TMI Blog2013 (10) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... e workers and the labour charges shown in the books of accounts. It is again an admitted position that the labour charges paid per meter of grey cloth were Rs.1.5 to 2 whereas the amount debited in the books was @ Rs.6.5 - Following the earlier orders of Tribunal restore the matter of inflated labour /job work charges to the file of the AO for his fresh consideration after giving due opportunity of hearing to the assessee. - I.T.A. No.8431, 8433, 8432/Mum/2011 - - - Dated:- 11-10-2013 - Shri B. R. Mittal,(JM) And Sanjay Arora (AM),JJ. For the Appellant : Shri Satish Chandak For the Respondent : Shri S. J. Singh ORDER Per Bench: The assessee filed these three appeals for assessment years 2003-04, 2005-06 and 2006-07 against all three orders of ld. CIT(A), dated 15.07.2011. In all these three appeals assessee disputed the confirmation of addition made by AO in respect of inflated labour charges. 2. Since the facts and the issue involved in all these appeals are similar, save and except amount involved, we have heard these appeals together and dispose of them by a common order for the sake of convenience. 3. We consider it prudent to state the facts relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. One Shri Dilip Prajapati, in a statement recorded during search in the factory premises at Park Compound admitted that, he had not done any job work for the appellant. In reply to a specific question, Shri Kalpesh Gada admitted that, karigar wages are paid on meter basis @ Rs.1.25 per meter. Further finding of the AO was that, the total labour charges claimed by the group over a period of 4 years from 2002 to 2003 to 2008-09 was of the order of Rs.14.09 crore. The AO worked out and found that, while the appellant was claiming in books Rs.6.50 per meter, the actual expenditure was of the order of Rs.1.5 to 2 per meter. In this connection a show cause notice was issued calling upon the appellant to show cause as to why labour charges should not be restricted. The replay that came from the appellant that the statement of Shri Kalpesh Gada admitting inflation of labour expenses was wrong. Shri Bhagwaji Gada, the main person has strongly objected to it. Only , few persons out of 80 labourers had given adverse statements and further reply was that, in order to buy peace of mind, the appellant has disclosed Rs 50.50 Lacs as additional income. Through another show cause notice, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position that the labour charges paid per meter of grey cloth were Rs.1.5 to 2 whereas the amount debited in the books was @ Rs.6.5. The assessee also argued that during assessment that it had booked all other related manufacturing expenses under labour charges, and the same should be considered. In view of this, a further allowance of Rs.1.5/ per meter is granted. The assessee, during the course of assessment proceedings failed to furnish stock register for verification. In view of this, the quantitative details available in the tax audit report have to be compulsorily levied upon. Thus, from the quantitative details, the total quantity manufactured during the year is determined, and the quantum of inflated expenses recorded in the books of accounts, after allowing a margin of Rs.3/- per meter (Rs.1.5 for labour + Rs.1.5 for other incidental expenses like transport, power, beam drawing etc) is worked out as below :- Closing stock of Fabric = 12875, meters, Rs.309255/- Average price=Rs.309255/12875 = Rs.24 Sales shown is Rs.1132121/- @Rs.24 per meter, quantity of Fabric manufactured = 1132121/24=47172 meters. Labour charges claimed Rs.1458165/- Labour charges allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 168 and 180 of the paper book, it can be said that the labour charges are paid @ Rs.3.25 per meter for the period from 1st April 2002 to 31st March 2003. The claim of the assessee that for the subsequent years, due to inflation, the labour charges paid has increased, cannot be brushed aside. This bench of the Tribunal in M/s. B.K. Tex Corp. and Mr. Bhagwan G. Gada (supra), has come to a conclusion that labour charges could be allowed by adopting Rs.3.00 per meter. As the evidence in the seized material, in the case on hand, is leading us to a conclusion that the expenditure is more than Rs.3.00 per meter laid down by the Bench, as suggested by both the parties, we restore the matter to the file of Assessing Officer for adjudication afresh in accordance with law. The Assessing Officer is directed to consider the propositions laid down by this Bench in the case of M/s. B.K. Tex Corp. (supra) and in the case of Mr. Bhagwan Gada (supra), as well as the material found during the course of search and the inflation factor claimed by the assessee and come to an appropriate conclusion. Accordingly, we set aside the impugned order passed by the Commissioner (Appeals) and restore this issue t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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