DABWALI TRANSPORT CO. Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS order shall dispose of two appeals being ITA Nos. 175 and 176 of 2007.

(2.) PASSED by the Income -tax Appellate Tribunal Chandigarh (for brevity 'the Tribunal') in ITA No. 398/Chd/2004 in respect of the asst. yr. 2000 -01. It has been claimed that the following substantial questions of law would arise for the determination of this Court :

(3.) BRIEF facts of the case are that the assessee firm is deriving its income from transportation contracts. In the year 1999 -2000 a year prior to the relevant asst. yr. 2000 -01 it disclosed transportation receipts of Rs. 1,88,54,650, but declared net profit of Rs. 78,160 only after debiting expenses on account of transportation, labour, interest, etc. It was noticed by the AO that the assessee had claimed expenditure of Rs. 37,79,920 as labour expenses in respect of loading and unloading of wheat bags. It was further noticed that a sum of Rs. 2,44,555 had been shown as outstanding loading charges @ Rs. 2.50 per bag. The assessee was asked to substantiate the claim of Rs. 3,79,920. It was found by the AO that the assessee had not maintained complete records and even the particulars of the drivers to whom the payments were made had not been maintained. The assessee failed to produce any of the persons to whom payments were either claimed to have been made or were shown outstanding. On enquiry from HAFED by the AO it was found that HAFED had paid to other contractors loading and unloading charges @ 56.2 paisa and 86.5 paisa per bag for loading and unloading of wheat bags of 50 kg. weight. The AO further found that the assessee is claimed to have paid the labourers at the rates more than the market rates. A show -cause notice was issued to the assessee to which no reply was furnished. The AO, accordingly recorded a finding that the assessee had inflated the labour expenses and disallowance of Rs. 20,00,000 was made by the AO. On appeal filed by the assessee the CIT(A) reduced the addition by a sum of Rs. 1,22,520 and sustained the addition of Rs. 18,77,480. On a further appeal the Tribunal reduced the addition by an amount of Rs. 1,32,925 sustained by the CIT(A) but sustained an addition of Rs. 15,00,000 out of the labour charges debited by the appellant to the P&L a/c amounting to Rs. 37,79,920.