ORDER SHEET GA NO.1179 OF 2016 WITH ITAT NO.148 OF 2016 IN HIGH COURT AT CALCUTTA SPECIAL JURISDICTION(INCOME-TAX) ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOME TAX-4, KOLKATA Versus M/S. EASTERN METEC PRIVATE LIMITED BEFORE: Hon'ble JUSTICE ANIRUDDHA BOSE Hon'ble JUSTICE PROTIK PRAKASH BANERJEE Date : 23rd October, 2017. MS.SMITA DAS DE, ADVOCATE FOR APPELLANT MR.BHASKAR SENGUPTA, ADVOCATE FOR RESPONDENT Court : This appeal by Revenue involves question of disallowance of certain expenses of engineering concern for assessment year 2009-10. assessee claimed sum of Rs.3,65,37,340/- on account of job work, site expenses and transportation charges as deductible expenses. assessing officer, however, restricted claim to 70% of aforesaid sum. assessing officer found:- 6.2. In P & L account, assessee claimed expenses on job work of Rs.1,48,55,401/- out of which assessee has shown outstanding liability of Rs.1,22,29,153/-. A/R was asked to furnish details of such outstanding liabilities of job work. On examination of details furnished it is seen that these expenses are mainly related to consumables, food, lodging 2 etc for different customer sites. A/R was asked to produce supporting bills and vouchers of said expenses. A/R produced some bills and vouchers. On verification of those vouchers it is found that roughly 30% of outstanding expenses are properly vouched. Regarding balance 70% expenses, neither A/R could produce bills and vouchers nor filed any satisfactory explanation. On appeal by assessee, Commissioner held:- Appeal on ground no.3 is against disallowance of Rs.23968850/- being 70% of expenses from job work site expenses and transportation charges. A.O. found that assessee has claimed Rs.3,65,37,340/- as outstanding liability on job work, site expenses transportation charges. A.O. asked for supporting documents for such expenses. Further, A.O. has given his finding that since 30% of outstanding expenses are properly vouched and details filed for 70% of expenses were not satisfactorily explained, therefore, A.O. disallowed 70% of such not fully explained provision for expenses. During appellate proceeding A.R. has submitted that assessee has to incur various expenses at various sites by taking casual labour and deploying local resources. A.R. has further submitted that it may not be possible all time to get proper bills from such casual 3 labourers. I have considered A.O s finding and submission made by A.R.. I agree with A.Os finding that all expenses are not duly supported by proper details and documents. But at same time A.R s submission cannot be ignored that when assessee is getting work done by casual labourers it may not be possible all time to get paka receipt from them. Keeping in view finding of A.O. and assessee s submission I find that disallowance of 70% of not properly vouched expenses is excessive in nature. In fact, this disallowance is on basis of estimate basis only. In my opinion such disallowances should be restricted to 10% instead of 70%. Thus, assessee s appeal on this ground is partly allowed. Tribunal sustained Commissioner s order, against which Revenue has invoked appellate jurisdiction of this court under Section 260A of Income Tax Act, 1961. Main argument of Ms. Das De, learned counsel for Revenue is that there is no basis for further lowering allowable expenditure and thereby restricting disallowance to 10% by Commissioner. Having heard learned counsel for Revenue, we admit appeal on following ground, which in our opinion involves substantial question of law:- 4 Whether finding of Tribunal was perverse and without any material to restrict disallowance to 10% of expenses of Rs.2,33,93,067/-debited to profit and loss account ? We have gone through assessment order, decision of Commissioner and that of Tribunal. We do not find any material on basis of which Commissioner had restricted disallowance to 10%, overriding assessing officer s computation. Tribunal, we find, has also not addressed this issue. This exercise appears to have been done on basis of guesswork. We accordingly set aside decision of Tribunal and remand matter to Tribunal for decision afresh on this issue. assessee, however, shall be entitled to produce further documents before Tribunal justifying its claim. As assessment year involved is 2009-10, we request Tribunal to conclude proceeding within period of six months from date of communication of this decision. appeal and connected application are allowed in above terms. (ANIRUDDHA BOSE, J.) (PROTIK PRAKASH BANERJEE, J.) sb. Principal Commissioner of Income-tax-4, Kolkata v. Eastern Metec Private Limited