LAXMI NARAIN AGARWAL, Jaipur V. ACIT, CENTRAL CIRCLE-3, Jaipur

ITA 851/JPR/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2013 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 03-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROLI AGARWAL; R S MEEL D CIT DH
• Keywords: Rejection of books of accounts; Unexplained investment; Gift; Depreciation; Search and seizure; Question of law; Corroborative evidences; Block assessment; Documents seized
• Section: 147; 131; 68; 132; 44AD; 15; 143(3); 153A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 848 TO 851/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 TO 2012-13 SHRI LAXMI NARAIN AGARWAL 104, RIDHI SIDHI APARTMENT, AHINSA CIRCLE, JAIPUR. CUKE VS. THE ACIT, CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABSPA 1338 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 1022 TO 1025/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 TO 2012-13 THE ACIT, CIRCLE-4, JAIPUR. CUKE VS. SHRI LAXMI NARAIN AGARWAL 1/513 VIDYADHAR NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABSPA 1338 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MANISH AGARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROLI AGARWAL (CIT) & SHRI R. S. MEEL (D.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/03/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 23/03/2018 VKNS'K@ ORDER ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 2 PER BENCH: THESE FOUR SETS OF CROSS APPEALS ARE DIRECTED AGAI NST FOUR SEPARATE ORDERS OF LD. CIT(A), JAIPUR ARISING FROM ASSESSMENT ORDERS PASSED U/S 153A R.W.S. 143(3) AND U/S 143(3) 153B( B) OF THE I.T. ACT FOR THE ASSESSMENT YEARS 2009-10 TO 2012-13 RESPECT IVELY. FOR THE ASSESSMENT YEAR 2009-10 & 2010-11 THE ASSESSEE HAS RAISED THE COMMON GROUNDS EXCEPT THE QUANTUM OF DISALLOWANCE. THE GROUNDS RAISED FOR THE ASSESSMENT YEAR 2009-10 OF THE ASSES SEE AND REVENUE ARE AS UNDER:- ASSESSEES GROUND 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE ASSESSME NT COMPLETED BY THE LD. AO U/S 153A OF THE INCOME TAX ACT, 1961 WHEN NO INCRIMINATING PAPER WAS FOUND AS A RESULT O F SEARCH PERTAINING TO THE YEAR UNDER APPEAL, THUS THE CONSE QUENT ORDER PASSED U/S 153A OF THE INCOME TAX ACT, 1961 DESERVE S TO BE QUASHED. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE REMAND REPORT OF THE AO WHEREIN HE HAS CATEGORICALL Y STOOD THAT NO INCRIMINATING PAPER WAS FOUND AS A RESULT O F SEARCH PERTAINING TO THE YEAR UNDER APPEAL, THUS THE ADDIT ION MADE U/S 153A DESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE REJECTION OF THE BOOKS OF ACCOUNTS MAINTAINED IN THE REGULAR COURSE OF BUS INESS WITHOUT APPRECIATING THE FACT OF CONSISTENCY IN MAINTAINING ACCOUNTS YEAR ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 3 AFTERI YEAR ON SAME BASIS AND FURTHER WITHOUT APPRECIATING THE NATURE OF BUSINESS, THAT BEING SO THE ENTIRE ADDITI ONS SO UPHOLD DESERVES TO BE DELETED IN TOTO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE APPLICATI ON OF THE NET PROFIT RATE OF 5.75% ON THE TURNOVER OF RS. 58, 80,71,121/- [SUBJECT TO INTEREST AND DEPRECIATION] IN M/S LAXMI NARAIN AGARWAL WITHOUT APPRECIATING THE SUBMISSIONS MADE A ND RECORDS PRODUCED AND FURTHER WITHOUT BRINGING ON RE CORD ANY MATERIAL TO SUPPORT OF SUCH A HIGH RATE OF NET PROF IT (HOWEVER NO FINANCIAL ADDITION HAS BEEN MADE BEING THE INCOM E DECLARED BY THE ASSESSEE IS HIGHER AS COMPARED TO T HE INCOME DERIVED AFTER APPLICATION OF SUCH N.P. RATE SUBJECT TO INTEREST AND DEPRECIATION). THIS BEING SO THE TRADING RESULT S AS DECLARED BY THE APPELLANT DESERVES TO BE ACCEPTED. 3.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT THE PROFIT RATE DECLARED BY THE ASSESSEE WORKS OUT TO 10.46% BEFORE ALLOWING THE STATUTORY DEDUCTION LIKE DEPREC IATION, INTEREST, SALES TAX AND ROYALTY AND EXTRAORDINARY I TEM SUCH AS MANPOWER DEDUCTIONS WHICH IS NOT ONLY QUITE REASONA BLE BUT ALSO HIGHER AS COMPARED TO THE NET PROFIT RATE APPLIED T HUS THE NET PROFIT RATE DECLARED BY THE ASSESSEE DESERVES TO BE ACCEPTED. WITHOUT PREJUDICE TO ABOVE 3.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORING THE FACT THAT THE TOTAL TURNOVER OF THE ASSESSEE CONSIDERED AT RS. 58,80,71,121/- FOR THE APPLICATION OF NET PROFIT RA TE @ 5.75% INCLUDES THE TURNOVER OF RS. 19,42,49,182/- GIVEN O N SUB- CONTRACT BASIS ON WHICH ASSESSEE HAS RECEIVED 2% NE T PROFIT MARGIN WHICH FACT IS NEVER DISPUTED BY LD. AO OR BY LD. CIT(A), THUS DEDUCTION FOR LOWER PROFIT MARGIN TO THE EXTEN T OF THE WORK ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 4 GIVEN ON SUB-CONTRACT HAS TO BE GIVEN OUT OF THE TO TAL PROFIT COMPUTED BY APPLYING 5.75% NET PROFIT RATE. 3.3 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT IN CASE OF CARRIED OVER CONTRACTS FROM PRECEDING AS SESSMENT YEARS, THE PROFIT RATE MUCH LESSOR THAN 5.75% WAS A PPLIED THUS HIGHER PROFIT RATE ON THE REMAINING WORK EXECUTED D URING THE YEAR UNDER APPEAL IS WITHOUT ANY BASIS AND THEREFOR E THE CONSEQUENT ADDITIONS DESERVES TO BE DELETED. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. REVENUES GROUND (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) HAS ERRED IN IGNORING THE FACT THAT THE AO APPLIED N.P. RATE AFTER ALLOWING DEPRECIATIO N AND INTEREST WHICH TANTAMOUNT TO ALLOWING DEPRECIATION AND INTER EST TWICE. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) HAS ERRED IN RELYING O N THE CASE OF JAIN CONSTRUCTION CO. AND ALLOWING DEPRECIATION AND INTEREST, IGNORING THE FACT THAT IN THAT CASE N.P. RATE WAS M UCH MORE THAN AS SPECIFIED U/S 44AD. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) HAS ERRED IN IGNORING THE FACT THAT THE AO HAS ALREADY APPLIED LOWER N.P. RATE AND THER EFORE NOT ALLOWED DEPRECIATION AND INTEREST. (IV) THE APPELLANT CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 5 2. GROUND NO. 1 OF ASSESSEE APPEAL IS REGARDING VAL IDITY OF REASSESSMENT OF INCOME WITHOUT ANY INCRIMINATING MA TERIAL FOUND OR SEIZED DURING THE SEARCH. THE LD. AR OF THE ASSESSE E HAS SUBMITTED THAT THERE WAS A SEARCH U/S 132 OF THE ACT ON 15.03.2012 AND THE ASSESSMENT FOR THE ASSESSMENT YEARS 2009-10 AND 201 0-11 WERE NOT PENDING AS ON THE DATE OF SEARCH AND FURTHER FOR TH E ASSESSMENT YEAR 2009-10 THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 23.12.2011 AND FOR THE ASSESSMENT YEAR 2010-11 THE LIMITATION FOR ISSUING NOTICE U/S 143(2) EXPIRED ON 30.09.2011. THUS, HE HAS SUBMITTE D THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL ON THE BASIS OF WHICH ADDITION CAN BE MADE THE REASSESSMENT OF INCOME FOR THE ASSESSME NT YEARS 2009-10 & 2010-11 ARE NOT VALID. THE AO HAS MADE TRADING AD DITION BY REJECTING THE BOOKS OF ACCOUNTS AND NO REFERENCE OF ANY INCRI MINATING MATERIAL SEIZED OR FOUND DURING THE SEARCH HAS BEEN MADE FOR THESE ASSESSMENT YEARS. THE LD. AR HAS FURTHER SUBMITTED THAT THIS F ACT OF NO INCRIMINATING MATERIAL IS ADMITTED BY THE AO IN THE REMAND REPORT SUBMITTED BEFORE THE LD. CIT(A) AS REPRODUCED AT PAGE 8 TO 10 OF THE IMPUGNED ORDER AS UNDER:- RELEVANT DETAILS HAVE BEEN FILED WHICH ARE PLACED ON RECORD AND CONSIDERED LEXAMINED WITH REFERENCE TO THE DOCUMENT S SEIZED DURING THE SEARCH. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 6 FURTHER, AFTER EXAMINATION OF THE ASSESSMENT ORDER, IT IS SEEN THAT NO ANY SEIZED MATERIAL/ANNEXURE HAVE BEEN USED IN T HEBODY OF ASSESSMENT ORDER. IT IS ALSO SUBMITTED THAT NO ANY STATEMENT OF THE ASSESSEE WAS RECORDED DURING THE ASSESSMENT PRO CEEDINGS AND DURING FINALIZING THE ASSESSMENT ORDER ON ANY ISSUE.. THUS, IN THE ABSENCE OF ANY SEIZED MATERIAL ADDITIO N MADE BY THE AO FOR THESE TWO ASSESSMENT YEARS ARE NOT SUSTAINABLE IN LAW. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF H ONBLE JURISDICTION HIGH COURT IN CASE OF JAI STEEL (INDIA) VS ACIT 259 CTR 281 AS WELL AS DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. KABUL CHAWLA 380 ITR 573. THE LD. AR HAS ALSO RELIED UPON THE DE CISION OF COORDINATE BENCH OF THIS TRIBUNAL DATED 27.12.2017 IN CASE OF M/S GORBANDH MARBLES PVT. LTD. VS. DCIT IN ITA NO. 605/JP/2017. THUS, THE LD. AR HAS SUBMITTED THAT WHEN THE ASSESSMENTS FOR THE ASSESSM ENT YEARS 2009- 10 & 2010-11 WERE ALREADY STOOD COMPLETED AS ON THE DATE OF SEARCH AND NO INCRIMINATING MATERIAL WAS BROUGHT ON RECOR D OR REFERRED BY THE AO FOR REASSESSMENT FRAMED U/S 153A THEN NO ADDITIO N COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 3. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT DURING THE SEARCH AND SEIZURE PROCEEDINGS U/S 132 OF THE ACT S OME LOSE PAPERS WERE SEIZED AND THEREAFTER, WHEN THE MATERIAL FOUND DURING THE SEARCH ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 7 WAS CONFRONTED WITH THE ASSESSEE IN THE STATEMENT R ECORDED U/S 132(4) HE ADMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSES SEE ARE NOT COMPLETED AND SUPPORTING VOUCHERS WERE NOT AVAILABL E WITH THE ASSESSEE AND THE ASSESSEE HIMSELF DECLARED THE INCO ME @ 8% ON THE TURNOVER. THEREFORE, THE REJECTION OF BOOKS OF ACCO UNTS FOR THESE TWO ASSESSMENT YEARS ARE BASED ON THE FACT THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION SEVERAL DEFICIENCIES WERE FOUND IN THE BOOKS OF ACCOUNTS WHICH HAS BEEN ADMITTED BY THE ASSESSEE THAT HE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS PROPERLY AND SOME OF THE EXPENSES ENTERED IN HIS BOOKS OF ACCOUNTS ARE BOGUS AND NO S UPPORTING BILLS OR VOUCHERS WERE AVAILABLE WITH HIM. THE LD. DR HAS AL SO REFERRED TO THE FINDING OF THE LD. CIT(A) ON THIS ISSUE IN PARA 3.1 .2. OF THE IMPUGNED ORDER AND SUBMITTED THAT THE LD. CIT(A) HAS REFERRE D THE ASSESSMENT ORDER IN PARA 7 AND FOUND CERTAIN LABOURS VOUCHERS ETC WERE FOUND, INVENTORISED AND SEIZED AND ON THAT BASIS, AO REJEC TED THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT. SHE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. A SEARCH AND SEIZURE ACTION U/S 132 WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 15.03.2012. DURI NG THE COURSE OF ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 8 SEARCH AND SEIZURE, STATEMENT OF THE ASSESSEE WAS R ECORDED U/S 132(4) OF THE ACT WHEREIN THE ASSESSEE ADMITTED THAT SOME OF THE EXPENDITURES ARE NOT SUPPORTED BY PROPER VOUCHERS AND BILLS AND THEREFORE, THE ASSESSEE DISCLOSED THE INCOME @ 8% FOR THE ASSESSME NT YEAR 2012-13. WE HAVE GONE THROUGH THE STATEMENT RECORDED U/S 132 (4) AND FOUND THAT THE ENTIRE CONTEXT OF THE STATEMENT OF THE ASS ESSEE RECORDED U/S 132(4) OF THE ACT IS REGARDING THE TRANSACTIONS AND TURNOVER FOR THE ASSESSMENT YEAR 2012-13. THE SPECIFIC DETAILS OF TH E TURNOVER WERE CONFRONTED WITH THE ASSESSEE BY THE INVESTIGATING T EAM FOR THE FINANCIAL YEAR 2011-12 RELEVANT TO THE ASSESSMENT YEAR 2012-1 3 AND THE ASSESSEE ADMITTED THAT THE SUPPORTING AND PROPER VO UCHERS AND BILLS WERE NOT AVAILABLE WITH THE ASSESSEE IN RESPECT OF SOME OF THE EXPENSES BOOKED IN THE BOOKS OF ACCOUNTS. THUS, THE ASSESSEE SURRENDERED THE INCOME @ 8% OF THE TURNOVER OF RS. 68 CRORES. THE E NTIRE DETAILS AND MATERIALS WHICH WERE CONFRONTED WITH THE ASSESSEE W ERE PERTAINING TO THE FINANCIAL YEAR 2011-12 AND THEREFORE THE SAID S TATEMENT OF THE ASSESSEE HAS NO RELEVANCY FOR THE ASSESSMENT YEARS OTHER THAN THE ASSESSMENT YEARS 2012-13. WE NOTE THAT IN THE ASSES SMENT ORDER THE AO HAS REJECTED THE BOOKS OF ACCOUNTS AND APPLIED N ET PROFIT RATE 5.75% TO ESTIMATE THE INCOME OF THE ASSESSEE AS AGA INST THE INCOME ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 9 DECLARED BY THE ASSESSEE @ 4.85%. THE ASSESSING OFF ICER HAS GIVEN THE REASONS FOR REJECTION OF BOOKS OF ACCOUNTS IN PARA 6.3 TO 6.7 AS UNDER:- 6.3 ON VERIFICATION OF BOOKS OF ACCOUNT, IT WAS ALSO NO TICED THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 7,26,06, 729/- ON ACCOUNT OF LABOUR & SUPERVISION CHARGES. MOST OF TH E PAYMENTS OF THESE EXPENSES WERE MADE IN CASH THROUG H SELF MADE VOUCHERS AND NO SUPPORTING EVIDENCE HAS BEEN MAINTAINED FOR LABOURS I.E. NO COMPLETE POSTAL ADDR ESSES OF LABOURS WERE MENTIONED ON THE VOUCHERS. MOREOVER, T HE ASSESSEE HAS NOT MAINTAINED AND PRODUCED WAGES REGI STER AND MUSTER ROLL FOR LABOUR PAYMENT. IN ABSENCE OF P ROPER AND COMPLETE VOUCHERS, WAGES SHOWN TO HAVE BEEN PAI D TO LABOURS ARE NOT FULLY OPEN TO VERIFICATION. 6.4 IN ADDITION TO ABOVE, THE ASSESSEE HAS DEBITED RS. 11,50,393/- ON ACCOUNT OF SITE EXPENSES, FROM THE V OUCHERS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING S, IT WAS NOTICED THAT THE PAYMENT OF THESE EXPENSES WERE MADE IN CASH THROUGH SELF MADE VOUCHERS WHICH ARE NOT VE RIFIABLE. 6.5 IN ADDITION TO ABOVE, THE ASSESSEE HAS DEBITED A SU M OF RS. 27,70,397/-ON ACCOUNT OF FREIGHT & CARTAGE, IT WAS NOTICED THAT THE PAYMENT OF THESE EXPENSES WERE MADE IN CAS H THROUGH SELF MADE VOUCHERS WHICH ARE NOT VERIFIABLE . 6.6 THE ASSESSEE HAS SHOWN CLOSING STOCK/WORK IN PROGRE SS AT RS. 45,68,423/-, WHICH ADMITTEDLY AS VALUED ON E STIMATION BASIS AS THE ASSESSEE HAD NOT MAINTAINED INVENTORY OF CLOSING STOCK CLAIMED TO BE HAVE TAKEN PHYSICALLY A S ON 31.03.2009. MOREOVER, THE ASSESSEE NEITHER MAINTAIN ED DAY- TO-DAY STOCK REGISTER NOR MAINTAINED QUANTITATIVE T ALLY OF ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 10 STOCK CONSUMPTION ON EACH PROJECT/SITE. EVEN, THE A SSESSEE HAS NOT FURNISHED THE CONTRACT WISE/SITE WISE DETAI LS OF DIMENSION & SPECIFICATION OF WORKS. MOREOVER, THE A SSESSEE HAS SHOWN HIS INABILITY IN FURNISHING OF SITE WISE BIFURCATION OF STOCK/ WORK IN PROGRESS. IN ABSENCE OF DAY-TO-DA Y STOCK REGISTER AS WELL AS SITE WISE CONSUMPTION OF RAW MA TERIAL ON DAILY BASIS AND SITE WISE DETAILS OF WIP, THE CORRE CT PROFITS OF BUSINESS CANNOT BE ASCERTAINED. 6.7 BESIDES, IT WAS ALSO NOTICED THAT CERTAIN VOUCHERS OF CONVEYANCE EXPENSES, OFFICE EXPENSES, TELEPHONE EXPENSES, TRAVELLING EXPENSES, VEHICLE RUNNING & MAINTENANCE EXPENSES AND STAFF WELFARE EXPENSES ARE SELF MADE AND NOT SUPPORTED WITH EVIDENCE OR SUPPORTED W ITH KACHHA BILLS AND IT WAS FOUND THAT MOST OF PAYMENTS IN RESPECT OF THESE EXPENSES WERE MADE IN CASH. MOREOV ER, IN ABSENCES OF ANY RECORD PERSONAL USE OF TELEPHONE & CARS BY THE ASSESSEE AND HIS FAMILY MEMBERS CANNOT BE RULED OUT. HENCE, THESE EXPENSES CLAIMED BY THE ASSESSEE ARE N OT OPEN TO VERIFICATION. FURTHER, THE ASSESSING OFFICER HAS CONSIDERED THE I SSUE OF REJECTION OF BOOKS OF ACCOUNTS AS OBJECTED BY THE ASSESSEE IN PARAS 7 AND 8 AS UNDER:- 7. I HAVE CONSIDERED THE SUBMISSION OF THE A/R OF THE ASSESSEE CAREFULLY AND FOUND NOT FULLY CONVINCING FOR THE RE ASON THAT THE ASSESSEE DID NOT MAINTAIN STOCK REGISTER AND NO SIT E WISE DETAILS OF MATERIAL CONSUMED/LABOUR EMPLOYED WERE MAINTAINE D PROPERLY. BESIDES, THE VARIOUS HUGE EXPENSES LIKE L ABOUR EXPENSES, SITE EXPENSES, FREIGHT & CARTAGES EXPENSE S ETC. WERE PAID IN CASH AND SUPPORTED WITH SELF MADE VOUCHERS ONLY AND ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 11 DO NOT CONTAIN THE NAME AND COMPLETE ADDRESS OF THE PERSONS TO WHOM PAYMENTS WERE MADE. IN VIEW OF DEFECTS POIN TED OUT AND DISCUSSED AS ABOVE, THE CORRECT PROFIT CAN NOT BE DEDUCED THEREOF. IT IS SWEET WILL OF THE ASSESSEE THAT HE C LAIMS THE EXPENSES AS PER HIS SUITABILITY. MOREOVER, THE BUSI NESS EXPEDIENCY AND GENUINENESS OF THESE EXPENSES REMAIN S UNVERIFIABLE. FURTHER, THE FACTS OF THE CASE LAWS Q UOTED BY THE AR OF THE ASSESSEE ARE DIFFERENT FROM THE ASSESSEE' S PRESENT CASE. THEREFORE, IN VIEW OF THE FACTS DISCUSSED ABO VE, THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE BEING REJECTED BY I NVOKING PROVISION OF SECTION 145(3) OF THE IT ACT, 1961. IN VIEW OF HON'BLE SUPREME COURT'S DECISION IN THE CASE OF S. N. NAMASIVAYAM CHETTIAR V/S CIT 38 ITR 579 AND RELIANC E CAN BE PLACED ON THE CASE OF VED PRAKASH V/S CIT 191 CTR 1 68/ 210 ITR 486. 8. IN VIEW OF THE FACTS MENTIONED ABOVE AND CIRCUMS TANCE OF THE CASE, PROVISIONS OF SECTION 145(3) ARE INVOKED AND BOOKS OF ACCOUNT ARE REJECTED. THE NET PROFIT RATE OF 5.75% IS APPLIED ON TOTAL CONTRACT RECEIPTS OF RS. 58,80,71,121/-, WHIC H GIVES NET PROFIT OF RS. 3,38,14,089/-, WHICH IS FAIR AND REAS ONABLE, LOOKING TO THE PAST HISTORY OF THE ASSESSEE OWN CASE. HENCE NET PROFIT OF THE ASSESSEES BUSINESS COMES TO RS. 3,38,14,089/-. THUS, IT IS CLEAR THAT IN THE ENTIRE ASSESSMENT ORD ER THE ASSESSING OFFICER HAS NOT REFERRED ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE SEARCH AS THE BASIS FOR REJECTION OF BOO KS OF ACCOUNTS AND CONSEQUENTIAL ADDITION. THE LD. CIT(A) THOUGH IN PA RA 3.1.2 HAS STATED THAT THE AO HAS MENTIONED IN PARA 7 THAT CERTAIN LA BOURS, VOUCHERS ETC. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 12 WERE FOUND AND INVENTORISED HOWEVER, THE SAID STATE MENT OF THE LD. CIT(A) IS CONTRARY TO THE ASSESSMENT ORDER. FOR THE SAKE OF COMPLETENESS AND READY REFERENCE, WE REPRODUCE THE OBSERVATION OF LD. CIT(A) IN PARA 3.1.2. AS UNDER:- 3.1.2 I HAVE DULY CONSIDERED THE ASSESSEE'S SUBMIS SION AND ALSO GONE THROUGH THE ASSESSMENT ORDER AND TAKEN A NOTE OF FACTUAL MATRIX OF THE CASE AS WELL AS LEGAL POSITIO N ON THIS ISSUE. ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, HOWEVER, DURING THE SEARCH OPERATION CARRIED O UT U/S 132 OF THE ACT, CERTAIN LABOUR VOUCHERS ETC (REFER ASSE SSMENT ORDER PARA 7 PG 8 ) WERE FOUND , INVENTORISED AND S EIZED AND ON THAT BASIS , AO REJECTED BOOKS OF ACCOUNTS U/S 1 45(3) OF THE ACT. IN VIEW OF THESE FACTS, I DO NOT FIND ANY REASON TO INTERVENE INTO THIS ISSUE. ASSESSEE'S APPEAL ON THI S GROUND IS DISMISSED. THE ABOVE OBSERVATION OF THE LD. CIT(A) IS FACTUAL LY INCORRECT AS THE AO IN PARA 7 HAS NOT MENTIONED ANY SEIZED MATERIAL AS IT CLEAR FROM THE SAID PARA REPRODUCED IN THE FORGOING PART OF TH IS ORDER. FURTHER, WE NOTE THAT IN THE REMAND REPORT THE ASSESSING OFF ICER HAS CLEARLY STATED THAT THE AO HAS NOT REFERRED ANY INCRIMINATI NG MATERIAL IN THE ASSESSMENT ORDER AND THIS FACT IS EMERGING FROM THE IMPUGNED ORDER OF THE LD. CIT(A) WHEREIN THE REMAND REPORT IS REPR ODUCED IN PARA 2.1. THEREFORE, IT IS MANIFEST FROM THE RECORD THAT THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNTS ON THE BASIS OF THE DETAILS AND ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 13 BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE AT THE T IME OF FRAMING THE ORIGINAL ASSESSMENT YEAR U/S 143(3). THUS, ONCE THE ASSESSMENT PROCEEDINGS WERE NOT PENDING ON THE DATE OF SEARCH THEN, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL THE AO CANNOT MAKE AN ADDITION TO THE INCOME ALREADY ASSESSED TO TAX BUT IN CONSEQ UENCE OF SEARCH TO REASSESS THE TOTAL INCOME THE ASSESSEE AS IT WAS AS SESSED IN THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT. THE HON BLE JURISDICTION HIGH COURT IN CASE OF JAI STEEL (INDIA) ACIT (SUPR A) AS WELL AS HONBLE DELHI HIGH COURT IN CASE OF CIT KABUL CHAWLA (SUPRA ) HAS LAID DOWN THE PRINCIPAL ON THIS POINT THAT IF NO INCRIMINATIN G MATERIAL WAS FOUND DURING THE COURSE OF SEARCH IN RESPECT OF ANY ISSU E THEN NO ADDITION IN RESPECT OF ANY ISSUE CAN BE MADE IN THE ASSESSME NT U/S 153A OF THE ACT. THE COORDINATE BENCH OF THIS TRIBUNAL IN C ASE OF M/S GORBANDH MARBLES PVT. LTD. VS. DCIT (SUPRA) WHILE D EALING WITH AN IDENTICAL ISSUE HAS HELD IN PARA 5 AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE FILED ITS RETURN O F INCOME FOR THE YEAR UNDER CONSIDERATION ON 24.09.2010 AND THEREFOR E, UNDISPUTEDLY THE TIME LIMIT FOR ISSUING THE NOTICE U/S 143(2) ON THE RETURN OF INCOME FILED U/S 139(1) EXPIRED ON 30.09.2011. A SE ARCH IN THE CASE OF THE ASSESSEE WAS CONDUCTED ON 17.07.2013 AND AS ON THE DATE OF SEARCH THE ASSESSMENT FOR THE YEAR UNDER CONSIDERAT ION WAS NOT PENDING. THUS, IT IS CLEAR THAT THE NOTICE ISSUED B Y THE AO U/S 153A ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 14 CONSEQUENT TO THE SEARCH CARRIED OUT U/S 132 IS FOR REASSESSMENT OF INCOME OF THE ASSESSEE. WE FURTHER NOTE THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS AC CEPTED THE INCOME DECLARED BY THE ASSESSEE IN THE ORIGINAL RET URN OF INCOME EXCEPT A DISALLOWANCE OF RS. 26,183/- ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO ESI AND PF. THE ENTIRE ASSESSMENT O RDER IS SILENT ABOUT ANY OF THE INCRIMINATING DOCUMENT FOUND OR SE IZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION AND THEREFORE, IT IS CLEAR THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER U/S 153A FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS NOT BASED ON ANY DOCUMENT FOUND OR SEIZED DURING THE COURSE OF SEARCH OR REQU ISITION MADE. THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE THAT THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION U/S 153 A R.W.S. 143(3) IS NOT BASED ON ANY INCRIMINATING DOCUMENT FOUND DU RING THE COURSE OF SEARCH. THIS ISSUE HAS BEEN CONSIDERED IN A SERI ES OF DECISIONS OF THE HONBLE HIGH COURTS AS RELIED UPON BY THE ASSES SEE. IN THE LATEST DECISION IN CASE OF PR. CIT VS. MEETA GUTGUT IA (SUPRA) THE HONBLE DELHI HIGH COURT HAS AGAIN CONSIDERED AND ANALYZED THE RELEVANT PROVISIONS OF THE ACT AS WELL ALL THE DECI SIONS ON THIS POINT IN PARA 57 TO 72 AS UNDER:- 57. THE QUESTION WHETHER UNEARTHING OF INCRIMINATING M ATERIAL RELATING TO ANY ONE OF THE AYS COULD JUSTIFY THE RE -OPENING OF THE ASSESSMENT FOR ALL THE EARLIER AYS WAS CONSIDERED B OTH IN ANIL KUMAR BHATIA (SUPRA) AND CHETAN DAS LACHMAN DAS (SU PRA). INCIDENTALLY, BOTH THESE DECISIONS WERE DISCUSSED T HREADBARE IN THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA). AS FAR AS ANIL KUMAR BHATIA (SUPRA) WAS CONCERNED, THE COURT IN PARAGRAP H 24 OF THAT DECISION NOTED THAT 'WE ARE NOT CONCERNED WITH A CA SE WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE THEREFORE EXPRESS NO OPI NION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN UNDER SUCH SITUATION'. THAT QUESTION WAS, THEREFORE, LEFT OPEN. AS FAR AS CHETAN DAS LACHMAN DAS (SUPRA) IS CONCERNED, IN PARA 11 OF THE DECISION IT WAS OBSERVED: ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 15 '11. SECTION 153A (1) (B) PROVIDES FOR THE ASSESSME NT OR REASSESSMENT OF THE TOTAL INCOME OF THE SIX ASSESSM ENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH TOOK PLACE. TO REPEAT, THE RE IS NO CONDITION IN THIS SECTION THAT ADDITIONS SHOULD BE STRICTLY M ADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSIN G OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND. THIS, HOWEVER , DOES NOT MEAN THAT THE ASSESSMENT UNDER SECTION 153A CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS S ECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' 58. IN KABUL CHAWLA (SUPRA), THE COURT DISCUSSED THE D ECISION IN FILATEX INDIA LTD. (SUPRA) AS WELL AS THE ABOVE TWO DECISIONS AND OBSERVED AS UNDER: '31. WHAT DISTINGUISHES THE DECISIONS BOTH IN CIT V . CHETAN DAS LACHMAN DAS (SUPRA), AND FILATEX INDIA LTD. V. CIT- IV (SUPRA) IN THEIR APPLICATION TO THE PRESENT CASE IS THAT IN BO TH THE SAID CASES THERE WAS SOME MATERIAL UNEARTHED DURING THE SEARCH , WHEREAS IN THE PRESENT CASE THERE ADMITTEDLY WAS NONE. SECONDL Y, IT IS PLAIN FROM A CAREFUL READING OF THE SAID TWO . DECISIONS THAT THEY DO NOT HOLD THAT ADDITIONS CAN BE VALIDLY MADE TO INCOME F ORMING THE SUBJECT MATTER OF COMPLETED ASSESSMENTS PRIOR TO TH E SEARCH EVEN IF NO INCRIMINATING MATERIAL WHATSOEVER WAS UNEARTHED DURING THE SEARCH. 32. RECENTLY BY ITS ORDER DATED 6TH JULY 2015 IN IT A NO. 369 OF 2015 (PR. COMMISSIONER OF INCOME TAX V. KURELE PAPE R MILLS P. LTD.), THIS COURT DECLINED TO FRAME A QUESTION OF L AW IN A CASE WHERE, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE SEARCH UNDER SECTION 132 OF THE ACT, THE REVENUE SOUGHT TO JUSTIFY INITIATION OF PROCEEDINGS UNDER SECTION 153A OF THE ACT AND MAKE AN ADDITION UNDER SECTION 68 OF THE ACT ON BOG US SHARE ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 16 CAPITAL GAIN. THE ORDER OF THE CIT (A), AFFIRMED BY THE ITAT, DELETING THE ADDITION, WAS NOT INTERFERED WITH.' 59. IN KABUL CHAWLA (SUPRA), THE COURT REFERRED TO THE DECISION OF THE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA) V. AS STT. CIT [2013] 36 TAXMANN.COM 523/219 TAXMAN 223 . THE SAID PART OF THE DECISION IN KABUL CHAWLA (SUPRA) IN PARAS 33 AND 34 READS AS UNDER: '33. THE DECISION OF THE RAJASTHAN HIGH COURT IN JA I STEEL (INDIA), JODHPUR V. ACIT (SUPRA) INVOLVED A CASE WHERE CERTA IN BOOKS OF ACCOUNTS AND OTHER DOCUMENTS THAT HAD NOT BEEN PROD UCED IN THE COURSE OF ORIGINAL ASSESSMENT WERE FOUND IN THE COU RSE OF SEARCH. IT WAS HELD WHERE UNDISCLOSED INCOME OR UNDISCLOSED PR OPERTY HAS BEEN FOUND AS A CONSEQUENCE OF THE SEARCH, THE SAME WOULD ALSO BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE TOT AL INCOME UNDER SECTION 153A OF THE ACT. THE COURT THEN EXPLAINED A S UNDER: '22. IN THE FIRM OPINION OF THIS COURT FROM A PLAIN READING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROVISION, WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISI TION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS APPARENT THAT: (A ) THE ASSESSMENTS OR REAS SESSMENTS, WHICH STAND ABATED IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; (B ) REGARDING OTHER CASES, THE ADDITION TO THE INCOME T HAT HAS ALREADY BEEN ASSESSED, T HE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL; AND (C ) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE.' 34. THE ARGUMENT OF THE REVENUE THAT THE AO WAS FRE E TO DISTURB INCOME DE HORS THE INCRIMINATING MATERIAL WHILE MAK ING ASSESSMENT ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 17 UNDER SECTION 153A OF THE ACT WAS SPECIFICALLY REJE CTED BY THE COURT ON THE GROUND THAT IT WAS 'NOT BORNE OUT FROM THE S CHEME OF THE SAID PROVISION' WHICH WAS IN THE CONTEXT OF SEARCH AND/OR REQUISITION. THE COURT ALSO EXPLAINED THE PURPORT O F THE WORDS 'ASSESS' AND 'REASSESS', WHICH HAVE BEEN FOUND AT M ORE THAN ONE PLACE IN SECTION 153A OF THE ACT AS UNDER: '26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVIS ION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE W ORDS 'ASSESS' OR 'REASSESS'-HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISI ON WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD ASSESS HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSESS HAS B EEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT A BATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SE ARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPOR T THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL F OUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS.'' 60. IN KABUL CHAWLA (SUPRA), THE COURT ALSO TOOK NOTE OF THE DECISION OF THE BOMBAY HIGH COURT IN CIT V. CONTINE NTAL WAREHOUSING CORPN (NHAVA SHEVA) LTD. [2015] 58 TAXMANN.COM 78/232 TAXMAN 270/374 ITR 645 (BOM.) WHICH ACCEPTED THE PLEA THAT IF NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH IN RESPECT OF AN ISSUE, THEN NO ADDITIONS IN RESPECT OF ANY ISSUE CAN BE MADE TO THE ASSESSMENT UNDER SECTION 1 53A AND 153C OF THE ACT. THE LEGAL POSITION WAS THEREAFTER SUMMA RIZED IN KABUL CHAWLA (SUPRA) AS UNDER: '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 18 AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUE D TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAV E TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE. AFOREMENTIONED SIX YEARS IN SEPARAT E ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS ' IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 19 RELATABLE TO ABATED PROCEEDINGS ( I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESS MENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 153A MERGES INTO O NE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE R ECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSE SSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME O R PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLO SED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 61. IT APPEARS THAT A NUMBER OF HIGH COURTS HAVE CONCU RRED WITH THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA) BEGINNING WITH THE GUJARAT HIGH COURT IN SAUMYA CONSTRUCTION (P.) LTD. (SUPRA). THERE, A SEARCH AND SEIZURE OPERATION WAS CARRIED O UT ON 7TH OCTOBER, 2009 AND AN ASSESSMENT CAME TO BE FRAMED U NDER SECTION 143(3) READ WITH SECTION 153A(1)(B) IN DETERMINING THE TOTAL INCOME OF THE ASSESSEE OF RS. 14.5 CRORES AGAINST D ECLARED INCOME OF RS. 3.44 CRORES. THE ITAT DELETED THE ADDITIONS ON THE GROUND THAT IT WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH IN RESPECT OF AYS UNDER CONSID ERATION I.E., AY 2006-07. THE GUJARAT HIGH COURT REFERRED TO THE DEC ISION IN KABUL CHAWLA(SUPRA), OF THE RAJASTHAN HIGH COURT IN JAI S TEEL (INDIA) (SUPRA) AND ONE EARLIER DECISION OF THE GUJ ARAT HIGH COURT ITSELF. IT EXPLAINED IN PARA 15 AND 16 AS UNDER: ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 20 '15. ON A PLAIN READING OF SECTION 153A OF THE ACT, IT IS EVIDENT THAT THE TRIGGER POINT FOR EXERCISE OF POWERS THEREUNDER IS A SEARCH UNDER SECTION 132 OR A REQUISITION UNDER SECTION 13 2A OF THE ACT. ONCE A SEARCH OR REQUISITION IS MADE, A MANDATE IS CAST UPON THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 153 A OF THE ACT TO THE PERSON, REQUIRING HIM TO FURNISH THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITI ON IS MADE AND ASSESS OR REASSESS THE SAME. SINCE THE ASSESSMENT U NDER SECTION 153A OF THE ACT IS LINKED WITH SEARCH AND REQUISITI ON UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS EVIDENT THAT THE OBJ ECT OF THE SECTION IS TO BRING TO TAX THE UNDISCLOSED INCOME WHICH IS FOUND DURING THE COURSE OF OR PURSUANT TO THE SEARCH OR REQUISITION. HOWEVER, INSTEAD OF THE EARLIER REGIME OF BLOCK ASSESSMENT WHEREBY, IT WAS ONLY THE UNDISCLOSED INCOME OF THE BLOCK PERIOD THAT WAS ASS ESSED, SECTION 153A OF THE ACT SEEKS TO ASSESS THE TOTAL INCOME FO R THE ASSESSMENT YEAR, WHICH IS CLEAR FROM THE FIRST PROVISO THERETO WHICH PROVIDES THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN S UCH SIX ASSESSMENT YEARS. THE SECOND PROVISO MAKES THE INTE NTION OF THE LEGISLATURE CLEAR AS THE SAME PROVIDES THAT ASSESSM ENT OR REASSESSMENT, IF ANY, RELATING TO THE SIX ASSESSMEN T YEARS REFERRED TO IN THE SUB-SECTION PENDING ON THE DATE OF INITIA TION OF SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A , AS THE CASE MAY BE, SHALL ABATE. SUB-SECTION (2) OF SECTION 153 A OF THE ACT PROVIDES THAT IF ANY PROCEEDING OR ANY ORDER OF ASS ESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) IS ANNULLED IN APPEAL OR ANY OTHER LEGAL PROVISION, THEN THE ASSESSMENT OR R EASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAD ABATED UN DER THE SECOND PROVISO WOULD STAND REVIVED. THE PROVISO THERETO SA YS THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT IF SUCH ORDER OF ANNULMENT IS SET ASIDE. THUS, ANY PROCEEDING OF ASSESSMENT OR REASSE SSMENT FALLING WITHIN THE SIX ASSESSMENT YEARS PRIOR TO THE SEARCH OR REQUISITION STANDS ABATED AND THE TOTAL INCOME OF THE ASSESSEE IS REQUIRED TO ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 21 BE DETERMINED UNDER SECTION 153A OF THE ACT. SIMILA RLY, SUB-SECTION (2) PROVIDES FOR REVIVAL OF ANY ASSESSMENT OR REASS ESSMENT WHICH STOOD ABATED, IF ANY PROCEEDING OR ANY ORDER OF ASS ESSMENT OR REASSESSMENT MADE UNDER SECTION 153A OF THE ACT IS ANNULLED IN APPEAL OR ANY OTHER PROCEEDING. 16. SECTION 153A BEARS THE HEADING 'ASSESSMENT IN C ASE OF SEARCH OR REQUISITION'. IT IS 'WELL SETTLED AS HELD BY THE SUPREME COURT IN A CATENA OF DECISIONS THAT THE HEADING OR THE SECTION CAN BE REGARDED AS A KEY TO THE INTERPRETATION OF THE OPERATIVE POR TION OF THE SECTION AND IF THERE IS NO AMBIGUITY IN THE LANGUAGE OR IF IT IS PLAIN AND CLEAR, THEN THE HEADING USED IN THE SECTION STRENGT HENS THAT MEANING. FROM THE HEADING OF SECTION 153. THE INTEN TION OF THE LEGISLATURE IS CLEAR, VIZ., TO PROVIDE FOR ASSESSME NT IN CASE OF SEARCH AND REQUISITION. WHEN THE VERY PURPOSE OF THE PROVI SION IS TO MAKE ASSESSMENT IN CASE OF SEARCH OR REQUISITION, IT GOE S WITHOUT SAYING THAT THE ASSESSMENT HAS TO HAVE RELATION TO THE SEA RCH OR REQUISITION, IN OTHER WORDS, THE ASSESSMENT SHOULD CONNECTED WITH SOMETHING ROUND DURING THE SEARCH OR REQUISITION VI Z., INCRIMINATING MATERIAL WHICH REVEALS UNDISCLOSED INCOME. THUS, WH ILE IN VIEW OF THE MANDATE OF SUB-SECTION (1) OF SECTION 153A OF T HE ACT, IN EVERY CASE WHERE THERE IS A SEARCH OR REQUISITION, THE AS SESSING OFFICER IS OBLIGED TO ISSUE NOTICE TO SUCH PERSON TO FURNISH R ETURNS OF INCOME FOR THE SIX YEARS PRECEDING THE ASSESSMENT YEAR REL EVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR R EQUISITION IS MADE, ANY ADDITION' OR DISALLOWANCE CAN BE MADE ONL Y ON THE BASIS OF MATERIAL COLLECTED DURING THE SEARCH OR REQUISIT ION, IN CASE NO INCRIMINATING MATERIAL IS FOUND, AS HELD BY THE RAJ ASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) V. ASST. CIT (SUPR A), THE EARLIER ASSESSMENT WOULD HAVE TO BE REITERATED, IN CASE WHE RE PENDING ASSESSMENTS HAVE ABATED, THE ASSESSING OFFICER CAN PASS ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS DETERMI NING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE INCOME D ECLARED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQU ISITION. IN CASE ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 22 WHERE A PENDING REASSESSMENT UNDER SECTION 147 OF T HE ACT HAS ABATED, NEEDLESS TO STATE THAT THE SCOPE AND AMBIT OF THE ASSESSMENT WOULD INCLUDE ANY ORDER WHICH THE ASSESS ING OFFICER COULD HAVE PASSED UNDER SECTION 147 OF THE ACT AS W ELL AS UNDER SECTION 153A OF THE ACT. ** ** ** 19. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTEND ED THAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING TH AT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATE RIAL IS FOUND, IT WOULD BE PERMISSIBLE TO MAKE ADDITIONS AND DISALLOW ANCE IN RESPECT OF AN THE SIX ASSESSMENT YEARS. IN THE OPINION OF T HIS COURT, THE SAID CONTENTION DOES NOT MERIT ACCEPTANCE, INASMUCH AS. THE ASSESSMENT IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IS A SEPARATE AND DISTINCT ASSESSMENT. UNDER SECTION 153A OF THE ACT, ASSESSMENT HAS TO BE MADE IN RELATION TO THE SEARCH OR REQUISITION , NAMELY, IN RELATION TO MATERIAL DISCLOSED DURING THE SEARCH OR REQUISITION. IF IN RELATION TO ANY ASSESSMENT YEAR, NO INCRIMINATING M ATERIAL IS FOUND, NO ADDITION OR DISALLOWANCE CAN BE MADE IN RELATION TO THAT ASSESSMENT YEAR IN EXERCISE OF POWERS UNDER SECTION 153A OF THE ACT AND THE EARLIER ASSESSMENT SHALL HAVE TO BE REI TERATED. IN THIS REGARD, THIS COURT IS IN COMPLETE AGREEMENT WITH TH E VIEW ADOPTED BY THE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEE L (INDIA) V. ASST. CIT (SUPRA). BESIDES, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE RESPONDENT, THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY THE DECISION OF THIS COURT IN T HE CASE OF CIT V. JAYABEN RATILAL SORATHIA (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHILE IT CANNOT BE DISPUTED THAT CONSIDERING S ECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN AND/OR ASSESS THE RETURN WITH RESPECT TO SIX PRECEDING YEARS ; HOWEVER, THERE MUS T BE SOME INCRIMINATING MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT TO THE SALE TRANSACTIONS IN THE PARTICULAR ASSESSMENT YEAR.' 62. SUBSEQUENTLY, IN DEVANGI ALIAS RUPA (SUPRA), ANOTH ER BENCH OF THE GUJARAT HIGH COURT REITERATED THE ABOVE LEGAL P OSITION FOLLOWING ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 23 ITS EARLIER DECISION IN SAUMYA CONSTRUCTION (P.) LT D. (SUPRA) AND OF THIS COURT IN KABUL CHAWLA (SUPRA). AS FAR AS KARNA TAKA HIGH COURT IS CONCERNED, IT HAS IN IBC KNOWLEDGE PARK (P.) LTD . (SUPRA) FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA) AND HELD THAT THERE HAD TO BE INCRIMINATING MATERIAL QUA EAC H OF THE AYS IN WHICH ADDITIONS WERE SOUGHT TO BE MADE PURSUANT TO SEARCH AND SEIZURE OPERATION. THE CALCUTTA HIGH COURT IN SALAS AR STOCK BROKING LTD. (SUPRA), TOO, FOLLOWED THE DECISION OF THIS CO URT IN KABUL CHAWLA (SUPRA). IN GURINDER SINGH BAWA (SUPRA), THE BOMBAY HIGH COURT HELD THAT: '6. . . . . . ONCE AN ASSESSMENT HAS ATTAINED FINAL ITY FOR A PARTICULAR YEAR, I.E., IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN PROCEEDINGS UNDER SECTION 153A OF THE ACT. THIS OF COURSE WOULD NOT APPLY IF INCRIMINATING MATERIALS ARE GATHERED I N THE COURSE OF SEARCH OR DURING PROCEEDINGS UNDER SECTION 153A OF THE ACT WHICH ARE CONTRARY TO AND/OR NOT DISCLOSED DURING THE REG ULAR ASSESSMENT PROCEEDINGS.' 63. EVEN THIS COURT HAS IN MAHESH KUMAR GUPTA (SUPRA) AND RAM AVTAR VERMA (SUPRA) FOLLOWED THE DECISION IN KABUL CHAWLA (SUPRA). THE DECISION OF THIS COURT IN KURELE PAPER MILLS (P .) LTD. (SUPRA) WHICH WAS REFERRED TO IN KABUL CHAWLA (SUPRA) HAS B EEN AFFIRMED BY THE SUPREME COURT BY THE DISMISSAL OF THE REVENUE'S SLP ON 7TH DECEMBER, 2015. THE DECISION IN DAYAWANTI GUPTA 64. THAT BRINGS US TO THE DECISION IN SMT. DAYAWANTI G UPTA (SUPRA). AS RIGHTLY POINTED OUT BY MR. KAUSHIK, LEARNED COUN SEL APPEARING FOR THE RESPONDENT, THAT THERE ARE SEVERAL DISTINGUISHI NG FEATURES IN THAT CASE WHICH MAKES ITS RATIO INAPPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE FIRST PLACE, THE ASSESSEES THE RE WERE ENGAGED IN THE BUSINESS OF PAN MASALA AND GUTKHA ETC. THE A NSWERS GIVEN TO QUESTIONS POSED TO THE ASSESSEE IN THE COURSE OF SE ARCH AND SURVEY PROCEEDINGS IN THAT CASE BRING OUT THE POINTS OF DI STINCTION. IN THE FIRST PLACE, IT WAS STATED THAT THE STATEMENT RECOR DED WAS UNDER ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 24 SECTION 132(4) AND NOT UNDER SECTION 133A. IT WAS A STATEMENT BY THE ASSESSEE HIMSELF. IN RESPONSE TO QUESTION NO. 7 WHETHER ALL THE PURCHASES MADE BY THE FAMILY FIRMS, WERE ENTERED IN THE REGULAR BOOKS OF ACCOUNT, THE ANSWER WAS: 'WE AND OUR FAMILY FIRMS NAMELY M/S. ASSAM SUPARI T RADERS AND M/S. BALAJI PERFUMES GENERALLY TRY TO RECORD THE TR ANSACTIONS MADE IN RESPECT OF PURCHASE, MANUFACTURING AND SALES IN OUR REGULAR BOOKS OF ACCOUNTS BUT IT IS ALSO FACT THAT SOME TIM E DUE TO SOME FACTORS LIKE INABILITY OF ACCOUNTANT, OUR BUSY SCHE DULE AND SOME FAMILY PROBLEMS, VARIOUS PURCHASES AND SALES OF SUP ARI, GUTKA AND OTHER ITEMS DEALT BY OUR FIRMS IS NOT ENTERED AND S HOWN IN THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY OUR FIRMS.' 65. THEREFORE, THERE WAS A CLEAR ADMISSION BY THE ASSE SSEES IN SMT. DAYAWANTI GUPTA (SUPRA) THERE THAT THEY WER E NOT MAINTAINING REGULAR BOOKS OF ACCOUNTS AND THE TRANS ACTIONS WERE NOT RECORDED THEREIN. 66. FURTHER, IN ANSWER TO QUESTION NO. 11, THE ASSESSE E IN SMT. DAYAWANTI GUPTA (SUPRA) WAS CONFRONTED WITH CERTAIN DOCUMENTS SEIZED DURING THE SEARCH. THE ANSWER WAS CATEGORICA L AND READS THUS: 'ANS:- I HEREBY ADMIT THAT THESE PAPERS ALSO CONTEN D DETAILS OF VARIOUS TRANSACTIONS INCLUDE PURCHASE/SALES/MANUFAC TURING TRADING OF GUTKHA, SUPARI MADE IN CASH OUTSIDE BOOKS OF ACC OUNTS AND THESE ARE ACTUALLY UNACCOUNTED TRANSACTIONS MADE BY OUR TWO FIRMS NAMELY M/S. ASOM TRADING AND M/S. BALAJI PERFUMES.' 67. BY CONTRAST, THERE IS NO SUCH STATEMENT IN THE PRE SENT CASE WHICH CAN BE SAID TO CONSTITUTE AN ADMISSION BY THE ASSESSEE OF A FAILURE TO RECORD ANY TRANSACTION IN THE ACCOUNTS O F THE ASSESSEE FOR THE AYS IN QUESTION. ON THE CONTRARY, THE ASSESSEE HEREIN STATED THAT, HE IS REGULARLY MAINTAINING THE BOOKS OF ACCO UNTS. THE DISCLOSURE MADE IN THE SUM OF RS. 1.10 CRORES WAS O NLY FOR THE YEAR OF SEARCH AND NOT FOR THE EARLIER YEARS. AS ALREADY NOTICED, THE ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 25 BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE IN THE PRESENT CASE HAVE BEEN ACCEPTED BY THE AO. IN RESPONSE TO QUESTI ON NO. 16 POSED TO MR. PAWAN GADIA, HE STATED THAT THERE WAS NO POSSIBILITY OF MANIPULATION OF THE ACCOUNTS. IN SMT. DAYAWANTI GUP TA (SUPRA), BY CONTRAST, THERE WAS A CHART PREPARED CONFIRMING THA T THERE HAD BEEN A YEAR-WISE NON-RECORDING OF TRANSACTIONS. IN SMT. DAYAWANTI GUPTA (SUPRA), ON THE BASIS OF MATERIAL RECOVERED D URING SEARCH, THE ADDITIONS WHICH WERE MADE FOR ALL THE YEARS WHEREAS ADDITIONS IN THE PRESENT CASE WERE MADE BY THE AO ONLY FOR AY 20 04-05 AND NOT ANY OF THE OTHER YEARS. EVEN THE ADDITIONS MADE FOR AYS 2004-05 WERE SUBSEQUENTLY DELETED BY THE CIT (A), WHICH ORD ER WAS AFFIRMED BY THE ITAT. EVEN THE REVENUE HAS CHALLENG ED ONLY TWO OF SUCH DELETIONS IN ITA NO. 306/2017. 68. IN PARA 23 OF THE DECISION IN SMT. DAYAWANTI GUPTA (SUPRA), IT WAS OBSERVED AS UNDER: '23. THIS COURT IS OF OPINION THAT THE ITAT'S FINDI NGS DO NOT REVEAL ANY FUNDAMENTAL ERROR, CALLING FOR CORRECTION. THE INFERENCES DRAWN IN RESPECT OF UNDECLARED INCOME WERE PREMISED ON TH E MATERIALS FOUND AS WELL AS THE STATEMENTS RECORDED BY THE ASS ESSEES. THESE ADDITIONS THEREFORE WERE NOT BASELESS. GIVEN THAT T HE ASSESSING AUTHORITIES IN SUCH CASES HAVE TO DRAW INFERENCES, BECAUSE OF THE NATURE OF THE MATERIALS - SINCE THEY COULD BE SCANT Y (AS ONE HABITUALLY CONCEALING INCOME OR INDULGING IN CLANDE STINE OPERATIONS CAN HARDLY BE EXPECTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG AND IN ALL PROBABILITY BE ANXIOUS TO DO AWAY W ITH SUCH EVIDENCE AT THE SHORTEST POSSIBILITY) THE ELEMENT OF GUESS W ORK IS TO HAVE SOME REASONABLE NEXUS WITH THE STATEMENTS RECORDED AND DOCUMENTS SEIZED. IN TILLS CASE, THE DIFFERENCES OF OPINION BETWEEN THE CIT (A) ON THE ONE HAND AND THE AO AND ITAT ON THE OTHER CANNOT BE THE SOLE BASIS FOR DISAGREEING WITH WHAT IS ESSENTIALLY A FACTUAL SURMISE THAT IS LOGICAL AND PLAUSIBLE. THES E FINDINGS DO NOT CALL FOR INTERFERENCE. THE SECOND QUESTION OF LAW I S ANSWERED AGAIN IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE.' ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 26 69. WHAT WEIGHED WITH THE COURT IN THE ABOVE DECISION WAS THE 'HABITUAL CONCEALING OF INCOME AND INDULGING IN CLA NDESTINE OPERATIONS' AND THAT A PERSON INDULGING IN SUCH ACT IVITIES 'CAN HARDLY BE ACCEPTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG.' THESE FACTORS ARE ABSENT IN THE PRESENT CASE . THERE WAS NO JUSTIFICATION AT ALL FOR THE AO TO PROCEED ON SURMI SES AND ESTIMATES WITHOUT THERE BEING ANY INCRIMINATING MATERIAL QUA THE AY FOR WHICH HE SOUGHT TO MAKE ADDITIONS OF FRANCHISEE COMMISSIO N. 70. THE ABOVE DISTINGUISHING FACTORS IN SMT. DAYAWANTI GUPTA (SUPRA), THEREFORE, DO NOT DETRACT FROM THE S ETTLED LEGAL POSITION IN KABUL CHAWLA(SUPRA) WHICH HAS BEEN FOLL OWED NOT ONLY BY THIS COURT IN ITS SUBSEQUENT DECISIONS BUT ALSO BY SEVERAL OTHER HIGH COURTS. 71. FOR ALL OF THE AFOREMENTIONED REASONS, THE COURT I S OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT THE INV OCATION OF SECTION 153A BY THE REVENUE FOR THE AYS 2000-01 TO 2003-04 WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCRIMINATING MATER IAL QUA EACH OF THOSE AYS. CONCLUSION 72. TO CONCLUDE: (I ) QUESTION (I) IS ANSWERED IN THE NEGATIVE I.E., IN F AVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IT IS HELD THAT I N THE FACTS AND CIRCUMSTANCES, THE REVENUE WAS NOT JUSTIFIED IN INV OKING SECTION 153A OF THE ACT AGAINST THE ASSESSEE IN RELATION TO AYS 2000- 01 TO AYS 2003-04? (II ) QUESTION (II) IS ANSWERED IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IT IS HELD THAT W ITH REFERENCE TO AY 2004- 05, THE ITAT WAS CORRECT IN CONFIRMING THE ORDERS O F THE CIT (A) TO THE EX TENT IT DELETED THE ADDITIONS MADE BY THE AO TO THE TAXABLE INCOME OF THE ASSESSEE OF FRANCHISE COM MISSION IN THE SUM OF RS. 88 LAKHS AND RENT PAYMENT FOR THE SUM OF RS. 13.79 ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 27 LAKHS? ACCORDINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSMENT IN QUESTION WAS FRAMED U/S 153A IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND OR SEIZED AND THEREFORE, THE ADDITION MADE BY THE AO OF RS. 26,18 3/- ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO ESI AND PF IS NOT JUSTIFIED AND THE SAME IS DELETED BY FOLLOWING DECISIONS OF D ELHI HIGH COURT IN CASE PR. CIT VS. MEETA GUTGUTIA (SUPRA). ACCORDINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS VARIOUS DECISIONS AND BINDING PRECEDENT AS CITED ABOVE THE ADDITION OF INCOME DURING THE ASSESSMENT FRAMED U/S 153A IS NOT SUSTAINABLE AS THE SAME IS NOT BASED ON ANY INCRIMINATING MATERIA L FOUND OR SEIZED AS THE ENTIRE ASSESSMENT ORDER IS SILENT ABOUT ANY INC RIMINATING MATERIAL AND FURTHER THE AO HAS ADMITTED IN THE REMAND REPOR T AND CONFIRMED THE FACT THAT NO INCRIMINATING MATERIAL WAS REFERRE D OR IS BASIS OF THE ASSESSMENT PROCEEDINGS U/S 153A. ACCORDINGLY, THE A DDITION MADE BY THE AO FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11 ARE NOT SUSTAINABLE AND LIABLE TO BE DELETED, WE ORDER ACCO RDINGLY. SINCE, WE HAVE DELETED THE ADDITION ON THE ISSUE OF JURISDICT ION OF THE AO U/S 153A OF THE ACT THEREFORE, WE DO NOT PROPOSE TO GO INTO OTHER ISSUES RAISED BY THE ASSESSEE. SIMILARLY ONLY ISSUE RAISED BY THE REVENUE IN THESE TWO ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 28 APPEALS FOR THE ASSESSMENT YEARS 2009-10 & 2010-11 ALSO BECOMES INFRUCTUOUS AND CONSEQUENTLY DISMISSED. 5. FOR THE ASSESSMENT YEAR 2011-12 THE ASSESSEE AS WELL AS REVENUE HAVE RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE ASSESSME NT COMPLETED BY THE LD. AO U/S 153A OF THE INCOME TAX ACT, 1961 WHEN NO INCRIMINATING PAPER WAS FOUND AS A RESULT OF SEARCH PERTAINING TO THE YEAR UNDER APPEAL, THUS THE CONSEQUENT ORDER PA SSED U/S 153A OF THE INCOME TAX ACT, 1961 DESERVES TO BE QUA SHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE REJECTION OF THE BOOKS OF ACCOUNTS MAINTAINED IN THE REGULAR COURSE OF BUSINE SS WITHOUT APPRECIATING THE FACT OF CONSISTENCY IN MAINTAINING ACCOUNTS YEAR AFTER YEAR ON SAME BASIS AND FURTHER WITHOUT APPREC IATING THE NATURE OF BUSINESS, THAT BEING SO THE ENTIRE ADDITI ONS SO UPHOLD DESERVES TO BE DELETED IN TOTO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE APPLICATI ON OF THE NET PROFIT RATE OF 5.75% ON THE TURNOVER OF RS. 58,89,8 3,394/- [SUBJECT TO INTEREST AND DEPRECIATION] IN M/S LAXMI NARAIN AGARWAL WITHOUT APPRECIATING THE SUBMISSIONS MADE A ND RECORDS PRODUCED AND FURTHER WITHOUT BRINGING ON RECORD ANY MATERIAL TO SUPPORT OF SUCH A HIGH RATE OF NET PROFIT (HOWEVER NO FINANCIAL ADDITION HAS BEEN MADE BEING THE INCOME DECLARED BY THE ASSESSEE IS HIGHER AS COMPARED TO THE INCOME DERIVE D AFTER APPLICATION OF SUCH N.P. RATE SUBJECT TO INTEREST A ND DEPRECIATION). THIS BEING SO THE TRADING RESULTS AS DECLARED BY THE APPELLANT DESERVES TO BE ACCEPTED. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 29 3.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNOR ING THE FACT THAT THE PROFIT RATE DECLARED BY THE ASSESSEE WORKS OUT TO 11.37% BEFORE ALLOWING THE STATUTORY DEDUCTION LIKE DEPREC IATION, INTEREST, SALES TAX AND ROYALTY AND EXTRAORDINARY I TEM SUCH AS MANPOWER DEDUCTIONS WHICH IS NOT ONLY QUITE REASONA BLE BUT ALSO HIGHER AS COMPARED TO THE NET PROFIT RATE APPLIED T HUS THE NET PROFIT RATE DECLARED BY THE ASSESSEE DESERVES TO BE ACCEPTED. WITHOUT PREJUDICE TO ABOVE 3.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORING THE FACT THAT THE TOTAL TURNOVER OF THE ASSESSEE CONSIDERED AT RS. 58,89,83,394/- FOR THE APPLICATION OF NET PROFIT RA TE @ 5.75% INCLUDES THE TURNOVER OF RS. 11,83,32,363/- GIVEN O N SUB- CONTRACT BASIS ON WHICH ASSESSEE HAS RECEIVED 2% NE T PROFIT MARGIN WHICH FACT IS NEVER DISPUTED BY LD. AO OR BY LD. CIT(A), THUS DEDUCTION FOR LOWER PROFIT MARGIN TO THE EXTEN T OF THE WORK GIVEN ON SUB-CONTRACT HAS TO BE GIVEN OUT OF THE TO TAL PROFIT COMPUTED BY APPLYING 5.75% NET PROFIT RATE. 3.3 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT IN CASE OF CARRIED OVER CONTRACTS FROM PRECEDING AS SESSMENT YEARS, THE PROFIT RATE MUCH LESSOR THAN 5.75% WAS A PPLIED THUS HIGHER PROFIT RATE ON THE REMAINING WORK EXECUTED D URING THE YEAR UNDER APPEAL IS WITHOUT ANY BASIS AND THEREFOR E THE CONSEQUENT ADDITIONS DESERVES TO BE DELETED. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. REVENUES GROUND ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 30 (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) HAS ERRED IN IGNORING THE FACT THAT THE AO APPLIED N.P. RATE AFTER ALLOWING DEPRECIATIO N AND INTEREST WHICH TANTAMOUNT TO ALLOWING DEPRECIATION AND INTER EST TWICE. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) HAS ERRED IN RELYING O N THE CASE OF JAIN CONSTRUCTION CO. AND ALLOWING DEPRECIATION AND INTEREST, IGNORING THE FACT THAT IN THAT CASE N.P. RATE WAS M UCH MORE THAN AS SPECIFIED U/S 44AD. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) HAS ERRED IN IGNORING THE FACT THAT THE AO HAS ALREADY APPLIED LOWER N.P. RATE AND THER EFORE NOT ALLOWED DEPRECIATION AND INTEREST. (IV) THE APPELLANT CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 6. GROUND NO. 1 AND 2 OF ASSESSEES APPEAL ARE REGA RDING VALIDITY OF THE REASSESSMENT FRAMED U/S 153A WITHOUT ANY INCRIM INATING MATERIAL AND REJECTION OF BOOKS OF ACCOUNTS U/S 154(3) OF TH E ACT. AT THE TIME HEARING, THE LEARNED COUNSEL FOR ASSESSEE STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROUND NOS. 1 AND 2 AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD. DR HAS RAISED NO OBJECTIONS IF GROUND NOS. 1 AND 2 OF THE ASSESSEES APPEAL ARE DISMISSED AS NOT PRESSED. ACCORDINGLY THE GROUND NOS. 1 AND 2 OF THE ASSESSEE S APPEAL ARE DISMISSED BEING NOT PRESSED. 7. GROUND NO. 3 IS REGARDING THE TRADING ADDITION M ADE BY THE AO BY TAKING NET PROFIT @ 5.75% OF TURNOVER. SINCE, TH E LD. CIT(A) HAS ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 31 ALLOWED DEDUCTION ON ACCOUNT OF DEPRECIATION AND IN TEREST FROM THE NET PROFIT @ 5.75% THE REVENUE IS ALSO AGGRIEVED BY THE IMPUGNED ORDER OF THE LD. CIT(A) AND FILED THE CROSS APPEAL THEREFORE , THIS GROUND IS COMMON IN BOTH APPEALS OF ASSESSEE AS WELL AS REVEN UE. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE AO HAS APPLIED NET PROFIT RATE ON THE ENTIRE TURNOVER WHICH INCLUDES A TURNOVER OF SU BCONTRACT RECEIPTS ON WHICH THE ASSESSEE IS EARNING THE INCOME @ 2% THERE FORE, APPLYING THE NET PROFIT RATIO ON THE ENTIRE TURNOVER IS NOT JUST IFIED. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE IS A CIVIL CONTRACTOR A ND ENGAGED IN THIS LINE OF BUSINESS FOR LONG TIME. THE ASSESSEE EARNED TURN OVER FROM HIS OWN EXECUTION OF WORK OF RS. 36.83 CRORES WHEREAS THE T URNOVER OF SUBCONTRACT WORK IS RS. 14.16 CRORES. THUS, THE LD. AR HAS SUBMITTED THAT THE PROFIT RATE APPLIED BY THE AO SHOULD HAVE BEEN RESTRICTED TO THE TURNOVER OF THE ASSESSEES OWN EXECUTION OF WORK AN D NOT ON THE SUBCONTRACT AS THE ASSESSEE IS RECEIVING ONLY 2% IN COME ON THE SUBCONTRACT TURNOVER. HE HAS REFERRED TO THE DETAIL S OF THE TURNOVER AND SUBMITTED THAT IF THE SUBCONTRACT TURNOVER IS EXCLU DED FOR THE PURPOSE OF ESTIMATING THE INCOME THEN, NO ADDITION IS CALLE D FOR IN THE RETURN INCOME OF THE ASSESSEE AFTER ALLOWING THE DEPRECIAT ION AND INTEREST. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 32 8. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT ONCE NET PROFIT RATE IS APPLIED FOR ESTIMATION OF INCOME THEN, NO F URTHER DEDUCTION IS ALLOWABLE. THE ASSESSEE HAS BIFURCATED THE TURNOVER WHEN INCOME OF THE ASSESSEE IS ASSESSED BY TAKING ON THE BASIS OF ESTIMATION. THE LD. DR HAS SUBMITTED THAT THE NET PROFIT RATE APPLIED B Y THE AO HAS TO BE COMPUTED ON THE ENTIRE TURNOVER. FURTHER, ONCE THE INCOME IS ESTIMATED BY ADOPTING THE NET PROFIT RATE THEN, NO FURTHER DE DUCTION IS ALLOWABLE. SHE HAS REFERRED TO THE PROVISIONS OF SECTION 44AD AND SUBMITTED THAT THE STATUTE HAS PROVIDED ESTIMATION OF INCOME BY TA KING THE PROFIT @ 8% OF TURNOVER WITHOUT ALLOWING FURTHER DEDUCTION. THUS, THE LD. DR HAS SUBMITTED THAT THE PROVISIONS OF SECTION 44AD ARE A PROPER GUIDANCE FOR ESTIMATION OF INCOME AFTER REJECTION OF BOOKS OF AC COUNTS. SHE HAS RELIED UPON THE ORDERS OF THE ASSESSING OFFICER. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER HAS REJEC TED THE BOOKS OF ACCOUNTS AND APPLIED NET PROFIT @ 5.75% TO ESTIMATE INCOME OF THE ASSESSEE. THOUGH THE AO HAS NOT GIVEN ANY DETAILS A S TO HOW THE NET PROFIT @ 5.75% IS TAKEN AS THE BASIS FOR ESTIMATION HOWEVER, WITHOUT GOING INTO THE CONTROVERSY OF WHAT WOULD HAVE BEEN THE PROPER RATE OF ESTIMATION WE FIRST DEAL WITH THE ISSUE OF APPLYING N.P. OF TOTAL TURNOVER ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 33 WHICH INCLUDES THE TURNOVER FROM SUBCONTRACT. WE NO TE THAT THE AO HAS TAKEN TOTAL TURNOVER OF RS. 51,00,10,676/- WHICH CO NSISTS THE TURNOVER OF RS. 36,83,23,723/- FROM THE EXECUTION OF WORK BY THE ASSESSEE AND THE BALANCE OF RS. 14,16,86,952/- FROM SUBCONTRACT. THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE EARNING ONLY 2% PROFIT ON THE SUBCONTRACT WORK AND THEREFORE, THE ESTIMATION OF INCOME BY APP LYING NET PROFIT CAN BE COMPUTED ONLY IN RESPECT OF THE TURNOVER FROM TH E EXECUTION OF WORK BY THE ASSESSEE HIMSELF EXCLUSION THE TURNOVER OF S UBCONTRACT. WE DO FIND MERITS AND SUBSTANCE IN THIS CONTENTION OF THE LD. AR THAT THE PROFIT FROM SUBCONTRACT CANNOT BE COMPARED WITH THE PROFIT OF ASSESSEES OWN EXECUTION OF WORK AND THEREFORE FOR THE PURPOSE OF ESTIMATING THE INCOME FROM TURNOVER OF THE ASSESSEES BUSINESS OF CIVIL CONTRACT HAS TO BE CONFINED ONLY TO THE TURNOVER FROM ASSESSEES OW N EXECUTION AND NOT THE EXECUTION THROUGH SUBCONTRACT. THERE IS REASON FOR NOT COMPARING THE TURNOVER FROM THE WORK EXECUTED THROUGH SUBCONT RACT BECAUSE MORE ONE PARTY ARE SHARING THE PROFIT IN SUCH EXECU TION OF WORK THROUGH SUBCONTRACTOR. THEREFORE, WHEN THE ASSESSEE IS EAR NING ONLY 2% PROFIT ON THE WORK EXECUTED THROUGH SUBCONTRACT THEN THE T URNOVER OF THE ASSESSEE FROM SUBCONTRACT CANNOT BE INCLUDED FOR T HE PURPOSE OF ESTIMATING THE PROFIT BY APPLYING A REASON ABLE AND PROPER RATE OF PROFIT. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 34 HENCE, WE DIRECT THE AO TO RE COMPUTE THE INCOME OF THE ASSESSEE ON THE BASIS OF ESTIMATION ONLY ON THE TURNOVER FROM A SSESSEES OWN EXECUTION OF WORK AND NOT ON THE TURNOVER FROM THE EXECUTION OF WORK THROUGH SUBCONTRACT. THE INCOME OF THE ASSESSEE FRO M SUBCONTRACT IS NOT IN DISPUTED AS IT IS CLEARLY EVENT FROM THE REC ORD THAT THE ASSESSEE IS RETAINING ONLY 2% OF SUCH EXECUTION OF WORK THROUGH SUBCONTRACT AND THEREFORE, THE INCOME ON THE SUBCONTRACT RECEIPT @ 2% HAS TO BE TAKEN INTO ACCOUNT. 10. AS REGARDS THE DISPUTE REGARDING ALLOWING FURTH ER DEDUCTION AM ACCOUNT OF INTEREST AND DEPRECIATION FROM THE INCOM E ESTIMATED BY APPLYING NET PROFIT RATE WE ARE OF THE CONSIDERED V IEW THAT THIS CONTROVERSY CAN BE RESOLVED BY TAKING A REASONABLE AND PROPER G.P. RATE INSTEAD OF N.P. RATE FOR ESTIMATION OF INCOME. THERE IS NO QUARREL AS FAR AS THE PAST HISTORY OF GP RATE DECLARED BY THE ASSESSEE IS A REASONABLE AND PROPER GUIDANCE FROM THE PURPOSES OF ADOPTING THE GP FOR ESTIMATING OF INCOME. ACCORDINGLY WE DIRECT THE AO TO APPLY A REASONABLE GP RATE FOR ESTIMATING OF INCOME INSTEAD OF NP RATE AND THEN ALLOW THE ALLOWABLE DEDUCTIONS AS PER LAW. HENCE, G ROUND NO. 3 OF THE ASSESSEES APPEAL AND THE GROUND RAISED IN THE REVE NUES APPEAL ARE DISPOSED OFF BEING SET ASIDE TO THE RECORD OF THE A SSESSING OFFICER FOR ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 35 ESTIMATION OF THE INCOME OF THE ASSESSEE BY APPLYIN G GP RATE AND FURTHER DEDUCTION ONLY IN RESPECT OF THE TURNOVER F ROM THE EXECUTION OF THE WORK BY THE ASSESSEE HIMSELF EXCLUDING THE TURN OVER OF SUBCONTRACT WORK. 11. FOR THE ASSESSMENT YEAR 2012-13 THE ASSESSEE AS WELL AS REVENUE HAVE RAISED THE FOLLOWING GROUNDS:- ASSESSEES GROUND 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE REJECTION OF THE BOOKS OF ACCOUNTS MAINTAINED IN THE REGULAR COURSE OF BUSINE SS WITHOUT APPRECIATING THE FACT OF CONSISTENCY IN MAINTAINING ACCOUNTS YEAR AFTER YEAR ON SAME BASIS AND FURTHER WITHOUT APPREC IATING THE NATURE OF BUSINESS, THAT BEING SO THE ENTIRE ADDITI ONS SO UPHOLD DESERVES TO BE DELETED IN TOTO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITIONS BY APP LYING THE NET PROFIT RATE OF 8% ON THE TURNOVER OF RS. 83,79,74,4 57/- [SUBJECT TO INTEREST AND DEPRECIATION] IN M/S LAXMI NARAIN AGAR WAL WITHOUT APPRECIATING THE SUBMISSIONS MADE AND RECORDS PRODU CED AND FURTHER WITHOUT BRINGING ON RECORD ANY MATERIAL TO SUPPORT OF SUCH A HIGH RATE OF NET PROFIT SOLELY BASED ON THE STATE MENTS RECORDED OF THE ASSESSEE DURING THE COURSE OF SEARCH WHICH W AS MADE WITHOUT REFERRING TO THE BOOKS OF ACCOUNT MAINTAINE D THUS THE ADDITION OF RS. 78,63,193/- SO UPHOLD DESERVES TO B E DELETED. 2.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT THE PROFIT RATE DECLARED BY THE ASSESSEE WORKS OUT TO 9 .70% BEFORE ALLOWING THE STATUTORY DEDUCTION LIKE DEPRECIATION, INTEREST, SALES TAX AND ROYALTY AND EXTRAORDINARY ITEM SUCH AS MANP OWER ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 36 DEDUCTIONS WHICH IS NOT ONLY QUITE REASONABLE BUT A LSO HIGHER AS COMPARED TO THE NET PROFIT RATE APPLIED THUS THE NE T PROFIT RATE DECLARED BY THE ASSESSEE DESERVES TO BE ACCEPTED. 2.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT EXCEPT THE SO-CALLED STATEMENTS OF THE ASSESSEE REC ORDED DURING THE COURSE OF SEARCH NO PAPER WAS FOUND AS A RESULT OF SEARCH INDICATING THAT THE ASSESSEE HAS EARNED NET PROFIT FROM CONTRACT ACTIVITY @ 8%, THUS THE ADDITIONS SO UPHOLD BY THE LD. CIT(A) BY APPLYING THE NET PROFIT RATE OF 8% DESERVES TO BE D ELETED. WITHOUT PREJUDICE TO ABOVE 2.3 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT THE TOTAL TURNOVER OF THE ASSESSEE CONSIDERED AT RS . 83,79,74,457/- FOR THE APPLICATION OF NET PROFIT RA TE @ 8% INCLUDES THE TURNOVER OF RS. 15,38,70,232/- GIVEN O N SUB- CONTRACT BASIS ON WHICH ASSESSEE HAS RECEIVED 2% NE T PROFIT MARGIN THUS DEDUCTION FOR LOWER PROFIT MARGIN TO TH E EXTENT OF THE WORK GIVEN ON SUB-CONTRACT HAS TO BE GIVEN OUT OF THE TOTAL PROFIT COMPUTED BY APPLYING 8% NET PROFIT RATE. 2.4 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT IN CASE OF CARRIED OVER CONTRACTS FROM PRECEDING AS SESSMENT YEARS, THE PROFIT RATE MUCH LESSOR THAN 8% WAS APPL IED THUS HIGHER PROFIT RATE ON THE REMAINING WORK EXECUTED D URING THE YEAR UNDER APPEAL IS WITHOUT ANY BASIS AND THEREFOR E THE CONSEQUENT ADDITIONS DESERVES TO BE DELETED. 3. THAT THE LD. CIT(A) HAS ERRED IN TREATING THE INTER EST INCOME OF RS. 76,99,437/- AS INCOME FROM OTHER SOURCES WITHOU T APPRECIATING THE FACT THAT INTEREST HAS BEEN EARNED ON THE FUNDS INVESTED IN THE REGULAR COURSE OF BUSINESS AS PER T HE TERMS OF THE CONTRACTS THUS THE SAME IS PART OF THE BUSINESS INC OME AND DESERVES TO BE INCLUDED IN THE NET PROFITS DECLARED FROM THE BUSINESS ACTIVITY OF THE ASSESSEE. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 37 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 17,46,402/- ON ACCOUNT OF JEWELLERY ALLEGED AS UNEX PLAINED ARBITRARILY, THUS THE ADDITION OF RS. 17,46,402/- D ESERVES TO BE DELETED. 4.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN NOT AL LOWING CREDIT OF THE JEWELLERY IN TERMS OF CBDT INSTRUCTIONS DATED 1 1.05.1994, RELIANCE IS PLACED ON THE DECISION OF HON'BLE KERAL A HIGH COURT IN THE CASE OF PATI DEVI VS. ITO REPORTED IN 240 IT R 727 AND THE DECISION OF JURISDICTIONAL JAIPUR BENCH OF ITAT WHICH ARE BINDING IN NATURE, THUS THE CONSEQUENT ADDITION WIT HOUT ALLOWING SUCH CREDIT DESERVES TO BE DELETED. 5. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN NOT ALL OWING THE BENEFIT OF TELESCOPING AND SET OFF OF THE ADDITIONS MADE IN TO EACH OTHER THUS THE BENEFIT OF TELESCOPING AND SET- OFF DESERV ES TO BE ALLOWED FROM THE ADDITIONS, IF ANY, FINALLY UPHOLD. 6. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. REVENUES GROUND (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) HAS ERRED IN RESTRICTI NG THE TRADING ADDITION FROM RS. 6,70,37,956/- TO RS. 4,17,56,924/ - BY ALLOWING DEPRECITATION AND INTEREST, IGNORING THE FACT THAT THE AO MADE ADDITION AFTER REJECTING BOOKS OF ACCOUNT AND CONSI DERING THE SHOWN STATEMENT OF THE ASSESSEE RECORDED ON OATH, D URING COURSE OF SEARCH & SEIZURE OPERATION, IN WHICH HE ADMITTED TO DECLARE 8% NET PROFIT ON GROSS RECEIPTS. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEALS) HAS ERRED IN DELETING ADDITION OF RS. 20,37,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINE D CASH FOUND AT THE RESIDENCE OF ASSESSEE, IGNORING THE FA CT THAT DURING ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 38 SEARCH AND SEIZURE PROCEEDINGS, THE ASSESSEE ADMITT ED TO SURRENDER UNDISCLOSED CASH FOR TAXATION. (III) THE APPELLANT CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 12. GROUND NOS. 1 AND 2 ARE REGARDING THE ADDITION MADE BY THE AO BY APPLYING NP RATE 8% ON THE TURNOVER OF RS. 83.79 CRORES. DURING THE COURSE OF SEARCH AND SEIZURE ACTION AND STATEMENT R ECORDED U/S 132(4) OF THE ACT THE ASSESSEE SURRENDERED AND DISCLOSED I NCOME @ 8% ON THE TURNOVER OF RS. 68 CRORES. IN THE RETURN OF INCOME THE ASSESSEE HAS DECLARED TURNOVER OF RS. 83.79 CRORES AND ACCORDING LY THE AO APPLIED THE NP RATE 8% ON THE ENTIRE TURNOVER. 13. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AS FAR AS THE INCO ME DISCLOSED AND SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SE ARCH AND SEIZURE ACTION AND IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT WE NOTE THAT THE ASSESSEE HAS ESTIMATED TURNOVER FOR THE YEAR UN DER CONSIDERATION OF RS. 68,00,47,401/- AND OFFERED INCOME @ 8% ON TH E SAID TURNOVER WHICH AMOUNTS TO RS. 5,44,03,792/-. IN THE RETURN O F INCOME THE ASSESSEE HAS DECLARED TURNOVER OF RS. 83.79 CRORES WHICH INCLUDES A TURNOVER OF RS. 15.57 CRORES FROM THE WORK EXCLUDED THROUGH SUBCONTRACT. THE CONTROVERSY AND DISPUTE IS REGARDI NG 8% NP ON THE ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 39 ENTIRE TURNOVER WHERE AS THE ASSESSEE HAS CONTENDED THAT THE TOTAL TURNOVER DECLARED BY THE ASSESSEE INCLUDES A TURNOV ER OF RS. 15,38,17,232/- FROM SUBCONTRACT AND FURTHER THE ASS ESSEE HAS SUBMITTED THAT A TURNOVER OF RS. 15.46 CRORES IS CA RRIED FROM EARLIER YEAR AND ON WHICH THE NET PROFIT AS APPLIED IN THE EARLIER ASSESSMENT YEAR SHOULD BE APPLIED. THE LD. DR HAS SUBMITTED TH AT THE ASSESSEE HAS ADMITTED THE PROFIT RATE 8% THEN, THE AO HAS CORREC TLY APPLIED THE SAID RATE AND THEREFORE, NO FURTHER DEDUCTION IS ALLOWAB LE FROM THE NP APPLIED BY THE AO. 14. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD WE NOTE THAT THE ASSESSEE HAS DE CLARED AND ADMITTED INCOME OF RS. 5,44,03,792/- BEING 8% ON TH E TURNOVER OF RS. 68,00,47,401/-. THEREFORE, THE TURNOVER OF RS. 68 C RORES AND INCOME ON SUCH TURNOVER @ 8% AMOUNTING TO RS. 5,44,03,792/- I S ADMITTED INCOME AS DECLARED BY THE ASSESSEE DURING THE SEARC H AND SEIZURE AND IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. TH E ASSESSEE OFFERED THE INCOME OF RS. 2,61,94,295/- IN THE RETURN OF IN COME ON TURNOVER OF RS. 83.79 CRORES OUT OF THIS THE TURNOVER OF RS. 68 CRORES WAS ADMITTED BY THE ASSESSEE AS THE TURNOVER FROM THE WORK EXECU TED BY THE ASSESSEE AND THUS, THE SAID TURNOVER IF EXCLUDE FRO M THE TOTAL TURNOVER ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 40 THE REMAINING TURNOVER IS FROM SUBCONTRACT WHICH I S RS. 15.39 CRORES. THEREFORE, THE INCOME OF THE ASSESSEE HAS TO BE ASS ESSED BY APPLYING 8% NP ON THE TURNOVER OF RS. 68 CRORES AND THEN 2% ON THE SUBCONTRACT TURNOVER OF RS. 15.38 CRORES. THE NET P ROFIT ON THE TURNOVER OF RS. 68 CRORES WAS ALREADY ADMITTED BY THE ASSESS EE IN THE STATEMENT RECORDED U/S 132(4) AMOUNT TO RS. 5,44,03,792/- AND FURTHER ADDITION OF RS. 30,77,404/- HAS TO BE MADE ON ACCOUNT OF SUB CONTRACT TURNOVER. THE LD. CIT(A) HAS ALLOWED FURTHER, DEDUCTION OF DE PRECIATION AND INTEREST WHICH HAS BEEN OBJECTED BY THE REVENUE IN THE CROSS APPEAL. WE ARE OF THE VIEW THAT IN THE NORMAL CIRCUMSTANCES IF THE INCOME IS ESTIMATED BY APPLYING NET PROFIT BASED ON SOME PAST HISTORY OF THE ASSESSEE THEN FURTHER DEDUCTION AS PER THE PROVISIO NS OF SECTION 44AD IS NOT APPLICABLE. RATHER THE AO IN SUCH A CASE SHALL APPLY G.P. RATE INSTEAD OF NP RATE. IN THIS CASE THE PROFIT @ 8% IS NOT BASED ON THE PAST HISTORY OF THE ASSESSEE OR ANY COMPARABLE CASE BUT IT WAS ADMITTED BY THE ASSESSEE IN THE STATEMENT RECORDED U/S 132(4 ) OF THE ACT. HENCE, BY APPLYING SUCH RATE 8% WHICH IS UNDISPUTEDLY VERY HIGH IN COMPARISON TO THE PAST HISTORY OF THE ASSESSEE THEN, FURTHER D EDUCTION ON ACCOUNT OF DEPRECIATION AND INTEREST AS ALLOWED BY THE LD. CIT(A) IS JUSTIFIED. KEEPING IN VIEW THE RATE OF INCOME APPLIED IS NOT B ASED ON ANY ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 41 REASONABLE AND PROPER RATE BUT IS ONLY ADOPTED DURI NG THE SEARCH AND SEIZURE ACTION, WE DO NOT FIND ANY ERROR OR ILLEGAL ITY IN THE ORDER OF THE LD. CIT(A) IN ALLOWING THE DEPRECIATION AND INTERES T. HENCE, THE GROUND NO. 2 OF THE ASSESSEES APPEAL AND GROUND NO. 1 OF THE REVENUES APPEAL ARE PARTLY ALLOWED. 15. GROUND NO. 3 OF THE ASSESSEES APPEAL IS REGARD ING INTEREST INCOME ASSESSED AS INCOME FROM OTHER SOURCES. AT TH E TIME HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROUND NO. 3 AND THE SAME MAY BE DIS MISSED AS NOT PRESSED. THE LD. DR HAS RAISED NO OBJECTION IF GROU ND NO. 3 OF THE ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. ACCO RDINGLY THE GROUND NO. 3 OF THE ASSESSEES APPEAL IS DISMISSED BEING N OT PRESSED. 16. GROUND NO. 4 OF THE ASSESSEES APPEAL IS REGARD ING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELL ERY OF RS. 17,46,402/- WHICH WAS CONFIRMED BY THE LD. CIT(A). DURING THE COURSE OF SEARCH AND SEIZURE ACTION GOLD JEWELLERY WEIGHTI NG 4658.05 GMS WAS FOUND AND VALUE AT RS. 1,07,38,664/-. AFTER ALLOWIN G THE BENEFIT OF CBDT INSTRUCTION DATED 11.05.1994 THE JEWELLERY OF RS. 57,33,374/- WAS SEIZED. IN THE RETURN OF INCOME THE ASSESSEE DE CLARED THE INCOME ON ACCOUNT OF UNDISCLOSED INVESTMENT OF RS. 39,86,9 72/- AS AGAINST RS. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 42 57,33,374/- OF JEWELLERY SEIZED BY THE DEPARTMENT. THE AO WHILE FRAMING THE ASSESSMENT U/S 143(3) R.W.S. 153B(B) OF THE ACT MADE ADDITION OF DIFFERENTIAL AMOUNT OF RS. 17,46,402/-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT( A) BUT COULD NOT SUCCEED. 17. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE WHILE DECLARING THE INCOME IN RETURN OF IN COME ON ACCOUNT OF UNDISCLOSED INVESTMENT OF RS. 39,86,972/- HAS MADE ADJUSTMENT ON TWO ACCOUNTS NAMELY IMPURITY TO THE EXTENT OF 30% IN TH E JEWELLERY AND FURTHER A JEWELLERY OF 250 GMS IS COVERED BY THE P URCHASE MADE BY THE ASSESSEE THROUGH CHEQUES AND DULY RECORDED IN THE BOOKS OF THE ASSESSEE. THEREFORE, THE ASSESSEE HAS OFFERED THE A MOUNT ON ACCOUNT OF UNDISCLOSED INCOME BY CONSIDERING THE IMPURITY A ND PURCHASES MADE BY THE ASSESSEE OF 250 GMS PURE GOLD. HENCE, HE HA S SUBMITTED THAT IF THIS ADJUSTMENT IS ALLOWED THEN, NO ADDITION IS CAL LED FOR ON THIS ACCOUNT. 18. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE LD. CIT(A) HAS DULY CONSIDERED THESE CONTENTIONS OF THE ASSESS EE AND HAS GIVEN FINDING THAT THE DVO HAS TAKEN THE NET WEIGHT OF TH E JEWELLERY AND THEREFORE, NO FURTHER ADJUSTMENT IS REQUIRED ON ACC OUNT OF IMPURITY IN ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 43 THE JEWELLERY. SHE HAS FURTHER SUBMITTED THAT AS RE GARDS THE PURCHASES OF PURE GOLD OF 250 GMS SINCE, NO PURE GOLD WAS FOU ND DURING THE SEARCH AND ONLY JEWELLERY WAS FOUND THEREFORE, NO A DJUSTMENT CAN BE GIVEN ON THIS ACCOUNT. THE LD. CIT(A) HAS CONSIDERE D THIS ISSUE AND GIVEN THE FINDING THAT THE COINS PURCHASED THE ASSE SSEE MAY BE FOR THE PURPOSE OF GIFT ON THE OCCASION OF FESTIVALS AND NO T USED FOR MAKING JEWELLERY. SHE HAS FURTHER CONTENDED THAT WHEN THE DEPARTMENT HAS ALREADY ALLOWED THE BENEFIT OF CBDT INSTRUCTION DAT ED 11.05.1994 THEN, THIS GOLD OF 250 GMS WILL BE PART OF THE SAID QUANT ITY FOR WHICH THE BENEFIT WAS ALLOWED AS PER INSTRUCTION. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. AS REGARDS THE CLAIM OF IMPURIT Y IN THE JEWELLERY THERE IS NO DISPUTE THAT THE DVO HAS TAKEN THE NET WEIGHT OF THE JEWELLERY AT 3969.440 GMS AS AGAINST THE GROSS RATE 4658.050GMS. THEREFORE, IT APPEARS THAT THE DVO GIVEN AROUND 15% REDUCTION ON ACCOUNT OF IMPURITY IN JEWELLERY WHEREAS THE ASSESS EE HAS FURTHER REDUCED 30% FROM THE NET WEIGHT TAKEN BY THE DVO. A CCORDINGLY, WE DO NOT ACCEPT THIS CONTENTION OF THE ASSESSEE THAT 30% REDUCTION BE ALLOWED IN THE VALUE TAKEN BY THE DVO HOWEVER, THE IMPURITY HAS TO BE REDUCED FROM THE GROSS WEIGHT AND THE PERCENTAGE OF IMPURITY HAS TO ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 44 BE CONSIDERED AS PER THE STANDARD APPLIED BY THE VA RIOUS AGENCIES AND IN THE TRADE IN RESPECT OF OLD JEWELLERY. ACCORDING LY, WE ARE OF THE CONSIDERED VIEW THAT THE VALUATION OF THE JEWELLERY HAS TO BE TAKEN AFTER GIVING PROPER ADJUSTMENT ON ACCOUNT OF THE IMPURITY . 20. AS REGARDS THE CREDIT ON ACCOUNT OF PURCHASES O F 250 GMS GOLD WE ARE OF THE VIEW THAT IF THE PURCHASE IS NOT UNDI SPUTED THEN THE ASSESSEE IS ELIGIBLE FOR SUCH CREDIT. THE LD. DR HA S RAISED AN OBJECTION THAT THE 250 GMS PURCHASES CAN BE CONSIDERED IN THE QUANTITY AS ALLOWED UNDER CBDT INSTRUCTION DATED 11.05.1994. HO WEVER, WE ARE OF THE OPINION THAT THE CBDT INSTRUCTIONS ARE APPLIED ON THE JEWELLERY FOUND DURING SEARCH AND FOR WHICH NO EXPLANATION WA S FURNISHED. IN CASE IF THE ASSESSEE FURNISHED THE EXPLANATION AND SOURCE OF INVESTMENT IN THE JEWELLERY THEN THERE IS NO NEED OF ALLOWING THE BENEFIT UNDER CBDT INSTRUCTIONS DATED 11.05.1994. THE PURPOSE OF ALLOWING CERTAIN QUANTITY OF JEWELLERY AS PER CBDT INSTRUCTION IS TH AT AS PER INDIAN CUSTOMS AND CULTURAL A CERTAIN QUANTITY OF JEWELLER Y IS SUPPOSED TO BE PERSONAL EFFECT/ISTRIDHAN OF THE FAMILY MEMBERS OF THE ASSESSEE. THEREFORE, TO THE EXTENT OF THE PURCHASES MADE BY T HE ASSESSEE THROUGH CHEQUES THE CREDIT OF THE SAID AMOUNT HAS T O BE ALLOWED FROM UNEXPLAINED INVESTMENT AFTER GIVING THE BENEFIT OF CBDT INSTRUCTION. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 45 HENCE, THIS ISSUE IS SET ASIDE TO THE RECORD OF THE AO WITH THE DIRECTION TO RE-COMPUTE THE VALUATION OF THE JEWELLERY AFTER ALLOWING A PROPER DEDUCTION ON ACCOUNT OF IMPURITY AS WELL AS ON ACCO UNT OF PURCHASE MADE BY THE ASSESSEE WHICH ARE DULY EXPLAINED MADE BY THE ASSESSEE. IN THE RESULT, GROUND NO. 4 IS PARTLY ALLOWED. 21. GROUND NO. 5 OF THE ASSESSEES APPEAL IS REGAR DING THE BENEFIT OF TELESCOPING. 22. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUT E THAT IF THE CERTAIN ADDITIONS ARE SUSTAINED ON ACCOUNT OF UNDISCLOSED I NCOME THEN TO THE EXTENT OF THE ADDITION THE TELESCOPING BENEFIT IS P ERMISSIBLE IN RESPECT OF THE UNEXPLAINED INVESTMENT MADE OR EXPENDITURE IS I NCURRED. ACCORDINGLY, WE FIND MERITS IN THIS GROUND OF THE A SSESSEES APPEAL AND DIRECT THE AO TO CONSIDER THE BENEFIT OF TELESCOPIN G TO THE EXTENT OF THE ADDITION MADE ON ACCOUNT OF UNDISCLOSED INCOME. 23. GROUND NO. 2 OF THE REVENUES APPEAL IS REGARDI NG ADDITION OF RS. 20,37,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINE D CASH WHICH WAS DELETED BY THE LD. CIT(A). 24. WE HAVE HEARD THE LD. DR AS WELL AS THE LD. AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. DURING THE COURSE OF SEARCH CASH OF RS. ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 46 24,37,000/- WAS FOUND FROM THE POSSESSION OF THE AS SESSEES FAMILY MEMBERS OUT OF WHICH RS. 20,37,000/- WAS SEIZED. F URTHER, DURING THE COURSE OF SEARCH AND SEIZURE IT WAS FOUND THAT THE BOOKS OF ACCOUNTS WERE NOT COMPLETED ON THE DATE OF SEARCH AND THIS F ACT WAS ALSO ADMITTED BY THE ASSESSEE IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. THE ASSESSEE HAS EXPLAINED THE BALANCE OF CASH AS PER COMPLETED BOOKS OF ACCOUNTS WHICH WAS ACCEPTED BY THE LD. CIT (A) IN PARA 3.4.2 AS UNDER:- 3.4.2 I HAVE DULY CONSIDERED ASSESSEE'S SUBMISSION AND CAREFULLY GONE THROUGH ASSESSMENT ORDER PASSED BY THE AO. I HAVE ALSO PERUSED THE FACTS OF THE CASE AND TAKEN A NOTE OF F ACTUAL MATRIX OF THE CASE. ON PERUSAL OF SWORN STATEMENTS RECORDED ON OATH U/S 132(4) OF THE ACT ON 16/03/2012 AND U/S 131 OF THE ACT ON 17/04/2012, IT IS SEEN THAT ASSESSEE HAD REITERATED HIS STAND THAT CASH SEIZED OF RS. 20,32,000/= DURIN G THE SEARCH & SEIZURE OPERATION WAS UNDISCLOSED AND HE H AD AGREED TO PAY TAXES ON THAT. HOWEVER, WHILE FILING THE RETURN OF INCOME IN PURSUANT TO NOTICE ISSUED U/S 153A OF THE ACT, ASSESSEE DID NOT OFFER THE SAME. IT IS CONTENDED TH AT IN CASE OF CASH INVENTORISED AND SEIZED AT THE TIME OF S & S OPERATION, THE SAME WAS ADMITTED ON THE BASIS OF IN COMPLETE BOOKS OF ACCOUNTS, AND WHEN WORKED OUT ON THE BASIS OF BOOKS OF ACCOUNTS COMPLETED AFTER SEARCH DULY INCOR PORATING ALL THE PENDING ENTRIES, IT IS SEEN THAT THERE WERE SUFFICIENT CASH BALANCE AVAILABLE AS PER CASH BOOKS, ON WHICH THE SAME WAS NOT OFFERED AS ADDITIONAL INCOME. IT IS ALSO CO NTENDED THAT NO DEFECT WHATSOEVER WAS POINTED BY AO IN THE COMPLETED CASH BOOK AND THE ADDITION WAS MADE FOR T HE SOLE REASON THAT THE ASSESSEE ADMITTED THE DIFFERENCE AS HIS ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 47 UNDISCLOSED INCOME DURING THE COURSE OF SEARCH. THE CASH BALANCE AS PER THE COMPLETED BOOKS OF ACCOUNTS AS O N THE DATE OF SEARCH WAS AS UNDER: S. NO. DETAILS AMOUNT (RS.) A) LA XMI NARAIN AGARWAL, JAIPUR RAJASTHAN SITES 24,82,873.20 B) LAXMI NARAIN AGARWAL, GWALIOR 2,16,450.00 C) LAXMI NARAIN AGARWAL, JAMMU 5,123.00 D) LAXMI NARAIN AGARWAL, MORENA 14,314.00 TOTAL 27,18,760.20 THE AO IN PARA 7.3 TO 7.5 OF THE ASSESSMENT ORDER H AS GIVEN HIS FINDINGS FOR THE ADDITION MADE ON ACCOUNT OF CA SH SEIZED DURING THE SEARCH OPERATION. ON PERUSAL OF THE SAME , AO HAS NOT POINTED OUT ANY DEFECTS IN THE CASH BOOK RE-CAS TED. FROM THE ABOVE, IT IS ALSO SEEN THAT AVAILABLE CASH BALA NCE AS ON THE DAY OF SEARCH FROM RAJASTHAN SITE OFFICE WAS AT RS. 24,82,873.20 WHICH IS MORE THAN THE CASH INVENTORIS ED AND SEIZED ON THE DAY OF SEARCH. IN VIEW OF THESE FACTS , TREATING OF SEIZED CASH AS UNDISCLOSED CANNOT BE SUSTAINED, HEN CE DELETED. ASSESSEE GETS A RELIEF OF RS. 20,37,000/= ON THIS GROUND. THEREFORE, WHEN THE COMPLETED CASH BOOK WAS ACCEPTE D WHICH SHOWS THE AVAILABILITY OF CASH AS ON THE DATE OF SEARCH T HEN NO ADDITION IS CALLED FOR ON THIS ACCOUNT. THE AO HAS NOT BROUGHT ANY CONTRARY FACT TO OUR NOTICE AND ACCORDINGLY, WE DO NOT FIND ANY ERRO R OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) QUA THIS ISSUE. IN THE RESULT, FOR THE ASSESSMENT YEARS 2009-10 AN D 2010-11 THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THOSE OF REVENUE ARE DISMISSED, FOR THE ASSESSMENT YEAR 2011-12 THE CRO SS APPEALS ARE ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015 SHRI LAXMI NARAIN AGARWAL VS. ACIT 48 PARTLY ALLOWED AND FOR THE ASSESSMENT YEAR 2012-13 THE CROSS APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/03/2018. SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23/03/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI LAXMI NARAIN AGARWAL, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT - ACIT, CENTRAL CIRCLE-3/CIRCLE-4 JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 848 TO 851 & 1022 TO 1025/JP/2015} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR