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2016 (7) TMI 322 - ITAT PUNE

2016 (7) TMI 322 - ITAT PUNE - TMI - Disallowance of labour charges etc. paid in cash - according to the Assessing Officer, the bonafides of such expenses could not be proved by the assessee - summons were issued under section 131 - Held that:- The impugned claim towards expenses is not substantiated by cogent evidence. When these factors are tested on the touchstone of preponderance of probabilities, the claim appears unfounded. It is true that once the summons under section 131 of the Act has .....

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bonafides of the transactions always lies with the assessee, which has not been discharged in the instant case. In the totality of circumstances, we find no infirmity in the order of the CIT(A). - Decided against assessee. - ITA No.858/PN/2014 - Dated:- 27-5-2016 - SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri C. H. Naniwadekar For The Respondent : Shri Abhijit Haldar ORDER PER PRADIP KUMAR KEDIA, AM : The captioned appeal filed by the assessee is against the or .....

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racts such as pipeline laying, dam, roads, building staff quarters and other factory buildings, etc.. During the relevant assessment year, the Assessing Officer inter-alia noticed that the assessee has incurred expenses towards labour charges to the tune of ₹ 23,93,862/- paid in cash involving five parties listed as under :- Sr.No. Name of the party Amount disallowed (Rs.) 1 Ramesh Jadhav 2,54,129.00 2 Ganesh Tajane 4,81,586.00 3 Gulab Shah 6,18,147.00 4 Jalaram Stone Crusher 4,35,000.00 5 .....

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ross-verification of claim and goods/services stated to be received from these parties. The assessee, however, could not furnish any details and thus failed to substantiate the claim. The parties were also not produced. Accordingly, the payments stated to have been made to these parties towards labour charges stated to be settled in cash were disallowed by the Assessing Officer and added to the total income of the assessee. 5. Aggrieved by the order of the Assessing Officer, the assessee carried .....

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parties namely Jamuna Stone Crusher and Gulab Shah attended before the Assessing Officer. The Assessing Officer further noted in the remand report that Shri Anil Patel (Proprietor of Jamuna Stone Crusher) who appeared in response to summons under section 131 of the Act confirmed before him that he has done work of ₹ 11 lakh for the assessee in the financial year 2008-09 relevant to assessment year 2009-10. However, Shri Anil Patel could not produce the bills/vouchers for the alleged work d .....

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ssertions made by any documentary evidence. 6. It was also asserted in the Remand Report that the impugned payments were made in cash and no TDS was deducted thereon. The Assessing Officer, thus, observed that the genuineness of the sub-contract expenses is not proved. The only two sub-contractors out of five sub-contractors appeared for the examination but except for oral assertions, were unable to produce any documentary evidence to establish that they have extended services for the contract a .....

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e is in second appeal before us. 8. The Ld. Authorized Representative (AR) for the assessee Shri C.H. Naniwadekar adverted our attention to the ledger account of the parties maintained in the books of the assessee at Page No.21 - 25 of the Paper Book which is stated to be duly authenticated by the respective parties. He submitted that these are small cash payments for obtaining services from these parties where the payments made are truncated and have been made over a period of time. The assesse .....

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ered. The Ld. AR vehemently asserted that assessee cannot be held responsible for non-appearance of parties summoned. He relied upon the decision of Agra Bench of ITAT in the case of ITO vs. Mayur Agarwal, (2011) 128 ITD 55 (TM) and the decision of Ahmedabad Bench of ITAT in the case of Sunij Pharma P. Ltd. vs. DCIT, (2014) 42 CCH 59 (Ahd-Trib.) (copy placed in file) for the aforesaid proposition. 9. The Ld. Departmental Representative (DR) for the Revenue, on the other hand, submitted that the .....

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expenses could not be proved by the assessee. Summons under S. 131 were also issued to probe the expenses claimed. Summons so issued could be delivered to four parties out of five parties involved herein. Thus, summon to one party remained undelivered. In this background, we take notice of the contentions of the Revenue that the impugned payments of ₹ 23.93 lacs in aggregate were made in cash to these parties. The payments made have not been subjected to any TDS under applicable provision .....

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sessee has made numerous truncated payments of small amounts ranging upto ₹ 20,000/- at one instance. However, at the same time, the said account extract also reveals that in all these five parties, there are several instances where several payments have been shown to be made in cash on the same date which if clubbed together will breach the threshold limit set under S. 40A(3) of the Act. Section 40A(3) obliges the assessee to shun settlement of payments towards expenditure in cash and ava .....

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e the pattern of payment is similar as noted above. This gives an unmistakable impression that the expenses have been booked in cash in such a manner which enables the assessee to bypass the statutory burden and obligations cast under the provisions of the Act while claiming the expenses. In the case of one of the parties namely Jalaram Stone Crusher , the expenses are stated to be incurred on site development expenses . The expenses have been booked on 21st March, 2009 by one entry as against m .....

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rty namely Jamuna Stone Crusher , it is observed from account extract that it is not a case of labour expenses. The assessee has booked some corresponding purchase against the payment made. However, the purchase bills or any other supporting are not placed on record. The truncated cash payments one after another on almost daily basis and sometimes multiple times on the same day is incomprehensible. The payment of such large amount in cash without meeting obligations under S. 40A(3) and/or to ded .....

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