on 31.3.2005 only after detection of the discrepancies in the course of assessment proceedings. The other explanations furnished by the assessee regarding bills of Sri Ramesh Shetty for Rs.2,75,000 and Sri S.C. Shettar for Rs.2,26,863 could not be explained by the assessee with reference to the books of accounts or other material evidence before the A.O. who rejected this claim of the assessee. 8.4 The A.O. on analysis of the material impounded in survey action u/s. 133A found that bills to the extent of Rs.8,16,455 may not be accounted for in the assessee's books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the many explanations and details filed by the assessee and on verification with the books of accounts, it is seen that the Assessing Officer found that bills pertaining to 4 parties amounting to Rs. 2,86,536 were in order. But, in respect of remaining 6 parties and their bills amounting to Rs. 5,29,919, the Assessing Officer found that the assessee's contentions were untenable, rejected them and brought this amount of Rs. 5,29,919 to tax in the assessee's hands as suppressed contract receipts. We find that the learned CIT(A) has confirmed the Assessing Officer findings only after dealing with the assessee's explanations in detail. Even at this stage, the assessee has not been able to establish with any documentary proof that these contract receipts amounting to Rs. 5,29,919 as per bills unearthed and impounded in the course of survey were nothing but estimates as contended or to disprove Revenue's finding that they were contract receipts not accounted for. In this view of the matter, we sustain the finding of the learned CIT(A) on this point and consequently the assessee's ground is dismissed. 9.1 In the grounds of appeal raised at S.No.6, the assessee challenges the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) which warrants any interference by us at this stage and accordingly dismiss the ground raised by the assessee on this issue. 10.1 In the ground of appeal raised at S.No.7, the assessee challenges the action of the learned CIT(A) in confirming the addition of Rs. 8,10,000 as unexplained cash credit under section 68 of the Act. 10.2 The Assessing Officer on examination of the assessee's books of account found that there were credits in the capital accounts of the following partulars of the assessee firm as under : 1) Sri N.A. Prasad Rs. 50,000 2) Sri Chandrabhan Varma Rs. 7,60,000. On being asked to explain these credits in their capital accounts during the relevant period, the assessee vide letter dt.10.9.2007 stated that these credits are out of their individual income and the investments are shown in their statement of affairs and are out of withdrawals from their respective bank accounts. The Assessing Officer then called for the two partners bank account statements to be filed in order to verify the withdrawals therefrom. The bank statement of Chandrabhan Varma with State Bank of Mysore was filed vide lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on put forward the addition of Rs. 8,10,000 under section 68 of the Act made by the Assessing Officer and confirmed by the learned CIT(A) be deleted. 10.4 The learned Departmental Representative supported the orders of the authorities below. He contended that the addition of Rs. 8,10,000 on account of unexplained cash credits under section 68 have to be confirmed as the assessee has failed to discharge its onus of explaining the sources of credits in the capital accounts of its partners Sri N.A. Prasad and Sri Chandrabhan Varma to the extent of Rs. 50,000 and Rs. 7,60,000 respectively. He further submitted that even the genuineness of the transaction and the credit worthiness has not been established. In respect of the contents of the Affidavit of Sri Vijay Kumar R. Varma dt.22.5.2012, the learned Departmental Representative submitted that there is nothing new in the issues raised in the submissions therein and these have already been addressed by the learned CIT(A) in his order while determining the assessee's appeal. In view of this, the learned Departmental Representative prayed that the orders of the authorities below be confirmed and the assessee's ground be dismissed. 10.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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