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| The Tax Publishers2020 TaxPub(DT) 3007 (Mum-Trib) INCOME TAX ACT, 1961
Section 68
Where assessee was carrying on work as a labour contractor, work entrusted to assessee was labour intensive and assessee showed receipt towards labour charges, it was to be accepted that assessee must have incurred quite substantial amount towards labour charges and thus, AO could not make addition by doubting amount expended by assessee on mere surmises and conjectures merely because details of payees/labourers such as PAN, address, bank account copy, etc., could not be furnished.
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Income from undisclosed sources - Addition under section 68 - Assessee was carrying on work as a labour contractor - AO doubted payments to labourers because details of payee were not furnished
Assessee was an individual carrying on business as a labour contractor. As details of payees/labourers such as PAN, address, bank account copy, etc., could not be furnished, AO treated labour charges as unexplained and added to income of assessee. Held: AO did not dispute fact that assessee received quite substantial amount from U towards labour charges, whereas, on other hand, AO disbelieved expenditure incurred by assessee towards labour charges. This, was completely unreasonable and illogical. When the work entrusted to the assessee was labour intensive and the assessee showed receipt towards labour charges, it was to be accepted that the assessee must have incurred quite substantial amount towards labour charges. AO did not make any in-depth enquiry, except making certain general queries with regard to the labour charges. Addition made purely on conjecture and surmises could not be sustained.
REFERRED :
FAVOUR : In assesse's favour.
A.Y. : 2009-10
INCOME TAX ACT, 1961
Section 143(3) Section 263
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