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TMI Blog2018 (4) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... owing Labour expenses of Rs. 8,45,000/- on the ground of non furnishing of the details of site where the work was executed and mismatch of signature with reference to the return of income and PAN no. of the contractors. The Learned CIT (Appeal) overlook the fact that in the case of the appellate proceedings, the appellant has submitted copy of the ledger accounts, bills and PAN of the labour contractors along with the bank statements highlighting the payment made to them. 1b The Learned CIT (Appeal) went about finding the fault in low net profit / gross profit declared by the appellant in disallowing the claim instead of rebutting or refuting the evidences produced in appellate proceedings. 1c The learned CIT (Appeal ) has allowed Labour charges of Rs. 4 lacs to Maa Durga Constructions on following one sets of principle whereas disallowed labour charges to remaining five parties on the different principle which is not only self contradictory but also untenable in the eyes of law. 1 d The confirmation of addition of Rs. 8,45,000/- by the CIT (Appeal) requires to be deleted / quashed and the relief may be granted to the appellant. 2a The Learned CIT (Appeal) has erred in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of civil construction, had filed his return of income for A.Y 2010-11 on 15/10/2010, declaring a total income of Rs. 6,54,286/-. The case of the assessee was taken up for scrutiny assessment under section 143(2) of the Act. During the course of assessment proceedings, it was observed by the Assessing Officer that the assessee had made total labour payments of Rs. 19,87,546/- to various parties. The bifurcated details of the payments along with the addresses of the parties were placed on record by the assessee during the course of assessment proceedings. The Assessing Officer in order to verify the genuineness of the payments, issued notices under section 133(6) to the following parties:- Sr.No. Name Address Amount Rs. 1. Shri Arun B. Tank B/32, Shradha Apartments Co-op Housing Society Ltd. Shakti Nagar, Marve Road,Malad (W), Mumbai - 400 064 2,00,000/- 2. M/s.GuduKanu Enterprises Room No. 187 Samart Ashok Nagar, Chakkala Vile Parle (E), Mumbai - 400 009 70,000/- 3. M/s. Kuber Enterprises H-Plot No.3, Govind Nagar Malad (E), Mumbai - 400097 2,00,000/- 4. M/s. Shyam Arts Flat No. 14 D. Wing, Govardhan Nagar, Barsopada Road, Behind Kandiwali (W), Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the assessee had claimed to be working as a contractor at the site of redevelopment, which proved the said fact to the hilt. That on the basis of the aforesaid observations, the Assessing Officer concluded that though the assessee was in receipt of redevelopment allowance, but however, the same was not reflected by him in his return of income for the year under consideration. The Assessing Officer on the basis of the aforesaid conviction estimated the value of redevelopment allowance @10% of the value of the property and made an addition of Rs. 2,30,000/- to the total income of the assessee under the head 'income from other sources'. The Assessing Officer while making the aforesaid contentions also observed that a similar addition was made in the case of the assessee for A.Y. 2009-10, which though was pending in appeal before the CIT(A), but however, as there was no change in the facts of the case during the year under consideration, therefore, made the addition in the hands of the assessee for the year under consideration. The Assessing Officer inter-alia made certain other additions and vide his order dated 28/02/2013, assessed the income at Rs. 21,92,880/-. 5. Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, who were claimed to have received labour charges from him. The CIT(A) was of the view that merely furnishing of the copies of ledger accounts, PAN cards and jurisdiction details of the said respective persons as gathered from the e-filing portal of the department would not lead to discharge of onus cast upon the assessee to prove the genuineness of his aforesaid claim of labour expenses. The CIT(A) further observing that as the copies of all the bills furnished by the assessee (except that in the case of M/s. Shyam Arts), which were purportedly raised by the aforesaid six parties on the assessee were prepared on computer, and neither of them (except for in the case of M/s. Maa Durga Construction) did make any mention of the site at which the civil work was carried out, therefore, the same did not inspire much of confidence to support the claim of the assessee. The CIT(A) further after carrying out a comparative analysis of the bills raised by the aforementioned parties as against their respective PAN cards, recorded his observations as regards the discrepancies emerging therefrom, as under:- " The bill of Shri Arun Tank is found to be signed by him in English while his PAN car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, as there was no question of earning any income there from, thus, the Assessing Officer had erred in estimating an income of Rs. 2.30 lakhs under the head 'income from other sources' in his hands. It was submitted by the assessee that the additions made by the Assessing Officer were merely backed by his whimsical presumption that the builder might have made payments, without verifying the factual position from the said builder, neither of whom as a matter of fact had made any such payments to the assessee. The assessee in order to drive home his aforesaid contention that no payment was received from the builder, placed on record the confirmation letter, dated 05/01/2016 received from the redevelopers, viz. M/s. Hubtown Ltd. for Mayanagar Project and M/s. Aarti Projects & Constructions for Rajivnagar Project, wherein both the said respective builders had clearly stated that no redevelopment allowance or alternate accommodation rent was paid by them to the assessee. However, the CIT(A) being of the view that as the assessee had failed to produce the relevant redevelopment agreements either during the course of assessment proceedings or before him, therefore, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the ld. A.R that the genuineness of the aforesaid payments could be well gathered from the fact that the same were made vide account payee cheques, and as and where an obligation was so cast, necessary tax was deducted at source while making the payments as per the mandate of law. The ld. A.R submitted that the main reasons which had weighed in the mind of the CIT(A) while upholding the order of the Assessing Officer were, viz. (i) the profit of the assessee was less as in comparison to that prevailing in the trade line of contractors; and (ii) the signatures of the respective parties as appearing on the bills did not match with those borne on their PAN cards. The ld. A.R further in order to drive home his contention that no adverse inference as regards the veracity of the payments made to the aforementioned five parties was liable to be drawn, submitted that the assessee in order to remove any scope of doubt, had placed on record of the lower authorities the copies of the bank statements evidencing the making of the aforesaid payments. The ld. A.R adverting to the addition of Rs. 2.30 lac made by the Assessing Officer on account of redevelopment allowance/deemed rental incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal by the CIT(A), having not been carried in further appeal, thus, had attained finality. It was submitted by the ld. D.R that as the appeal of the assessee was devoid of any force, therefore, the same may be dismissed. 8. We have heard the ld. authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present appeal has been sought for adjudication of two issues, viz. (i) the validity of disallowance of labour expenses of Rs. 8.45 lac sustained by the CIT(A); and (ii) the sustainability of the addition of Rs. 2.30 lakhs made by the Assessing Officer on account of redevelopment allowance/deemed rental income, which thereafter had been sustained as such by the CIT(A). We shall first take up the issue as regards the disallowance of Rs. 8.45 lakhs made by the Assessing Officer in respect of labour expenses which was claimed by the assessee to have been paid to the aforementioned five parties. We find that it remains as a matter of fact that the assessee in order to fortify his claim as regards the genuineness of the payments made to the aforementioned parties, had placed on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer and the assessee was in no position to obtain the copies of the returns of income of the aforesaid parties, for any reason, therefore, to some extent an obligation was cast upon the Revenue to have verified the actual position by calling for and looking into its own records pertaining to the said parties, before hushing through the matter and jumping to drawing of adverse inferences in the hands of the assessee. We further find it beyond our comprehension that as to how the exercise carried out by the CIT(A) by making a comparative analysis of the signatures of the aforesaid parties as appearing on the bills, as against those borne on their respective PAN cards could form a basis for drawing of adverse inference as regards the genuineness of the claim of the assessee. We find that the CIT(A) had observed certain discrepancies in the signatures, for the reason that either the signatures in certain cases as appearing on the bills were in English, while for those on the PAN cards were in Gujarati or/and in certain situations signatures on the bills did not tally with those borne on the respective PAN cards. We however, are unable to persuade ourselves to justify draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. The Assessing Officer while making the aforesaid addition had further observed that in case the addition on account of redevelopment allowance does not survive, then the addition would be called for in the hands of the assessee towards deemed house property income. We are unable to persuade ourselves to accept the aforesaid observations of the lower authorities. We find that not only it remains as a matter of fact that the addition towards redevelopment allowance of Rs. 2.30 lakhs was made by the Assessing Officer on an estimate basis, but rather, very surprisingly though the assessee in order to dispel any such doubts on the part of the lower authorities had placed on record the confirmation letters dated 05/01/2016 from the redevelopers, viz. (i) M/s.Hubtown Ltd. for Mayanagar Project; and (ii) M/s. Aarti Projects & Constructions for Rajivnagar Project, wherein the said respective redevelopers had categorically stated that no redevelopment allowance or alternate accommodation rent was paid to the assessee, but however, the said material documentary evidence which seized the issue under consideration was discarded by the CIT(A) for the reason that as the assessee was himself w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law. And therefore, the reopening of the assessment is invalid. 2. On the facts and circumstances of the case and in law, the CIT(A) -53 Mumbai has erred in disallowing Labour expenses of Rs. 1,58,271/- on lumpsum basis being 30% of the cash labour expenses of Rs. 5,27,569/- disregarding the provision of section 40(A)(3) read with rule 6DD of the Act. 3a The Learned CIT (Appeal) has erred in confirming an addition of Rs. 2,30,000/- made by the AO on imaginary and estimated basis on account of non existing redevelopment allowance. 3b While confirming the disallowance, the learned CIT (Appeal) observed that existence of assets in the form of room / cottage not established and there was no contractual agreement for the payment or otherwise of redevelopment allowance, overlooking the fact that in the body of the assessment order itself the A O has specifically mention about existence of assets in the form of room at Three different places, moreover a confirmatory letters was produced from builders and contractors confirming fact that no redevelopments allowance or alternative accommodation rent has been paid to the appellant. 3c The learned CIT ( Appeal ) while confirming a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter in appeal before us. The assessee had assailed before us the validity of the reopening of the assessment under section 147 of the Act, for the reason that there was no tangible material available on record which could have justified the formation of belief on the part of the Assessing Officer for reopening the case. However, during the course of hearing of the appeal, no contention was advanced by the ld. A.R to support the challenge thrown to the validity of the reassessment proceedings before us. We, thus, in absence of any contention having been raised by the ld. A.R on the issue under consideration, are unable to find any infirmity in the order of the CIT(A) upholding the validity of the reopening of the assessment made by the Assessing Officer under section 147 of the Act. 15. The assessee had further assailed before us the validity of the confirming of the disallowance of labour expenses of Rs. 1,58,271/- and an addition of Rs. 2.30 lac on an estimate basis in respect of redevelopment allowances by the CIT(A). We find that as the facts and the issues pertaining to both the aforesaid additions/disallowances remain the same, as were there before us in the appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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