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2016 (5) TMI 1084 - ITAT AGRA

2016 (5) TMI 1084 - ITAT AGRA - TMI - Disallowance being 20% of the payment made to sub-contractors - Held that:- We concur with the findings of the Ld. CIT(A) that no sub contract work was executed by the three sub contractors and infact excess payment was made to them. Further we concur with the Ld. CIT(A) in holding that though sub contract work has not been carried out by the three sub contractors, it has been carried out by some other parties and in the view thereof it is fair and reasonabl .....

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urposes and no scrap is therefore sold, the case of the revenue is that the explanation of the assessee is not plausible and some scrap must have been sold by the assessee. We find no infirmity in the order of the Ld. CIT(A) in this respect and agree with his findings that it is impossible to believe that no scrap was sold during the year and that the entire scrap is reused in the business of the assessee. We therefore uphold the order of the Ld. CIT(A) sustaining the addition made on account of .....

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of provision of section 145. 2. That CIT(A) has erred on facts and in law to presume that sub contract work was not actually carried out by Sh. Sanjay Agarwal, Subodh Agarwal, RR Agarwal and presume possibility of making excess payment to the aforesaid sub contractors. 3. That the CIT(A) has erred on facts and in law to hold that payments to Subcontractor in the name of three aforesaid persons have not being shown correctly. 4. That the CIT(A) has erred on facts and in law to infer that there i .....

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00/-. 2. Ground No. 1,2,3,4 and 5 raised by the assessee is against the disallowance of a sum of ₹ 16,28,539/- being 20% of the payment made to sub-contractors. 3. Brief facts relating to the issue are that during the impugned assessment year, the assessee had shown payments made on account of sub-contract work to Sh.Sanjay Agarwal, Sh. Subodh Agarwal and Sh. R. R. Agarwal. During the course of assessment proceedings, the AO found that these persons did not have the capacity to do sub-cont .....

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sessee firm. Therefore the excess amount being ₹ 29,37,497/-, ₹ 16,94,702/- & ₹ 34,28,498/- paid to the three persons otherwise than by salary was disallowed also by involving the provisions of the section 40A(2) of the Act. 4. The matter was carried in appeal before the Ld. CIT(A) where the assessee argued that similar addition was made in assessment year 2008-09 also which was sustained to the extent of 20% only by the ITAT, Agra in its order No. 129/Agr/2012 and 157/Agr/ .....

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ed out by other parties. Therefore in the facts of the case it was considered fair and reasonable that 20% of the payment made to sub contractors be disallowed. It was also argued by the assessee before the Ld. CIT(A) that the Hon ble ITAT had sustained the addition of 20% in the preceding year since there was a fall in GP rate from the immediately preceding year. Ld. Counsel for the assessee pleaded before the Ld. CIT(A) that since there was an increase in the GP rate in the impugned year as co .....

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Ld. CIT(A) upheld disallowance of payment made on account of sub contract work to the above stated three sub contractors to the extent of 20% of the payment made. Ld. CIT(A)further pointed out that while the assessee had shown the total payments made to these three sub contractors as per their ledger accounts to be as ₹ 81,32,697/- as follows: Sh. Sanjay Agarwal ₹ 29,61,497/- Sh. Subodh Agarwal ₹ 34,76,798/- Sh. R.R. Agarwal ₹ 16,94,702/- ₹ 81,32,697/- the tax audi .....

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No. 1 the assessee has agitated against the application of N.P. rate to estimate the income of the assessee without rejecting its books of accounts or invoking the provision of section 145. Ground No. 2 raised by the assessee is against the findings of the Ld. CIT(A) that no contract work was carried out by the impugned three contractors and that excess payment was made to them. 7. Before us, Ld. AR agreed that on identical set of facts in the preceding year, disallowance to the extent of 20% o .....

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yments were disallowed in the preceding year also. The reason for disallowing the payments are also identical to that in the preceding year being that no sub contract work was found to have been done by these three persons and infact they were found to be employees of the assessee firm. The Ld. AR has not been able to point out before us as to how the facts of the case differ from the preceding year. Therefore, since on identical set of facts , the Hon ble ITAT had in the preceding year held tha .....

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g/2012 held as follows: 23. We have heard the Ld. Representative of the parties and records perused. The case of the Revenue is that the assessee has claimed payments to subcontractors which were not genuine sub-contractors. The CIT(A) found that merely filing affidavit is not sufficient unless some corroborative evidence is furnished. In the case under consideration sub-contractors could not be produced or any evidence to establish that they had actually carried out any work as claimed by the a .....

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. Uma Devi. The above details have been noted from the assessee s paper book at page No. 258. In the light of the fact and the material available on record, in principle we agree that the subcontract was not carried out by the above sub-contractors and in this regard the findings of the Revenue authorities is confirmed. However, it is also admitted fact that the assessee has carried out contact work, may be not from these subcontractors but by other parties or by otherwise. On considering the to .....

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e income declared in the return of ₹ 30,06,760/- considering the fact that the sub-contractor work may be carried out by other mode of carrying out work not by these sub-contractors, we are of the view that it will be fair and reasonable if 20% of the expenditure claimed as payment to sub-contractors is disallowed of which calculation comes to ₹ 12,35,225/- (20% of 61,76,126/-)(21,57,500 + 26,09,254 + 14,09,372). The addition to the extent of ₹ 12,35,225/- is confirmed and the .....

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account of subcontract work. 10. Ground No. 1 & 2 raised by the assessee are therefore dismissed. 11. In Ground No. 5 the assessee has agitated against the disallowance of 20% of the sub contract expenses made by following earlier years order when the G.P. rate shown by the assessee in the impugned year was progressive as compared to the preceding year. 12. Before us Ld. AR stated that disallowance to the extent of 20% had been upheld by the Hon ble ITAT in the preceding year, in view of the .....

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and further as compared to Assessment year 2007-08, considering which the Hon ble ITAT has rendered its judgment for Assessment year 2008-09, the GP rate still shows a decline. We find that the GP rate in the Assessment year 2007-08 was 15.6% while in the impugned Assessment year the GP rate is 14.785%. Therefore since the G.P. rate in the current year is on the lower side as compared to A.Y. 2007-08, which was considered by the ITAT, while rendering its judgment for Assessment year 2008- 09, w .....

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he Ld. CIT(A) on this aspect also since undisputedly the assessee has shown different figures in the tax audit report and in the ledger accounts of the parties. While the tax audit report shows payments made to these sub-contractors amounting to ₹ 90,12,424/- the ledger account shows the same as ₹ 81,32,697/-. The Ld. AR has not been able to demonstrate before us as to how there was no difference in the two figures. The Ld. CIT(A)has therefore rightly restored the matter to the AO to .....

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truction process must have been sold by the assessee. He therefore estimated the sale on account of scrap and empty bags to be ₹ 1,00,000/- and made addition of the same. Before the Ld. CIT(A) the assessee argued that the addition has been made merely an conjectures and surmises without any supplementary material and moreover since the trading results were progressive, no such addition was warranted. Ld. CIT(A) rejected the assessee s contentions and upheld the addition made by stating tha .....

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ture of contract work being done by the assessee (appellant), such sale of scrap and empty bags cannot be ruled out. It is really difficult to gather any evidence of sale of scrap or empty bags during the course of assessment proceedings after filing of Income Tax Return for a particular year but it is also impossible to believe that no income on such sale would have earned by the assessee. The assessee (appellant) on his own has not shown any such income on sale of scrap or empty bags. Hence, t .....

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