Smt Vaishali SDhivhare, Gwalior V. The DCIT, Central-1, Bhopal

ITSSA 136/Ind/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4710 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 15-11-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Search and seizure
• Section: 131; 145; 132; 139; 143(3); 153A; 143(2); 2(A); 13; 153; 145(3); 153C

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, इंदौर 瀈यायपीठ इंदौर 瀈यायपीठइंदौर 瀈यायपीठ इंदौर 瀈यायपीठ, इंदौर इंदौरइंदौर इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare, Gwalior बनाम बनामबनाम बनाम/ Vs. DCIT Central-1, Bhopal (Appellant) (Respondent ) P.A. No.AHMPR8573N Appellant by S/Shri Anil Kamal Garg & Arpit Gaur, CAs Respondent by Shri P.K. Mitra, CIT-DR Date of Hearing: 20.01.2022 Date of Pronouncement: 19.04.2022 आदेश / आदेश / आदेश / आदेश / O R D E R PER BENCH: The above captioned appeals filed at the instance of the Assessee are directed against the Common Order of the Ld. Commissioner of Income Tax (Appeals)-3, Bhopal (in short ‘CIT(A)’), dated 01.07.2020, which is arising out of the Common Assessment Order u/s. 153A r.w.s. 143(3) of the Income-Tax Act, 1961 (in short, ‘the Act’) dated 26.12.2017 framed by the ACIT (Central) -I, Bhopal. IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 2 of 16 2.1 Grounds of appeal raised by the Assessee for AY 2012-13 in IT(SS)A No.132/Ind/2020: “1 That, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.19,01,716/- out of the total additions of Rs.33,80,828/- made by the AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 2a) That, the learned AO grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.19,01,716/- out of the total addition of Rs.33,80,828/- made by the AO in the appellant’s income, on account of alleged suppression of net profit without having recourse to any incriminating material found or seized during the course of the Search. 2b) That, without prejudice to the above, the learned AO grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.19,01,716/- out of the total addition of Rs.33,80,828/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, without first rejecting the books of account under the provisions of sub-section (3) of section 145 of the Income-Tax Act, 1961. 2c) That, without prejudice to the above, the learned AO grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.19,01,716/- out of the total addition of Rs.33,80,828/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, merely on guess work, surmises and conjectures, without giving any specific finding as regard to any defect or discrepancy in the regular books of account maintained by the appellant. 2d) That, without prejudice to the above, the estimation of net profit at the flat rate of 2.25% of turnover by the learned CIT(A) is quite excessive and arbitrary considering the nature of trade and net profit shown and accepted by the Revenue in the cases of other assessees carrying out the similar business. 3 That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.2 Grounds of appeal raised by the Assessee for AY 2013-14in IT(SS)A No.133/Ind/2020: “1 That, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.16,23,173/- out of the total additions of Rs.33,58,614/- made by the AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 3 of 16 2a) That, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.16,23,173/- out of the total addition of Rs.33,58,614/- made by the AO in the appellant’s income, on account of alleged suppression of net profit despite giving a specific finding in the body of the appellate order that the assessment proceedings for the assessment year under consideration had got completed before the date of the search and in absence of any recourse to any seized material, no addition could have been made. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.16,23,173/- out of the total addition of Rs.33,58,614/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, without first rejecting the books of account under the provisions of sub-section (3) of section 145 of the Income-Tax Act, 1961. 2c) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.16,23,173/- out of the total addition of Rs.33,58,614/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, merely on guess work, surmises and conjectures, without giving any specific finding as regard to any defect or discrepancy in the regular books of account maintained by the appellant. 2d) That, without prejudice to the above, the estimation of net profit at the flat rate of 2.25% of turnover by the learned CIT(A) is quite excessive and arbitrary considering the nature of trade and net profit shown and accepted by the Revenue in the cases of other assessees carrying out the similar business. 3 That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.3 Grounds of appeal raised by the Assessee for AY 2014-15 in IT(SS)A No.134/Ind/2020: “1 That, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.16,61,313/- out of the total additions of Rs.38,98,228/- made by the AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 2a) That, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.16,61,313/- out of the total addition of Rs.38,98,228/- made by the AO in the appellant’s income, on account of alleged suppression of net profit despite giving a specific finding in the body of the appellate order that the assessment proceedings for the assessment year IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 4 of 16 under consideration had got completed before the date of the search and in absence of any recourse to any seized material, no addition could have been made. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.16,61,313/- out of the total addition of Rs.38,98,228/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, without first rejecting the books of account under the provisions of sub-section (3) of section 145 of the Income-Tax Act, 1961. 2c) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.16,61,313/- out of the total addition of Rs.38,98,228/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, merely on guess work, surmises and conjectures, without giving any specific finding as regard to any defect or discrepancy in the regular books of account maintained by the appellant. 2d) That, without prejudice to the above, the estimation of net profit at the flat rate of 2.25% of turnover by the learned CIT(A) is quite excessive and arbitrary considering the nature of trade and net profit shown and accepted by the Revenue in the cases of other assessees carrying out the similar business.” 2.4 Grounds of appeal raised by the Assessee for AY 2015-16 in IT(SS)A No.135/Ind/2020: “1 That, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.14,43,726/- out of the total additions of Rs.41,82,636/- made by the AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 2a) That, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.14,43,726/- out of the total addition of Rs.41,82,636/- made by the AO in the appellant’s income, on account of alleged suppression of net profit. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.14,43,726/- out of the total addition of Rs.41,82,636/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, without first rejecting the books of account under the provisions of sub-section (3) of section 145 of the Income-Tax Act, 1961. IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 5 of 16 2c) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.14,43,726/- out of the total addition of Rs.41,82,636/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, merely on guess work, surmises and conjectures, without giving any specific finding as regard to any defect or discrepancy in the regular books of account maintained by the appellant. 2d) That, without prejudice to the above, the estimation of net profit at the flat rate of 2.25% of turnover by the learned CIT(A) is quite excessive and arbitrary considering the nature of trade and net profit shown and accepted by the Revenue in the cases of other assessees carrying out the similar business. 3 That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.5 Grounds of appeal raised by the Assessee for AY 2016-17 in IT(SS)A No.136/Ind/2020: “1 That, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.17,34,931/- out of the total additions of Rs.48,82,827/- made by the AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 2a) That, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.17,34,931/- out of the total addition of Rs.48,82,827/- made by the AO in the appellant’s income, on account of alleged suppression of net profit. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.17,34,931/- out of the total addition of Rs.48,82,827/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, without first rejecting the books of account under the provisions of sub-section (3) of section 145 of the Income-Tax Act, 1961. 2c) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.17,34,931/- out of the total addition of Rs.48,82,827/- by estimating the net profit in liquor business at a flat rate of 2.25% on the total turnover of the appellant as against the net profit estimated by the AO at a flat rate of 4%, merely on guess work, surmises and conjectures, without giving any specific finding as regard to any defect or discrepancy in the regular books of account maintained by the appellant. IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 6 of 16 2d) That, without prejudice to the above, the estimation of net profit at the flat rate of 2.25% of turnover by the learned CIT(A) is quite excessive and arbitrary considering the nature of trade and net profit shown and accepted by the Revenue in the cases of other assessees carrying out the similar business. 3 That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 3.1 The brief facts of the case as culled out from the records are that the assessee, an individual, is carrying out the business of liquor. The assessee furnished her original returns of income for the various years u/s. 139 of the I.T. Act, 1961. Search and seizure operations u/s. 132 were carried out at various premises of Shivhare group and the assessee on 07/01/2016. Consequently, notices u/s. 153A were issued to the assessee for A.Y. 2010-11 to A.Y. 2015-16 on 08/02/2017. In response to the above notices, the assessee filed returns of income for A.Ys. 2010-11 to 2015-16 on 01/03/2017. The assessee filed regular return of income for A.Y. 2016-17 on 01/11/2017 declaring total income of Rs. 21,62,360/-. The details of returns of income for A.Y. 2012-13 to 2016-17 are as under: A.Y. Date of filing of Return u/s. 139 Returned income (in Rs.) Date of filing of Return in response to the notice u/s. 153A Income declared in Return u/s. 153A (In Rs.) Additional Income offered, if any (In Rs.) 2012-13 Not Filed NA 01/03/2017 28,02,580 28,02,580 2013-14 15/01/2015 20,08,110 01/03/2017 20,08,110 Nil 2014-15 15/01/2015 26,14,720 01/03/2017 26,14,720 Nil 2015-16 10/11/2015 34,46,280 01/03/2017 34,46,280 Nil 2016-17 01/11/2017 21,62,360 NA NA Nil 3.2 According to the AO, during the course of the assessment proceedings, the assessee was issued notices under s.142(1) of the Act calling for books of account but, the assessee failed to produce such books of account for all the assessment years before the AO. The AO found that before her, incomplete books of account were produced by the assessee and these books were not supported by supporting bills and vouchers. Considering this aspect, the AO estimated the net profit of the assessee @4% of the turnover shown in the books of account and accordingly, after giving a set-off for the net profit already shown in the Profit & Loss Account by the assessee for the respective years, the AO made additions of Rs.33,80,828/- in A.Y. 2012-13, Rs.33,58,614/- in A.Y. IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 7 of 16 2013-14, Rs.38,98,228/- in A.Y. 2014-15, Rs.41,82,636/- in A.Y. 2015-16 and Rs.48,82,827/- in A.Y. 2016-17 in the income of the assessee (para 11). 4. Aggrieved assessee preferred separate appeals for the assessment years under consideration before Ld. CIT(A). The ld. CIT(A), vide his common Order dated 01.07.2020 adjudicated the appeals of the assessee. The ld. CIT(A) vide para (3.22) of his Order, reduced the rate of net profit from that of 4% estimated by the AO to 2.25% which resulted into grant of partial relief to the assessee. 5. Now, aggrieved by the additions sustained by the ld. CIT(A), the assessee is in appeal before this Tribunal for the assessment years under consideration. 6. As all the appeals relate to the same assessee and the issues raised are common, they were heard together and are being disposed off by this common order for sake of convenience and brevity. 7. Ground No. 1 of the Assessee for all the assessment years under consideration 7.1 Through this Ground, the assessee has challenged the additions confirmed by the ld. CIT(A) in various assessment years under consideration. In the written submissions, the assessee herself has submitted that she has taken separate grounds of appeal in respect of each and every addition confirmed by the ld. CIT(A) on different grounds and therefore, no separate adjudication is warranted. Accordingly, this ground no. 1of the assessee for A.Y. 2012-13, A.Y. 2013-14, A.Y. 2014-15, A.Y. 2015-16 & A.Y. 2016-17 is hereby Dismissed. 8. Ground No. 2(a)of the Assessee for A.Y. 2012-13, A.Y. 2013-14 & A.Y. 2014-15 8.1 Through the Ground No. 2(a) taken for A.Y. 2012-13, A.Y. 2013-14 & A.Y. 2014-15, the assessee has challenged the action of the ld. CIT(A) in upholding the additions made by the AO in completed assessment years without having recourse to any incriminating material found during the course of search. 8.2 Before the ld. CIT(A), the assessee furnished the detailed written submissions on the subject ground. Although the ld. CIT(A) dealt with the legal ground raised by the assessee in his Order, but, the ld. CIT(A) has not given any specific finding that the additions were made in the completed assessment IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 8 of 16 years without having recourse to any incriminating material found during the course of search. 8.3 Aggrieved with the Order of the ld. CIT(A), the assessee has preferred appeals before us. 8.4 Before us, the learned CIT(DR) vehemently argued supporting the observations of the AO and the ld. CIT(A) on this issue. However, during the course of the hearing before us, the ld. CIT(DR) failed to bring on record any incriminating material on the basis whereof the subject additions were made. 8.5 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A) and has also filed short hand notes before this Bench. 9.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, written and oral submissions made from both the sides. 9.2 We find that in the case of the assessee, a Search u/s. 132 was conducted on 07-01-2016. We find that for the two assessment years viz. A.Y. 2013-14 & A.Y. 2014-15, the assessee had furnished her original returns of income under s.139 respectively on 15.01.2015 and 15.01.2015. However, as per findings given by the AO at para (5.0) for A.Y. 2012-13 the assessee had not furnished any return of income prior to the search. We further find that the time limit of issuance of notices u/s 143(2) of the Act for selecting assessee’s case for scrutiny expired for A.Y. 2013-14 on 30-09-2014 and for A.Y. 2014-15 on 30-09-2015. We also find that the AO, while making the impugned additions on account of estimation of gross profit in the assessment years under consideration, has not made any single reference to any incriminating material found during the course of the search. We find that in the instant case, the AO has made the estimation of net profit on the sole basis of certain discrepancies found by her in the books of account maintained by the assessee without making reference of any seized document or any other evidence gathered during the course of search. Before us, the ld. CIT (DR) also could not bring on record any single incriminating material on the basis whereof the additions have been made by the AO in the assessment order for the years under consideration. We find that since A.Y. 2012-13, the assessee had not furnished any return of income u/s. 139 of the Act and further, prior to the date of search, she was not regularly assessed for such assessment year, such IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 9 of 16 assessment year would fall within the category of abated year in accordance with the provisions of s.153A of the Act and therefore, for such assessment year, the assessee would not be legally entitled to raise the present ground. Accordingly, the Ground No. 2(a) of the Assessee for A.Y. 2012-13 is Dismissed. However, in our considered view, the other two assessment years viz. A.Y. 2013-14 and A.Y. 2014-15 are non-abated assessment years and therefore, as per the settled position of the law, any addition for such non-abated assessment years could have been made only on the basis of some incriminating material or evidences gathered during the course of the search which is not a case here. 9.3 We find support from the decision of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (2016) 380 ITR 53 (Del HC) wherein the Hon’ble Court after considering various judgments had dealt with this issue 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 explained in the aforementioned decisions, the legal position that emerges 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 issued to the person searched requiring him to file returns for six 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 have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect 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 separate assessment orders for each of the six years. In other words there 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. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 10 of 16 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. 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 record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.” 9.4 The above stated ratio laid down by the Hon’ble Delhi High Court has been applied by this Tribunal in the case of Kalani Bros. [IT(SS) No.71/Ind/2015 dated 6.11.15] observing as follows:- "We have heard both the sides. We have also gone through the case laws relied upon by both the sides. We have also considered various relevant facts of the case. It is a settled legal position that once a search and seizure action has taken place u/ s 132 of the Act or a requisition has been made u/ s 132A, the provisions of section 153A trigged and Assessing Officer is bound to issue notice u/ s 153A of the Act. Once notices are issued u/ s 153A of, the Act then assessee is legally obliged to file return of income for six years. The assessment and reassessment for six years shall be finalised by the Assessing Officer. It is also held by various Courts that once notice u/ s 153A of the Act issued, then assessment for six years shall be at large both for Assessing Officer and assessee have no warrant of law. It has been also held that in the assessment years where assessments have been abated in terms of second proviso to section 153A then Assessing Officer acts under original jurisdiction and one assessment is made for total income including the addition made on the basis of seized material. But where there is no abatement of assessments and assessments were completed on the date of search then addition can be made only on the basis of incriminating documents or undisclosed assets, etc. In these cases there was no incriminating document found and seized. No assessment proceedings were abated in these assessees. Thus assessments for these assessment years were completed on the date of search. The assessments were completed u/ s 143(3} of the Act read with section 153A/ 153C of the Act after the search. There was no abatement of any proceedings in these cases for these assessment years in terms of second proviso to section 153A of the Act. There is no seized material belonging to the assessee which was found and seized in relation to additions made. In. a recent decision, Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) has held that completed assessments can be interfered with by the Assessing Officer while making assessment u/ s 153A of the Act, only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which was not produced or not already disclosed or made IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 11 of 16 known in the course of original assessment. In. all these cases no assessments were pending on the date of search for these assessment years. No assessments were abated in terms of second proviso to section 153A of the Act. Hon'ble Delhi High / Court in the case of CIT vs. Kabul Chawla (supra) has considered various High Court decisions relied upon by the learned DR. The Hon'ble Delhi High Court has considered the cases of Canara Housing Development Co. vs. DCIT; Madugula vs. DCIT; CIT vs. Chetandas Laxmandas and CIT vs. Anil Kumar Bhatia (supra). The only decision of the Hon'ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora; 367 ITR 517 relied on by the learned DR was not considered by Hon'ble Delhi High Court while deciding the issue in the case of Kabul Chawla. The Hon'ble Allahabad High Court has reversed the order of the Tribunal and remanded the issue to the Tribunal to consider the appeal of the department on merits. It is a settled legal position that when two views are possible on a particulars issue then the view favourable to the assessee should be followed as held by the Hon'ble Apex Court in the case of CIT vs. Vegetable Products; 88 ITR 192. Respectively following the decision of the Hon'ble Apex Court, we dismiss the ground of appeals of the Revenue. Departmental appeals are disposed accordingly." 9.5 Similar view also taken in the case of DCIT, Indore vs. Shri Satish Neema (2020) 37 ITJ 308 (Trib. Indore). Relevant extract of the decision is reproduced below: “19. We therefore respectfully following the decision referred above and also considering the latest judgement of Hon'ble High court of Delhi in the case of Pr. CIT & Ors. Vs. Meeta Gutgutia (supra) come to the conclusion that since the assessment orders in question were concluded and non-abated assessments no addition can be made in the assessment proceedings u/s 153A of the act unless there is any incriminating material found during the course of search. We find no inconsistency in the finding of Ld. CIT(A) quashing the assessment proceedings u/s 153A of the Act since the additions were not made on the basis of any incriminating material found during the course of search. Thus revenue's appeal for Assessment Years 2005-06, 2006- 07 and 2009-10 stands dismissed.” 9.6 This Tribunal in the case of Rajmohan Agrawal (Ind), Bhopal vs. ACIT- 2(1), Bhopal [IT(SS)A No.04/Ind/2019 Order dated 07-09-2021] has held as under: “9. We find that the year under appeal is A.Y. 2006-07. Time limit of issuance of notice u/s 143(2) of the Act for selecting assessee’s case for scrutiny expires on 30th September 2007. Search was conducted on 13.11.2007. Except registered sale deed no other incriminating material was found. Consideration mentioned in the registered sale deed is duly accounted for. Other evidences are gathered by the Ld. AO by issuing notice u/s 131 of the Act and statement of the sellers were recorded during the course of assessment proceedings. The year under appeal is a non-abated assessment year. Addition in such non-abated assessment years IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 12 of 16 can be made only on the basis of incriminating material found during the course of search. 10. Our this proposition is supported by the judgment of Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla 280 ITR 570 and in the case of Pr. CIT vs. Meeta Gutgutia 395 ITR 526. We have also followed this ratio in the case of Satish Neema –IT(SS)A No.149/Ind/2016 dated 07.02.2020. Ld. DR failed to bring any other binding precedence in its favour. We, therefore, respectfully following the above referred decisions allow the legal ground raised by the assessee and delete the impugned addition.” 9.7 Thus, respectfully following the settled judicial precedence which are squarely applicable on the instant issue, we are of the view that while making an assessment under s.153A of the Act in pursuance of a search under s.132, no addition could have been made by the AO in the assessee’s income in a completed year of assessment without having recourse to any incriminating material. Accordingly, in our considered view, even the partial additions for A.Y. 2013-14 and A.Y. 2014-15, amounting respectively to Rs.16,23,173/- and Rs.16,61,313/- sustained by the ld. CIT(A), were not warranted in the assessee’s case. Thus, Ground No. 2(a) of the Assessee for A.Y. 2012-13 is dismissed and the Ground No. 2(a)of the assessee for A.Y. 2013-14 & A.Y. 2014-15 are allowed. 10. Ground No. 2(b) of the Assessee for all the assessment years under consideration 10.1 Through this ground of appeal, the assessee has challenged the action of the ld. CIT(A) in upholding the action of the AO for making trading additions in the business income of the assessee without first rejecting the regular books of account u/s. 145(3) of the Act. 10.2 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee agitated that in the impugned assessment order, the AO has made trading additions in the hands of the assessee but, before making such addition, she has not specifically rejected the books of account of the assessee. 10.3 The ld. CIT(A) by way of giving his finding at para (3.3.1) of his Order dismissed the similar ground so raised by the assessee before him. The ld. CIT(A) held that the assessee failed to produce complete books of account along with supporting bills and vouchers before the AO and therefore, it cannot be said that the books of account were correct and complete. According to the ld. IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 13 of 16 CIT(A), although the AO has not specifically mentioned the specific provisions of the Act for rejecting the books of account, but, he has impliedly rejected the books of account and estimated the net profit. In view of the ld. CIT(A), non- mentioning of the specific provisions of section 145(3) would not vitiate the action of the AO in rejecting the books and making estimation of net profit. Accordingly, the ld. CIT(A) dismissed the Ground so raised. 10.4 Aggrieved with the Order of the ld. CIT(A), the assessee is in appeal before us. 10.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO and the ld. CIT(A) on this issue. 10.6 Per Contra, Learned Counsel for the assessee relied upon the written submissions made before the ld. CIT(A). 10.7 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. In our considered view, if the assessee had failed to produce complete books of account along with supporting bills and vouchers before the AO, then it cannot be said that the books of account were correct and complete. We are in full agreement with the findings of the ld. CIT(A) that although the AO has not specifically mentioned the specific provisions of the Act for rejecting the books of account, but, he has impliedly rejected the books of account and estimated the net profit. In such circumstances, mere non- mentioning of the specific provisions of section 145(3) would not vitiate the action of the AO in rejecting the books and making estimation of net profit. Accordingly, the Ground No. 2(b) of the Assessee for all the assessment years under consideration, being devoid of any merit, are hereby dismissed. 11. Ground Nos. 2(a) for A.Y. 2015-16 & A.Y. 2016-17 and Ground No. 2(c) & 2(d) of the Assessee for all the assessment years under consideration 11.1 Through these Grounds, the assessee has challenged the action of the ld. CIT(A) in partially confirming the additions made by the AO on account of suppression of net profit. 11.2 Briefly stated facts of the issue, as emerging out from the assessment order, are that during the course of the assessment proceedings, the AO IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 14 of 16 required the assessee to show cause as to why the net profit rate shall not be computed at 8% and the books of account be not rejected. In response, the assessee made her explanation before the AO. The AO noted that the assessee could not produce the complete sets of books of account and supporting bills and vouchers. Accordingly, the AO made an estimation of the net profit of the assessee at a flat rate of 4% of sales for all the assessment years under appeal. 11.3 Aggrieved with the Order of Assessment, the assessee preferred separate appeals for the subject assessment years before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences. The Ld. CIT(A), by making reference to the decision of this Tribunal in the case of ACIT vs. Avinash Chalana & Co. (2013) 36 CCH 0319 (Indore Trib), estimated the net profit of the assessee, for all the assessment years under consideration, at 2.25% as against the same estimated by the AO at 4%.Accordingly, the ld. CIT(A)confirmed the additions to the tune of Rs.19,01,716/- in AY 2012-13, Rs. 16,23,173/- in AY 2013-14, Rs. 16,61313/- in AY 2014-15, Rs. 14,43,726/- in AY 2015-16 and Rs. 17,34,931/- in AY 2016-17 thereby granting relief of Rs. 14,79,112/- in AY 2012-13, Rs.17,35,441/- in AY 2013-14, Rs.22,36,915/- in AY 2014-15, Rs.27,38,910/- in AY 2015-16 and Rs.31,47,896/- in AY 2016-17 to the assessee. The ld. CIT(A) has given the relevant findings at paras (3.4.1)& (3.4.2) of his order which are reproduced as under: "3.4.1 I have considered the facts of the case, plea raised by the appellant and findings of the AO. For A.Y. 2013-14 and A.Y. 2014-15, while adjudicating ground no. 2, I have already held that for both the assessment years, the assessment proceedings had got completed before the date of search and therefore, in absence of any recourse to any seized material, no addition could have been made. Accordingly, the present grounds of appeal for A.Y. 2013-14 and A.Y. 2014-15 have become academic and requiring no adjudication. 3.4.2 However, for the other assessment years under appeal viz. A.Y. 2012-13, A.Y. 2015-16 and A.Y. 2016-17, in my view, the AO was justified in making an estimation of net profit as the appellant had not produced her complete set of books of account, supporting bills and vouchers. Even before me, the appellant could not contravene such factual findings of the AO. However, I find that for estimating the net profit of 4%, the AO has not assigned any basis whatsoever. The AO has neither made any reference of the appellant’s own history nor brought on record any comparable case of the assessees in the same trade. In my view, the net profit so estimated by the AO is quite at a higher side. Hon’ble ITAT Indore in the case of ACIT vs. Avinash Chalana& Co. (2013) 36 CCH 0319 (Indore Trib) has held the net profit rate of 2% as reasonable for liquor trader. Considering all the facts, in my view, in order to meet the ends of justice, it would be reasonable to estimate the net profit @2.25% for A.Y. 2012-13, A.Y. 2015-16 IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 15 of 16 and A.Y. 2016-17. Thus, additions made by the AO amounting to Rs.19,01,716/- in AY 2012-13, Rs. 16,23,173/- in AY 2013-14, Rs. 16,61313/- in AY 2014-15, Rs. 14,43,726/- in AY 2015-16 and Rs. 17,34,931/- in AY 2016-17 are Confirmed and appellant gets relief of Rs. 14,79,112/- in AY 2012-13, Rs.17,35,441/- in AY 2013-14, Rs.22,36,915/- in AY 2014-15, Rs.27,38,910/- in AY 2015-16 and Rs.31,47,896/- in AY 2016-17. Therefore, appeal on these grounds is Partly Allowed." 11.4 Aggrieved with the addition confirmed by the ld. CIT(A), the assessee is in appeal before us. 11.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO and the ld. CIT(A) on this issue. 11.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A) and has also filed short hand notes before this Bench. 12.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, written and oral submissions made from both the sides and the decisions relied upon from both the sides. While adjudicating the Ground No. 2(a) for A.Y. 2013-14 and A.Y. 2014-15,supra, we have already held that addition for such assessment years made by the AO and partly confirmed by the ld. CIT(A) are not maintainable. Thus, the Ground Nos. 2(c) & 2(d) of the Assessee for the assessment years have become academic in nature only. Accordingly, these grounds of appeal for the A.Y. 2013-14 and A.Y. 2014- 15 are hereby dismissed being infructuous. 12.2 In respect of the Ground No. 2(c) & 2(d) of the assessee for A.Y. 2012-13, A.Y. 2015-16 & A.Y. 2016-17, we find that in the instant case, the assessee had not produced her complete books of account along with the complete records and therefore, as already held by us while adjudicating the Ground No. 2(b) of the assessee, the AO was justified in making estimation of net profit. We find that the AO made the estimation @4% of the net turnover against which the ld. CIT(A) considering the nature of business, has restricted the net profit rate to 2.25% in place of 4%. In our considered view, the ld. CIT(A) has rightly estimated the rate of 2.25% on the total turnover of the assessee which is quite reasonable looking to the nature of business of the assessee and surrounding circumstances. Accordingly, the Ground Nos. 2(a) for A.Y. 2015-16 & A.Y. 2016-17, Ground Nos. 2(c) & 2(d) for A.Y. 2012-13, A.Y. 2015-16 & A.Y. 2016- 17 are hereby Dismissed. IT(SS)A No.132 to 136/Ind/2020 Assessment Year: 2012-13 to 2016-17 Smt. Vaishali Shivhare Page 16 of 16 13. In the result, the appeals of the assessee are partly allowed as per terms indicated hereinabove. The order pronounced as per Rule 34 of ITAT Rules, 1963 on 19.04.2022. Sd/- Sd/- (MAHAVIR PRASAD) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER 琈दनांक /Dated : 19.04.2022 Patel/PS Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt.Registrar, I.T.A.T., Indore