AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 1276
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....nted money into the books of accounts. 3. In the facts and circumstances of the case, whether the ld.CIT(A) is correct in deleting the addition towards STCG without appreciating the fact that if the value of the shares deserves such a huge price, it is not clear why the earlier company has sold these shares at a meagre price of Rs.10/-." 3. The brief facts of the case are that the assessee e-filed its return of income for the assessment year under consideration on 30.10.2017 admitting loss of Rs. 52,14,82,099/-. Subsequently, the case of the assessee was selected for scrutiny under CASS and notices u/s 143(2) and 142(1) of the Act were issued to the assessee from time to time. The submissions were made by the assessee in response to the above notices. After considering the submissions made by the assessee, the Assessing Officer completed the assessment interalia making additions of Rs. 21,24,00,000/-, Rs. 8,91,35,102/- and Rs. 116,04,55,413/- on account of settlement rights, non-explanation of short term capital gains and excess receipts from contract works, respectively, u/s 68 of the Act. Thereafter, the Assessing Officer passed assessment order on 31.12.2019 u/s 143(....
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.... the ledger extracts of the appellant in its books were not submitted before the AO. After verification of the submissions made by the appellant, the Assessing Officer considered the explanation furnished by the appellant as not satisfactory and without any documentary evidences and considered the actual work done to the extent of Rs. 14,65,65,865/- only and worked out the estimated profit at 8% on the work of Rs. 14,65,65,865/- which came at Rs. 1,27,44,857/-. Hence, the Assessing Officer anticipated that the appellant should have received an amount of Rs. 15,93,10,722/- (Rs 14,65,65,865/- + Rs. 1,27,44,857/-) only instead of Rs. 131,97,66,135/- and accordingly, treated the excess receipt of Rs. 116,04,55,413/- (Rs. 131,97,66,135/- less Rs. 15,93,10,722/-) as unexplained cash credits u/s 68 of the Act. The first issue and the primary issue is to consider the amount received by M/ so MEIL under section 68 of the Income Tax Act, 1961. It is seen that while passing the assessment order, everything has been considered u/s 68 by the Assessing Officer with regard to the additions made. In all the three cases of addition, the appellant has offered the whole quantum in the books ....
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.... details of the primary work order received by MEIL, and also the details of the work orders given to LEPL projects limited out of the primary work order received by it, are mentioned. The details of Tax deducted by Megha Engineering are also furnished. 4.2. As seen from the information filed by the assessee, though it appears to be the assessee proved the identity, creditworthiness and genuineness of the transaction, alternatively, the discussion made by the AO at the last para of Page No. 7 and first para of page No.8 in the Assessment Order towards the addition of unexplained expenditure u/s.69C of the IT Act may also be considered." The Assessing Officer has agreed that the appellant has proved the identity, creditworthiness and genuineness of the transactions with M/s MEIL. Since the Assessing Officer found the contention of the appellant that the addition of Rs. 116,04,55,413/- cannot be made u/s 68 of the Act, to be genuine in the remand report, no further comments on the said addition u/s 68 of the Act are required to be made. Therefore, the said addition cannot be sustained u/ s 68 of the Act. The next issue raised in the remand report is regardi....
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....d the appellant's submissions and has been reproduced above. As the appellant has given the breakup during re-mend proceedings as additional evidence and there is no adverse inference drawn by the AO with regard to the above and also the same forms the part of the remand report as enclosures to the same. It seems that the AO in the assessment order had made a passing remark without any proper findings and has made a sweeping remark that they don't pertain to this construction business in a single line without any basis and while in the remand report the veracity of the segment wise breakup of expenditure was not doubted. Thus, as the AO has not doubted or objected to the bifurcation of expenses submitted by the appellant during remand proceedings in principle, there is no basis to presume the idea of unexplained expenditure. It is also important to note that the percentage of net profit is almost close to 16%, than what adopted by the AO of 8% in the assessment order. The AO in the assessment proceedings had only considered direct expenditure without considering the other expenses in the P&L account and further, has connoted that the work has been done but....
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....e above paragraphs. It is also seen from the history of the case that the scrutiny u/ s 143(3) and after that u/s 153A for AY 2014-15 and 2016-17 was completed without any addition and accepting the returned loss and in the scrutiny for AY 2015-16 u/s 143(3), there were certain disallowances made with regard to the expenditure debited by the appellant and the assessment was completed without any initiation of penalty proceedings and subsequently u/s 153A, no further additions were made. The proceedings for AY 2018-19 and AY 2019-20 u/s 153A were completed at NIL by making no additions. Keeping in view the factual discussion above, accordingly grounds no. 7(a) relating to the said quantum, 8 & 9 of the appeal are allowed. The ground no. 11 & 13 addresses all the three additions made by the AO u/s 68, each of the additions have already been separately adjudicated in the favour of the appellant. Therefore, these grounds are not separately adjudicated. Ground no. 12 is related to invocation of section 115BBE on the above additions made by the Assessing Officer u/s 68 of the Act. Since the above additions are deleted u/s 68 of the Act, the invocation ....
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....00,270/- in carrying out construction work wherein he incurred expenditure of Rs. 14,65,65,865/- only. No prudent business man can give an amount of Rs. 131 for any work the cost of which will be Rs. 14,65,65,865/-. Hence earning such a huge profit of Rs. 117,32,00,270/- being 88.89% of the total receipts of Rs. 131,97,66,135/- is beyond human comprehension. The actual profit at the rate of 8% on this work of Rs. 14,65,65,865/- works out to Rs. 1,27,44,857/-. Hence, assessee should have received an amount of Rs. 15,93,10,722/- whereas the assessee received an amount of Rs. 131,97,66,135/-. In spite of giving opportunities, the assessee has not produced any evidence explaining the strange situation. Hence, the excess receipt of (-) has to be treated as unaccounted cash credit u/s.68 of the IT Act in the books of accounts of the assessee. Alternatively, in the normal course of contract works, the profit margin will be 12%. However, the assessee got the works on a sub-contract basis where in the profit margin will be at the most 8%. Moreover, most of these works are allotted to the M/s.Mega Engineering & Infrastructures Limited, Hyderabad by Govt. of Telangana, Govt of Andhra....
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.... compared with the documents submitted by the assessee and the profit and loss account, then it is clear that the books of accounts submitted by the assessee and considered by the ld.CIT(A) are not matching with replies and submissions filed before the Assessing Officer and therefore, it was submitted that the action on the part of the Assessing Officer is correct. 10. Per contra, ld. AR has submitted that the basic issue raised by the Assessing Officer was with respect to addition u/s 68 of the Act. It was submitted that once the Assessing Officer in the remand report had satisfied himself with the identity, creditworthiness and genuineness of M/s. MIEL, then the ld.CIT(A) has rightly dropped the proceedings u/s 68 of the Act. Further, it was submitted that for the purpose of making the alternative addition u/s 69C of the Act, it is required to prove that there was unexplained expenditure incurred by the assessee. It was submitted that the expenditure incurred by the assessee were forming part of the profit and loss account of the assessee in the consolidated financial statements given and reproduced here in above in the submissions of the ld. DR. Further, the expenditure may n....
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....state projects carried out by LEPL Projects was Excavation of Hard Rock for Laying of Pipe Line and Closer of the opened stretch with Suitable soil and Construction of Culverts in Different Irrigation projects on subcontract basis. The work related expense of Rs. 14, 65, 65,865 is direct expenditure incurred incidental to business. Apart from this, other expenses such as Salaries, Travelling, Transport, and Fuel charges etc are incurred. TDS of 2% was deducted by Contractor on the income. Same is claimed as per the Form 26AS submitted to your perusal." 11.4 The Assessing Officer had also issued a letter dt. 24.12.2019 to M/s MEIL and called for the details. In response thereto, MEIL filed the details of the work allotted to LEPL Projects Ltd. and the works contract agreements but had not furnished the ledger extracts of the assessee in the books of M/s.MEIL. 11.5 Thereafter, the Assessing Officer considering the reply of the assessee had treated the amount of Rs. 1,16,04,55,413/- as excess receipts and treated as unexplained cash credit u/s 68 of the Act in the books of accounts. The findings of the Assessing Officer vide page 7 of its order is to the following effec....
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....arges 38.12 0 16.86 54.98 5 Finance Charges 0 1.28 12.77 14.05 6 Depreciation 18.26 5.33 0.17 23.76 7 Other expenses 192.87 1.91 19.23 214.01 Total 367.88 9.77 109.11 486.76 11.8 The ld.CIT(A) for the reasons best known to him has not examined the details of the expenditure given by the assessee in appellate proceedings with the details of the expenditure filed before the Assessing Officer along with ledger. The ld.CIT(A) has wrongly considered that Rs. 109.11 crores were spent towards the contract value of Rs. 1,31,97,66,135/-. In our view, the above said finding of the ld.CIT(A) is contrary to record. 11.9 The assessee in its reply dt. 03.04.2019 had mentioned that during the year, company has incurred lease rentals of Rs. 54,97,59,539/- towards aircrafts leasing and also incurred fuel expenses of Rs. 113,09,79,932/-. Quite contrary to the above, the reply given before the Assessing Officer, it was wrongly submitted by the assessee before the ld.CIT(A) that instead of spending Rs. 54,97,59,539/-, the assessee has spent only Rs. 38.12 crores towards the aircraft leasing. Similarly, fue....
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....r aircraft business and the other business, the finance cost of Rs. 15,34,12,570/- whereas the entire finance cost for the other business had now been allocated to the construction business of the assessee. Further, the assessee has not given the details of the equipment which were financed and for which the assessee had paid the finance charges. 11.12 Similarly, the assessee had claimed Rs. 16.81 crores as expenses incurred towards salary and wages of contract works. In our view, this figure is not supported by any document. The details of the salary paid, the names of the employees working for the contract had not been provided to the Assessing Officer. In fact, the employees' expenses for the year ending as on 31.03.2016 was Rs. 70,12,23,921/- and as against that the salary / employee benefit expenses for the year ending as on 31.03.2017 was Rs. 52,21,01,421/-. Thus, the employee expenditure for the year under consideration is far less than the previous year. However, during this year the assessee had additionally undertaken the new construction activities, therefore, the necessary corollary would be that there would be increase in the employee cost. No such details have been....
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...."You may furnish exact details of work given to M/s. LEPL Projects Limited. You may furnish the ledger extracts of M/s. LEPL Projects Limited in your books of account for the F.Y. 2015-16, 2016-17 & 2017- 18. How much profit margin you have admitted on these works given on subcontract to M/s. LEPL projects." 11.15 In response thereto, M/s. MEIL had only filed the details of the work allotted to LEPL but no ledger extract of the assessee in the books of MEIL have been given and further, no details of the profit margin admitted by MEIL on the works given on sub-contract to the assessee was also given. 11.16 The assessee had filed submissions before the ld.CIT(A) and the ld.CIT(A) had called upon the remand report from the Assessing Officer. The submissions of the assessee were captured by the ld.CIT(A) in his order in Paragraphs 13 to 16, which is to the following effect : 11.17 Before the ld.CIT(A), the assessee filed written submissions. The ld. AR had drawn our attention to paragraphs 13 to 16, which is to the following effect : - left intentionally - 11.18 The above said submission of the assessee, if compared with the reply submitted by M/s. MEIL which is....
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....work for Kaleswara Sundilla at Sl.No.5 was allocated by MEIL on 16.12.2016 for a sum of Rs. 8,07,53,975/- and the assessee ironically had raised the running bill of Rs. 8,00,01,05/- on 31.01.2017, 28.02.2017 and 31.03.2017. We fail to understand how the bills can be raised within a gap of 43 days after the receipt of the work order for a huge amount. Similarly, in the case of the work order No. MEIL/MBNR/1178/WO/ 2544/16-17 at Sl.No.14, was given on 20.12.2016 and the assessee after receipt of the work order, within 40 days, has raised a huge bill of Rs. 6 crore out of total work value of Rs. 6,47,53,425/-. The only inference we can draw from the above said analysis of the work contracts and the running bills is that either the bills were raised without any work done by the assessee or after doing negligible work and the amount was paid by MEIL to the assessee. There is no corresponding expenditure incurred by the assessee for executing the above said projects as mentioned in the preceding paragraphs except the small sum of Rs. 14,65,65,865/-. In our opinion, when the 12 work orders were given by M/s. MEIL to the assessee, only after October, 2016, therefore, there is no occasion f....
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....rofit earned by the assessee. The ld.CIT(A) has not applied his mind and had accepted the expenditure incurred by the assessee towards the aircraft business to be expenditure of construction activity and wrongly concluded that profit of 16% is just and fair. In the development project of the State, it is highly unimaginable and impermissible to divert the funds meant for construction and irrigation projects of the government to the aircraft activities of the assessee and further, it is highly impossible to earn the huge profits which is more than 90% of the contract value. We can imagine what kind of development on paper had taken place on the above noted 14 sites since as against the cost of Rs.131 crores, Rs.14 crores only had been spent and the remaining amount was adjusted towards the expenditure of the other activities i.e., aircraft business of the assessee. In our view, the notion of earning a profit of 90% is unimaginable and in other words, is Contractual Loot under the guise of the alleged development activities. 11.23 It is correct that the assessee, in its wisdom, has disclosed the entire amount as income in the assessment year under consideration. However, we fail t....
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....ing or diversion of funds meant for development by any unscrupulous contractor. If today we decide this issue against the Revenue, by legalizing the payment merely because the contractor had submitted the confirmations of grant of contract then it would set a wrong precedent and there would not be any actual construction / development works would take place. 11.25 Since in the present case, the Revenue authorities have failed to examine the details of the work contracts awarded and the payment made by the Government which are relatable to various stages of work contract, therefore, we remit back the matter to the file of Assessing Officer for fresh examination. Needless to say while examining the matter afresh, the Assessing Officer shall take the assistance from state Government Development Agencies and other statutory enforcement agencies to find out the terms of the allotment of the contract, execution, performance, quality control etc., and whether the assessee can divert the funds meant for development to its other activities namely, aircraft / solar power business. Thereafter, considering the inputs from the State Government and other enforcement agencies the Assessing Off....
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....ine electronically in 'E-Proceeding' facility through your account in 'e-filing' website of Income Tax Department. d) Para(s) (a) to (c) are applicable if you have an account in e-filing website of such an account is created by you, assessment proceedings shall account or manually (if e-mail is not available). edings shall be carried Tax Department. Till either through your e-mail e) In cases where order has to be passed under section 153A/153C of the Income Tax Act, 1961 read with section 143(3), assessment proceedings would be conducted manually. Yours faithfully, BHARADWAJA MANNEPALLI CIRCLE 3(1),VIJAYAWADA Document 2 ANNEXURE This office has issued a notice u/s 142(1) on 19.02.2019. However no information has been received till now. You are requested to furnish the information at the earliest. BHARADWAJA MANNEPALLI CIRCLE 3(1), VIJAYAWADA (In case the document is digitally signed please refer Digital Signature at the bottom of the page) Document 3 INCOMETAX DEPARTMEN GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 3(1), VIJAYA....
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.... Produce the bank statements of all bank accounts and books of accounts. 10. Details of cash deposited during the demonetization period. 11. Furnish depreciation schedule and also furnish invoices if there are any additions to the assets. 12. Furnish the details of GP and NP for the year endings 31.03.2015. 31.03.2016 and 31.03.2017. 13. Please furnish the details of all the other sources of income of Rs.36,14,78,892/- 14. Details of foreign inward remittances and foreign outward remittances and the reasons for the same. 15. Furnish the complete details of tax deducted by the company and to clarify whether the entire amount was remitted to the central government. Also furnish the details of payments on which tax was not deducted and the details of disallowances made by the company u/s 40(a)(ia) of the IT Act. 16. Details of investments/advances made by the company and sources for the same. 17. Details of income from house property. In this context reconcile the income from house property as admitted by you with the receipts as appearing in 26AS. 18. Details of foreign exchange loss and the details for the same. BHARADWAJA MANNEPALL....
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....xpenses of Rs.214,00,72,632/- along with ledger extracts. Reply: Please find below the details of Other Expenses:- S.No Nature of Expense 1. Solar Project Maintenance Charges 2. Solar Project insurance Aircraft Insurance & Other Insurance 3. Amount (Rs.) 1,08,45,286 9,06,018 4,63,52,242 4. 5. Landing, Navigation and Other Airport Charges Aircraft Maintenance 6. Sales & Marketing Expenses 7. Training cost 8. 9 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. Hotel Accommodation charges In-flight and Other Pax Amenities Solar Project Expenses Rent Repairs & Maintenance IT & Communication Travelling Exp Audit Fee Business Promotion Exp Consultancy Charges Managerial Remuneration Electricity Charges 20. Interest on taxes 21. License & Taxes 22. Office Expenses 23. Loss on sale of vehicles 24. Other administrative Expenses 25. Maintenance Reserve written off Total Ledger extract of the above expenses is enclosed. (Ref Annexure-VII) 24,77,83,806 16,69,53,043 5,34,95,313 3,63,28,119 2,79,94,072 1,82,72,675....
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.... 28,57,37,265 TOTAL 99,72,56,913 1,32,66,978 10,63,493 79,11,119 1,00,36,76,265 18,83,30,151 81,53,46,113 During the year total additions to gross block are Rs. 1,43,30,471/-, Item wise details of asset additions are mentioned below:- Nature of Asset S.No Date of Amount Rs. addition 1. 30-Apr-16 External DVD writer &power cable 2,450.00 2. 30-Apr-16 HP make desktop 59,500.00 3. 31-May-16 web camera with speakers 2,000.00 4. 31-May-16 broadband modem and keyboard 2,700.00 5. ADSL Router Purchased for Broadbandline 31-May-16 of BSNL at ATO 1,750.00 6. 17-Sep-16 HP make 1TBHDD 1,53,956.00 7. 31-Oct-16 Exide make 12V battery for Server 27,000.00 8. Rack and Connector, battery and PVC 31-Oct-16 casing 1,14,300.00 9. 29-Apr-16 Plain Table 20,200.00 10. 30-Apr-16 Cot-6x5 18,000.00 11. 30-Apr-16 Foam mattress 7,000.00 12. 30-Apr-16 foam mattress 4,000.00 13. 30-Apr-16 Dining set with 4 chairs 11,000.00 14. 30-May-16 5x6 size cot 36,000.00 15. 30-May-16 Foam mattress 16,0....
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....Furnish the details of GP and NP for the year endings 31.03.2015, 31.03.2016 and 31.03.2017. Reply: Following are the details of GP and NP for the above stated periods are as follows: Particulars Gross Profit Net Profit/(Loss) For the year ending 31.03.2015 Nil (55,98,39,975) For the year ending 31.03.2016 Nil (112,35,21,200) (Note: As we are not into an Manufacturing / Trading Business - Gross Profit will be NIL) 13. Please furnish the details of all the other sources of income of Rs.36,14,78,892/-. Reply: Below are the details of Other Income. Particulars Income from settlement of rights Interest received Profit on sale of investments Gain on foreign exchange fluctuation Others Total Amount Rs. 21,24,00,000 2,29,77,349 8,91,35,102 4,28,33,358 1,33,084 36,14,78,892 For the year ending 31.03.2017 Nil (77,78,86,378) Request you to allow two weeks time to furnish balance information. Be pleased to consider the above information and oblige. Yours sincerely For LEPL Projects Limited Sd/- LVS Rajasekhar Director 1. 2. 3. Enclosures: Annexure 01: Compu....
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....jects Limited LEA ZAYAWADA L. Ramesh Director DIN: 00171927 Document 10 2 50-14-16, Cepe Hans Ravadinta Negu, Vemula CASH FLOW STATEMENT BOR THE YEAR ENDED 31st March 2011 Parties A Cash Flow from Operating Activities Profit before Tax A Duprin & Anoni Profit/Loss on sale of Find Assets I lo Expenditure Opening Pruit before Woking Capital Changes Maverweses in Working Capital D) Decrease/decrease) is Trade Receivable Decare/(c) la Stew Tesa Lans & Advance (Decrease)/acrease is Trade and other payables Cash geed from operation Tax paid Net Cach feons Operating Acts Cash Flow from lavesting Act Increase in Share Application May Pastase of Fixed Ass Sale of Fixed Assets leccase la Long TownLoad Advan Sale of Imestment beest oms Net Cash esed in investing Activities C Cash Flow from Fling Activities Vear Ended 31st March 2017 (77,71,86,380 Year Ended 31st March 2016 (1.12.15.21.200 23,75,84,074 21.1791.380 10,45,776 (2,29,77,340) 13,25,37,356 12.129. $1,10,61,536 (42,96,95423) (76,89.61,741 83,22,344 (1,36,85,27,581) 99.76,67,1....
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.... 60,00,000 37,01,906 52,80,719 42,49,811 42,13,081 25. Loss on sale of vehicles Other administrative Expenses Maintenance Reserve written off Total 10,79,760 3,37,71,318 1,32,16,82,879 214,00,72,632 Document 12 LE PL Projects Limited (Formerly Lingamaneni Estates Pvt Ltd) Lingamaneni Corporate House, #59-14-10, Ramachandra Nagar, VIJAYAWADA - 520 008. Power & Fuel - Charges Ledger Account 1-Apr-2016 to 31-Mar-2017 40 Date Particulars Vch Type Vch No. Debit Page 1 Credit 5-1-2017 Cr Nizamabad-Singoor Water Grid Works 21-1-2017 Cr AKBR Segment- NLG Works 25-1-2017 Cr Somasila Phase-1 Works Journal 105 76,64,650.00 Journal 110 62,29,015.00 Journal 112 8,16,097.00 Cr Purushothapatnam Lift Works 26-1-2017 Cr Adilabad Water Grid Works Cr Nellore WSS Project Works 30-1-2017 Cr New Kaleshwaram-Sundilla Works 31-1-2017 Cr MBNR Water Segment Works Cr New Kaleshwaram - Annaram Works Journal 113 32,24,568.00 Journal 114 9,04,020.00 Journal 115 66,36,020.00 Journal 117 15,03,650.00 Journal 120 8,23,500.00 J....
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....or the Year Ended 31st March 2017 12.76,69,289 48,68,566 80,10,967 14,05,48,823 For the Year Ended 31st March 2017 (Amount in Rs.) For the Year Ended 31st March 2016 13,42,30,838 28,30,698 1,63,51,034 15,34,12,570 (Amount in Rs.) For the Year Ended 31st March 2016 Document 14 13. During the FY 2016-17, certain civil works were awarded on contract basis to the assessee by M/s Mega Engineering & Infrastructures Ltd. (hereinafter referred to as 'MEIL') as per the following details: SI. Work order No. referenc e and date 1. MEIL/SL IS/16- 17/792 dt.16/1 0/2016 Road and Other miscellaneous works in Lift- 2 & 3 of Somasila Phase-1 Project 8,31,07,500.00 (3083) Issue of Work Order for Formation of Approach assessee Work bill no.01, 02 dt.25/02/17 and 03 dt.30/03/17 Nature of work Value of work order (in Rs.) Running bill Amount of running bill reference no. and date i (In Rs.) raised by 8,19,07,975.00 Pressure Main pipeline alignment between Yeguvaralapalli & Chaparalapalli villages, Anantha Sagaram Mandal,....
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.... 0/2016 9. MEIL/Ni zamaba d- Singoor water grid Adilabad Water Grid (4127) work order for laying of MS lines including earth. work. excavation in all types of soils & shifting of excess material, levelling of trench for laying of MS pipes and unloading, lowering, laying, joining of MS pipes, internal & external field joint coating and refilling of pipeline trenches 6,12,00,000.00 Bill no.01 dt.26/01/17, 6,12,00,000.00 02 dt.25/02/17 and 03 dt.29/03/17 Nizamabad Singoor Water 9,02,50,000.00 Grid issue of work order for laying of 1530 mm dia MS pipe, joining and Hydro testing Bill no.01 dt.05/01/17, 02 dt. 10/02/17 and 03 8,69,50,000.00 (4128)/ WO 441 dt. 10/1 0/2016 10. W.O./M EIL/War angal- Paleru (4125)/ 330/201 6-17 - Warangal Paleru issue of 12,03,62,500.00 work order for earth work excavation and blasting in hard rock for levelling of site for WTP and construction of drains CC roads and retaining wall dt.25/03/17 gis Bill no.01 dt.28/01/17, 11,90,98,625.00 02 dt.27/02/17 and 0....
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.... "Real Estate and Construction 16. Nature of Real Estate projects carried out by LEPL Projects was Excavation of Hard Rock for Laying of Pipe Line and Closer of the opened stretch with Suitable soil and Construction of Culverts in Different Irrigation projects on subcontract basis The work related expense of Rs. 14, 65, 65,865 is direct expenditure incurred incidental to business. Apart from this, other expenses such as Salaries, Travelling, Transport, and Fuel charges etc are incurred. TDS of 2% was deducted by Contractor on the income. Same is claimed as per the Form 26AS submitted to your perusal." The Id. AO appears to have enquired with MEIL regarding the above income receipts of the assessee from contract works awarded by it to the assessee, yet, did not made any adverse comments on the same. Document 17 13. In the case of the Appellant, the Learned Assessing Officer, had in spite of the establishment of the three ingredients as mandated by the Standard Procedure, ignored the fulfilment of the required elements and went on to make additions based on suspicion and surmise. The Learned Assessing Officer was nursing unfounded su....
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.... (Rupees One hundred Thirty-One Crores Ninety-Seven Lakhs Sixty-Six thousand One Hundred and Thirty-Five Only). (d) The Appellant had received the contracted receipts from the MEIL through proper banking channels. Document 19 (e) Relevant confirmation from the MEIL was obtained by the Leal Assessing Officer regarding this receipt of money. (f) There is no dispute on this receipt of money and this receipt is admi in the assessment order. (g) The said amount representing the contracted price is credited to Profit & Loss Account of the Appellant for the relevant financial year (h) Therefore, the said receipt does not represent a "bogus" receipt. genuineness of the receipt is established. Therefore, the Appellant had established all the three fundamen requirements required of him under the said Standard Procedure, for amounts credited in the books of account - viz., (1) identity of the credit ( 2) creditworthiness of the creditor; and (3) genuineness of the transactio Contract expenditure referred is not the total expenditure 15. It is submitted that the expenditure considered by the Learned Assessi Officer is not the tot....
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.... 6.30 13 Nalgonda Water Grid - formation of approach roads for HILL Areas and laying of 1030 mm Diameter pipeline 18.37 Approximate Total value of the contracts in Crores 134.64 A detailed list of the above contracts is included in the statement of facts. The contracts are for laying various pipes and for earth work at several places specified by the main contractor. The material to be used, i.e., pipes to be laid underground, was supplied by MEIL, the main contractor. The Appellant had to perform the entire work entrusted using the material supplied. The majority segment of the work performed is excavation of all kinds of soil including hard rock and partly RCC work at the pumphouse. Apart from such material received, the Appellant had incurred other expenditure towards wages, hire charges, finance costs and other administrative expenses. These costs form part of the separate heads of accounts included in the Profit and Loss Account. The contract is labour oriented and nearly 45% of the cost of the contract is towards labour wages only. Such expenditure towards wages and the costs form part of the expenditure incurred und....