TMI Blog2013 (5) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... the said vouchers are cash vouchers, no addresses of the mukadams is given, no IT particulars mentioned, no PAN number are details is given and the basic details regarding the addresses of the mukadams for facilitate issue of notices for conducting queries if any were not available. It is also the fact that there is fall in the GP Rs. 5.75% and NP Rs. 4.03% no specific reasons are mentioned for the said fall. It is also noted that labour expenses amount substantially with compare to the some debits for the AY 2006-07. These facts indicate that all is not well with this account. It is also undisputed fact that the AO has not justified for adopting 8% for making disallowances. In these circumstances, there is a need for some disallowances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs (rounded off) during the year. Thus, the net profit rate works out to 4.04%. 3. AO completed assessment u/s 143 of the Act determining the total income of Rs. 51,54,420/- against the returned income of Rs. 37,47,004/-. AO made as couple of additions (1) on account of labour charges and (2) on account of disallowable of expenditure u/s 14A of the Act. In the first appellate proceedings, Ld CIT(A) allowed the appeal of the Assessee partly. So far as the labour charges addition as concerned, CIT(A) sustained the same fully. Regarding the other addition u/s 14A of the Act, CIT(A) gave a finding that in view of the jurisdictional High Court judgment in case of Godrej Boyce Manufacturing Co. Ltd. 328 ITR 81, the provisions of Rule 8D is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anpower for labour works relating to his project works. The said amounts were paid to them according to the measurements of work at sites, details of which can be seen from the face of the vouchers given by the mukadams. 6. During the scrutiny of assessment proceedings, AO desired the Assessee to furnish all supporting documents and the details of the manpower. Assessee furnished vouchers duly signed by the said Mukadams. AO examined them closely the vouchers and found that they lack details of the details of the employees who actually rendered the services and there no addresses of the employees/labour. It also does not contain the details of the work sites handled by the mukadams and the contract particulars. The AO also noted with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard, Ld Counsel brought our attention to the impugned vouchers duly signed by the mukadams and mentioned that the same are credible and reliable. He also mentioned that the Assessee has done TDS in respect of each and every payment made to the mukadams. He also brought our attention to the details of the work done by the mukadams labour, appearing on the said vouchers. Regarding the details of the labour, referring to the fact of making TDS on the payments made to the work contractor, the assessee submitted that it is for the subcontractor to demonstrate the same. Referring to cash payments involved and also the absence of PAN of this mukadams, Ld counsel brought our attention to page 31 of the paper book and mentioned that the labour exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges Account. AO came to the conclusion that some disallowances are required to be made in this account considering the fall in the NP qua the past AYs as well as the evidence. Accordingly, without any basis, AO adopted 8% is reasonable. CIT(A) confirmed the same by holding that such an addition will bring the NP to the level of 5%, which is reasonable one and which is close to the NP for the AY 2006-07. In our observation, we find that the AO examined the quality of the self-made vouchers issued by the mukadams and noted that the same contains the name of the mukadams and the measurements particulars and the number of days and the amounts, TDS particulars, the signature of the mukadams, also the name of the employee of the company to prep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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