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These are appeals by the Revenue for assessment years 2005-06 and 2006-07 and cross objection by the assessee for A.Y. 2005-06. Since common issues are involved, these appeals were heard together and are disposed of by this common order.

2. The assessee is in the business of civil, mining, marine and specialist engineering and construction activity. For the asst. year 2005-06, the assessee declared loss at `3,99,75,980/-. For asst. year 2006-07, the assessee declared loss of `21,44,28,218/-. The A.O., in the scrutiny M/s. ITD Cementation India Ltd.

The A.O., in the course of scrutiny, asked for various details from the assessee. The A.O. noticed that there are huge losses incurred by the assessee and the losses cannot be accepted as the projects undertaken by the assessee were having escalation clause. Since the assessee has not M/s. ITD Cementation India Ltd.

furnished complete details in various questionnaires issued and has not reconciled the gross receipts with reference to TDS certificates and in the course of scrutiny some of the notices under section133(6) were not responded and on the reasoning that the assessee has not produced stock register and stock details in spite of repeated requests, the A.O. was of the opinion that the assessee's books of account cannot be relied. The A.O. discussed these issues from page 2 to page 11 of his assessment order as to why he has considered these issues for rejecting the books of account. Before the CIT(A), the assessee contended that the assessee was not given sufficient opportunities of hearing and that the assessee was also suffering from difficulties inasmuch as the records pertaining to the year under consideration were destroyed in water logging during July 2005 and further the issue relating to the increase in cost and expenses was only raised on 4- 12-2007 and time given was short considering the volume and nature of business coupled with the nature of projects undertaken during the year. The details furnished by the assessee were sent on remand to the A.O. who submitted his report vide letter dated 06.03.2009. The findings of the A.O. in the remand report are summarized by the CIT(A) as under: -

M/s. ITD Cementation India Ltd.

The said report was provided to the assessee who furnished detailed explanations including the copies of the bills, vouchers & ledger copies, which were extracted by the CIT(A) in para 3.3.3 of his order. Afterwards, the CIT(A) considered the detailed submissions of the A.R. and objections raised in the remand report and gave the following finding ( some of the paras are extracted for brevity):

Losses from the projects:
ITD Cementation India Limited Assessment year : 2005-06 Projectwise profit and loss earned during the F Y 2004-05 Turnover Loss Job code (` in lakhs) (` in lakhs) B2805 3,137 (1,733) B2806 2,769 (1,641) AA011 8,093 (540) AA014 7,029 (168) Total Road Project 21,029 (4,082) Non Road Projects 29,149 2,804 Grand Total 50,177 (1,278) M/s. ITD Cementation India Ltd.