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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 ..... ion made on the ground that this item of receipt is shown in the profit & loss account apart from contract receipts and also fact that the assessee did not clarify that this item so received was also derived from the contract business - Held that: - the assessee has failed to clarify that the item of receipt was also derived from the contract business. In the absence of such clarification, the A.O. was right in making additions towards hire charges. Disallowance of certain expenditure - oil and diesel expenses - roller charges - machinery maintenance - estimation of income on sub contract payment - Held that: - As most of the works have been sub contracted, the claim of huge expenditure under diesel and oil is in doubt and the assessee failed to substantiate the consumption or the use in its works. As regards the sub contract payment, the assessee failed to submit all the relevant details. Therefore, taking into account, the various discrepancies noticed, directed the A.O. to estimate net profit of 6% on gross contract receipts net of all deductions and directed the A.O. to re-compute the total income. - In so far as assessment year 2010-11, considering the totality of the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see further submitted that the A.O. was erred in making additions of ₹ 50,48,070/- towards unproved credits when income is estimated from contract receipts. The assessee further submitted that in the first round of litigation, the Ld. CIT(A) had deleted additions made by the A.O. towards unproved credits after considering confirmation letter filed by the assessee and also taken into account the remand report issued by the A.O., wherein the A.O. has accepted all creditors are trade credits and the assessee has filed necessary evidences to prove genuineness of creditors. The CIT(A) after considering the relevant submissions of the assessee and also taken into account the orders of ITAT, observed that the assessee failed to furnish necessary evidences to prove the credits as trade creditors for which the ITAT had set aside the issue to the A.O. for further verification. Though, the assessee has furnished certified ledger extract of the parties, failed to file independent confirmation letter from the parties to prove creditors are trade creditors, but not cash credits. Thus, as the assessee failed to provide any information/evidence to clarify the nature of credit transaction, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t during the course of assessment proceedings, the A.O. has estimated income from contract receipts and made separate additions towards trade creditors on the ground that the assessee has failed to prove the creditors with necessary evidences. According to the A.O., the assessee failed to file confirmation letter from the parties to prove the identity and genuineness of the creditors. It is the contention of the assessee that once income is estimated from contract receipts, no additions can be made towards trade creditors. The assessee further contended that once income is estimated, it is presumed that all expenditure including purchases have been deemed to be allowed as genuine and once the purchases have been treated as genuine, the credit arised out of such purchases cannot be treated as ingenuine. The assessee further contended that even on merits, the CIT(A) gave a categorical finding that the assessee has filed confirmation letter from 7 out of 9 creditors and the remaining two creditors has filed ledger extract proving settlement of such credits in the next financial year. Based on such information, the CIT(A) came to the conclusion that the assessee has proved the genuinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the reason that once income is estimated, no additions can be made towards trade creditors which is arised out of such purchases. Therefore, we are of the view that the CIT(A) without appreciating the facts simply upheld the additions made by the A.O. towards impugned trade creditors, hence, we direct the A.O. to delete additions made towards impugned creditors. 8. The next issue challenged by the assessee is additions towards hire charges. The A.O. made additions of ₹ 70,140/- towards hire charges. The assessee claims that once income is estimated from total receipts, hire charges also should be considered for the purpose of estimation of income. We do not find any merits in the arguments of the assessee for the reason that the assessee has failed to clarify that the item of receipt was also derived from the contract business. In the absence of such clarification, the A.O. was right in making additions towards hire charges. The CIT(A) after considering the relevant submissions has rightly upheld the additions made by the A.O. We do not find any error in the order of the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject ground raised by the assessee. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by bills and vouchers. The assessee further contended that the income estimated by the A.O. was on higher side when compared to the nature of contracts executed. 12. The CIT(A) after considering the relevant submissions of the assessee, observed that admittedly some of the vouchers were selfmade and could not be cross verified. As most of the works have been sub contracted, the claim of huge expenditure under diesel and oil is in doubt and the assessee failed to substantiate the consumption or the use in its works. As regards the sub contract payment, the assessee failed to submit all the relevant details. Therefore, taking into account, the various discrepancies noticed, directed the A.O. to estimate net profit of 6% on gross contract receipts net of all deductions and directed the A.O. to re-compute the total income. In so far as assessment year 2010-11, considering the totality of the facts and circumstances, the CIT(A) directed the A.O. to estimate net profit of 5% on total sub contract receipts. In so far as income from other sources, the CIT(A) confirmed additions made by the A.O. Aggrieved by the CIT(A) order, the assessee as well as the revenue are in appeal before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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