TMI Blog2011 (8) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... by his own admission your appellant received all materials from the contractee and your appellant not defied none of the provisions of Section 144 of the I.T. Act, 1961. 3. That from the facts and circumstances of the case, the Ld. C.I.T. (Appeal) Jalpaiguri. has erred by not verifying the written submission for low profit from scrutiny case record that the appellant firm executing work at their native village where their own house so as houses of their kins were submerging by erosion of river ganga. The sub contract under taken by the firm contained much more emotional issue nothing to make profit. 4. That from the facts and circumstances of the case the Ld. C.I.T. (Appeal) Jalpaiguri, has erred by upholding the order of Addl. Commissioner of Income Tax, Jalpaiguri of the additions made on the interest on performance guarantee against the work as an income other than income from business. 2. Grounds No. 1 to 3 are against rejection of books of account by invoking provisions of sec. 145 of the Act and thereby estimating the net profit at ₹ 6,81,496/- by applying rate of 4% on the total turnover as against net profit declared by the assessee at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained comprehensive site-wise registers showing inflow and outflow of inputs and no unified stock register was possible to be maintained. In this connection, the learned counsel referred to copies of work order procured by the assessee during the assessment year under consideration placed at pages 27 to 146 of the paper book. He has also filed details of purchases made during the year at page 154 of the paper book and related copies of ledger accounts of various suppliers of such materials used for its execution of contract works at different sites at pages 155 to 172 of the paper book. The learned counsel further submitted that the assessee had incurred considerable labour expenses in the execution of the contract work and month-wise details of such expenses are filed at page 173 of the paper book. In respect of wages/labour charges paid to labourers at different sites, copies of ledger account of such expenses have been filed at pages 174 to 193 of the paper book. In regard to the allegation of thumb impression of laborers made by the A.O., the ld. counsel submitted that about 22 or 23% of the labourers signed their names while others failed because of illiteracy. He further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such expenses was doubtful and actual profit on the basis of such unverifiable nature of expenses cannot be arrived at. He, therefore, submitted that in such circumstances, the A.O. has rightly rejected the trading results shown by the assessee by invoking provisions of sec. 145 of the Act as the books of account were not properly maintained with supporting evidence and thereby estimating the fair and reasonable profit at 4% of the turnover declared by the assessee. He further submitted that the ld. C.I.T.(A) after considering all the details and evidences on record and taking into consideration the comparable cases has rightly upheld the estimate of net profit at 4%, which should be upheld. 5. We have heard the parties and perused the orders of the authorities below. We have also gone through the papers filed in the paper book of the assessee. The reasons/shortfalls as stated by the A.O. for rejecting the books of account of the assessee are summarized as under :- a) No stock register for material purchased and distributed is maintained. a) Although the assessee maintains labour register/muster roll, but this register only contains the names of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no evidence before the A.O. to verify the distribution/utilization of such materials inasmuch as the assessee has not given site-wise consumption of materials. Further, Labour payments of ₹ 85,38,760/- form part of a major head in the trading/P L Account considering the gross bill received to the tune of ₹ 1,70,37,407/-. The details produced by the assessee in support of payments to the labourers are only the names of such labourers and most of these are backed by thumb impressions. Further, number of labours deployed site-wise is not ascertained from such details of labour charges and the A.O. has thus doubted the correctness of such labour payments. Similarly in respect of carrying charges of ₹ 16,37,590/- for transporting materials, it is not disputed that most of the debit vouchers are self-made and signed by the employees of the assessee and there was no quantitative details of materials carried by different mode of transportation. In respect of other expenses, the same were documented by self-made vouchers prepared by the employees without any supporting bills. Therefore, in our considered opinion, the A.O. was having reasons for his dissatisfacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccrued on such guarantee money was claimed as business income. Whether the income accruing on such deposit would constitute business income stands answered by the decisions of Hon ble Supreme Court in the cases of CIT vs. Bokaro Steel Ltd. [236 ITR 315 (SC)] and CIT vs. Karnal Co-operative Sugar Mills Ltd. [243 ITR 2 (SC)], which were followed by Hon ble Delhi High Court in the cases of CIT vs. Koshika Telecom Ltd. [287 ITR 479 (Del)] and in a recent decision in the case of CIT vs. Jaypee DSC Ventures Ltd. [(2011) 335 ITR 132 (Del)], wherein it was held that deposits of margin money by the assessee with the banks was inextricably linked to the furnishing of the bank guarantee by the assessee and, therefore, income from interest on deposits constitutes business income and not income from other sources. Respectfully following the above decisions, we are of the view that interest income of ₹ 61,622/- is to be treated as icome rom business. Since we have already directed the A.O. to adopt the rate of net profit at 2% on gross contractual receipts of the assessee as its business income, in our opinion, no separate addition of ₹ 61,622/- is required. 7. In the resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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