TMI Blog2021 (12) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... ur opinion, is not justified. Thus, the ground raised in cross objection by the assessee is allowed. Disallowance of labour expenses paid to BVG India Limited without giving an opportunity to the AO - All requisite documents and evidences were submitted by the assessee before the AO on 02-03-2016. There is no dispute the AO completed the assessment proceedings considering all the details. Further, as noted by us all the relevant details like work order, ledger extracts of BVG India Limited in the books of the assessee along with invoices and also ledger extracts of BESCOM in the books of the assessee and the invoices raised by the assessee on BESCOM were before the AO and there is no dispute in this regard which are all filed before us by way of a paper book. CIT(A) also examined the return of income, computation of income, audit report and bank statements of BVG India Limited which are also available before the AO during the course of assessment proceedings. Therefore, the contention of the ld. DR that the CIT(A) ought to have given an opportunity to the AO in the remand proceedings does not arise at all for the reason that no evidence brought on record before us that thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties and perused the material available on record. We note that the AO on an examination of profit and loss account found labour charges and contract receipts for A.Ys. 2010-11 and 2011-12 found as under : Particulars For A.Y. 2010-11 For A.Y. 2011-12 Labour Charges ₹ 36,02,77,332/- ₹ 47,15,94,654/- Contract Receipts ₹ 75,92,45,892/- ₹ 77,05,16,538/- 7. In the light of the above, according to the AO, when compared to A.Y. 2010-11 the labour expenses for A.Y. 2011-12 were increased by 30.80% and the contract receipts increased only 1.48%. To verify the genuineness of labour expenses, summons were issued to M/s. Krishna Electricals Engineers and M/s. Rohan Electricals and others. According to AO in statement at Q. No. 8 of Shri Krishna Sayaram Bhoi the Proprietor of M/s. Krishna Electricals and Engineers stated that during the F.Y. 2009-10 (A.Y. 2010-11), work done of only ₹ 51,53,808/- against ₹ 105 lacs shown by the assessee and that he submitted a letter dated 06-08-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one the remaining work to arrive at the sales as mentioned in the trading account. 9. We note, further, on perusal of copies of Bills raised by M/s. Krishna Electricals Engineers on the assessee, which were filed by M/s. Krishna Electricals Engineers before the AO show that in F.Y. 2009-10, relevant to A.Y. 2010-11, the bills are raised on the letter head as Krishna Electricals Engineers where as in the Balance Sheet, Trading Account and Profit Loss enclosed with the Return of Income filed with the Department, the name of the concern has been mentioned only as Krishna Electricals . Further, it is observed that on the bills issued by M/s. Krishna Electricals Engineers, the address of the concern is shown as Flat No. 494, Behind Dattawadi Police Station, Dattawadi Pune whereas in the Balance Sheet, Trading Account etc., the address of the concern is mentioned as S. No. 128, B/ 5, Hanuman Nagar, Dattawadi Pune. The copies of the documents filed by Shri Krishna Dayaram Bhoi with the Respondent Revenue show that the PAN of the assessee as AJM PB 4523 A on the invoices raised on the assessee for A.Y. 2010-11. 10. We find in answer to Q.7 of statement recorded by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han ₹ 85.75 lakhs in the F.Y. 2009-10 and doubted that during this period M/s. Rohan Electrical have received payment of only ₹ 41.96 lakhs from the assessee and according to AO, we note that the labour engaged by M/s. Rohan Electrical remained unpaid, concluded that the expenses booked by the assessee against M/s. Rohan Electrical is not genuine, held that the amounts mentioned in the bills submitted by M/s. Rohan Electricals are considered as actual expenditure and treated the balance amount of ₹ 44,80,895/- as inflation of labour expenses and added to the income of the assessee. 14. Another allegation of AO is that the assessee has not shown M/s. Krishna Electrical and Engineering in the list of sundry creditors exceeding ₹ 20,00,000/- as on 31-03-2010. We note that the list of the sundry creditors furnished before the AO was in respect of the suppliers. The amount payable to M/s. Krishna Electricals and Engineers as on 31-03- 2010 was reflected in the other schedule of the balance sheet. The AO accorded another reason for disallowing the labour expenses is that a part of the labour expenses have remained payable for a long time to the subcontractors n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank accounts showing relevant debit entries were filed before the AO. We find that the payment of labour charges constitutes a major portion of the expenses of these contracts and the assessee has duly deducted TDS on the labours expenses claimed by it and M/s. Krishan Electrical and Engineers have claimed the credit for the same. 16. Having considering the above contentions, we note that the AO asked the assessee to furnish details from M/s. Krishna Electricals and Engineers and M/s. Rohan Electricals for the A.Y. 2011-12 and the AO for the reasons recorded in the assessment order for A.Y. 2010-11 proceeded to consider the amount mentioned in the bills as actual expenditure and the differences against M/s. Krishna Electricals and Engineers at ₹ 36,48,540/- (₹ 46,23,895/- - ₹ 9,75,355/-) and M/s. Rohan Electricals at ₹ 44,80,895/- (₹ 1,17,26,560/- - ₹ 72,45,665/-) totaling to ₹ 81,29,435/- disallowed on account of labour charges. Further, the AO in order to seek information from the other parties issued notice u/s. 133(6) of the Act to six parties out of which we note that no compliance was made by M/s. Chinmay Electricals in view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not genuine, in our opinion, without any basis on record. We note that the AO made disallowance at 4% of total labour expenses (₹ 47,15,94,654/- @ 4%) is ₹ 1,88,63,786/- which is inclusive of disallowance made against M/s. Krishna Electricals and Engineers and M/s. Rohan Electricals which clearly establishes there was no basis made by the AO for such kind of estimation at 4% which clearly proves that the disallowance made by the AO only on presumptions and assumptions. Further, the CIT(A) also in his order at Para No. 5.1.7 clearly held that the assessee cannot be held liable for any in accuracy in the books of the sub-contractors which clearly supports the arguments of the ld. AR that all the payments made to sub-contractors which was debited to profit and loss account are genuine, the payments of which made through banking channel by way of cheque by deducting TDS. We find that the CIT(A) has correctly concluded in Para 5.3 at Page No. 15 that from the documents brought on record by holding that Shri Krishna Dayaram Bhoi has fabricated his statement in order to suppress his own income, in our opinion, requires no interference from us, it is justified. The CIT(A) also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Electricals and Engineers were reproduced at Para Nos. 4, 5 and 6 of the paper book which clearly demonstrate that the statements of Shri Krishna Dayaram Bhoi representing M/s. Krishna Electricals and Engineers and bills raised by M/s. Krishna Electricals and Engineers shown A.Y. 2010-11 but not to the year under consideration. Further, the AO also reproduced ledger account of assessee in the books of M/s. Rohan Electricals and statement thereon at Page Nos. 8, 9, 10, 12, 13, 14 and 15 clearly shows those are relevant to A.Ys. 2009-10 and 2010-11 but not to the year under consideration. Likewise, without having any independent enquiry the AO made disallowance on estimation basis @ 4% of total labour expenditure at ₹ 1,85,50,699/- (₹ 46,37,67,463/- at 4%). 22. Further, we find the CIT(A) discussed the entire issue in the impugned order at Para No. 6.3. The CIT(A) held the disallowance made by the AO at 4% of total labour expenses is not justified in view of the disallowance made on the basis of preceding assessment years but however, the CIT(A) restricted the disallowance to ₹ 16,63,524/- against M/s. Kalyani Electricals, M/s. Rohan Electricals and M/s. Sanjiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rementioned paragraphs that the assessment made by the AO on ad hoc basis is not justified without there being separate enquiry concerning the year under consideration. We find that as rightly pointed by the ld. AR that no discrepancies or whatsoever material concerning the same were reflected in the assessment order against M/s. Rohan Electricals, M/s. Kalyani Electricals and M/s. Sanjivani Electricals. On perusal of the details in Schedule 20 we note that the assessee an amount of ₹ 9,69,594/- against M/s. Kalyani Electricals at Sr. No. 34, M/s. Rohan Electricals of ₹ 6,68,930/- at Sr. No. 36 and M/s. Sanjivani Electricals at Sr. No. 78 to an extent of ₹ 25,000/-. As we noted above, there was no enquiry or examination conducted by the AO regarding the above entities to show that the assessee inflated labour expenses to the said three entities. In view of the same when there is no independent enquiry regarding the above said three entities involving an amount of ₹ 16,63,524/- the disallowance is not maintainable and therefore, the order of CIT(A) is not justified. Thus, ground No. 2 raised by the assessee in cross objection is allowed. 29, Now, we shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by BESCOM to the assessee, Ledger Extract of BVG India Limited appearing in books of assessee along with invoices raised by BVG India Limited on the assessee and ledger Extract of BESCOM in the books of the assessee and invoices raised by the assessee on BESCOM. TDS has been deducted on advance payments made to them in the previous Assessment Years i.e. A.Y. 2012-2013 and corresponding invoices towards the same were booked in the current assessment year. The complete details of the work allotted by BESCOM and sublet to M/s. BVG India Ltd. was filed before the AO as Annexure III to the written submissions dated 18-02-2016, a copy of which has been placed before us in Page No. 11 of the Paper Book. The copies of the work order issued by BESCOM were also filed before the AO as Annexure III B of the written submissions dated 18-02-2016 which are placed before us at Page No. 12 of the Paper Book. It is seen that the AO agitated that the party was not produced nor any confirmation from the party was furnished. The copy of the confirmation from M/s. BVG India Ltd. was also filed before the AO along with the written submissions dated 29-02-2016 which is placed before us at Page No. 30 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no dispute the AO completed the assessment proceedings considering all the details. Further, as noted by us all the relevant details like work order, ledger extracts of BVG India Limited in the books of the assessee along with invoices and also ledger extracts of BESCOM in the books of the assessee and the invoices raised by the assessee on BESCOM were before the AO and there is no dispute in this regard which are all filed before us by way of a paper book. The CIT(A) also examined the return of income, computation of income, audit report and bank statements of BVG India Limited which are also available before the AO during the course of assessment proceedings. We find the same at Page Nos. 65 to 175 of the paper book filed before us. Therefore, the contention of the ld. DR that the CIT(A) ought to have given an opportunity to the AO in the remand proceedings does not arise at all for the reason that no evidence brought on record before us that these documents were not before the AO in assessment proceedings and also the CIT(A) considered any additional evidence which was not before the AO. Therefore, the submissions of ld. DR that there was no opportunity for AO for examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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