TMI Blog2021 (1) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the contractor. However, it is not known as to on what aspects, reply was not adequately received. Thus, in totality of the circumstances, the assessee, in our view, has proved overall bonafides of the expenses actually incurred in relation to construction of project. Given the evidences placed, the Assessing Officer could not have drawn an inference against the assessee in wholesale. The action of the Revenue Authorities is accordingly set aside and the additions made in question is directed to be deleted. Penalty u/s 271(1)(c) automatically gets obliterated. The penalty imposed under s.271(1)(c) of the Act thus stands deleted. Appeal of assessee allowed. - ITA No.1012/Ahd/2015, ITA No. 298/Ahd/2019 - - - Dated:- 4-1-2021 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) in sustaining the disallowances of ₹ 46,44,514/- incurred towards job-work/labour work expenses. 4. Briefly stated, the assessee is a Builder and Real Estate Developers. The assessee filed return of income declaring total income of ₹ 1,12,04,240/- for the AY 2011-12 which was subjected to scrutiny assessment. In the course of the assessment proceedings, it was noticed by the Assessing Officer that assessee has inter alia claimed expenses of ₹ 46,44,518/- on account of job-work/labour work paid to one Shri Kailash Sukhlal Mandal. To verify the genuineness of the aforesaid expenses, notice under s.133(6) of the Act was issued to be aforesaid party seeking details in relation to the aforesaid work and payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia disallowed and added to the total income. The Assessing Officer also imposed penalty on the aforesaid additions in terms of s.271(1)(c) of the Act which is also subject matter of appeal in ITA No.298/Ahd/2019 for AY 2011-12 (supra). 6. Aggrieved, the assessee preferred appeal before the CIT(A) for reversal of the action of the Assessing Officer. The CIT(A), however, found little merit in the plea of the assessee for nullifying the additions. The CIT(A) thus sustained the additions so made by the Assessing Officer on following terms: 3.3 I have carefully considered the submissions made by the appellant and the assessment order passed by the Assessing Officer. 3.3.1. Appellant has claimed payment of ₹ 46,44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le on the bills raised by this party. It is not clear when these details are not available on the bills of the party, how appellant has given such details in the Ledger account of this party in its accounts. In view of all the above reasons, it is held that appellant could not prove that Shri Kailash Sukhlal Mandal has done labour work on the sites constructed by the appellant. Genuineness of payment of ₹ 46,44,518/- to Shri Kailash Sukhlal Mandal could not be proved with .corroborative evidences. Deduction of only those expenses is allowable against business income which can be proved to have been incurred for the purpose of business. Therefore, it is held that AO was justified in disallowing ₹ 46,44,518/-. 7. Further, agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Nos. A, B, C, D E of the construction work. It is contended that job-work charges were paid to the contractor for RCC work of these blocks for which expenses have not been incurred and paid to any other party. In this background, it is the contention of the assessee that notwithstanding the non-appearance of the party before the Assessing Officer, the fact remains intact that the construction cannot be completed without the RCC work being carried out by someone. It was further supported that cash withdrawn by the contractor is only natural to meet the day-to-day basis and other expenses by him. The running bills drawn by the contractor on the last day of the year was justified on the ground that these contractors are not professionally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to be deleted. 12. In the result, appeal of the assessee in ITA No.1012/Ahd/2015 for AY 2011-12 is allowed. ITA No.298/Ahd/2019 for AY 2011-12 (penalty appeal): 13. The subject matter of this appeal concerns imposition of penalty on the additions made in quantum proceedings. 14. In view of the reversal of the additions/disallowances made in the quantum appeal in ITA No.1012/Ahd/2015 (supra), the consequential penalty under s.271(1)(c) of the Act automatically gets obliterated. The penalty imposed under s.271(1)(c) of the Act thus stands deleted. 15. In the result, appeal of the assessee in ITA No.298/Ahd/2019 for AY 2011-12 is allowed. 16. In the combined result, both the captioned appeals of the assessee are allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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