TMI Blog2012 (5) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... salary expenses and Miscellaneous expenses without appreciating the evidences of wage register, salary register and vouchers verified by Assessing Officer. The addition of ₹ 27,49,273/- should be deleted. II. The learned CIT(A) has grievously erred in law and on facts in confirming the addition of ₹ 27,49,273/- without appreciating the facts that even if there are some defects the net profit of assessee at 3.27% being higher than Net Profit of 1% to 1.5% in identical case determined by ITAT Rajkot Bench, the addition should be deleted. 2. The assessee is a partnership firm filed its return of income on 16-10-2006 declaring total income of ₹ 2,33,023/- along with audit report in Form No.3CB and 3CD and audited a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amonds by engaging skilled labourers. It was claimed by the assessee that its activity of business was in the nature of a middleman and nothing more. During the course of assessment on verification of the details the Ld. AO found that the assessee has shown expenses under the head karigars mazdoori ₹ 1,32,48,051/-. The assessee has shown ₹ 55,000/- as partner s capital against Shri Ashwinbhai Dhirubhai and ₹ 45,000/- against Shri Sanjaybhai Pragjibhai. Further, on verification of the form 3CD the learned AO found that the assessee purchased machinery during the year for ₹ 60,000/- and in the profit loss account assessee has shown legal charges of ₹ 17,500/-, salary expenses of ₹ 3,95,500/- and Misc. e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were absent, the learned AO rejected the books of accounts of the assessee u/s 145(3) of the Act and accordingly disallowed ₹ 27,49,273/- being 20% of the total expenditure claimed by the assessee. The learned AO relied on the decisions of the Hon ble Rajasthan High Court in the case of Jaipur Electro Pvt. Ltd. Vs CIT, 233 ITR 535, 539 540 and the decision of the Hon ble Delhi High Court in the case of Siddho Mal Sons Vs CIT, 122 ITR 839. 3. The matter traveled before the learned CIT(A), however, none appeared before the learned CIT(A) on behalf of the assessee instead a letter dated 27-01-2009 signed by one Shri V. V. Bootwala was received by the learned CIT(A) and it further appeared that the signatory of the letter was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not made known to me. The appellant/A.R. seem to be taking shelter behind the quoted cases without commenting/committing any thing on their own conduct of non-compliance and failure to substantiate any claim either in assessment or appellate proceedings. Thus in the light of above, action of the assessing officer is upheld and appeal dismissed. 4. Before us, the assessee submitted that even if there were some defects in wages registers and vouchers produced before the learned AO, only net profit could be estimated and that assessee s correct net profit rate during the year under consideration was 3.27% and is quite reasonable. It was further submitted that ITAT Rajkot Bench on identical cases in (i) Dulabhai Mavjibhai Sanka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts and thus could not substantiate the major expenditure being labour charges viz. karigars mazdoori. The learned AO had wisely observed that in this kind of skilled labour contract various processes like Ghat, Table, Talia, Peal, Mathala etc. are involved and all these processes have to be properly accounted and recorded since the raw materials are precious and highly valuable. The Ld.AO further observed that the assessee had not maintained day to day production record, stock movement register, piece-wise details of processed diamonds etc. The Ld. AO had observed that, only if such records are maintained with respect to all the processes involved , coupled with the labour payment records and vouchers, the labour expenditure could be e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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