TMI Blog2023 (7) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... k from them and the payments were business receipts which have been duly accounted for towards the income of the assessee and due tax paid thereupon. Therefore, the impugned additions are not sustainable, same are, accordingly, ordered to be deleted. Addition u/s 40A(3) - assessee had made cash payments to the labourers, CIT(A) restricted the addition to 50% of the addition made by the AO - HELD THAT:- No justification on the part of the CIT(A) having admitted the contention of the assessee that the aforesaid payment was made out of compulsion to the labourers, therefore, the impugned addition is ordered to be deleted. Addition on account of non-deduction of tax at source (TDS) invoking the provisions of Section 40(a)(ia) - HELD THAT:- This issue is restored to the file of the AO to consider the contentions of the assessee and to verify that the aforesaid payments have been taken into consideration by the respective payees for the purpose of their computation of income and due tax, if any paid thereupon. Disallowance of notional interest - assessee had given certain interest free loans - HELD THAT:- Assessee has explained that the assessee had sufficient own funds to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... client, he does not prefer ground No. 1, therefore, ground No. 1 is dismissed as not pressed. 4. Vide Ground No. 2, the assessee has contested the action of the lower authorities in upholding the addition of Rs. 2,00,947/- on account of disallowance of revenue expenditure claimed by the assessee. The brief facts of the case are that the assessee is a Civil Contractor and operating his business in remote areas of Himachal Pradesh. During the year, the assessee claimed to have made certain payments on account of business expenditure towards labour work and hiring of vehicle etc., however, the AO finding that the assessee could not prove the aforesaid payments, made an addition of Rs. 8,28,311/-. However, the CIT(A) considering the submissions and evidences furnished by the assessee, restricted the addition to Rs. 2,00,947/-. The CIT(A) in this respect has drawn a table in the impugned order which, for the sake of ready reference, is reproduced as under : Name of the person to whom notice u/s 133(6) was issued. Outcome of notice issued u/s 133(6) Expenditure disallowed (Rs) 1. Komal Tomar to veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions. He also noted that some of the parties being mostly daily wagers/vehicle operators may not actually keep track of all receipts over a time period and further the aforesaid parties did not deny the fact that they had transactions with the assessee and payments were received. He further noted that even in some cases unless there was compelling evidence to the contrary, there was no reason to doubt the correctness of the vouchers signed by the parties on account of receipt of payment. He, therefore, considering the aforesaid circumstances deleted the addition/disallowance made by the AO in respect of parties mentioned at Sr.No. 3, 4, 5, 7A to 7D, 9A to 9C as given in the table above. However, he confirmed the addition in respect of parties mentioned at Sr.No. 1, 2, 6, 8. 4.2 In respect of party mentioned at Sr.No. 1 i.e. Komal Tomar, the ld. Counsel for the assessee has invited my attention to the Chart to submit that the said payment was made on account of labour contract payment. Notice sent to the said party remained unserved, however, the assessee had produced signed vouchers in respect of the expenditure. The ld. counsel, in this respect has submitted that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and also considering that the assessee out of small turnover of Rs. 2.55 Cr has declared the profit of approximately Rs. 19 lacs which is 7.44% of the turnover. I do not find justification on the part of the lower authorities in disbelieving the small payments booked by the assessee to villagers/labour etc. during the execution of his work specially when execution of the work has not been doubted and the recipients were illiterate labourers/tractor operators etc. Therefore, the impugned addition agitated vide ground No. 2 is ordered to be deleted. 8. Vide ground No. 3, the assessee has agitated the addition of Rs. 3,02,450/- made by the lower authorities on account of alleged cash credits. The ld. Counsel for the assessee in this respect has invited my attention to para 6 of the impugned order wherein a table has been drawn in the impugned order of the CIT(A), which, for the sake of ready reference, is reproduced as under : 1 Mr Dinesh Kumar 96,800 2 Mr K C Sharma 2,40,000 3 Mr K D Nirash 62,450 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven there is a cross-verification of the ledger/books of account of Shri K.D. Nirash and there is no denial that the assessee has carried out work from them and the payments were business receipts which have been duly accounted for towards the income of the assessee and due tax paid thereupon. Therefore, the impugned additions are not sustainable, same are, accordingly, ordered to be deleted. 11. Vide ground No. 4, the assessee has assailed the order of the ld. CIT(A) in sustaining the addition of Rs. 22,167/- as against of Rs. 44,133/- made by the AO under the provisions of Section 40A(3) of the Income Tax Act. The AO noted that the assessee had made cash payments to the labourers, therefore, he by invoking the provisions of Section 40A(3) of the Income Tax Act made the impugned additions. Though the ld. CIT(A) agreed that the contention of the assessee that the aforesaid small amount of Rs. 44,133/- was made by the assessee to the labourers who did not have any bank account and they were working in the remote area of the Himachal Pradesh and insisted of cash payments which were made as a compulsion of the business, however, the ld. CIT(A) restricted the addition to 50% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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