2016 (2) TMI 602

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.... of Rs. 2,70,067/- was issued. The AO, thereafter, issued a notice u/s 148 of the Act after a period of four years. The assessee filed a letter requesting the AO to treat the return of income already filed as the return filed in response to the notice u/s 148 of the Act. The AO passed order u/s 144 r.w.s. 147 determining the income at Rs. 58,05,610/- by disallowing as under: a) Diesel and lubricant expenses Rs. 56,94,518 b) Penalty for short supply of material Rs. 15,000 Total Rs.57,09,518/- 2.1 The details of the issue are that the assessee received Rs. 47,86,361/- from South Central Railways, Guntakal towards contract receipts. It also received Rs. 1,47,58,896/- from Sri Sai Sreenivasa Constructions Pvt. Ltd. towards contract works....

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....o digging of earth and importing the hard soil for construction of embankment for the tanks. Number of vehicles have to be used for this purpose for quantity wise. We engage the vehicle and when we require, on daily hire basis for which vehicles, main contractor will supply the diesel and lubricate expenditure. The cost of the Diesel & Lubricants will be deducted in our payments. This expenditure was debited in our P & L Ale. The vehicle hire charges in the head account Earth works Embankment and metal collection with transport charge. 3. Books of Accounts. Books of Accounts Due to the loss incurred by me, I have shifted my family to Hyderabad from Anantapur to earn my livelihood by working with other contractors as a worker. During the....

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....imation of the income at the above said rates is clear of all the expenses and all other expenses including the depreciation if any, is deemed to have been allowed. Accordingly, the AO is directed to estimate the income." 4. As regards the disallowance of Rs. 15,000/-, the CIT(A) allowed the same. 5. Aggrieved by the order of CIT(A), the assessee is in appeal before us and has raised the following grounds of appeal: "1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous to the extent it is prejudicial to the appellant. 2. The learned Commissioner of Income-Tax (Appeals) erred in directing the Assessing Officer to estimate the income at 12.5% on the receipts from own contracts and profit at 4% on the sub-contrac....

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....at the estimation should be adopted based on the judicial pronouncements of this Tribunal at 8% and 5% on main contract and sub-contract respectively. 8. We have heard the submissions of the parties and perused the material facts on record. So far as the first issue with regard to the rate of profit in estimating the income of the assessee is concerned, the CIT (A) is of the view that income in the case of the assessee had to be estimated due to unverifiable nature of expenditure claimed which does not give the correct book results. The assessee more or less had also accepted the estimation of profit. However, the dispute is with regard to the rate at which the profit is to be estimated. We find that, in a recent decision, the Income-tax A....