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TMI Blog2017 (5) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... ') on 29.3.2004 determining the total income of Rs. 82,97,940/-. Aggrieved by the assessment order, the assessee carried the matter in appeal before the CIT(A) and the CIT(A) granted certain relief vide order dated 25.10.2004, as a result, the total income was revised to Rs. 29,31,605/-. On further appeal before the ITAT, the ITAT has set aside the issue of creditor to the file of the A.O. for fresh verification. Consequent to findings of the ITAT, the A.O. had taken up the case for re-examination and asked the assessee to file necessary evidences to prove the creditors. The A.O. after considering the details filed by the assessee completed assessment u/s 143(3) r.w.s. 254 of the Act, on 30.12.2011 and determined total income of Rs. 80,49,868/- interalia estimating income from contract receipts at 8% on gross contract receipts and addition towards unproved creditors of Rs. 50,48,070/-. The A.O. also made a separate addition of Rs. 70,140/- towards hire charges. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee has filed written submission on 2.7.2013. The assessee further submitted that the A.O. was erred in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer having satisfied with the evidences filed by the assessee accepted credits as trade credits. The A.R. further submitted that when income is estimated from contract receipts, the A.O. was erred in making separate additions towards trade credits even though the Hon'ble ITAT has set aside the issue for the limited purpose of ascertaining the nature of credit. It was further submitted that the ITAT has given a categorical finding to the A.O. according to which, if the credits are proved as trade credits, the A.O. is directed to delete additions made towards trade creditors. It is further submitted that when the assessee has furnished all the evidences which proves the creditors are trade credits, the A.O. was erred in travelling beyond the specific direction of the ITAT to confirm the additions and therefore, the additions made by the A.O. should be deleted. On the other hand, the Ld. D.R. strongly supported the order of the CIT(A). 5. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix which leads to the addition are that during the course of assessment proceedings, the A.O. has estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 7. The assessee claims that these creditors are arised out of purchases as well as services rendered by the parties which were settled in the normal course of business in the subsequent financial year. The assessee has filed necessary confirmation letters along with proof of identity of the creditors and also filed ledger extract of next financial year evidencing payment of creditors. On verification of the details filed by the assessee, we find that the creditors have filed a confirmation letter indicating the nature of transactions and also amount outstanding as on the date. We further observed that the assessee has filed a ledger extract of creditors evidencing the payment of credits in subsequent financial years. On further verification of the ledger accounts filed by the assessee, we noticed that most of the credits have been paid by way of cheques. Therefore, we are of the view that the assessee has proved the nature of credits with necessary evidences and as per which these creditors are arised out of purchases as well as rendering services. Even otherwise, the impugned additions cannot be sustained for the reason that once income is estimated, no additions can be made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om business @ 6% on contract receipts. 11. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee has challenged the additions made by the A.O. towards disallowance of certain expenditure on adhoc basis and also estimation of income on sub contract payments. The assessee further submitted that all the expenses were properly vouched and there is no justification of disallowance of any expenditure. The assessee further submitted that with regard to the sub contract payments, all the payments are made for executing works such as drilling works, generator charges, grouting charges, revetment works, blasting charges, etc. and all the expenses are supported by proper bills and vouchers, therefore, the A.O. was erred in estimation of net profit on expenditure incurred towards execution of works contract. In so far as assessment year 2010-11, the assessee submitted that the A.O. was erred in estimating net profit of 6% on gross contract receipts ignoring the fact that all the expenditure debited to P&L account is supported by bills and vouchers. The assessee further contended that the income estimated by the A.O. was on highe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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