Kothuri Subbaraju, Rajahmundry V. THE ACIT, Rajahmundry

ITA 213/VIZ/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8909 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-02-2017
• Assessment Year: misc
• Appeal Filed On: 29-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K DEVA RATNA KUMAR
• Section: 143(3); 263

Judgement Text

ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.198/VIZAG/2014 ( / ASSESSMENT YEAR: 2001-02) KOTHURI SUBBARAJU, RAJAHMUNDRY [PAN NO.AERPK2584G] ACIT, CIRCLE - 1, RAJAHMUNDRY ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NOS.213&214/VIZAG/2015 ( / ASSESSMENT YEAR: 2009-10 & 2010-11) KOTHURI SUBBARAJU, RAJAHMUNDRY ACIT, CIRCLE - 1, RAJAHMUNDRY ( % / APPELLANT) ( & '% / RESPONDENT) ./I.T.A.NO.169/VIZAG/2015 ( / ASSESSMENT YEAR: 2010-11) ACIT, CIRCLE - 2(1), RAJAHMUNDRY KOTHURI SUBBARAJU, RAJAHMUNDRY ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.243/VIZAG/2015 ( / ASSESSMENT YEAR: 2009-10) ACIT, CIRCLE - 1(1), RAJAHMUNDRY KOTHURI SUBBARAJU, RAJAHMUNDRY ( % / APPELLANT) ( &'% / RESPONDENT) ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 2 / APPELLANT BY : SHRI K. DEVA RATNAKUMAR, DR & SHRI M.N. MURTHY NAIK, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 19.04.2017 / DATE OF PRONOUNCEMENT : 28.04.2017 / O R D E R PER SHRI G. MANJUNATHA, ACCOUNTANT MEMBER: THESE CROSS APPEALS FILED BY THE ASSESSEE, AS WELL AS THE REVENUE ARE DIRECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE CIT(A), VISAKHAPATNAM FOR THE ASSESSMENT YEARS 2001-02, 200 9-10 & 2010-11. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMO N, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OFF, BY WAY OF THIS COM MON ORDER. ITA 198/VIZAG/2014: 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 ON 31.10.2001 DECLARING TOTAL INCOME OF RS.13,16,100/- . THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER CALLED AS THE ACT) ON 29.3.2004 DETERMINING THE T OTAL 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 ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 3 CERTAIN RELIEF VIDE ORDER DATED 25.10.2004, AS A RE SULT, THE TOTAL INCOME WAS REVISED TO RS.29,31,605/-. ON FURTHER APPEAL B EFORE THE ITAT, THE ITAT HAS SET ASIDE THE ISSUE OF CREDITOR TO THE FIL E 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 C ONSIDERING 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 R S.80,49,868/- INTER- ALIA 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 A SSESSEE HAS FILED WRITTEN SUBMISSION ON 2.7.2013. THE ASSESSEE FURTH ER SUBMITTED THAT THE A.O. WAS ERRED IN MAKING ADDITIONS OF RS.50,48, 070/- TOWARDS UNPROVED CREDITS WHEN INCOME IS ESTIMATED FROM CONT RACT RECEIPTS. THE ASSESSEE FURTHER SUBMITTED THAT IN THE FIRST ROUND OF LITIGATION, THE LD. CIT(A) HAD DELETED ADDITIONS MADE BY THE A.O. TOWAR DS UNPROVED CREDITS AFTER CONSIDERING CONFIRMATION LETTER FILED BY THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE REMAND REPORT ISSUED BY THE A.O., WHEREIN ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 4 THE A.O. HAS ACCEPTED ALL CREDITORS ARE TRADE CREDI TS AND THE ASSESSEE HAS FILED NECESSARY EVIDENCES TO PROVE GENUINENESS OF CREDITORS. THE CIT(A) AFTER CONSIDERING THE RELEVANT SUBMISSIONS O F THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE ORDERS OF ITAT, OBSERVE D THAT THE ASSESSEE FAILED TO FURNISH NECESSARY EVIDENCES TO PROVE THE CREDITS AS TRADE CREDITORS FOR WHICH THE ITAT HAD SET ASIDE THE ISSU E TO THE A.O. FOR FURTHER VERIFICATION. THOUGH, THE ASSESSEE HAS FUR NISHED 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 INFORMA TION/EVIDENCE TO CLARIFY THE NATURE OF CREDIT TRANSACTION, WHICH WAS REQUIRED TO BE SUBMITTED AND EXAMINED AS PER THE ORDER OF THE ITAT , OPINED THAT THE ASSESSING OFFICER IS JUSTIFIED IN MAKING THE IMPUGN ED ADDITION OF RS.50,48,070/-. IN SO FAR AS ADDITION TOWARDS HIRE CHARGES, IT IS SEEN THAT THIS ITEM OF RECEIPT IS SHOWN IN THE PROFIT & LOSS ACCOUNT APART FROM CONTRACT RECEIPTS AND ALSO FACT THAT THE ASSESSEE D ID NOT CLARIFY THAT THIS ITEM SO RECEIVED WAS ALSO DERIVED FROM THE CONTRACT BUSINESS, THE A.O. WAS RIGHT IN MAKING ADDITION TOWARDS HIRE CHARGES. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE LOWER AUTHORITIES ARE NOT CORRECT IN MAKING ADDITIONS WITHOUT GIVING PROPER OPPORTUNITY TO ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 5 THE ASSESSEE BEFORE COMPLETING THE ASSESSMENT. THE A.R. FURTHER SUBMITTED THAT THE A.O. WAS ERRED IN TREATING THE I MPUGNED ADDITION OF RS.50,48,070/- AS CASH CREDITS, DESPITE THE FACT TH AT THE ASSESSEE HAS FURNISHED NECESSARY EVIDENCES TO PROVE THAT THOSE C REDITS ARE TRADE CREDITS. THE A.R. FURTHER SUBMITTED THAT AS A MATT ER OF FACT, THE ALLEGED CONFIRMATION LETTER FROM THE TRADE CREDITORS ARE SU BMITTED LONG AGO BEFORE THE ASSISTANT COMMISSIONER OF INCOME TAX, CI RCLE-1, RAJAHMUNDRY DURING THE REMAND PROCEEDINGS AND THE A SSESSING OFFICER HAVING SATISFIED WITH THE EVIDENCES FILED BY THE AS SESSEE ACCEPTED CREDITS AS TRADE CREDITS. THE A.R. FURTHER SUBMITT ED THAT WHEN INCOME IS ESTIMATED FROM CONTRACT RECEIPTS, THE A.O. WAS ERRE D IN MAKING SEPARATE ADDITIONS TOWARDS TRADE CREDITS EVEN THOUGH THE HON BLE ITAT HAS SET ASIDE THE ISSUE FOR THE LIMITED PURPOSE OF ASCERTAI NING 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 CRED ITS ARE PROVED AS TRADE CREDITS, THE A.O. IS DIRECTED TO DELETE ADDITIONS M ADE TOWARDS TRADE CREDITORS. IT IS FURTHER SUBMITTED THAT WHEN THE A SSESSEE HAS FURNISHED ALL THE EVIDENCES WHICH PROVES THE CREDITORS ARE TR ADE CREDITS, THE A.O. WAS ERRED IN TRAVELLING BEYOND THE SPECIFIC DIRECTI ON OF THE ITAT TO CONFIRM THE ADDITIONS AND THEREFORE, THE ADDITIONS MADE BY THE A.O. ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 6 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 MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FACTUAL MATRIX WHICH LEADS TO THE ADDITION ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS ESTIMATED INCO ME FROM CONTRACT RECEIPTS AND MADE SEPARATE ADDITIONS TOWARDS TRADE CREDITORS ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE CR EDITORS WITH NECESSARY EVIDENCES. ACCORDING TO THE A.O., THE AS SESSEE FAILED TO FILE CONFIRMATION LETTER FROM THE PARTIES TO PROVE THE I DENTITY 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 E XPENDITURE 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 ASSE SSEE FURTHER CONTENDED THAT EVEN ON MERITS, THE CIT(A) GAVE A CA TEGORICAL FINDING THAT THE ASSESSEE HAS FILED CONFIRMATION LETTER FRO M 7 OUT OF 9 CREDITORS AND THE REMAINING TWO CREDITORS HAS FILED LEDGER EX TRACT PROVING SETTLEMENT OF SUCH CREDITS IN THE NEXT FINANCIAL YE AR. BASED ON SUCH ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 7 INFORMATION, THE CIT(A) CAME TO THE CONCLUSION THAT THE ASSESSEE HAS PROVED THE GENUINENESS OF CREDITS AND HENCE NO ADDI TION IS REQUIRED. 6. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATER IAL ON RECORD, WE FIND THAT IN THE FIRST ROUND OF LITIGATION, THE LD. CIT(A) HAS OBSERVED THAT WHEN THE INCOME OF THE ASSESSEE IS ESTIMATED, NO SEPARATE ADDITION TOWARDS UNPROVED TRADE CREDITORS IS CONSIDERED NECE SSARY. EVEN ON MERITS, THE CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS FILED CONFIRMATION LETTER FROM 7 CREDITORS OUT OF 9 CREDITORS. IN CASE OF REMAINING TWO CREDITORS, THE CIT(A) OBSERVED THAT T HE ASSESSEE HAS FILED NECESSARY LEDGER EXTRACT PROVING SETTLEMENT OF CRED ITS BY MAKING PAYMENT IN THE SUBSEQUENT FINANCIAL YEAR AND HENCE OBSERVED THAT THE CREDITS ARE GENUINE. WE FURTHER OBSERVED THAT THE I TAT, WHILE SETTING ASIDE THE ISSUE TO THE FILE OF THE CIT(A) OBSERVED THAT THE CASE OF THE A.O. IS THAT THE ASSESSEE HAS FAILED TO PROVE THAT THESE CREDITS REPRESENT TRADE CREDITORS, WHEREAS THE LD. CIT(A) HAS PROCEED ED ON THE ASSUMPTION THAT THEY ARE TRADE CREDITORS. HOWEVER, ON MISCELLANEOUS PETITION FILED BY THE ASSESSEE, THE ITAT HAS MODIFI ED ITS ORDER AND DIRECTED THE A.O. TO VERIFY THE ISSUE WITH REGARD T O THE NATURE OF CREDITS. IN CASE THE CREDITORS ARE TRADE CREDITORS, DIRECTED THE A.O. TO DELETE THE IMPUGNED ADDITIONS. ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 8 7. THE ASSESSEE CLAIMS THAT THESE CREDITORS ARE ARI SED OUT OF PURCHASES AS WELL AS SERVICES RENDERED BY THE PARTI ES WHICH WERE SETTLED IN THE NORMAL COURSE OF BUSINESS IN THE SUBSEQUENT FINANCIAL YEAR. THE ASSESSEE HAS FILED NECESSARY CONFIRMATION LETTERS A LONG WITH PROOF OF IDENTITY OF THE CREDITORS AND ALSO FILED LEDGER EXT RACT OF NEXT FINANCIAL YEAR EVIDENCING PAYMENT OF CREDITORS. ON VERIFICAT ION OF THE DETAILS FILED BY THE ASSESSEE, WE FIND THAT THE CREDITORS HAVE FI LED A CONFIRMATION LETTER INDICATING THE NATURE OF TRANSACTIONS AND AL SO AMOUNT OUTSTANDING AS ON THE DATE. WE FURTHER OBSERVED THAT THE ASSESS EE HAS FILED A LEDGER EXTRACT OF CREDITORS EVIDENCING THE PAYMENT OF CREDITS IN SUBSEQUENT FINANCIAL YEARS. ON FURTHER VERIFICATIO N OF THE LEDGER ACCOUNTS FILED BY THE ASSESSEE, WE NOTICED THAT MOS T 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 NECE SSARY EVIDENCES AND AS PER WHICH THESE CREDITORS ARE ARISED OUT OF PURC HASES AS WELL AS RENDERING SERVICES. EVEN OTHERWISE, THE IMPUGNED A DDITIONS CANNOT BE SUSTAINED FOR THE REASON THAT ONCE INCOME IS ESTIMA TED, 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) WITHO UT APPRECIATING THE FACTS SIMPLY UPHELD THE ADDITIONS MADE BY THE A.O. TOWARDS IMPUGNED ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 9 TRADE CREDITORS, HENCE, WE DIRECT THE A.O. TO DELET E ADDITIONS MADE TOWARDS IMPUGNED CREDITORS. 8. THE NEXT ISSUE CHALLENGED BY THE ASSESSEE IS ADD ITIONS TOWARDS HIRE CHARGES. THE A.O. MADE ADDITIONS OF RS.70,140 /- TOWARDS HIRE CHARGES. THE ASSESSEE CLAIMS THAT ONCE INCOME IS E STIMATED FROM TOTAL RECEIPTS, HIRE CHARGES ALSO SHOULD BE CONSIDERED FO R 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 F AILED TO CLARIFY THAT THE ITEM OF RECEIPT WAS ALSO DERIVED FROM THE CONTR ACT BUSINESS. IN THE ABSENCE OF SUCH CLARIFICATION, THE A.O. WAS RIGHT I N MAKING ADDITIONS TOWARDS HIRE CHARGES. THE CIT(A) AFTER CONSIDERING THE RELEVANT SUBMISSIONS HAS RIGHTLY UPHELD THE ADDITIONS MADE B Y THE A.O. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A). HEN CE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT GROUND RAISED BY THE ASSESSEE. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ITA 169, 213, 214 & 243/VIZAG/2015: 10. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS, FILED R ETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 AND 2010-11 DECLARING TOTAL INCOME OF RS.1,07,39,500/- AND RS.61,42,790/- RESPECTIVELY. THE ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10 WAS INITIALLY COMPLETED U/S 143(3) OF THE ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 10 ACT, ON 30.3.2011 DETERMINING THE TOTAL INCOME AT R S.1,55,79,310/-. SUBSEQUENTLY, THE CIT, RAJAHMUNDRY VIDE HIS ORDER U /S 263 OF THE ACT, DATED 22.3.2013 SET ASIDE THE ORDER DATED 30.3.2011 AND DIRECTED THE A.O. TO VERIFY CERTAIN ISSUES AND COMPLETE THE ASSE SSMENT. THE A.O. ACCORDINGLY, INITIATED ASSESSMENT PROCEEDINGS AND A FTER EXAMINING THE ISSUES, COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 263 OF THE ACT DETERMINING THE TOTAL INCOME OF RS.1,97,29,749/-, B Y DISALLOWING, CERTAIN EXPENSES TOWARDS OIL AND DIESEL EXPENSES, ROLLER CH ARGES, MACHINERY MAINTENANCE AND ALSO ESTIMATED 2% NET PROFIT FROM S UB CONTRACT PAYMENTS. SIMILARLY, THE ASSESSMENT FOR THE ASSESS MENT YEAR 2010-11 WAS COMPLETED U/S 143(3) OF THE ACT, ON 27.2.2013 D ETERMINING THE TOTAL INCOME OF RS.1,00,16,700/-, WHEREIN THE A.O. HAS ES TIMATED INCOME FROM 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 A SSESSEE HAS CHALLENGED THE ADDITIONS MADE BY THE A.O. TOWARDS D ISALLOWANCE OF CERTAIN EXPENDITURE ON ADHOC BASIS AND ALSO ESTIMAT ION OF INCOME ON SUB CONTRACT PAYMENTS. THE ASSESSEE FURTHER SUBMITTED THAT ALL THE EXPENSES WERE PROPERLY VOUCHED AND THERE IS NO JUST IFICATION OF DISALLOWANCE OF ANY EXPENDITURE. THE ASSESSEE FURT HER SUBMITTED THAT WITH REGARD TO THE SUB CONTRACT PAYMENTS, ALL THE P AYMENTS ARE MADE ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 11 FOR EXECUTING WORKS SUCH AS DRILLING WORKS, GENERAT OR CHARGES, GROUTING CHARGES, REVETMENT WORKS, BLASTING CHARGES, ETC. AN D ALL THE EXPENSES ARE SUPPORTED BY PROPER BILLS AND VOUCHERS, THEREFO RE, THE A.O. WAS ERRED IN ESTIMATION OF NET PROFIT ON EXPENDITURE IN CURRED TOWARDS EXECUTION OF WORKS CONTRACT. IN SO FAR AS ASSESSME NT YEAR 2010-11, THE ASSESSEE SUBMITTED THAT THE A.O. WAS ERRED IN ESTIM ATING NET PROFIT OF 6% ON GROSS CONTRACT RECEIPTS IGNORING THE FACT THA T ALL THE EXPENDITURE DEBITED TO P&L ACCOUNT IS SUPPORTED BY BILLS AND VO UCHERS. THE ASSESSEE FURTHER CONTENDED THAT THE INCOME ESTIMATE D BY THE A.O. WAS ON HIGHER SIDE WHEN COMPARED TO THE NATURE OF CONTR ACTS EXECUTED. 12. THE CIT(A) AFTER CONSIDERING THE RELEVANT SUBMI SSIONS OF THE ASSESSEE, OBSERVED THAT ADMITTEDLY SOME OF THE VOUC HERS WERE SELF- MADE AND COULD NOT BE CROSS VERIFIED. AS MOST OF T HE WORKS HAVE BEEN SUB CONTRACTED, THE CLAIM OF HUGE EXPENDITURE UNDER DIESEL AND OIL IS IN DOUBT AND THE ASSESSEE FAILED TO SUBSTANTIATE THE C ONSUMPTION OR THE USE IN ITS WORKS. AS REGARDS THE SUB CONTRACT PAYM ENT, THE ASSESSEE FAILED TO SUBMIT ALL THE RELEVANT DETAILS. THEREFO RE, 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 ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 12 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 B EFORE US. 13. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION FROM BOTH THE APPEALS IS ESTIMATION OF NET PROFIT FROM BUSINESS. THE A.O. HAS ESTIMATED NET PROFIT FROM BUSINESS FOR BOTH THE ASS ESSMENT YEARS. IN ADDITION TO ESTIMATION OF NET PROFIT, MADE CERTAIN ADHOC DISALLOWANCE TOWARDS EXPENDITURE ON THE GROUND THAT THE ASSESSEE HAS FAILED TO JUSTIFY THE EXPENDITURE WITH NECESSARY BILLS AND VO UCHERS. THE A.O. ALSO MADE SEPARATE ESTIMATION TOWARDS SUB CONTRACT PAYME NTS. THE CIT(A) AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE DIRECTED THE A.O. TO ESTIMATE NET PROFIT OF 6% NET OF ALL DEDUCT IONS FOR THE ASSESSMENT YEAR 2009-10 AND 5% NET OF ALL DEDUCTION S FOR THE ASSESSMENT YEAR 2010-11. THE FACTS REMAINS UNCHANG ED. THE ASSESSEE, AS WELL AS THE REVENUE FAILS TO BRING ON RECORD ANY EVIDENCES TO PROVE THE FINDINGS OF FACTS RECORDED BY THE CIT( A) IS INCORRECT. THEREFORE, WE UPHOLD THE FINDINGS OF THE CIT(A) AND REJECT THE GROUND RAISED BY THE ASSESSEE AS WELL AS THE REVENUE. 14. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM A.Y. 2010- 11 IS ADDITIONS TOWARDS BANK INTEREST UNDER THE HEA D INCOME FROM OTHER ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 13 SOURCES. THE A.O. MADE SEPARATE ADDITIONS TOWARDS BANK INTEREST ON THE GROUND THAT EARNING OF INTEREST FROM BANK DEPOS ITS IS NOTHING TO DO WITH ESTIMATION OF INCOME FROM CONTRACT BUSINESS. THE ASSESSEE CLAIMS THAT ONCE INCOME IS ESTIMATED FROM CONTRACT RECEIPT S, SEPARATE ADDITIONS CANNOT BE MADE TOWARDS INTEREST INCOME. WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT E ARNING OF INTEREST ON BANK DEPOSITS IS NOTHING TO DO WITH ASSESSEES BUSI NESS. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. WAS RIGHT IN MAKING S EPARATE ADDITIONS TOWARDS INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE CIT(A) AFTER CONSIDERING RELEVANT FACTS AND ALS O BY FOLLOWING THE DECISION OF ITAT, IN THE CASE OF M/S. K. VENKATA RA JU IN ITA NO.312/VIZAG/2008 DATED 3.5.2013 UPHOLD THE ADDITIO NS MADE BY THE A.O. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE C IT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE. 15. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E AND THE APPEALS FILED BY THE REVENUE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 28 TH APR17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER ITA NO.198/VIZAG/2014 & ITA NOS.169, 213, 214&243/V IZAG/2015 KOTHURI SUBBARAJU, RAJAHMUNDRY 14 # /VISAKHAPATNAM: ' /DATED : 28.04.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SRI KOTHURI SUBBARAJU, D.NO.79-7 -4, OFFICIAL COLONY, SYAMALA NAGAR, RAJAHMUNDRY 2. / THE APPELLANT THE ACIT, CIRCLE-2(1), RAJAHMUND RY 3. / THE APPELLANT THE ACIT, CIRCLE-1(1), RAJAHMUND RY 4. / THE RESPONDENT THE ACIT, CIRCLE-1, RAJAHMUNDRY 5. + / THE CIT, RAJAHMUNDRY 6. + ( ) / THE CIT (A), RAJAHMUNDRY 7. # . , . , # / DR, ITAT, VISAKHAPATNAM 8 . / GUARD FILE / BY ORDER // TRUE COPY //