DCIT, Dehradun V. Shri Naveen Kumar Agarwal, Dehradun

ITA 3136/DEL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5534 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 18-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Assessee Lawyers: MIRDEL AGGARWAL
• Keywords: Unexplained investment; Unexplained expenditure; Business expenditure; Document seized; Valuation report; Tax effect; Reason to believe; Documents seized
• Section: 143(3); 153A; 12AA; 145; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES E : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA.NO.1840/DEL./2017 ASSESSMENT YEAR 2011-2012 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. C/O. VERENDRA KAIRA & CO., CHARTERED ACCOUNTANTS, 75/7 RAJPUR ROAD, DEHRADUN 248001. UTTARAKHAND. PAN ADEPK2818H VS THE DCIT, CENTRAL CIRCLE, DEHRADUN. (APPELLANT) (RESPONDENT) ITA.NO.3136/DEL./2017 ASSESSMENT YEAR 2011-2012 THE DCIT, CENTRAL CIRCLE, GROUND FLOOR, 16A-CROSS ROAD, DEHRADUN 248 001. VS SHRI NAVIN KUMAR AGARWAL, DEHRADUN. C/O. VERENDRA KAIRA & CO., CHARTERED ACCOUNTANTS, 75/7 RAJPUR ROAD, DEHRADUN 248001. UTTARAKHAND. PAN ADEPK2818H (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI RAKESH GARG, ADVOCATE AND SHRI MIRDEL AGGARWAL, C.A. FOR REVENUE : MS. SHEFALI SWAROOP, CIT-D.R. DATE OF HEARING : 14.03.2018 DATE OF PRONOUNCEMENT : 13.04.2018 2 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. ORDER PER BHAVNESH SAINI, J.M. BOTH THE CROSS-APPEALS ARE DIRECTED AGAINST THE O RDER OF THE LD. CIT(A)-IV, KANPUR, DATED 28 TH FEBRUARY, 2017, FOR THE A.Y. 2011-2012. 2. THE ASSESSEE IN HIS APPEAL, CHALLENGED THE ADDI TION OF RS.1,26,48,849/- AND ADDITION OF RS.69,97,218/-. THE REVENUE IN ITS APPEAL CHALLENGED THE ORDER OF LD. C IT(A) IN REDUCING THE ADDITION TO RS.7,35,75,589/- FROM RS.8,62,24,238/-. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT ASSESSE E IS AN INDIVIDUAL AND DERIVING INCOME FROM BUSINESS AND OT HER SOURCES. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION WORK, MAINLY CARRYING CONSTRUCTION BUS INESS IN THE NAME AND STYLE OF M/S. GUPTA & CO. A SEARCH, UN DER SECTION 132 OF THE I.T. ACT, 1961 WAS INITIATED AND TOOK PL ACE ON 21 ST NOVEMBER, 2013, IN THE BUSINESS AND RESIDENTIAL PRE MISES OF THE ASSESSEE AT DEHRADUN AND IN CASE OF GRAPHIC ERA SOCIETY 3 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. GROUP, DEHRADUN. THE ASSESSEE FILED RETURN OF INCOM E DECLARING INCOME OF RS.13,08,540/- WHICH WAS REVISED TO RS.25 ,40,840/- UNDER SECTION 153A OF THE I.T. ACT. 3.1. DURING THE COURSE OF SEARCH, CERTAIN INCRIMIN ATING DOCUMENTS HAVE BEEN FOUND AT THE RESIDENCE OF THE A SSESSEE. DURING THE COURSE OF SEARCH PROCEEDINGS, STATEMENT OF ASSESSEE WAS RECORDED IN WHICH HE HAS ADMITTED TO HAVE CARRY ING ON CONSTRUCTION BUSINESS BEING IN HIS PERSONAL CAPACIT Y AND IN THE NAME OF HIS FAMILY MEMBERS I.E., SMT. NEELAM AGARWA L, SHRI ASHMEET AGARWAL, SHRI KARUN AGARWAL AND SHRI NAVNEE T AGARWAL, IN THE NAME OF PROPRIETARY CONCERN IN DIFF ERENT NAMES. ALL THESE PERSONS ARE ENGAGED IN THE BUSINESS OF CO NSTRUCTION WORK MAINLY CARRYING CONSTRUCTION WORK FOR M/S. GRA PHIC ERA EDUCATIONAL SOCIETY AND SHRI KAMAL GHANSHALA, PROPR IETOR OF M/S. GRAPHIC ERA. THE MAIN SOURCE OF INCOME OF ASSE SSEE AND HIS FAMILY MEMBERS IS BY WAY OF CARRYING OUT MAIN C IVIL WORK OF SHRI KAMAL GHANSHALA AND M/S. GRAPHIC ERA INSTITUTE . DURING THE COURSE OF SEARCH, NO BOOKS OF ACCOUNT OF ASSESS EE WERE 4 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. FOUND. THE ASSESSEE EXPLAINED THAT HE NEVER MAINTAI NED MUSTER ROLL OR PURCHASE REGISTER OR ANY BILLS/VOUCHERS. WH ATEVER DOCUMENTS THE ASSESSEE GOT FROM THE SUPPLIERS WERE PROVIDED TO THE CHARTERED ACCOUNTANT WHO PREPARED THE DETAIL S. THE CHARTERED ACCOUNTANT WHEN EXAMINED, ASSERTED THAT H E IS NOT IN POSSESSION OF BOOKS OF ACCOUNT OF THE ASSESSEE. HOWEVER, HE HAS EXPLAINED THAT ASSESSEE MAINTAINED CASH BOOK, L EDGER AND OTHER DETAILS ALONG WITH BANK STATEMENTS, WHICH WER E RETURNED TO THE ASSESSEE AFTER FILING OF THE RETURN OF INCOM E. DURING THE COURSE OF SEARCH, BOOKS OF ACCOUNTS WERE NOT FOUND. THE ASSESSEE WAS CONFRONTED WITH STATEMENT OF C.A. AND IN POST SEARCH INVESTIGATION ASSESSEE ADMITTED THAT NO BOOK S OF ACCOUNT ARE MAINTAINED BY HIM. THE STATEMENT OF ASS ESSEE WAS RECORDED DURING THE COURSE OF SEARCH WHICH IS REPRO DUCED IN THE ASSESSMENT ORDER IN WHICH HE HAS EXPLAINED THAT ON THE BASIS OF BILLS, BANK STATEMENT ETC., AVAILABLE WITH HIM, THE INCOME IS COMPUTED ON THAT BASIS. ON THE BASIS OF T HE SEIZED MATERIAL, A.O. ASKED FOR EXPLANATION OF ASSESSEE RE GARDING WORK DONE FOR GRAPHIC ERA SOCIETY UP TO 14.11.2010 FOR A SUM OF 5 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. RS.25,61,13,398/-, OUT OF RS.15.15 CRORES HAS BEEN RECEIVED AND RS.10.45 CRORES IS PAYABLE. THE ASSESSEE REPLIE D THAT THE WORK WAS DONE UP TO 2013. IT IS A ROUGH SLIP. THE A SSESSEE WAS NOT HAVING OTHER DETAILS. THE EXPLANATION OF ASSESS EE WAS CALLED FOR MAINTAINING BOOKS OF ACCOUNT AT THE ASSESSMENT STAGE IN WHICH HE HAS MENTIONED THAT TO PURCHASE PEACE OF MI ND, ASSESSEE IS OFFERING HIS CONTRACTUAL INCOME AT THE DEEMED RATE OF 8% OF THE GROSS RECEIPTS. THE DETAILS OF THE SAM E FROM A.YS. 2008-2009 TO 2013-2014 WAS FILED OFFERING THE INCOM E IN THESE ASSESSMENT YEARS @ 8%. THE A.O. HOWEVER, NOTED THAT THERE IS A CONTRADICTION IN THE STATEMENT OF THE ASSESSEE AN D HIS CHARTERED ACCOUNTANT REGARDING MAINTENANCE OF THE B OOKS OF ACCOUNT AND NOTED THAT IT IS EVIDENT THAT NO BOOKS OF ACCOUNT AND SUPPORTING DOCUMENTS HAVE BEEN MAINTAINED BY AS SESSEE. THE A.O. REFERRED TO THE INCRIMINATING MATERIAL IN THE ASSESSMENT ORDER. PAGE-95 OF ANNEXURE-A24 IS REFERR ED TO SHOW PARTICULAR RECEIPTS FROM THE YEAR 2005 TO 31.03.201 1 OF VARIOUS CONCERNS OF THE ASSESSEE AND HIS FAMILY MEMBERS IN A SUM OF RS.22,98,08,709/- AND IN CASE OF GUPTA & CO. IT IS 6 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. RS.17,61,91,897/- (PB-63). THE A.O. ALSO REFERRED T O OTHER DETAILS, OTHER YEARS PAPERS AND CALLED FOR EXPLANA TION OF ASSESSEE WHETHER ENTRIES MADE IN THESE PAPERS HAVE BEEN TAKEN INTO ACCOUNT IN RETURN UNDER SECTION 153A. THE ASSE SSEE EXPLAINED THAT DETAILS COULD BE VERIFIED FROM THE B ANK STATEMENT AND SUBMITTED THE DETAILS OF AMOUNT ALREADY DECLARE D IN THE ORIGINAL RETURN OF INCOME WITH GROSS TURNOVER OF AS SESSEE FROM F.YS. 2007-2008 TO 2013-2014 AND SIMILARLY, THE GRO SS RECEIPTS SURRENDERED ALONG WITH INCOME SURRENDERED AFTER THE SEARCH, THE DETAILS OF THE SAME IS NOTED AT PAGE-21 OF THE ASSESSMENT ORDER IN WHICH THE ASSESSEE DECLARED UNDISCLOSED GR OSS RECEIPTS OFFERED UNDER SECTION 153A OF THE I.T. ACT IN A SUM OF RS.32,03,17,116/-, ON WHICH, PROFIT HAVE BEEN OFFER ED @ 8%, OTHER INCOME ARE ALSO ADDED AND TOTAL INCOME IS DEC LARED FOR ALL THESE YEARS IN A SUM OF RS.3,12,71,654/-. THE NET S URRENDERED INCOME HAS BEEN RS.1,50,15,262/-. FOR ASSESSMENT Y EAR UNDER APPEAL I.E., 2011-2012, THE GROSS TURNOVER DE CLARED BY ASSESSEE IS RS.3,00,61,785/- ON WHICH PROFIT @ 8% D ECLARED AND AFTER ADDING OTHER INCOME, THE INCOME IS DECLAR ED IN THE 7 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. RETURN OF INCOME AT RS.26,22,840/-. THE A.O. THEREF ORE, NOTED THAT SINCE ASSESSEE DID NOT MAINTAINED BOOKS OF ACC OUNT, THEREFORE, PENALTY PROCEEDINGS WERE INITIATED. FURT HER, SEIZED PAPER ALSO REFERRED IN THE ASSESSMENT ORDER ON WHIC H EXPLANATION OF ASSESSEE WAS CALLED FOR WITH REGARD TO WORK AWARDED FOR CONSTRUCTION BY M/S. GRAPHIC ERA AND OT HER DETAILS MENTIONED IN THE SEIZED PAPER. THE STATEMENTS OF TH E ASSESSEE HAVE BEEN REFERRED TO BY A.O. THE A.O. THEREFORE, N OTED THAT WHATEVER EXPLANATION WAS GIVEN BY ASSESSEE AND STAT EMENT GIVEN IN SEARCH IS CONTRADICTORY AND HAS NOT BEEN S UPPORTED WITH ANY KIND OF DOCUMENTARY EVIDENCES. A PERUSAL O F THE BANK ACCOUNTS SHOWS THAT THERE WERE FREQUENT AND HEAVY C ASH WITHDRAWALS. THE ASSESSEE WAS REQUIRED TO EXPLAIN P URPOSE OF THE CASH WITHDRAWALS. THE ASSESSEE STATED THAT AMOU NT HAVE BEEN WITHDRAWN FOR BUSINESS EXPENSES. HOWEVER, IT W AS NOT SUBSTANTIATED WITH EVIDENCES OF ACTUAL BILLS OF EXP ENSES. THE ASSESSEE DECLARED PROFIT @ 8% OF RECEIPTS. THE RECE IPTS ARE TAKEN AS PER SEIZED PAPER IN REVISED COMPUTATION OF INCOM E. THE A.O. NOTED THAT ISSUE OF CASH RETURN AND BACK RECORDED ON VARIOUS 8 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. SEIZED DOCUMENTS AGAINST THE ENTRIES IS BEING EXAMI NED IN THE HANDS OF THE SOCIETY. 3.2. THE A.O. FURTHER NOTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS, PAGE-9 OF A4, WAS FOUND AND SEI ZED FROM THE RESIDENCE OF THE ASSESSEE, WHICH IS ACCOUNT STA TEMENT OF 14.11.2010, ON WHICH, CERTAIN WORKING OF RS.25,61,1 3,398/- HAVE BEEN MADE, OUT OF WHICH, A SUM OF RS.15,15,54, 956/- HAS BEEN DEDUCTED TO ARRIVE AT A FIGURE OF RS.10,45,58, 442/-. WHEN CONFRONTED DURING THE COURSE OF SEARCH, ASSESSEE RE PLIED THAT THE SLIP IS IN HIS HAND WRITING AND IS THE AMOUNT O F WORK DONE BY HIM UP TO 14.11.2010. OUT OF THE PAYMENT OF RS.2 5.61 CRORES, HE ADMITTED HAVING RECEIVED THE PAYMENT OF RS.15.15 CRORES AND FURTHER STATED THAT RS.10.45 CRORE IS BA LANCE WHICH HE HAD NOT RECEIVED TILL RECORDING OF THE STATEMENT DURING THE COURSE OF SEARCH. IT WAS FURTHER ADMITTED THAT RS.2 1,05,13,398 MENTIONED ON THAT PAPER IS THE AMOUNT AS PER MEASUR EMENT WHICH IS RELATED TO M/S. GRAPHIC ERA AND A SUM OF R S.4.56 CRORE MENTIONED BELOW AS MISCELLANEOUS EXPENSES, FOR WHIC H, NO BILLS 9 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. HAVE BEEN PREPARED. THE TOTAL AMOUNT IS RS.26,61,13 ,398/- RELATED TO THE CONSTRUCTION OF M/S. GRAPHIC ERA GRO UP WHICH HAS BEEN STRUCK-OFF AS THE TOTAL WAS WRONG. AFTER R E-CALCULATING THE SAME AMOUNT IS OF RS.25,61,13,398/-. THE SUM OF RS.15.15 CRORE IS ADVANCE PAYMENT RECEIVED FROM M/S. GRAPHIC ERA AND BALANCE IS RS.10.45 CRORES. THE SEIZED PAPER IS NOT ED AND REPRODUCED AT PAGE-34 OF THE ASSESSMENT ORDER. FURT HER, EXPLANATION OF ASSESSEE WAS CALLED FOR, IN WHICH, H E HAS STATED THAT BALANCE AMOUNT HAVE NOT BEEN RECEIVED FROM M/S . GRAPHIC ERA EDUCATIONAL SOCIETY. THE ASSESSEE FURTHER EXPLA INED THAT WORK FOR M/S. GRAPHIC ERA EDUCATIONAL SOCIETY WAS D ONE TILL MARCH, 2013. THIS SLIP CONTAINS ONLY ROUGH WORKING. THE ASSESSEE AGAIN REFERRED TO PAGE-95 OF A-24, (PB-63) TO SHOW THAT THE ASSESSEE EXECUTED WORK ALONG WITH HIS FAMILY ME MBERS FOR M/S. GRAPHIC ERA EDUCATIONAL SOCIETY TILL 31 ST MARCH, 2011 AND ACCORDING TO IT, PROPRIETARY CONCERN OF ASSESSEE GU PTA & CO. TILL 31 ST MARCH, 2011 HAS DONE THE WORK OF RS.17.61 CRORES. HE HAS, THEREFORE, SUBMITTED THAT WORK OF RS.25.61 CRORE WA S DONE TILL MARCH, 2013, WHICH ALSO MATCH WITH THE DETAILS OF R ECEIPTS OF 10 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. RS.27.77 CRORES RECORDED IN THE BOOKS OF ACCOUNT, D ETAILS OF WHICH, WERE FILED BEFORE A.O. THEREFORE, TAKING GRO SS RECEIPT OF RS.25.61 CRORE TILL 14.11.2010 IS INCORRECT AND INC ONSISTENT WITH OTHER DOCUMENTS SEIZED. THE DATE MENTIONED ON TOP OF PAGE CONTAIN SEGREGATED RECEIPT OF TWO PARTS. 3.3. THE A.O. HOWEVER, DID NOT ACCEPT THE CONTENTI ON OF ASSESSEE AND BY REFERRING TO SECTION 292C OF THE I. T. ACT, NOTED THAT SINCE THE DOCUMENTS WERE FOUND FROM THE POSSES SION OF THE ASSESSEE, IT IS PRESUMED TO BE CORRECT AND TRANSACT IONS CARRIED- OUT THOUGH SLIP PERTAINS TO HIM. STATEMENT IS AN AF TERTHOUGHT. THE A.O. HAS TAKEN THE ENTIRE GROSS RECEIPTS OF RS. 25.61 CRORES TILL 14.11.2010 AND BY CONSIDERING SHORT RECEIPTS A ND APPLYING PROFIT RATE OF 8% MADE THE ADDITION OF RS.69,96,218 /- ON ACCOUNT OF INCOME EARNED ON SUPPRESSED SALES OUTSID E THE BOOKS OF ACCOUNT. A.O. ASKED FOR SOURCE OF INVESTME NT OF RS.10.45 CRORES. IT WAS EXPLAINED M/S. GRAPHIC ERA MADE PAYMENT UPON MEASUREMENT OF WORK DONE WHICH IS RECO RDED IN THEIR BOOKS OF ACCOUNT. SO, THERE IS NO UNEXPLAINED INVESTMENT. 11 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. THE A.O. FURTHER NOTED THAT ASSESSEE HAS RECEIVED R S.15.15 CRORES FROM M/S. GRAPHIC ERA GROUP AGAINST WORK DON E OF RS.25.61 CRORES AND BALANCE AMOUNT IS RS.10.45 CROR ES. THE A.O. NOTED THAT THE AVAILABILITY OF THE SOURCE OF C APITAL OF ASSESSEE HAS BEEN FROM OWN CAPITAL, O.D. FACILITY, LOANS, SUNDRY CREDITOR IS IN SUM OF RS.1,83,34,204/- WHICH WAS RE DUCED FROM THE BALANCE AMOUNT OF RS.10.45 CRORE AND BALANCE OF RS.8,62,24,238/- WAS ADDED TO INCOME OF ASSESSEE, H AVING THE RECEIPTS AND INVESTMENTS OUTSIDE THE BOOKS OF ACCOU NT OF ASSESSEE. 4. THE ASSESSEE CHALLENGED BOTH THE ADDITIONS BEFO RE THE LD. CIT(A). THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN THE APPELLATE ORDER IN WHICH THE ASSESSEE BRIEFL Y EXPLAINED THAT ADDITIONS ARE MADE ON MERE CALCULATION ON A RO UGH PAPER AND ASSESSEE AND HIS FAMILY HAS ALREADY OFFERED GRO SS RECEIPTS AND TAXABLE INCOME FOR EACH YEAR SEPARATELY. THE A. O. HAS NOT APPRECIATED AND CONSIDERED PAGE-95 OF ANNEXURE-A-24 OF SEIZED MATERIAL WHICH EXPLAIN AMOUNT ALREADY OFFERED TO TA X. A.O. 12 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. RELIED ON ROUGH AND CRYPTIC PAPER. THE ADDITION ON ACCOUNT OF UNEXPLAINED CAPITAL DEPLOYED IS WHOLLY UNJUSTIFIED WHICH IS WITHOUT ANY BASIS OR EVIDENCE ON RECORD. THE ASSESS EE COMPLETED THE WORK UP TO MARCH, 2013 AND OFFERED TH E INCOME IN DIFFERENT YEARS WHICH HAVE BEEN ACCEPTED BY THE A.O. THE A.O. THEREFORE, SHOULD NOT HAVE BELIEVED THE ROUGH WORKING. BOTH THE SEIZED PAPERS PAGE-9 OF ANNEXURE-A4 AND PA GE-95 OF ANNEXURE-24, SHOULD BE READ TOGETHER. NO FURTHER AD DITION SHOULD HAVE BEEN MADE BY THE A.O. THE REMAND REPORT FROM THE A.O. WAS CALLED FOR IN WHICH HE HAS REITERATED THE SAME FACTS AS MENTIONED IN THE ASSESSMENT ORDER. ASSESSEE ALSO FI LED REJOINDER IN WHICH ASSESSEE RE-AFFIRMED THE SUBMISS IONS MADE BEFORE THE AUTHORITIES BELOW. 5. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF ASSESSEE AND MATERIAL ON RECORD, PARTLY ALLOWED THE APPEAL OF ASSESSEE. HIS FINDINGS IN PARAS 5.1 AND 6 OF THE OR DER ARE REPRODUCED AS UNDER : 13 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. 5.1. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, WRITTEN SUBMISSION FILED, REMAND REPORT AND REJOINDER FILED BY THE APPELLANT. IT MAY BE SEEN FROM THE ASSESSMENT ORDER THAT THE MATERIAL FACT IS THAT THE PAPER MARKED AS PAGE 9 OF ANNEXURE A-4 WAS SEIZED FROM THE RESIDENCE OF SHRI NAVEEN KUMAR AGARWAL. I AGREE WITH THE FINDING GIVEN BY THE AO IN RESPECT OF THIS PAPER IN PARA 9 OF THE ASSESSMENT ORDER. THE PLAIN READING OF THIS PAPER SHOWS THAT IT IS DATED 14/11/2010 ON WHICH WORK, AS GIVEN IN MANY TERMS IS WRITTEN FTS. 25,61,13,398/-. THE VARIOUS CONTENTIONS OF THE APPELLANT IN THE WRITTEN SUBMISSIONS ARE SELF CONTRADICTORY, THE NOTING'S MADE ON THIS PAPER ARE WORK DONE BY APPELLANT FOR GRAPHIC ERA. THE APPELLANT MADE ATTEMPT TO EXPLAIN THAT IT PERTAINS TO WORK DONE IN 2013. THIS CONTENTION OF THE APPELLANT IS NOT ACCEPTABLE AND IS ONLY AFTER THOUGHT. DATE PUT ON THE PAPER IS 14/11/2010. NO PRUDENT BUSINESS MAN WILL MAKE NOTING OF WORK DONE IN THE YEAR 2013 IN ADVANCE; IT IS AGAINST HUMAN PROBABILITY SO THE CONTENTIONS OF THE APPELLANT IN THIS REGARD LACK MERIT. 14 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. ON THE BASIS OF HIS DETAILED FINDING GIVEN IN THE ASSESSMENT ORDER, THE AO HAS ASSESSED TOTAL INCOME ON THE GROSS RECEIPTS HAS REDUCED BY THE GROSS PROFIT ALREADY DISCLOSED BY THE APPELLANT IN HIS RETURN. HE CALCULATED THE RATE OF 8% ON THIS BASIS OF GROSS PROFIT SHOWN BY THE APPELLANT IN THE RETURN INCOME, THEREFORE, I DO NOT FIND REASONS TO INTERFERE WITH THE ADDITION MADE BY THE AO IN THIS RESPECT AND THE ADDITION OF FTS. 69,97,218/- IS CONFIRMED. 6.2. GROUND NO.1 TO 4 ARE INTER LINKED, THEREFORE THEY ARE TAKEN TOGETHER. THESE PERTAIN TO THE ADDITION OF RS.8,62,24,238/-. THIS ADDITION HAS BEEN SPECIFICALLY DEALT IN PARA 10 AND THE 10.1 PAGE NO. 38 OF THE ASSESSMENT ORDER. IT IS SEEN FROM THE ASSESSMENT ORDER THAT AO HAS DISCUSSED THAT THERE WAS TOTAL TURNOVER OF THE APPELLANT OF RS.25,61,13,398/- AS PER PAGE 9 OF ANNEXURE 4-4 (SEIZED DOCUMENT). AS PER THIS PAPER THERE IS BALANCE AMOUNT OF RS.10,45,58,442/-. THE AO RIGHTLY CONSIDERED IT TO BE PART OF TOTAL TURNOVER OF THE APPELLANT FOR THIS YEAR. NOW, THE AO PROCEEDED TO CALCULATE THE CAPITAL EMPLOYED ON THIS UNDISCLOSED TURNOVER IN PARA 10 AND 10.1 OF 15 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. THE ASSESSMENT ORDER. ACCORDING TO THE AO THE CAPITAL EMPLOYED IN THE BOOKS OF ACCOUNT WAS ONLY RS.1,83,34,204/- FOR DISCLOSED TURNOVER AS PER RETURN. THE AO CALCULATED THE UNDISCLOSED CAPITAL EMPLOYED BY REDUCING THE DISCLOSED CAPITAL OF RS.1,83,34,204/- FROM THE AMOUNT OF RS.10,45,58,442/- AND THE RESULTANT FIGURE OF RS.8,62,24,238/- WAS ADDED AS UNEXPLAINED CAPITAL OF THE APPELLANT. IN MY OPINION, THE AO SHOULD HAVE CALCULATED CAPITAL EMPLOYED ON AMOUNT OF RS.10,45,58,442/- (BEING PART OF TURNOVER) IN THE SAME RATIO TO WHICH THE DISCLOSED CAPITAL IS RELATED TO THE DISCLOSED TURNOVER. MEANING, THEREBY THAT THE A0 SHOULD HAVE CALCULATED THE UNDISCLOSED CAPITAL EMPLOYED ON THE BASIS OF FORMULA THAT IF, FOR THE DISCLOSED TURNOVER OF RS.15,15,54,956/- CAPITAL REQUIRED IS OF RS.1,83,34,204/- THEN HOW MUCH CAPITAL WILL BE REQUIRED FOR UNDISCLOSED TURNOVER RS.10,45,58,442/-. THE AO IS DIRECTED TO CALCULATE THE UNDISCLOSED TURNOVER ON THIS BASIS. IN THIS WAY THE CAPITAL EMPLOYED ON UNDISCLOSED TURNOVER COMES TO RS.1,26,48,849/-. THUS, THE ADDITION TO THIS EXTENT OF RS.1,26,48,849/- IS CONFIRMED AND BALANCE OF RS.7,35,75,389/- IS HEREBY DELETED. 16 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. 6. RESULT : IN THE RESULT, FOR STATISTICAL PURPOSES, THE APPEAL IS PARTLY ALLOWED. 5.1. BOTH PARTIES ARE IN CROSS APPEALS. 6. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE H AS REFERRED TO PAGE-32 OF THE ASSESSMENT ORDER IN WHICH SEIZED PAPER PAGE- 9, A-4 IS REPRODUCED, WHICH IS DATED 14.11.2010. HE HAS REFERRED TO PB-63 WHICH IS ANOTHER SEIZED PAPER, PA GE-95 OF ANNEXURE-24 IN WHICH TOTAL WORK DONE FROM YEAR 2005 TO 31 ST MARCH, 2011 OF ASSESSEE AND ALL HIS FAMILY CONCERNS HAVE BEEN SHOWN IN A SUM OF RS.22.98 CRORES AND AGAINST THE N AME OF ASSESSEES CONCERNS GUPTA & CO. A SUM OF RS.17,61,9 1,897/- HAVE BEEN MENTIONED. LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT BOTH THE DOCUMENTS SHOULD BE READ TO GETHER WHICH WOULD CLEARLY SHOW THAT WORK WAS DONE UP TO M ARCH, 2013. HE HAS REFERRED TO PAGE-21 OF THE ASSESSMENT ORDER, IN WHICH, THE SURRENDER MADE BY THE ASSESSEE IN VARIOU S YEARS 17 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. INCLUDING ASSESSMENT YEAR UNDER APPEAL HAVE BEEN RE PRODUCED BY THE A.O. HE HAS SUBMITTED THAT A.O. HAS TAKEN IN TO CONSIDERATION DETAILS FROM THE SEIZED PAPER AND ACC EPTED THE SURRENDERED AMOUNT AS DISCLOSED IN THE RETURN OF IN COME FOR VARIOUS YEARS INCLUDING THE ASSESSMENT YEAR UNDER A PPEAL. COPIES OF I.T. RETURN FOR A.YS. 2008-2009 TO 2014-2 015 ARE FILED. SO, THERE WAS NO JUSTIFICATION TO MAKE FURTHER ADDI TIONS AGAINST THE ASSESSEE, WHICH WOULD AMOUNT TO DOUBLE ADDITION . IT IS TAX NEUTRAL EXERCISE ONLY. PAGE-9, A-4 IS, THEREFORE, N OT RELEVANT. PB-63 ANOTHER SEIZED PAPER HAVE NOT BEEN DISPUTED B Y THE A.O. THEREFORE, THERE WAS NO JUSTIFICATION TO MAKE ADDIT ION AGAINST THE ASSESSEE. THE ASSESSEE HAS ALREADY DECLARED PRO FIT @ 8% OF THE TOTAL UNDISCLOSED RECEIPTS AND A.O. HAS ALSO AP PLIED 8% FOR COMPUTING THE INCOME OF ASSESSEE. THEREFORE, NO FUR THER ADDITION SHOULD BE MADE IN ASSESSMENT YEAR UNDER AP PEAL. THERE IS NO BASIS FOR MAKING BOTH THE ADDITIONS. TH ERE IS NO EVIDENCE OF UNDISCLOSED CAPITAL DEPLOYED BY ASSESSE E IN MAKING UNDISCLOSED SALES. HE HAS FILED COPY OF THE APPELLA TE ORDER OF THE LD. CIT(A)-4, KANPUR IN THE CASE OF M/S. GRAPHIC ER A 18 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. EDUCATIONAL SOCIETY DATED 21 ST DECEMBER, 2017 FOR A.Y. 2011- 2012 TO A.Y. 2014-2015 IN WHICH THE LD. CIT(A) SIMI LARLY DELETED THE ADDITION. HE HAS SUBMITTED THAT ASSESSE E WAS ENGAGED IN CONSTRUCTION WORK OF M/S. GRAPHIC ERA ED UCATIONAL SOCIETY FOR DEHRADUN CAMPUS WHICH WAS REFERRED BY T HE REVENUE DEPARTMENT TO DVO TO ASCERTAIN THE COST OF INVESTMENT/UNEXPLAINED EXPENDITURE, IN WHICH, THE D IFFERENCE WAS REPORTED BY DVO AT RS.47,88,442/- FROM F.YS. 20 07-2008 TO 2013-2014 WHICH WAS ONLY 0.47% AND ULTIMATE DIFF ERENCE IN VALUATION REPORTED BY DVO IN CASE OF M/S. GRAPHIC E RA EDUCATIONAL SOCIETY WAS 2.87%. THEREFORE, LD. CIT(A ) DELETED THE ENTIRE ADDITION. HE HAS SUBMITTED THAT SIMILAR PAGE-9, A-4 IS REFERRED TO AND CONSIDERED BY THE LD. CIT(A) IN CASE OF M/S. GRAPHIC ERA EDUCATIONAL SOCIETY AND ADDITION HAVE B EEN DELETED. THEREFORE, THERE IS NO BASIS TO MAKE ANY A DDITION AGAINST THE ASSESSEE. HE HAS REFERRED TO PB-92 WHIC H IS BALANCE-SHEET ENDING 31 ST MARCH, 2011 TO SHOW THAT ASSESSEE HAS TO PAY RS.6,27,085/- TO M/S. GRAPHIC ERA EDUCAT IONAL SOCIETY WHICH ACCOUNT HAVE BEEN ACCEPTED BY THE A.O . THE A.O. 19 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. ACCEPTED THE TURNOVER AND PROFIT DECLARED BY ASSESS EE FOR ASSESSMENT YEAR UNDER APPEAL AS WELL AS FOR OTHER Y EARS SURRENDERED BY ASSESSEE. HE HAS FILED COPY OF ASSES SMENT ORDER UNDER SECTION 143(3) DATED 07.07.2017 IN CASE OF AS SESSEE FOR A.Y. 2013-2014 WHERE PART SURRENDER HAVE BEEN ACCEP TED. SO, NO FURTHER ADDITION SHOULD BE MADE. 7. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORD ERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SINCE S EIZED DOCUMENT WAS FOUND FROM THE POSSESSION OF ASSESSEE, THEREFORE, PRESUMPTION UNDER SECTION 292C IS AVAILA BLE AGAINST THE ASSESSEE. THE SEIZED DOCUMENTS ARE CORRECT. HE HAS, THEREFORE, SUBMITTED THAT APPEAL OF ASSESSEE MAY BE DISMISSED AND DEPARTMENTAL APPEAL MAY BE ALLOWED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ACCORDING TO SECTIO N 292C OF THE I.T. ACT THERE IS A PRESUMPTION THAT THE SEIZED DOCUMENT MAY BE PRESUMED TO BELONG TO ASSESSEE BECAUSE IT WA S FOUND FROM POSSESSION OF THE ASSESSEE AND THE DOCUMENTS A RE TRUE. 20 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. HOWEVER, SUCH PRESUMPTION IS REBUTTAL. THE A.O. HAS REFERRED TO SEVERAL DOCUMENTS IN THE ASSESSMENT ORDER AND UL TIMATELY, HEAVILY RELIED UPON PAGE-9 OF ANNEXURE-A4 FOR THE P URPOSE OF MAKING THE ABOVE ADDITIONS AGAINST THE ASSESSEE. AC CORDING TO THE SEIZED PAPER, IT IS DATED 14.11.2010 AND ASSESS EE HAS DONE THE WORK FOR M/S. GRAPHIC ERA EDUCATIONAL SOCIETY F OR A SUM OF RS.25,61,13,398/- OUT OF WHICH, IT IS STATED THAT A SSESSEE HAS RECEIVED ADVANCE OF RS.15,15,54,956/- AND BALANCE P AYABLE IS RS.10,45,58,442/-. THE A.OS. PRESUMPTION IS THAT A SSESSEE HAS COMPLETED THE WORK UP TO 14.11.2010 AND ENHANCE D THE RECEIPTS AND COMPUTED THE TURNOVER AND PROFIT OF TH E ASSESSEE TILL THAT DATE THOUGH ACCEPTED THE SURRENDERED INCO ME IN A.YS. 2008-2009, 2009-2010 AND 2010-2011. THE A.O. HAS AL SO REFERRED TO ANOTHER SEIZED PAPER PAGE-95 OF ANNEXUR E-A-24 IN WHICH PARTICULARS OF RECEIPTS FROM THE YEAR 2005 TO 31 ST MARCH, 2011 IN RESPECT OF VARIOUS BUSINESS CONCERNS OF ASS ESSEE AND HIS FAMILY MEMBERS ARE MENTIONED FOR A SUM OF RS.22,98,08,709/- (PB-63) OF GRAPHIC ERA GROUP.. AS AGAINST M/S. GUPTA AND CO. A SUM OF RS.17,61,91,897/- HAVE BEEN 21 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. MENTIONED. COPY OF THE SEIZED PAPER IS ALSO FILED A T PAGE-63 OF THE PAPER BOOK. THE ASSESSEE SUBMITTED THAT BOTH TH E SEIZED DOCUMENTS MAY BE READ TOGETHER. WE FIND JUSTIFICATI ON IN THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT BOTH THE DOCUMENTS SHOULD BE CONSIDERED TOGETHER BECAUSE ACCORDING TO DEPARTMENT BOTH WERE SEIZED DURING THE COURSE OF SEARCH. WHEN ONE DOCUMENT SPEAKS THAT WORK IS DONE FOR M/S. GRAPHIC ERA EDUCATIONAL SOCIETY FROM THE YEAR 2005 TO 31 ST MARCH, 2011 BY ASSESSEE FOR A SUM OF RS.17.61 CRORE S, THERE IS NO REASON TO BELIEVE THAT ASSESSEE WOULD HAVE COMPL ETED THE CONTRACT WORK OF RS.25.61 CRORES UP TO 14.11.2010. EXPLANATION OF ASSESSEE IS, THEREFORE, ACCEPTABLE TO SAY THAT T HE ENTIRE WORK HAVE BEEN DONE UP TO MARCH, 2013 FOR A SUM OF RS.25 .61 CRORES. THUS, THE EXPLANATION OF ASSESSEE SHOULD NOT HAVE B EEN DISBELIEVED BY THE AUTHORITIES BELOW. THE ASSESSEE DECLARED PROFIT RATE OF 8% ON THE ENTIRE GROSS RECEIPTS IN T HE RETURN FILED UNDER SECTION 153A OF THE I.T. ACT FOR A.YS. 2008-2 009 TO 2014- 2015. THE DETAILS OF THE SAME ARE NOTED AT PAGE-21 OF THE ASSESSMENT ORDER IN WHICH FROM F.Y. 2007-2008 TO 20 13-2014 22 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. ASSESSEE HAS DECLARED GROSS RECEIPTS OFFERED FOR TA XATION UNDER SECTION 153A IN A SUM OF RS.32,03,17,116/-, ON WHIC H, PROFIT @ 8% HAVE BEEN DECLARED. THEREAFTER, OTHER INCOME HAV E BEEN ADDED AND ASSESSEE HAS SURRENDERED THE TOTAL INCOME OF RS.3,12,71,654/- IN A.YS. 2008-2009 TO 2014-2015. W HATEVER INCOME WAS DECLARED IN THE ORIGINAL RETURN OF INCOM E HAVE BEEN REDUCED THEREFROM. THE ASSESSEE HAS FILED COPIES OF THE RETURNS OF INCOME FOR ALL THESE YEARS ALONG WITH COMPUTATIO N OF INCOME TO SHOW THAT ACTUAL ADDITIONAL INCOME HAVE BEEN SUR RENDERED ON WHICH TAXES HAVE BEEN PAID. THE ASSESSEE ALSO FI LED COPY OF THE ASSESSMENT ORDER FOR A.YS. 2013-2014 DATED 07.0 7.2017 UNDER SECTIONS 153A/143(3) IN WHICH THE A.O. ACCEPT ED THE RETURNED INCOME OF RS.59,77,010/- WHICH INCLUDES AD DITIONAL DEEMED PROFIT @ 8% OF GROSS RECEIPTS IN A SUM OF RS.42,49,347/-. LEARNED COUNSEL FOR THE ASSESSEE AL SO SUBMITTED THAT IN ALL THESE ASSESSMENT YEARS, THE I NCOME TAX DEPARTMENT HAS ACCEPTED RETURNED INCOME OF THE ASSE SSEE. IT IS, THEREFORE, PROVED ON RECORD THAT ASSESSEE MADE SURRENDER OF GROSS TURNOVER OF RS.32.03 CRORES IN VARIOUS YEARS AS AGAINST 23 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. THE GROSS RECEIPTS OF RS.25.61 CRORES FOUND ON THE BASIS OF THE SEIZED PAPER. THEREFORE, ASSESSEE HAS DECLARED MORE UNDISCLOSED TURNOVER AND DECLARED MORE ADDITIONAL I NCOME ON THE SAME. THERE IS THUS NO JUSTIFICATION TO MAKE AN Y FURTHER ADDITION AGAINST THE ASSESSEE SEPARATELY ON ACCOUNT OF PROFIT RATE. LEARNED COUNSEL FOR THE ASSESSEE RIGHTLY CONT ENDED THAT IT IS ONLY A TAX NEUTRAL EXERCISE BECAUSE NO CASE I S MADE OUT THAT IF REVENUE HAVE BEEN DEPRIVED OF ANY TAXES. TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRI ES LTD., 358 ITR 295 HELD THAT THERE IS NO DISPUTE THAT IN SUBSEQUENT ACCOUNTING YEAR, ASSESSEE DID MAKE IMPORTS AND DID DERIVE BENEFITS UNDER THE ADVANCE LICENSES AND DUTIES ENTI TLEMENT PASS BOOK AND PAID TAXES, THEREFORE, IT IS NOT AS IF THE REVENUE HAS BEEN DEPRIVED OF ANY TAX. WE ARE TOLD THAT RATE OF TAX REMAINS THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN S UBSEQUENT ASSESSMENT YEARS. THEREFORE, THE DISPUTE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT THE BEST, MAY FOR MINOR TAX EFFECT. 24 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. 9. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS . REALIST BUILDER AND SERVICES LTD., 307 ITR 202 HELD THAT A.O. MUST GIVE FACTS AND FIGURES THAT THE IMPUGNED METHO D OF ACCOUNTING ADOPTED BY THE ASSESSEE RESULTS IN UNDER ESTIMATION OF PROFITS, FOR CHANGING THE METHOD OF ACCOUNTING U NDER SECTION 145 OF THE ACT . OTHERWISE, IT WILL BE PRESUMED THA T ENTIRE EXERCISE IS REVENUE NEUTRAL. SINCE THE ASSESSEE DECLARED MORE GROSS TURNOVER AND DECLARED MORE INCOME IN THE RETURNS FI LED FOR VARIOUS YEARS INCLUDING ASSESSMENT YEAR UNDER APPEA L AND PAID THE TAXES WHICH HAVE BEEN ACCEPTED BY THE DEPARTMEN T, IT WOULD AMOUNT TO TAX NEUTRAL EXERCISE AND NO FURTHER ADDITION WOULD BE JUSTIFIED. EVEN OTHERWISE THE FACTS NOTED ABOVE, CLEARLY JUSTIFY THE CONTENTION OF ASSESSEE THAT IF BOTH THE SEIZED PAPERS ARE TAKEN TOGETHER, THE ADDITION MADE BY THE A.O. O N ACCOUNT OF FURTHER GROSS PROFIT APPLYING PROFIT RATE OF 8% WOULD NOT BE JUSTIFIED. THE PRESUMPTION IS, THEREFORE, REBUTTED BY ASSESSEE. THERE IS THUS NO BASIS TO MAKE THE ADDITION OF RS.6 9,97,268/- TO THE INCOME OF ASSESSEE ON ACCOUNT OF UNDISCLOSED PROFIT. 25 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. 10. IT MAY ALSO BE NOTED HERE THAT THE A.O. ON THE BASIS OF SEIZED PAPER NOTED THAT THERE IS BALANCE PAYABLE TO THE ASSESSEE IN A SUM OF RS.10,45,58,442/-. THE A.O. HA S FURTHER NOTED THAT THE CAPITAL AVAILABLE WITH THE ASSESSEE IS FOR A SUM OF RS.1,83,34,209/- AND THIS AMOUNT WAS REDUCED FRO M THE PAYABLE AMOUNTS AND MADE THE ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENTS IN A SUM OF RS.8.62 CRORES. THE LD. CIT(A), HOWEVER, IN THE RATIO OF THE CAPITAL AVAILA BLE TO ASSESSEE, REDUCED THE ADDITION TO RS.1.26 CRORES. LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME SEIZED PAPER PAGE- 9, A4, HAS BEEN CONSIDERED BY THE LD. CIT(A) IN THE CASE OF M/ S. GRAPHIC ERA EDUCATIONAL SOCIETY VIDE ORDER DATED 21 ST DECEMBER, 2017. THE FINDINGS OF THE LD. CIT(A) IN PARAS 6.3 TO 6.7 ARE REPRODUCED AS UNDER : 6.3. UNDERSIGNED HAS CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, WRITTEN SUBMISSION AND THE VERBAL ARGUMENT OF THE LD. A.R. IT IS SEEN TH AT THE A.O. HAS MADE ADDITION ON THE BASIS OF AN INCRIMINATING DOCU MENT AT PAGE 9 OF ANNEXURE A-4 FOUND AND SEIZED FROM THE RESIDENCE OF SHRI NAVEEN AGARWAL, DEHRADUN. THUS, THE ONLY BASIS OF ADDITION IS THIS INCRIMINATING DO CUMENT AT PAGE 9 OF ANNEXURE A-4 WHICH IS REPRODUCED HEREUNDER FOR TH E BETTER APPRECIATION OF ITS CONTENTS. 26 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. 27 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. 6.4. IT APPEARS FROM THE DOCUMENT THAT THIS IS AN A CCOUNT STATEMENT PREPARED ON 14.11.2010 WHEREIN CERTAIN WORKING OF AMOUNT OF RS.25,61,13,393/- HAVE BEEN MADE. OUT OF WHICH A SUM OF RS.15,15,54,956/- HAS BEEN DEDUCED TO ARRIVE AT A FIGURE OF RS.10,45,58,442/-. THIS MAY BE NOTED THAT THIS INCRIMINATING DOCUMENT WAS FOUND FROM THE RESIDENCE OF SHRI NAVEEN AGGARWAL WHO IS A CONTRACTOR FOR CONSTRUCTION OF THE BUILDINGS OF THE APPELLANT SOCI ETY WHEN CONFRONTED WITH THIS INCRIMINATING DOCUMENT SHRI NAVEEN AGGARWAL REPLIED TO QUESTION NO.57 AND STATED THAT THE SLIP IS WRITTEN IN HIS HAND WRITING AND IT SHOWS THE AMOUNT OF WORKED DONE BY HIM UP TO 14.11.2010, OUT OF THE PAYMENT OF RS.25,61,13,398/- HE RECEIVED THE PAYMENT OF RS.15,15,54,956/- AND RS.10,25,58,442/- IS THE BALANCE AMOUNT WHICH HAS NOT BEEN RECEIVED TILL THE DATE OF SEARCH. HE FURTHER ADMITTED THAT THE SUM OF RS.25,61,13.398/- RELATES TO THE CONSTRUCTION OF 28 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. GRAPHIC ERA GROUP WHICH HAS BEEN STRUCK OF AS THE TOTALING WAS WRONG. AFTER RECALCULATION SUM AMOUNTS TO RS.25,61,13,398/- THE SUM OF RS.15,15,54,956 IS THE ADVANCE PAYMENT RECEIVED FROM THE APPELLANT SOCIETY AND THE BALANCE OF RS.10,45,58,442/- IS THE BALANCE PAYMENT. AFTER SPECIFICALLY BEEN ASKED WHETHER HE HAS RECEIVED THE BALANCE PAYMENT TO WHICH SHRI NAVEEN AGGARWAL CATEGORICALLY REPLIED TH AT THE BALANCE PAYMENT HAS NOT BEEN RECEIVED BY HIM TI LL THE RECORDING OF STATEMENT I.E. 17.04.2015. AO HAS CONSIDERED THE CONTENTION OF THE CONTRACTOR SHRI NAVEEN AGGARWAL REGARDING THE TOTAL WORK DONE AS ON 14.11.2010 AT RS.25,61,13,398/-. AO HAS ALSO OBSERVED THAT AS PER BOOKS OF THE APPELLANT SOCIETY MADE TOTAL PAYMENT OF RS.16,07,72,700/- TO SHRI NAVEEN AGGARWAL UP TO THE A.Y. 2011-12, HENCE THE BALANCE PAYMENT OF RS.09,53,40,698 (25,61,13,998- 6,07,72,700) WAS CONSIDERED AS UNEXPLAINED PAYMENT IN THE HANDS OF APPELLANT SOCIETY. 29 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. 6.5. IT IS PERTAINING TO MENTION HERE THAT AO HAS MADE ADDITION OF RS.10 54 CRORES ON THE BASIS OF SA ME INCRIMINATING DOCUMENTS IN THE HANDS OF SHRI NAVEEN AGGARWAL BY CONCLUDING THAT THE DIFFERENCE IN WORKED DONE OF RS.25,61,13,398 AND THE PAYMENT RECEIVED OF RS.15,15,54,956/- REPRESENTS THE UNACCOUNTED EXPENDITURE MADE BY SHRI NAVEEN AGGARWAL. IT IS ALSO INTERESTING TO NOTE THAT THE SAME ADDITION HAS BEEN MADE BY THE AO IN THE CASE, OF APPELLANT SOCIETY TREATING IT AS UNEXPLAINED EXPENDITURE INCURRED OUT OF UNDISCLOSED INCOME. FRO M THE DETAILED SCRUTINY OF THE INCRIMINATING DOCUMENT S MENTIONED HERE-IN-ABOVE AND THE STATEMENT OF SHRI NAVEEN AGGARWAL, FOLLOWING FACTS EMERGES: I. THE SEIZED DOCUMENT AT PAGE 9 OF ANNEXURE A-4 WA S NOT FOUND FROM THE PREMISES OF APPELLANT SOCIETY BU T WAS FOUND FROM THE RESIDENTIAL PREMISES OF SHRI NAVEEN AGGARWAL, THE CONTRACTOR OF APPELLANT SOCIET Y. 30 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. II. THE ENTIRE ADDITION IS BASED ONLY ON THIS ONE P AGE DOCUMENT INVENTORISED AS PAGE 9 OF ANNEXURE A4. III. THE DOCUMENT IS IN THE HAND WRITING OF SHRI NA VEEN AGGARWAL CONTRACTOR OF APPELLANT SOCIETY. IV. DURING THE COURSE OF SEARCH SHRI NAVEEN AGGARWA L EXPLAINED THE DOCUMENT AS THE ACCOUNT STATEMENT AS ON 14.11.2010 RELEVANT TO A.Y. 2011-12. V. ACCORDING TO THE STATEMENT ON OATH OF SHRI NAVEE N AGGARWAL WHICH WAS RECORDED ON 29.02 2015, THE ENTRY OF AMOUNT RS.25,61,13,398/- REPRESENTS GROSS WORK DONE BY THE CONTRACTOR FOR THE APPELLANT SOCIE TY. VI. IT WAS ADMITTED BY SHRI NAVEEN AGGARWAL THAT TH ERE IS A BALANCE OF RS.10,45,58,442/- FROM THE APPELLANT TRUST AS ON DATE OF RECORDING OF THE STATEMENT. 6.6. FROM THE ABOVE DISCUSSION AND ALSO CONSIDERING THE TOTALITY OF THE FACTS AND THE CIRCUMSTANCES OF THE CASE UNDERSIGNED IS OF THE VIEW THAT THE ADDITION MADE B Y 31 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. THE A.O. IS NOT JUSTIFIED BECAUSE OF THE FOLLOWING REASONS. A) APPELLANT IS THE SOCIETY REGISTERED WITH THE REG ISTRAR OF SOCIETY UNDER THE SOCIETY REGISTRATION ACT, 1860 , HAVING ITS REGISTERED OFFICE AT 56676, BELL ROAD CLEMENT TOWN, DEHRADUN. A SEARCH OPERATION U/S. 132 OF THE I.T. ACT, 1961 WAS INITIATED IN THE BUSI NESS AND THE RESIDENTIAL PREMISES OF THE APPELLANT SOCIE TY AND ITS GOVERNING BODY MEMBERS AND OTHERS ON 21.11.2013. APPELLANT SOCIETY ALSO ENJOYS THE REGISTRATION U/S 12AA OF THE I.T. ACT, 1961 BY VIRT UE OF PERMISSION GRANTED BY COMMISSIONER OF INCOME TAX, MEERUT VIDE ORDER NO. F.NO.40(98)/NIRBHAN/ DEHRADUN/98-99/4048 DATED 31.05.1999. FURTHER, APPROVAL U/S.10(23C) OF THE I.T. ACT, 1961 WAS GRANTED TO THE APPELLANT SOCIETY BY CHIEF COMMISSIONER OF INCOME TAX, DEHRADUN VIDE HIS LETTE R F.NO. CCIT/DDN/TECH/10(23C)/4/2010-11/2924 32 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. DATED 05.08.2010. IT IS PERTAINING TO NOTE THAT THE APPELLANT SOCIETY CONTINUES TO ENJOY THE BENEFITS O F 12AA AND TO (23C) OF THE I.T. ACT, 1961 TILL DATE. B) IT IS NOT DISPUTED THAT AS PER DOCUMENT SEIZED T OTAL WORK DONE BY THE CONTRACTOR TILL 14.11.2010 STANDS AT RS.25,61,13,398/-, IT IS ALSO NOT DISPUTED THAT SHR I NAVEEN AGGARWAL HAS NOT RECEIVED THE ENTIRE AMOUNT FOR THE CONTRACT WORK EXECUTED BY HIM FOR THE APPEL LANT TRUST. THE VERY FACT THAT THE BALANCE AMOUNT OF WOR K DONE HAS NOT BEEN PAID BY THE APPELLANT SOCIETY IS UNDISPUTED. SHRI NAVEEN AGGARWAL, CONTRACTOR OF THE APPELLANT SOCIETY ALSO CONFIRMS THIS FACT THAT THE BALANCE PAYMENT HAS NOT BEEN RECEIVED BY HIM FROM THE APPELLANT SOCIETY. IN SUCH CIRCUMSTANCES, THE ADDITION MADE BY THE A.O. IS NOTHING BUT A FIGMENT OF IMAGINATION WITHOUT ANY COGENT AND CORROBORATIVE EVIDENCE. 33 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. C) DURING THE COURSE OF SEARCH NO EVIDENCE WAS FOUND TO SUBSTANTIATE THE FACT THAT THE UNACCOUNTED PAYMENT WAS MADE BY THE APPELLANT SOCIETY TO ITS CONTRACTOR, SHRI NAVEEN AGGARWAL. NO SALE OR PURCHASE BILLS WERE FOUND DURING THE COURSE OF SEAR CH EVIDENCING THAT SO CALLED TRANSACTION OF RS.10.54 C RORE WAS CARRIED OUT BY THE CONTRACTOR TILL THAT PERIOD. SURELY, THE CONSTRUCTION TO TUNE OF RS.10.45 CRORE CANNOT BE CARRIED OUT IN THIN AIR WITHOUT LEAVING I TS FOOT PRINTS OF EVIDENCES. THE AO HAS FAILED TO BRING ON RECORD ANY INDEPENDENT EVIDENCE TO SUBSTANTIATE THE ADDITION. D) IT IS PERTAINING TO NOTE THAT THE ADDITION OF RS .10.45 CRORE ON THE BASIS OF SAME INCRIMINATING DOCUMENT HAS BEEN MADE IN THE HANDS OF SHRI NAVEEN AGGARWAL WHICH HAS BEEN PARTLY CONFIRMED BY THE HON'BLE CIT (APPEAL)-IV, KANPUR VIDE HIS APPEAL ORDER NO CIT (A)-IV/4!2/DCIT-CC/DDN/ 2015-16/300 34 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. DATED 28.02.2017. THEREFORE, THE SAME ADDITION AGAI N IN THE HAND OF APPELLANT SOCIETY WOULD TANTAMOUNT T O DOUBLE ADDITION WHICH IS THE AGAINST THE TENANTS OF THE LAW. E) NO UNEXPLAINED CASH EXPENDITURE WERE FOUND DURIN G THE COURSE OF SEARCH M THE CASE OF APPELLANT SOCIET Y WHICH WOULD SUPPORT THE ADDITIONAL DEPLOYMENT OF FUNDS TO SUPPORT WORK EARNED OUT TO THE MAGNITUDE O F 10.45 CRORE OUT OF UNDISCLOSED FUNDS. FURTHER, NO UNEXPLAINED DEPOSITS OR WITHDRAWAL IN THE BANK ACCOUNTS OF THE APPELLANT SOCIETY WERE DISCOVERED DURING THE COURSE OF SCORCH OR ASSESSMENT PROCEEDIN GS BY THE AO. ON THE CONTRARY THE PAYMENT MADE BY THE APPELLANT SOCIETY WERE FOUND DULY INCORPORATED IN T HE BOOKS OF THE CONTRACTOR AND NO ADVERSE INFERENCE WHATSOEVER IS POINTED OUT BY THE AO, THEREFORE, THE ADDITION MADE BY THE AO REMAINS UNSUBSTANTIATED. 35 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. F) EVEN THOUGH, FOR A MOMENT IT IS IMAGINED THAT TH E ADDITION IS TO BE MADE IN THE HANDS OF THE APPELLAN T SOCIETY THEN THE SAME WOULD BE REVENUE NEUTRAL BECAUSE PROCEEDING HYPOTHETICALLY, THE IMPACT OF AN Y SUCH INVESTMENT BY THE CONTRACTOR WILL ONLY HAVE TH E EFFECT OF INCREASING THE COST OF THE BUILDING ON TH E ASSETS SIDE AND INCREASING THE OUTSTANDING LIABILIT Y OF THE CONTRACTOR ON THE LIABILITY SIDE IN THE BOOKS O F THE APPELLANT SOCIETY AND HENCE THIS DIFFERENCE WILL NO T CONSTITUTE ANY ADDITION IN THE HANDS OF THE APPELLA NT SOCIETY AND MORE SO AS TO THE CONTRARY IT HAS ALREA DY BEEN ADDED IN THE HANDS OF THE CONTRACTOR AND ATTEM PT TO MAKE THE SIMILAR ADDITION M THE HANDS OF APPELLA NT SOCIETY WILL BE COMPLETELY CONTRADICTORY TO THE OWN FINDINGS OF AO. FURTHER, CASE LAWS CITED BY LD. A.R . STRENGTHENS THE CASE OF THE APPELLANT SOCIETY, AS T HE SAME ARE SQUARELY APPLICABLE TO THE FACTS OF RITE PRESENT CASE. 36 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. G) IT IS A SETTLED PREPOSITION OF LAW THAT NO ADDIT ION CAN BE MADE ON THE DIARY OR DOCUMENTS FOUND FROM THE THIRD PARTY WITHOUT ANY CORROBORATIVE EVIDENCE FOR MAKING SUCH ADDITION. IN THE CASE OF CBI VS V.C.SHUKLA (JAIN HAWALA CASE), HON'BLE SUPREME COURT HAS HELD THAT THE CONTENTS OF INCRIMINATING MATERIAL IMPOUNDED FROM THE THIRD PARTY COULD NOT LEAD TO PROVING THE CHARGE AGAINST THE RESPONDENT. FURTHER, HONBLE SUPREME COURT HAS RULED M THE CASE OF COMMON CAUSE VS UNION OF INDIA (BIRLA ARID SAHARA CASE) THAT LOOSE SHEETS OF PAPER FOUND AND SEIZED FROM THIRD PARTY ARE WHOLLY IRRELEVANT AS EVIDENCE AS PER SECTION 34 OF THE EVIDENCE ACT, 6.7. IN VIEW OF THE DETAILED DISCUSSION AND THE REA SONING MENTIONED HEREINABOVE UNDERSIGNED IS OF THE OPINION THAT THE ADDITION MADE BY THE AO IS UNJUSTIFIED AND UNSUSTAINABLE ON THE FACTS AND IN THE EYES OF LAW. 37 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. HENCE, THE SAME IS DELETED AND THE GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. 11. NO EVIDENCE WAS FOUND DURING THE COURSE OF SEA RCH IF ASSESSEE HAD DEPLOYED ANY CAPITAL FROM UNDISCLOSED SOURCES FOR CONDUCTING THE TURNOVER OF RS.10.45 CRORES. IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINST THE ASSESSEE FOR DEPLOYM ENT OF ANY CAPITAL TO CONDUCT THE BUSINESS OF CONSTRUCTION FOR M/S. GRAPHIC ERA EDUCATIONAL SOCIETY, IT WOULD BE DIFFIC ULT TO BELIEVE THAT ASSESSEE WOULD HAVE MADE INVESTMENT OUT OF UND ISCLOSED SOURCES. THE ASSESSEE EXPLAINED BEFORE A.O. THAT AS SESSEE USED TO MAKE REQUEST THE SOCIETY TO MAKE ADVANCE AGAINST CONTRACT AND AFTER MEASUREMENT AND VERIFYING THE WORK EXECUT ED, PAYMENTS WERE MADE. THE EXPLANATION OF ASSESSEE WAS NOT FOUND FALSE. UNDER THESE CIRCUMSTANCES, THERE WAS N O NEED TO MAKE UNDISCLOSED INVESTMENT. IT MAY ALSO BE NOTED H ERE THAT IN THE ORDER OF THE LD. CIT(A), IN THE CASE OF M/S. GR APHIC ERA EDUCATIONAL SOCIETY (SUPRA), WITH REGARD TO WORK DO NE BY ASSESSEE FOR THEM, VALUATION OF THE PROPERTIES WAS REFERRED TO 38 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. THE DVO, WHO HAS REPORTED THAT THERE IS A DIFFERENC E OF RS.47,88,442/- BETWEEN THE COST OF CONSTRUCTION REP ORTED BY SOCIETY AND AS ESTIMATED BY THE DVO IN RESPECT OF P ROPERTY CONSTRUCTED BY ASSESSEE, WHICH WAS FOUND TO BE 0.47 % ONLY. IT WAS NEGLIGIBLE DIFFERENCE. THEREFORE, LD. CIT(A), D ELETED THE ADDITION. THEREFORE, SIMILARLY IN THE CASE OF ASSES SEE WHEN NOTHING WAS FOUND AGAINST THE ASSESSEE OF MAKING AN Y INVESTMENT OUT OF UNKNOWN SOURCES AND THAT WHATEVER VALUE WAS REPORTED BY THE EDUCATIONAL SOCIETY HAVE BEEN A CCEPTED BY THE LD. CIT(A), AS SUCH, THERE IS NO BASIS TO MAKE FURTHER ADDITION AGAINST THE ASSESSEE. ULTIMATELY, THE CASE HAD BEEN THAT AS PER THE SEIZED PAPER THE TOTAL TURNOVER WAS TAKEN AT RS.25.61 CRORES ON WHICH PROFIT HAVE BEEN ESTIMATED BY A.O. AT 8% WHICH IS ALSO DISCLOSED BY ASSESSEE IN DIFFERENT YEARS, WHICH HAVE NOT BEEN DISPUTED BY THE REVENUE DEPARTMENT. S IMILARLY, VALUATION HAVE BEEN DONE BY THE DVO IN THE CASE OF M/S. GRAPHIC ERA EDUCATIONAL SOCIETY AGAINST THE VALUATI ON SO DONE FROM F.Y. 2007-2008 TO 2013-2014 AS IS MENTIONED IN PARA 5.2 OF THE APPELLATE ORDER IN THE CASE OF M/S. GRAPHIC ERA 39 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. EDUCATIONAL SOCIETY. THE CONTENTION OF ASSESSEE IS, THEREFORE, CORRECT THAT ENTIRE TURNOVER IS TO BE DISTRIBUTED I N THESE DIFFERENT YEARS. THEREFORE, WHATEVER AMOUNT WAS SUR RENDERED BY ASSESSEE IN DIFFERENT YEARS GETS CORROBORATED FR OM THE ORDER PASSED BY THE LD. CIT(A) IN THE CASE OF M/S. GRAPHI C ERA EDUCATIONAL SOCIETY. THE ASSESSEE HAS HOWEVER, DECL ARED MORE GROSS TURNOVER AND MORE INCOME. SO, WHAT REMAINS TO MAKE FURTHER ADDITION AGAINST THE ASSESSEE ? THE LD. CIT (A) WAS, THEREFORE, NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.69,97,218/- ON ACCOUNT OF GROSS PROFIT. THE LD. CIT(A) IS ALSO NOT JUSTIFIED IN CALCULATING THE ADDITION OF RS.1,2 6,48,849/- ON ACCOUNT OF CAPITAL DEPLOYED ON UNDISCLOSED TURNOVER BECAUSE THERE WERE NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH SO AS TO MAKE THE ADDITION. 12. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF AMOUNTS S URRENDERED BY THE ASSESSEE IN VARIOUS YEARS AND ACCEPTED BY TH E REVENUE DEPARTMENT WHICH WAS SIMILARLY CONSIDERED IN THE CA SE OF M/S. 40 ITA.NO.1840/DEL./2017 & ITA.NO.3136/DEL./2017 SHRI NAVIN KUMAR AGARWAL, DEHRADUN. GRAPHIC ERA EDUCATIONAL SOCIETY AND ADDITION DELETE D BY LD. CIT(A), WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN ANY ADDITION IN THIS CASE. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE BOTH THE ADDITIONS IN ENTIRETY. 13. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED A ND APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (LP SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED APRIL, 2018 VBP/- COPY TO 1. THE APP ELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT E BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.