Case Law Details
R.S. Pabbla Constructions Pvt Ltd Vs DCIT (ITAT Visakhapatnam)
ITAT Visakhapatnam held that addition towards unexplained labour credits sustained as assessee failed to discharge the onus casted on it and failed to produce material evidence with respect to labour payments and material payments.
Facts- The assessee is engaged in the business of executing contract work relating to construction of chimneys, overhead reservoirs, cooling towers, buildings and high rise structures of various plants across the country.
The case was selected for scrutiny. During the pendency of scrutiny proceedings, a survey u/sec. 133A was conducted in the assessee’s premises. During the course of survey, the Managing Director of the company Sri R.S. Pabbla admitted that certain credits outstanding in the books are bogus and fictitious and offered additional income of Rs. 1.51 crores for the A.Y. 2013-14 and Rs. 3.60 crores for A.Y. 2014-15 in the sworn deposition given by him.
During the scrutiny proceedings, the AO called upon the assessee to substantiate the claim of sundry creditors to the tune of Rs. 6.46 crores shown as outstanding as on 31/03/2013 in its balance sheet. AO also noted that the assessee failed to adduce primary evidence in support of the existence of some of such credit liabilities. As a result, an amount of Rs. 1,61,61,069/- was added to the total income, after excluding the opening balance and liability claimed towards sub-contractors. The AO also made an addition of Rs. 24,15,012/- by way of disallowance u/sec. 40(a)(ia). Similarly for the A.Y. 2014-15 certain additions amounting to Rs. 6,98,71,035/- were made towards unexplained labour credits. It is also noted that the assessee failed to produce confirmation letters from both labour and material contractors.
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