×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals], Dehradun dated 19.02.2015 pertaining to assessment year 2011-12.
2. The assessee has raised three substantive grounds of appeal. However, at the very outset, the ld. AR stated that he is not pressing Ground Nos. 2 and 3. Accordingly, Ground Nos. 2 and 3 are dismissed as not pressed.
3. Surviving Ground No. 1 relates to the confirmation of addition of Rs. 2,09,07,245/- on account of alleged bogus labour wages claimed.
4. Briefly stated, the facts of the case are that a search action u/s 132 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] was initiated and took place in the business and residential premises of the assessee-firm on 17.02.2012. During the course of scrutiny assessment proceedings, some documents were seized relating to labour expenses. The same are exhibited as under:
5. The Assessing Officer analysed the above loose sheets and came to the conclusion that the amount in the books of the assessee is at Rs. 6.13 crores, whereas the wages as per the muster roll is at Rs. 4.03 crores. The Assessing Officer was of the opinion that the amount of Rs. 2.09 crores has been adjusted against the wages of different months to arrive at Rs. 6.13 crores, being the amount shown in tally amount and, accordingly, debited in the profit and loss account as on 31.03.2011.
6. The assessee was asked to explain the loose sheets exhibited elsewhere. The assessee filed its reply as under:
" Annexure A-l page no.10 shows wages complete tally amount and balance. This chart was prepared at the time of audit. When it was found the certain sheets of labour scroll were not available the auditor asked the assessee firm to collect the missing sheets. Wages are paid at the different sites of work where these labour scroll were kept. Inadvertently all the sites the staff did not sent the complete labour scroll. Hence it was pointed out to the assessee firm to bring the missing scrolls, it is difference between the labour scrolls which were with the auditor. Actually, the total payment of labour for the FY 010-11 were Rs.6,13,00 000/- as recorded in the books of accounts. Hence no adverse should be taken of this annexure. Your honour has pointed out that in the statement recorded during the search Sh.Satinder sawhney in his reply to question no.11 admitted that there was discrepancy. No doubt this statement was on oath but it is also a fact that. the assessee being a human being is under extreme pressure and anxiety during the search toe it is not possible to recollect full facts and explain the entries correctly."
7. The reply of the assessee did not find any favour with the Assessing Officer who was of the firm belief that the modus operandi of the assessee is to book bogus and excessive expenses in its books of account to minimise the profitability. The Assessing Officer analysed the previous history qua labour expenses as under:
8. The Assessing Officer further observed that the payments on account of labour wages have been made all in cash and no vouchers have been found to be maintained by the assessee in respect of expenses incurred on wages payments. The Assessing Officer was of the opinion that the net profit of the assessee would have been much higher if the bogus expenses would not have been debited to the profit and loss account.
9. Taking a leaf out of the voluntary surrender of Rs. 1.50 crores, the Assessing Officer concluded by holding that since the partners have admitted that there are discrepancies in the books of account and hence surrendered Rs. 1.50 crores, the Assessing Officer made addition of Rs. 2,09,07,245/- as bogus expenditure.
10. The assessee carried the matter before the CIT(A) but without any success.
11. Before us, the ld AR drew our attention to the profitability ratio of 7 A.Ys and the same is as under: