Appeal partially allowed, CIT(A) order confirmed on salaries/wages disallowance. Revenue appeals allowed for stats, remitted for fresh consideration.

The Tribunal partly allowed the appeal, sustaining a minor addition and confirming the CIT(A)'s order on the disallowance of salaries and wages. The Revenue's appeals were allowed for statistical purposes, remitting the issues back to the AO for fresh consideration. The judgment was pronounced on 16th May 2014.

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Issues Involved:
1. Rejection of books of account and estimation of income.
2. Addition made under Section 41(2) and depreciation on dozers and tippers.
3. Deletion of addition of Rs. 77,61,781 as balance outstanding.
4. Restriction of disallowance under the head 'salaries & wages'.

Issue-wise Detailed Analysis:

1. Rejection of Books of Account and Estimation of Income:
The Assessing Officer (AO) rejected the books of account of the assessee due to the failure to produce all bills and vouchers, estimating the income at 12.5% of gross contract receipts. The CIT(A) disagreed, stating that the rejection was unjustified without pointing out specific deficiencies. The Tribunal noted that the AO had no option but to reject unverifiable books but remitted the issue back to the AO, directing to give the assessee another opportunity to produce the requisite bills and vouchers. If the assessee fails again, the AO can estimate the income following the Tribunal's decision in C. Eswar Reddy's case.

2. Addition Made Under Section 41(2) and Depreciation on Dozers and Tippers:
The Tribunal noted that the issue of depreciation did not require adjudication due to findings in previous paragraphs. However, the assessee's claim under Section 41(2) was allowed as it did not fall under Sections 30 to 38 and was not written off, confirming the CIT(A)'s order on this issue.

3. Deletion of Addition of Rs. 77,61,781 as Balance Outstanding:
The AO added Rs. 2,60,72,866 towards diesel purchases, which was reduced by the CIT(A) after verifying payments and confirming the genuineness of transactions. The Tribunal sustained an addition of Rs. 6 lakhs due to the unavailability of bills, rejecting the AO's basis of outstanding balance as a reason for disallowance.

4. Restriction of Disallowance Under the Head 'Salaries & Wages':
The AO disallowed 5% of the salaries and wages claimed by the assessee, amounting to Rs. 28,41,605. The CIT(A) reduced this disallowance to Rs. 5 lakhs, considering the nature of the assessee's work and the impracticality of obtaining third-party evidence for wage payments. The Tribunal confirmed the CIT(A)'s order as reasonable and justified.

Conclusion:
The Tribunal allowed the Revenue's appeals in ITA No. 305/Hyd/2010 and ITA Nos. 1313 to 1315/Hyd/2013 for statistical purposes, remitting the issues back to the AO for fresh consideration. The appeal in ITA No. 1143/Hyd/2009 was partly allowed, sustaining a minor addition and confirming the CIT(A)'s order on salaries and wages disallowance. The judgment was pronounced in the open court on 16th May 2014.

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