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2017 (5) TMI 73 - AT - Income TaxValidity of assessment order - estimation of income - additions towards unapproved creditors - hire charges - as the assessee failed to provide any information/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 impugned addition of ₹ 50,48,070/- - Held that: - the creditors have filed a confirmation letter indicating the nature of transactions and also amount outstanding as on the date - the assessee has filed a ledger extract of creditors evidencing the payment of credits in subsequent financial years - 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 towards trade creditors which is arised out of such purchases - the additions made is directed to be deleted. Hire charges - addition 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 and circumstances, the CIT(A) directed the A.O. to estimate net profit of 5% on total sub contract receipts. Appeal allowed - decided partly in favor of appellant.
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