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TMI Blog2014 (3) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessing Officer observed that as on 01.04.2006, there was opening balance of Rs 1,89,854/- on account of labour charges. The Assessing Officer further observed that the labour charges which were incurred in earlier years were still unpaid till 01.03.2007. She summoned Sh. Kalam, one of the labourers and recorded his statement. From the statement of Sh. Kalam, she found that he was not a man of means and entire family including his wife, sister, brother worked as labourers. She also found that Sh. Kalam was an illiterate person having no bank account and no savings. During the course of his statement, he admitted that whatever he earned was spent and he did not earn enough to save. Therefore, the Assessing Officer observed that it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The High Court observed that in the present case, both the elements are missing and therefore, no addition could be made to the income of the assessee. The High Court has further held that where the liability itself seems to be under serious doubt, the liability as it stands, perhaps holds that there was no cessation or remission or liability and therefore the amount in question cannot be added back as deemed income u/s 41(1) of the Act. 6. The Ld. DR very fairly conceded that in view of the above cited decision of the Hon'ble Gujarat High Court by the assessee, the addition made cannot survive. 7. We find that outstanding labour charge of Rs 1,89,854/- which was added by the Assessing Officer to the income of the assessee was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer was of the view that it was unacceptable that the labourers who would not receive their daily wages for months together. In absence of any further evidence, she disallowed Rs 11,17,056/- which was reduced to Rs 7,67,566/-. by the Ld. CIT(A) on the ground that wages for the month of March was paid in April was understandable, but it was not probable that wages in the month January to February were paid in the month of May and June of the next year. He, therefore, allowed partial relief t the extent of Rs 3,49,490/- and restricted the disallowance to Rs 7,67,566/-. 11. The Ld. AR of the assessee relied on the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Bhogilal Ramjibhai Atara (supra) and submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obability and doubting that the payments to labourers could not be outstanding for more than 3 months. Besides that, no material has been brought on record by the Assessing Officer or the Ld. CIT(A) for making the disallowance. He further submitted that the liabilities have been shown by the assessee similarly in earlier years also where no disallowance was made by the Assessing Officer. We find that the both the lower authorities have doubted that the liability for labour charges of Rs 7,67,566/- was bogus as the same was outstanding for more than one month. Besides, the suspicion, they have brought no material on record after examination that the liability was not genuine or that the assessee did not make the payments for the same in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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