TMI Blog2018 (5) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... he year ended 31.03.2008 and the amount of works bill is of ₹ 1,37,60,588/- out of which labour charges are to the tune of ₹ 71,81,150/-. - Decided in favour of assessee Addition on account of sundry creditors - Held that:- AO was not justified in treating the concerned creditors as bogus without doubting the genuineness of the corresponding purchases made by the assessee from the said creditors. On the basis of all these findings of fact recorded by him, CIT(A) treated the concerned creditors as genuine and deleted the addition made by the AO by treating the same as bogus. After having considered all the facts of the case as found by the ld. CIT(A) and remained uncontroverted by the revenue, we find no justifiable reason to interfere with the impugned order of the ld. CIT(A) - Decided in favour of assessee - ITA No. 1412/Kol/2015 - - - Dated:- 18-5-2018 - Hon ble Shri P. M. Jagtap, AM And Shri S. S. Viswanethra Ravi, JM For the Appellant : Shri S.Dasgupta, Addl. CIT (DR) For the Respondent : Shri D.Bhaumik, Advocate Shri S.K.Saha, FCA ORDER Per P. M. Jagtap, AM This is an appeal filed by the Revenue against the order dated 22.09.2010 passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers of CIT(A) is co-terminus with that of the AO he can do what the ITO can do and can also direct him to do what he failed to do . 5. That the appellant craves leave to add, alter, modify, delete or include any of the grounds of appeal. 3. Ground No.1 relates to the deletion of addition of ₹ 10,37,732/- on account of materials purchased. According to the AO during the scrutiny proceedings the assessee was asked to furnish supporting evidences/bills and vouchers on account of materials purchased. The assessee did not furnish any supporting evidences/bills and vouchers in that respect. Considering this fact 20% of the said expenses of ₹ 51,88,662/- claimed on estimate basis had been treated as bogus to the tune of Rs.,10,37,732/- and the same is added back to the total income of the assessee. 4. On appeal the CIT(A) while dealing with the particular ground opined that the AO has just abruptly made adhoc disallowance at 20%. He has also mentioned that such assessment was in a last moment hurried assessment. In the remand proceedings the AO embarked to make enquiries on 19 parties to which it was a queer process of assessment done in reverse. 5. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions and gone through the records of the case. We are of the opinion that the details of these parties were properly provided before the AO and the existence of those parties cannot be questioned. The statement made by the AO in this regard that the assessee did not furnish the evidence/bills and vouchers in respect of materials purchased is not tenable. In fact when the details of the required documents were furnished the disallowance of 20% of the total expenses claimed by the assessee considering this as bogus expenses is not justified. We uphold the observation made by the ld. CIT(A) in this regard. Consequently the expenses claimed to the tune of ₹ 10,37,732/- cannot be treated as bogus. Thus we dismiss the ground no.1 raised by the revenue and confirm the order of CIT(A). 9. Ground No.2 relates to the deletion of addition of ₹ 71,81,150/- on account of labour charges. From the trading account it is seen that an amount of ₹ 51,88,662/- was debited on account of labour charges. During the scrutiny proceedings the assessee was asked to produce supporting evidence whether TDS has been deducted in respect of labour charges claimed. The AO has also mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of these expenses. By a letter dated 21.07.2011 the AR stated that daily labourers are of migratory in nature and might have shifted from the earlier address. The weekly payment register of labourers was produced. He further added that the total payments made to all the labourers in a week are entered in the register and subsequently in cash book. Both the ledger and cash book were produced before the AO. The documents and accounts were test checked at that end. From the verification of the weekly payment register, it is found that name and address of all 83 labourers were written serially in the register and all have acknowledged receipt of money by putting thumb impression on register. 12. The ld. DR supported the order passed by the AO and further contended that the presence of the names of 83 labourers in the register by itself cannot justify that they were given wages. 13. The ld. Counsel appearing on behalf of the assessee argued in detail. He took us through the details of labour charges paid, being part of the record in the paper book. He further added that the AO has failed to establish that any sub-contract was engaged in the payment of labour charges. It is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallow such purchase/expense. There cannot be a blanket disallowance of the entire sundry creditors which tantamounts to disbelieving that the assessee ever carried on business. He further added that the AO had issued letters to the creditors and it was reported that in two cases the letters were returned unserved and in three cases were some balance differences. The existence of the party was proved by the VAT registration number provided by the assessee later on. The other party is an individual and after considering the nature of business of the assessee he found no justification for disbelieving the assessee just because it has claimed that letters came unserved. In regard to the other issue where the balance differences is concerned it is a very petty amount of a few thousand rupees only. 17. The ld. DR supported the order of the AO dated 29.12.2010 in this regard. He reiterated that there was no cooperation on the part of the assessee while he was asked to furnish the names and address of the sundry creditors. Neither any reconciliation was filed during the assessment proceedings pending before the AO. He further added that whatever the assessee could not place on record b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is adverse remand report of the AO was confronted to the assessee by the ld. CIT(A), the assessee filed his rejoinder and on the basis of the same, the ld. CIT(A) treated the sundry creditors as genuine after having found that the existence of the said creditors was duly established by the assessee by filing the relevant details such as VAT registration etc. He also found that the difference in the balance of three creditors as pointed out by the AO was very small and the same was due to unreconciled accounts as pointed by the assessee. He also found that the genuineness of corresponding purchases made by the assessee from the said creditors was not doubted by the AO. According to the ld. CIT(A), the AO was not justified in treating the concerned creditors as bogus without doubting the genuineness of the corresponding purchases made by the assessee from the said creditors. On the basis of all these findings of fact recorded by him, the ld. CIT(A) treated the concerned creditors as genuine and deleted the addition made by the AO by treating the same as bogus. After having considered all the facts of the case as found by the ld. CIT(A) and remained uncontroverted by the revenue, we f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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