TaxTMI 
TaxTMI 
2016 (9) TMI 1325
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.... section 145(3) of the Income Tax Act, 1961, hereinafter referred as "Act". 3. That in the facts and circumstances of the case and in law the Ld. CIT(A) erred in estimating income of appellant @ 8% by applying section 44AD of the Act. 4. That in the facts and circumstances of the case and in law the Ld. CIT(A) erred in upholding that onus to produce the sub contractors before Ld Assessing Officer is on the Appellant. 5. That in the facts and circumstances of the case and in law the Ld. CIT(A) erred in observing that the appellant failed to furnish any cogent materials/evidence to controvert finding of the Assessing Officer." 2. The brief facts of the case are that the assessee company is engaged in the business of electro-mechanical and civil engineering contractor and carried out the erection of Extra High Voltage Overhead transmission lines, installation of underground EHV power cables, Microbe and telecom towers, repair and maintenance of EHV transmission and distribution equipments for electrification. The assessee filed its return of income on 01.12.2003, declaring total income of Rs. 16,79,304/- which comprises the business income at Rs. 9,43,295/- and income from ....
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....aul, Bihar. Rs. 4,27,856/- for excavation and concrete. 7) Shri S. Soman, SS Sadanam, Mulhalakullam, P.O. Kollam, Kerala. Rs. 5,02,594/- Survey Work. 8) Sri K. Girisham Pillai, Kizakkepaiavilia, PO Nedunagolam, Distt Koilam, Kerala Rs. 68,600/- excavation and concrete. 9) M/s Solar Engg. Pvt. Ltd, B-56, Sector-14, Noida - Rs. 3,88,700/- excavation and concrete. 10) M/s R.K. Constructions, Palloo, Rawaisar, distt : Hanuman Garh, Rajasthan Rs. 4,37,903/- excavation and concrete. 11) Jai Maruti Constructions, Ram Nagar, Mangalpuri, Kankarkhera, Meerut. Rs. 3,86,926/-excavation and concrete. Out of the above parties, the notices sent to S. Soman, Solar Engg., and Jai Maruti were returned back with the remarks "Not traceable". Only M/s H.P. Sharma & Associates confirmed the transaction vide his letter dated 25.9.2005. Since the notice sent to above parties were returned back and no response was received from the remaining parties for whom the payments had been claimed, the AO issued a letter dated 15.12.2005 to the assessee for justifying the same and to produce evidence to prove the impugned expenditure. 3. Thereafter confirmations were received from four parties M/s INFOZI....
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....ssee is in these appeals before the Tribunal. For the sake of convenience, we first take up quantum appeal. 4. During the course of hearing, the ld. Counsel for the assessee submitted that the rejection of accounts, made by the authorities below is not justified as the AO has failed to point out any specific defect in the maintenance of books, as per section 145(3) of the Act. Simply because some of the contractors did not respond to the notices of AO, the expenditure made cannot be disbelieved, particularly when complete books of accounts along with relevant vouchers were produced before the AO. It was further submitted that the ld. Authorities below have failed to consider the explanation of assessee that provisions of section 44AD are not applicable in the present case, because the appellant company is neither an eligible assessee nor doing eligible business as contemplated u/s. 44AD of the Act. It is an admitted fact that the turnover of the assessee company exceeds Rs. 40 lacs and books of accounts maintained by assessee duly audited, were produced before the ld. Assessing Officer, which were examined on test check basis and no defects were been pointed out. Reliance is place....
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....owever, as to the correctness and completeness of accounts maintained by the assessee, the main objection of the Revenue has been that the expenditures debited by assessee in its profit and loss accounts towards payments to various sub-contractors, were not found open for verification. Such expenditures were found to have been made both through account payee cheques/DDs as well as in cash. The Assessing Officer had made deep investigations to verify the impugned expenditures by issuing summons u/s. 133(6) and 131 of the Act and also afforded several opportunities to the assessee, but no confirmations regarding the work done by five parties noted above certifying the receipt of payments from assessee, could be produced before the Assessing Officer. It is no doubt true that mere lack of response by the parties to whom payments are said to have been made by assessee, cannot be taken to be a sole ground for rejection of books of accounts and making best judgment assessment u/s. 144 as held in various decisions relied by assessee, but once the assessee was required time and again, informing the result of investigation, to furnish the confirmations of the parties to justify the impugned ....