TMI Blog2020 (12) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Nikunj Eximp Enterprises P. Ltd. [ 2013 (1) TMI 88 - BOMBAY HIGH COURT] and several other case laws are applicable, that 100% disallowance in such cases is not permissible. Accordingly, assessee has done purchases from grey market. In our considered opinion 12.5% disallowance in this case would meet the end of justice. We direct accordingly. On similar reasoning we disallow 12.5% of the labour expenditure in this regard. Disallowance under section 40(a)(ia) - HELD THAT:- We note that this issue was also remanded by the learned CIT(A) to the AO, but we note that the Assessing Officer has not properly examined the issue. Accordingly, we remit this issue to the file of the Assessing Officer. The Assessing Officer is dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls, corresponding sales would not have been possible. 3. In the facts and circumstances of the case and in law, the Learned CIT(A) has erred in upholding the disallowance of purchases of ₹ 21,19,723/- being purchase of steel pipes made from M/s Asian Steel, disregarding the fact that the said party is not even being declared a hawala dealer by the sales tax department and without consumption of materials, corresponding sales would not have been possible. 4. In the facts and circumstances of the case and in law, the Learned CIT(A) has erred in upholding the disallowance of ₹ 10,99,818/-in respect of labour charges paid to Siddharth Constructions. 5. In the facts and circumstances of the case and in law, the Learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vinayak Steel 9,25,579 4 Paras Sales Corporation 4,33,160 Total 56,17,397 The AO confronted the assessee regarding the above vide notice under section 142(2) dated 01/02/2013. In this notice the AO had listed all the concerns where the notices under section 133(6) could not be served and the assessee was directed to establish the identity of such persons and also to establish the genuineness of the transactions with these persons. Thereafter the AO again issued a show cause notice to the assessee dated 01/03/2013 mentioning that there has been no response to the earlier notice from the assessee/In respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17,397/- to be bogus and the same was added to the taxable income of the assessee. 7. The AO also noted that yet another purchase of ₹ 21,19,723/- had been claimed by the assessee as made from one M/s Asian Steel, Pune. The AO issued a notice under section 133(6) to this party for confirmation of the facts. This supplier has responded to the same and has categorically denied having carried out any transactions with the assessee. The AO confronted the assessee with this fact but there was no response from the assessee. Accordingly the AO held that the purchase of ₹ 21,19,7237- is also bogus and the same was added to the income of the assessee. 8. The AO also noted that the assessee has claimed to have made purchases or had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that during the previous year the assessee had made aggregate payments exceeding ₹ 50,000/- to 127 labour parties. The amount involved was ₹ 1,10,44,091/-. The AO issued necessary show-cause to the assessee as to why this amount net be disallowed as an expense for nondeduction of TDS under section 194C of the Act. The assessee contended that the labour force is not contractual and therefore no TDS was done. The AO noted that these persons have been employed on a daily basis at various work sites of the assessee and there was no employer-employee relationship. The AO also noted that the assessee admittedly does labour contract work and the payment to these 127 persons was in the nature of a sub-contract only. Accordingly th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case should not be done. 12. Per contra, learned Departmental Representative relied upon the order of learned CIT(A). 13. Upon careful consideration we find that the authorities below have treated the purchases to be bogus primarily on account of information from Sales Tax Department and non-response by the concerned suppliers to the notice of the Assessing Officer. The assessee has duly submitted the purchase invoices and payments were also done through banking channel. It also noted that the assessee has done contract work and as per the contract specification assessee was required to provide materials and labour. No discussion whatsoever is there in the orders of the authorities below regarding the disallowance of the contact w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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