M/s Associated Constructions,, Rajahmundry v. THE ITO, WARD-4,, Rajahmundry

ITA 347/VIZ/2013 | 2009-2010
Pronouncement Date: 27-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 34725314 RSA 2013
Assessee PAN AAGPA2543L
Bench Visakhapatnam
Appeal Number ITA 347/VIZ/2013
Duration Of Justice 3 year(s) 5 month(s) 10 day(s)
Appellant M/s Associated Constructions,, Rajahmundry
Respondent THE ITO, WARD-4,, Rajahmundry
Appeal Type Income Tax Appeal
Pronouncement Date 27-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 27-10-2016
Assessment Year 2009-2010
Appeal Filed On 17-05-2013
Judgment Text
ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM . . $ BEFORE SHRI V. DURGA RAO JUDICIAL MEMBER & SHRI G. MANJUNATHA ACCOUNTANT MEMBER ./I.T.A.NO.343/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) ITO WARD - 4 RAJAHMUNDRY VS. M/S. ASSOCIATED CONSTRUCTIONS RAJAHMUNDRY [PAN : AAGPA2543L ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.347/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) M/S. ASSOCIATED CONSTRUCTIONS RAJAHMUNDRY VS. ITO WARD - 4 RAJAHMUNDRY ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI M.K. SETHI DR / RESPONDENT BY : SHRI G.V.N. HARI AR / DATE OF HEARING : 18.10.2016 / DATE OF PRONOUNCEMENT : 27.10.2016 ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 2 / O R D E R PER G. MANJUNATHA ACCOUNTANT MEMBER: THESE CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS REVENUE ARE DIRECTED AGAINST THE ORDER OF CIT(A) V ISAKHAPATNAM DATED 15.3.2013 AND IT PERTAINS TO THE ASSESSMENT YEAR 20 09-10. SINCE THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON THEY ARE CLUBBED HEARD TOGETHER AND DISPOSED-OFF BY WAY OF THIS COMMON ORD ER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONTRACT WORK S FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30.9.2010 DECLARING NIL TOTAL INCOME. THE CASE HAS BEEN SELECTED FOR SCRUTINY UN DER CASS ACCORDINGLY NOTICE U/S 143(2) AND 142(1) OF THE INC OME TAX ACT 1961 (HEREINAFTER CALLED AS 'THE ACT') WERE ISSUED. IN RESPONSE TO NOTICES THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED ON 2.12.2011 AND PRODUCED BOOKS OF ACCOUNTS BILLS VOUCHERS BANK S TATEMENTS AND OTHER DETAILS CALLED FOR. THE ASSESSMENT WAS COMPLETED U /S 143(3) OF THE ACT ON 26.12.2011 BY MAKING THE FOLLOWING ADDITIONS: A) ADDITION TOWARDS DIFFERENCE IN CONTRACT RECEIPTS OF ` 4 59 585/- B) ADDITION TOWARDS UNVERIFIABLE EXPENDITURE OF ` 5 37 021/-. C) ADDITION TOWARDS COMPENSATION EXPENDITURE OF ` 6 96 800/-. ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 3 D) ADDITION TOWARDS UNSECURED LOANS OF ` 57 49 334/-. E) ADDITION TOWARDS CARRIED FORWARD LOSSES OF ` 16 10 821/-. F) ADDITION TOWARDS DISALLOWANCE OF INTEREST OF ` 2 90 121/-. G) ADDITION TOWARDS SUNDRY CREDITORS OF ` 70 67 338/-. 3. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE A SSESSEE HAS FILED WRITTEN SUBMISSIONS ALONG WITH ADDITIONAL EVIDENCES IN THE FORM OF CONFIRMATION LETTERS FROM UNSECURED LOANS AND SUNDR Y CREDITORS. DURING APPELLATE PROCEEDINGS THE CIT(A) FORWARDED ADDITIO NAL EVIDENCES FILED BY THE ASSESSEE TO THE A.O. FOR HIS COMMENTS. THE A.O. VIDE REMAND REPORT DATED 19.2.2013 COMMENTED EACH AND EVERY AD DITION MADE BY THE ASSESSING OFFICER AND ACCEPTED EXPLANATION WIT H REGARD TO UNSECURED LOANS AND SUNDRY CREDITORS TO THE TUNE OF ` 28 44 619/- AND REAFFIRMED THE FINDINGS OF A.O. TOWARDS OTHER ADDIT IONS. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE REMAND REPORT ISSUED BY THE A.O. CONFI RMED ADDITIONS TOWARDS DIFFERENCE IN CONTRACT RECEIPTS OF ` 4 59 585/- ADHOC DISALLOWANCE OF EXPENDITURE OF ` 5 37 021/- COMPENSATION EXPENDITURE OF ` 6 96 800/- HOWEVER DELETED ADDITIONS TOWARDS INT EREST OF ` 2 90 121/- UNSECURED LOAN OF ` 57 49 334/- AND PARTLY DELETED ADDITIONS TOWARDS SUNDRY CREDITORS OF ` 28 44 619/- OUT OF TOTAL ADDITIONS OF ` 70 67 338/-. THE CIT(A) ALSO DIRECTED THE A.O. TO EXAMINE THE BROUGHT ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 4 FORWARD LOSS CLAIM MADE BY THE ASSESSEE AND ACCORDI NGLY SET ASIDE THE ISSUE TO THE FILE OF THE A.O. FOR THE PURPOSE OF EX AMINATION. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE AS WELL AS REVENU E ARE IN APPEAL BEFORE US. 4. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM ASSESSEES APPEAL IS ADDITION TOWARDS DIFFERENCE IN CONTRACT R ECEIPT OF ` 4 59 585/-. THE A.O. MADE ADDITIONS OF ` 4 59 585/- TOWARDS DIFFERENCE IN CONTRACT RECEIPTS REPORTED BY THE ASSESSEE IN HIS BOOKS OF A CCOUNTS AND CONTRACT RECEIPTS AS PER FORM NO.26AS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THERE IS DIFFERE NCE OF ` 4 59 585/- IN RESPECT OF CONTRACT RECEIPTS ADMITTED BY THE ASSESS EE AND CONTRACT RECEIPTS AS PER FORM NO.26AS. THIS OMISSION WAS PO INTED OUT TO THE ASSESSEES AUTHORIZED REPRESENTATIVE. THE A.R. AGR EED THAT THE SAID AMOUNT WAS NOT OFFERED TO TAX AND ACCORDINGLY ACCEP TED FOR THE ADDITION VIDE ORDER SHEET NOTING DATED 6.12.2007 WHEREIN HE HAS GIVEN HIS CONSENT FOR THE ADDITION. ACCORDINGLY A.O. MADE A DDITION OF ` 4 59 585/- TOWARDS DIFFERENCE IN CONTRACT RECEIPTS. IT IS THE CONTENTION OF THE ASSESSEE THAT THE A.O. WAS ERRED IN MAKING A DDITIONS TOWARDS TOTAL CONTRACT RECEIPTS. THE A.R. FURTHER SUBMITTE D THAT THE ENTIRE CONTRACT RECEIPT IS NOT A PROFIT AND ONLY PROFIT MA RGIN HAS TO BE ESTIMATED INSTEAD OF TOTAL CONTRACT RECEIPTS. WE D O NOT FIND ANY MERITS ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 5 IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THA T THE ASSESSEE HAS FAILED TO FURNISH DETAILS OF EXPENDITURE INCURRED A GAINST SUCH CONTRACT RECEIPTS. WE FURTHER OBSERVED THAT IN THIS CASE TH E A.O. HAS DETERMINED THE NET PROFIT AS PER THE BOOKS OF ACCOUNTS MAINTAI NED BY THE ASSESSEE. THE ASSESSEE HAS CONSIDERED ALL THE EXPENDITURE IN RELATION TO CONTRACT RECEIPTS THEREFORE ALLOWING FURTHER DEDUCTIONS TOW ARDS EXPENDITURE AGAINST CONTRACT RECEIPTS WITHOUT ANY CLAIM MADE BY THE ASSESSEE AND ALSO EVIDENCE IN SUPPORT OF EXPENDITURE IS INCORREC T. THEREFORE WE ARE OF THE VIEW THAT THE A.O. WAS RIGHT IN MAKING ADDIT IONS OF ` 4 59 585/- TOWARDS DIFFERENCE IN CONTRACT RECEIPTS AND HIS ORD ER DOES NOT REQUIRE ANY INTERFERENCE. HENCE WE INCLINED TO UPHOLD THE ADDITIONS MADE BY THE A.O. TOWARDS DIFFERENCE IN CONTRACT RECEIPTS AN D REJECT THE GROUND RAISED BY THE ASSESSEE. 5. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N IS ADDITION TOWARDS ADHOC DISALLOWANCE OF CERTAIN EXPENDITURE. THE A.O. MADE DISALLOWANCE OF 10% EXPENDITURE FOR THE REASON THAT THE ASSESSEE HAS FAILED TO FURNISH NECESSARY BILLS AND VOUCHERS IN S UPPORT OF EXPENDITURES. THOUGH THE ASSESSEE FURNISHED SUPPORTING VOUCHERS IN THE FORM OF SELF- MADE VOUCHERS THE VOUCHERS MAINTAINED BY THE ASSES SEE ARE NOT SUSCEPTIBLE FOR VERIFICATION THEREFORE DISALLOWED 10% OF THE TOTAL EXPENDITURE OF ` 53 70 217/- WHICH WORKS OUT TO ` 5 37 021/-. IT IS THE ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 6 CONTENTION OF THE ASSESSEE THAT THE A.O. WAS ERRED IN DISALLOWING 10% EXPENDITURE TOWARDS LABOUR AND LIKE CHARGES WITHOUT POINTING OUT ANY SPECIFIC DEFECTS IN VOUCHERS. THE ASSESSEE FURTHER CONTENDED THAT IT HAS MAINTAINED PROPER BILLS AND VOUCHERS IN SUPPORT OF EXPENDITURE HOWEVER IN THE CASE OF LABOUR AND LIKE CHARGES SE LF-MADE VOUCHERS ARE AVAILABLE WHICH ARE VERIFIED BY THE A.O. THEREFORE THE A.O. WAS NOT CORRECT IN ADHOC DISALLOWANCE OF 10% EXPENDITURE. WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE ASSESSEE FOR THE REA SON THAT EVEN DURING APPELLATE PROCEEDINGS BEFORE CIT(A) THE ASSESSEE F AILED TO FURNISH NECESSARY BILLS AND VOUCHERS IN SUPPORT OF EXPENDIT URES. THEREFORE WE ARE OF THE VIEW THAT THE A.O. HAS RIGHTLY DISALLOWE D 10% OF TOTAL EXPENDITURE TOWARDS NON-MAINTENANCE OF PROPER BILLS AND VOUCHERS. THE CIT(A) AFTER CONSIDERING THE RELEVANT DETAILS RIGHT LY UPHELD THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY ERROR OR INFIRMI TY IN THE ORDER OF THE CIT(A) AND HENCE WE INCLINED TO UPHOLD THE CIT (A) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE. 6. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N IS ADDITION TOWARDS DISALLOWANCE OF COMPENSATION EXPENDITURE OF ` 6 96 800/-. THE A.O. DISALLOWED COMPENSATION EXPENDITURE CLAIMED BY THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HAS FAILED TO FURNISH DETAILS OF NATURE OF COMPENSATION PAID TO FARMERS. THE DETAILS FILED BY THE ASSESSEE IN THE ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 7 FORM OF CONFIRMATION LETTER FROM THE FARMERS ARE IN THE NATURE OF STEREO TYPED LETTERS WITHOUT ANY DETAILS AS TO NATURE OF C OMPENSATION PAID THE PERSON TO WHOM IT WAS PAID AND AMOUNT OF COMPENSATI ON PAID THEREFORE OPINED THAT THE ASSESSEE FAILED TO SUBST ANTIATE THE EXPENDITURE AND ACCORDINGLY MADE ADDITIONS. IT IS THE CONTENTION OF THE ASSESSEE THAT COMPENSATION PAID TO FARMERS TOWARDS FENCING AND OTHER WORKS TO SET RIGHT THE DAMAGE CAUSED TO THE FARMERS IN THE WORK SITE. THE ASSESSEE FURTHER CONTENDED THAT IT HAS FILED CO NFIRMATION LETTERS FROM THE PARTNERS IN SUPPORT OF EXPENDITURE. WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THA T THE ASSESSEE FAILED TO FILE NECESSARY EVIDENCES TO JUSTIFY THE PAYMENT OF COMPENSATION TO PARTNERS. THOUGH THE ASSESSEE FILED CONFIRMATION LETTERS FROM THE FARMERS THE CONFIRMATION LETTERS DOES NOT CONTAIN REQUIRED INFORMATION IN THE FORM OF TYPE OF COMPENSATION PAID AND AMOUNT OF COMPENSATION PAID TO FARMERS. IN THE ABSENCE OF NECESSARY EVIDE NCES TO JUSTIFY THE PAYMENT OF COMPENSATION IT IS DIFFICULT TO ACCEPT THE EXPLANATIONS OF THE ASSESSEE THAT IT HAS PAID COMPENSATION TOWARDS FENC ING AND OTHER WORKS TO SET RIGHT THE DAMAGE CAUSED TO THE FARMERS. THE CIT(A) AFTER CONSIDERING THE RELEVANT INFORMATION RIGHTLY UPHELD THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 8 THE CIT(A) AND HENCE WE INCLINED TO UPHELD CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE. 7. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N IS DISALLOWANCE OF CARRY FORWARD LOSSES OF ` 16 10 821/-. THE A.O. DENIED BENEFIT OF SET OFF OF BROUGHT FORWARD LOSSES OF ` 16 10 821/- FOR THE REASON THAT THE ASSESSEE FAILED TO FURNISH NECESSARY PROOF OF CLAIM ING OF SUCH LOSS IN THE BOOKS OF ACCOUNTS. THE A.O. FURTHER OBSERVED THAT AS PER THE NOTE LEFT IN THE STATEMENT OF COMPUTATION OF TOTAL INCOME TH E ASSESSEE CLAIMS THAT GROSS RECEIPT RECEIVABLE FROM CHITRADURGA PROJ ECT CONTRACT IS NOT TAKEN FOR CONSIDERATION WHILE COMPUTING THE ABOVE S TATEMENT AS THERE IS A DISPUTE BETWEEN THE JOINT VENTURE PARTNERS REG ARDING THE AMOUNT RECEIVABLE BY THE PARTNERS. HOWEVER IT WILL BE AC COUNTED AS AND WHEN THE DISPUTE IS SETTLED AND THE RECEIVABLE BILLS ARE RECEIVED BY US. THE A.O. FURTHER OBSERVED THAT FROM THE NOTES IN THE ST ATEMENT OF TOTAL INCOME IT IS CLEAR THAT THE ASSESSEE ITSELF HAS CO NFESSED THAT THE GROSS BILL RECEIVABLE FROM THE CHITRADURGA PROJECT WAS NO T ACCOUNTED IN THE BOOKS OF ACCOUNTS. SINCE THE ASSESSEE FAILED TO A DDUCE ANY REASONS FOR NOT ACCOUNTING THE RECEIPTS AND ALSO QUANTIFYING TH E LOSS FOR THE ASSESSMENT YEAR 2006-07 THE LOSS FOR THE ASSESSMEN T YEAR 2006-07 CANNOT BE SET OFF AGAINST THE INCOME FOR THE ASSESS MENT YEAR 2009-10. IT IS THE CONTENTION OF THE ASSESSEE THAT THE A.O. SHOULD HAVE ALLOWED ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 9 SET OFF OF BROUGHT FORWARD LOSS AGAINST CURRENT YEA R INCOME AS THE LOSS WAS NOT QUANTIFIED IN THE ASSESSMENT YEAR 2006-07 B ECAUSE OF A DISPUTE WITH JOINT VENTURE PARTNERS. SINCE THE MATTER IS PENDING BEFORE ARBITRATION THE ASSESSEE COULD NOT RECOGNIZE THE R EVENUE FOR THE ASSESSMENT YEAR 2006-07 HOWEVER THE FACT REMAINS THAT THE ASSESSEE HAS INCURRED LOSS OF ` 16 10 821/- FOR WHICH IT IS ELIGIBLE FOR SET OFF AGAINST INCOME FROM BUSINESS. 8. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATER IALS AVAILABLE ON RECORD WE FIND THAT THE ASSESSEE FAILED TO PROVE T HE EXACT NATURE OF BROUGHT FORWARD LOSS TO THE SATISFACTION OF THE ASS ESSING OFFICER SO AS TO ALLOW THE SET OFF OF LOSS AGAINST BUSINESS INCOME. AS PER THE NOTES LEFT IN THE STATEMENT OF TOTAL INCOME THE ASSESSEE ITSE LF CONFESSED THAT IT HAS NOT RECOGNISED THE SAID RECEIPTS IN THE BOOKS O F ACCOUNTS FOR THE ASSESSMENT YEAR 2006-07. THOUGH ASSESSEE ADDUCES A REASON OF DISPUTE BETWEEN JOINT VENTURE PARTNERS FAILED TO F ILE NECESSARY EVIDENCES TO PROVE THAT THE ASSESSEE HAS FULFILLED THE CONDITIONS SPECIFIED U/S 72 OF THE ACT TO ALLOW THE SET OFF O F BROUGHT FORWARD LOSSES. IN THE ABSENCE OF NECESSARY DETAILS THE A .O. HAS RIGHTLY DENIED THE SET OFF OF BROUGHT FORWARD LOSSES AGAINST INCOM E OF THE CURRENT YEAR. THE CIT(A) AFTER CONSIDERING THE RELEVANT DETAILS H AS SET ASIDE THE ISSUE TO THE FILE OF THE A.O. AND DIRECT THE A.O. TO REEX AMINE THE ISSUE IN ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 10 ACCORDANCE WITH LAW. WE DO NOT FIND ANY ERRORS OR I NFIRMITY IN THE ORDER OF THE CIT(A) AND HENCE WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE. 9. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM REVENUE APPEAL IS ADDITIONS TOWARDS UNSECURED LOANS. THE A .O. MADE ADDITIONS OF ` 57 49 334/- TOWARDS UNSECURED LOANS FOR THE REASON THAT THE ASSESSEE FAILED TO FURNISH CONFIRMATION LETTERS TO PROVE THE IDENTITY GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF THE PARTIES. DURING APPELLATE PROCEEDINGS THE ASSESSEE HAS FURN ISHED CONFIRMATION LETTERS FROM UNSECURED LOANS. THE CIT(A) FORWARDED CONFIRMATION LETTERS FILED BY THE ASSESSEE TO THE A.O. FOR HIS VERIFICAT ION. THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS HAS EXAMINED THE CONFIRMATION LETTERS FILED BY THE ASSESSEE ALONG WITH LEDGER ACCOUNT COP IES OF UNSECURED LOAN CREDITORS HAS STATED THAT THE ASSESSEE HAS FILED CO NFIRMATION LETTERS EXPLAINING THE IDENTITY GENUINENESS OF TRANSACTION S AND CREDITWORTHINESS OF THE PARTIES. THE CIT(A) AFTER CONSIDERING THE E VIDENCES FILED BY THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE REMAND REP ORT OF THE A.O. DELETED THE ADDITION TOWARDS UNSECURED LOAN. THE F ACTS REMAIN UNCHANGED. THE REVENUE FAILS TO BRING ON RECORD AN Y EVIDENCES TO PROVE THE FINDINGS OF FACTS RECORDED BY THE CIT(A)IS INCO RRECT. HENCE WE UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISE D BY THE REVENUE. ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 11 10. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION TOWARDS DISALLOWANCE OF INTEREST U/S 40(A)(IA) OF T HE ACT FOR NON- DEDUCTION OF TAX AT SOURCE ON INTEREST PAYMENTS. T HE A.O. MADE ADDITION OF ` 2 90 121/- FOR THE REASON THAT THE ASSESSEE OUGHT TO HAVE DEDUCTED TDS ON INTEREST PAYMENT BUT FAILS TO DEDU CT TDS UNDER THE PROVISIONS OF THE ACT. THE A.O. FURTHER OBSERVED T HAT THOUGH ASSESSEE CLAIMS TO HAVE SUBMITTED FORM 15G FAILED TO FILE E VIDENCES. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAS FILED FORM 1 5G WITHIN THE DUE DATE SPECIFIED UNDER THE ACT WITH THE CONCERNED COMMISSI ONER OF INCOME TAX THEREFORE THE A.O. WAS INCORRECT IN DISALLOWI NG INTEREST PAYMENTS FOR NON-DEDUCTION OF TAX AT SOURCE. THE CIT(A) DU RING APPELLATE PROCEEDINGS CALLED FOR REMAND REPORT FROM THE A.O. WHEREIN THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DE DUCTED TDS ON INTEREST PAYMENTS AND ALSO FURNISHED FORM NO.15G WI TH THE CONCERNED COMMISSIONER OF INCOME TAX WITHIN THE PRESCRIBED TI ME. THEREFORE THE ADDITION MADE TOWARDS INTEREST UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT NOT REQUIRED. THE CIT(A) AFTER CONSIDER ING THE EVIDENCES FILED BY THE ASSESSEE AND ALSO TAKEN INTO CONSIDERATION T HE REMAND REPORT OF THE A.O. DELETED ADDITIONS MADE BY THE A.O. UNDER THE PROVISIONS OF SECTION 40(A)(IA). WE DO NOT SEE ANY REASONS TO INT ERFERE WITH THE ORDER ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 12 OF CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE REVENUE. 11. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM ASSESSEE AS WELL AS REVENUES APPEAL IS ADDITIONS TOWARDS TH E SUNDRY CREDITORS. DURING THE ASSESSMENT PROCEEDINGS THE A.O. OBSERVE D THAT THE ASSESSEE HAS CLAIMED SUNDRY CREDITORS OF ` 70 67 338/-. TO ASCERTAIN THE CORRECTNESS OF CLAIM MADE BY THE ASSESSEE THE A.O. ISSUED SHOW CAUSE NOTICE AND ASKED TO FURNISH CONFIRMATION LETT ERS FROM THE CREDITORS. SINCE THE ASSESSEE FAILED TO FURNISH CONFIRMATION LETTERS FROM THE CREDITORS AND ALSO FAILED TO ESTABLISH IDENTITY GE NUINENESS AND CREDITWORTHINESS OF PARTIES MADE ADDITIONS OF ` 70 67 338/- AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. DURING A PPELLATE PROCEEDINGS THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM TH E PARTIES. THE CIT(A) FORWARDED EVIDENCES FILED BY THE ASSESSEE TO THE AS SESSING OFFICER FOR HIS VERIFICATION. THE A.O. AFTER EXAMINATION OF THE SA ID CONFIRMATION LETTERS OBSERVED THAT THE ASSESSEE HAS FILED CONFIRMATION L ETTERS TO THE EXTENT OF ` 28 44 690/- OUT OF TOTAL ADDITIONS OF ` 70 67 338/-. THE CONFIRMATION LETTERS FILED BY THE ASSESSEE FROM SHRI RAJ YUVRAJ INFRA PVT. LTD. STEEL TRPT CORPORATION VICTORY EARTH MOVERS HAVE BEEN EX AMINED WITH REFERENCE TO LEDGER ACCOUNT EXTRACT OF THE CREDITOR S AND FOUND THAT THE CONFIRMATION LETTERS FILED BY THE ASSESSEE ARE IN A GREEMENT WITH THE ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 13 LEDGER ACCOUNTS OF THE PARTIES. THE A.O. FURTHER O BSERVED THAT AFTER CAREFUL EXAMINATION OF THE SAID CONFIRMATION LETTER S IT IS FOUND THAT THE SUNDRY CREDITORS TO THE TUNE OF ` 28 44 699/- STANDS EXPLAINED. THE CIT(A) AFTER CONSIDERING THE EVIDENCES FILED BY THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE REMAND REPORT OF THE A.O. D ELETED ADDITIONS TO THE EXTENT OF ` 28 44 619/- AND CONFIRMED BALANCE BY HOLDING THAT THE ASSESSEE FAILED TO PROVE THE IDENTITY GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. 12. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT TH E ASSESSEE COULD NOT OBTAIN THE CONFIRMATION LETTERS FROM THE REMAIN ING PARTIES BEFORE CONCLUSION OF APPELLATE PROCEEDINGS EVEN AFTER THE ASSESSEE TRIED HIS BEST TO OBTAIN THE CONFIRMATION LETTERS FROM THE PA RTIES. THE A.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS FILED EVIDENCES BEF ORE THE LD. CIT TO THE EFFECT THAT IT HAS ISSUED LETTERS TO THE SUNDRY CREDITORS REQUESTING FOR CONFIRMATION LETTERS. INSPITE OF ITS BEST EFFORTS TO COLLECT THE CONFIRMATION LETTERS BEFORE THE APPELLATE PROCEEDINGS IT COULD NOT SUCCEED IN ITS EFFORT HOWEVER ON CONSISTENT FOLLOW-UP CREDITORS SUBMITTED CONFIRMATION LETTERS AFTER THE CONCLUSION OF THE AP PELLATE PROCEEDINGS THEREFORE ONE MORE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE TO FILE NECESSARY CONFIRMATION LETTERS BEFORE THE A.O. TO P ROVE THE IDENTITY GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 14 13. ON THE OTHER HAND THE LD. D.R. SUBMITTED THAT THE CIT(A) OUGHT TO HAVE SUSTAINED THE ADDITIONS IN RESPECT OF SUNDR Y CREDITORS IN FULL AS ASSESSEE INTENTIONALLY FAILED TO PRODUCE THE CONFIR MATION LETTERS/LEDGER ACCOUNT COPIES ETC. TO ESTABLISH THE GENUINENESS A ND CREDITWORTHINESS OF THE SUNDRY CREDITORS AND THEY REMAINED UNVERIFIE D EVEN AFTER REMAND REPORT. THE D.R. FURTHER SUBMITTED THAT THOUGH ASS ESSEE FILED SOME EVIDENCES IN THE FORM OF PHOTOCOPY OF POSTAL STAMP RECEIPTS ADDRESSING LETTERS TO THE SUNDRY CREDITORS REQUESTING FOR CONF IRMATION LETTERS THE ASSESSEE FAILED TO OBTAIN CONFIRMATION LETTERS EVEN BEFORE APPELLATE AUTHORITY THEREFORE THE ADDITIONS BY THE A.O. TOW ARDS SUNDRY CREDITORS SHOULD BE UPHELD. 14. HAVING HEARD BOTH THE PARTIES AND CONSIDERED TH E MATERIALS AVAILABLE ON RECORD WE FIND THAT THE CIT(A) DELETE D ` 28 44 619/- OUT OF TOTAL ADDITION OF ` 70 67 338/- BY CONSIDERING THE ADDITIONAL EVIDENCE S FILED BY THE ASSESSEE IN THE FORM OF CONFIRMATION L ETTERS FROM 3 CREDITORS AND ALSO TAKEN INTO ACCOUNT THE REMAND REPORT ISSUE D BY THE A.O. IN SO FAR AS REMAINING SUNDRY CREDITORS THE ASSESSEE HAS FILED CONFIRMATION LETTERS BEFORE US. THE ASSESSEE CONTENDED THAT IT COULD NOT OBTAIN CONFIRMATION LETTERS BEFORE COMPLETION OF APPELLATE PROCEEDINGS BEFORE FIRST APPELLATE AUTHORITY INSPITE OF ITS BEST EFFOR TS. HOWEVER THE CREDITORS FURNISHED CONFIRMATION LETTERS WHICH ARE AVAILABLE NOW THEREFORE ONE ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 15 MORE OPPORTUNITY MAY BE GIVEN TO FURNISH THE CONFIR MATION LETTER BEFORE THE A.O. WE FIND THAT THE ASSESSEE HAS FILED CONFI RMATION LETTERS IN RESPECT OF REMAINING SUNDRY CREDITORS ALONG WITH LE DGER ACCOUNT COPIES OF CREDITORS. THE ASSESSEE ALSO FILED A PROOF OF P OSTAL STAMP RECEIPTS IN SUPPORT OF HIS ARGUMENT THAT IT HAS ADDRESSED LETTE RS TO CREDITORS REQUESTING FOR CONFIRMATION LETTERS. THEREFORE WE ARE OF THE VIEW THAT THE ASSESSEE NEEDS ONE MORE OPPORTUNITY TO JUSTIFY ITS CASE BEFORE THE A.O. HENCE WE SET ASIDE THE ISSUE TO THE FILE OF THE A.O. TO EXAMINE THE CONFIRMATION LETTERS FILED BY THE ASSESSEE. ACCORD INGLY WE SET ASIDE THE ISSUE TO THE FILE OF THE A.O. AND DIRECT THE A.O. T O CONSIDER THE CONFIRMATION LETTERS FILED BY THE ASSESSEE IN ACCOR DANCE WITH LAW. IN THE RESULT THE GROUND RAISED BY THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE AND GROUND RAISED BY THE REVENUE IS REJECTE D. 15. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND APPEAL FILED BY THE REVENU E IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 27 TH OCT16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 27.10.2016 VG/SPS ITA NOS.343 & 347/VIZAG/2013 M/S. ASSOCIATED CONSTRUCTIONS RJY 16 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO WARD-4 RAJAHMUNDRY 2. / THE RESPONDENT M/S. ASSOCIATED CONSTRUCTIONS 82-4-9/3 PLOT NO.33 VIDYUT NAGAR AVA ROAD RAJAHMUNDRY 3. + / THE CIT RAJAHMUNDRY 4. + ( ) / THE CIT (A) VISAKHAPATNAM 5. # . . # / DR ITAT VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . # / ITAT VISAKHAPATNAM