Madhur Balasaheb Patil Vs ITO (ITAT Pune)
Ad-hoc Disallowance of Cash Labour Charges Quashed: Pune ITAT Restores Appeals to CIT(A)
The Pune Bench “A” of the ITAT, in Madhur Balasaheb Patil vs ITO (ITA Nos. 1009 & 1010/PUN/2025, AYs 2013-14 & 2014-15), set aside the ex-parte dismissal of appeals by the CIT(A)/NFAC and restored the matters for fresh adjudication on merits. The Assessee, engaged in manpower supply through a proprietary concern, had received contract payments from Dr. D.Y. Patil group institutions, which were withdrawn in cash and claimed as labour charges.
The AO reopened the assessments u/s 147 and, invoking section 145(3), rejected the audited books and made ad-hoc additions of ₹2.49 crore (AY 2013-14) and ₹3.54 crore (AY 2014-15) by applying Government minimum wage rates, treating the excess cash payments as unexplained. The CIT(A)/NFAC dismissed both appeals for non-prosecution without passing a speaking order on merits.
The Tribunal observed that dismissal of appeals without examining the issues on merits is unsustainable, particularly where substantial additions were made by estimating wages and without pointing out specific defects in books. In the interest of justice, the ITAT restored the matters to the CIT(A)/NFAC with a direction to grant one final opportunity to the Assessee to substantiate her claims and decide the issues as per fact and law. Both appeals were allowed for statistical purposes
FULL TEXT OF THE ORDER OF ITAT PUNE
