TMI Blog2022 (1) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... ad-hoc disallowance of labour charges at 30% cannot be sustained in the eyes of law Even in the present case also, no material was brought by the Assessing Officer suggesting that the expenditure incurred on labour charges is bogus. The Assessing Officer merely disallowed payment of labour charges on the presumption and surmises. It is settled position of law that no addition can be made merely on the basis of presumption, surmises and conjectures. Hence, we do not find any justification to disallow 5% of labour charges on ad-hoc basis. Thus, the issue raised in the grounds of appeal stands allowed. - ITA No. 45/PUN/2019 - - - Dated:- 13-1-2022 - SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was completed by the Assistant Commissioner of Income Tax, Circle-6, Pune ( the Assessing Officer ) vide order dated 26.12.2017 passed u/s 143(3) of the Income Tax Act, 1961 ( the Act ) at a total income of ₹ 6,70,44,451/- after making an addition of ₹ 14,95,431/- being 5% of total labour charges of ₹ 2,99,05,616/- by holding that the vouchers are self-made vouchers. 4. Being aggrieved by the above disallowance, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the addition as made by the Assessing Officer. 5. Being aggrieved by the above decision of the ld. CIT(A), the appellant is before us in the present appeal. 6. When the appeal was called on, none appeared on behalf of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the works could not have been completed without engagement of the labourers. Thus, the genuineness of the expenditure is beyond the doubt but what is doubted by the ld. CIT(A) is the reasonableness of its expenditure having regard to the fact that the vouchers are self-made. The approach of the ld. CIT(A) cannot be sustained for the reason that having regard to the trade business practices, the vouchers in respect of the labour payments are clearly self-made by acknowledgement of receipt from the labourers or his gang leaders, which is not in doubt in present case. There is no doubt on cash entries made in the books of accounts, no material was brought on record by the ld. CIT(A) casting doubts on the genuineness of the labour paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the contract value as a labour component and the actual charges only 33% of the contract value which is merely 10% excess. Thus, in any event, it cannot be said that the labour charges incurred are excessive or unreasonable. Therefore, the decision of the ld. CIT(A) making the ad-hoc disallowance of labour charges at 30% cannot be sustained in the eyes of law. Accordingly, this ground of appeal no.6 stands allowed. 8. Even in the present case also, no material was brought by the Assessing Officer suggesting that the expenditure incurred on labour charges is bogus. The Assessing Officer merely disallowed payment of labour charges on the presumption and surmises. It is settled position of law that no addition can be made merely on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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