The ACIT, Central Circle-2(1), Ahmedabad V. M/s. Dineshchandra R.Agrawal Infracon Pvt.Ltd., Ahmedabad

ITSSA 411/AHD/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5383 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-01-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 29-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Not Found
• Assessee Lawyers: Not Found
• Keywords: Rejection of books of accounts; Unexplained investment; Business income; Income from undisclosed sources; Principle of natural justice; Tangible material; Corroborative evidences; Revised return; Documents seized; TDS; Rule 8D
• Section: 147; 131; 12; 10; 154; 2; 69C; 15; 139; 143(3); 133A; 153A; 14A; 133(6); 143(2); 192; 139(1); 64; 13; 145(3); 22; 153C

Judgement Text

आयकर अपील य अ धकरण, अहमदाबाद यायपीठ ‘D’अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD (Convened through Virtual Court) BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER &SMT. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील(एसएस)सं./I. T. (S S) A. N os .4 09 to 4 13 /A hd /2 01 9 ( नधा रण वष / A sse ss me nt Ye ar s : 2 0 11- 12 to 2 01 5- 16 ) Assistant Co mmi ssioner of Inco me-tax Central Circle-2(1), 3 r d Floor, Roo m No.A-306, Aa yakar Bhavan, Ashra m Road, Ah medabad – 380009 बनाम/ Vs. M/s. Dineshchan dra R Agrawal Infracon Pvt . Ltd. 401-403, Grand M all, Opp. SB I Zonal Office, Amba wadi, Ah me dabad- 380006 थायी लेखा सं. /जीआइआर सं. / P A N / G IR N o .: A A BC D 9 5 2 3 D (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से/Appellant by : Shri Mohd. Usman, CIT.D.R. यथ क ओर से/Respondent by: Shri S. L. Poddar, A.R. स ु नवाई क तार ख/ D at e o f He ari ng 10/11/2021 घोषणा क तार ख /Dat e o f Pro n ou nc e men t 11/01/2022 आदेश/O R D E R PER MS. MADHUMITA ROY, JUDICIAL MEMBER:- The bunch of appeals filed by the Revenue are directed against the orders passed by the Ld. CIT(A)-12, Ahmedabad all dated 21.06.2019 arising out of the assessment orders passed by the ACIT, Cent.Cir.2(1), Ahmedabad all dated 31.12.2018 passed under section 153A read with section 143(3) of the Income Tax Act, 1961 (in short “the Act”) for Assessment Years 2011-12 to 2015-16 respectively. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 - 2. At the time of hearing of the instant appeals, Ld. Representatives appearing for the respective parties submitted that the issue involved in all these appeals are broadly similar and therefore all these matters were analogously heard and are being disposed of by a common order. 3. We shall take up the Revenue’s appeal in IT(SS)A No. 409/Ahd/2019 concerning AY 2011-12 as a lead case for adjudication. IT (S S) A No . 40 9/ A hd /2 01 9 – AY - 20 11- 12 4. Grounds of appeal raised by the Revenue read as under: 1 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c a se a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n d e l e t i n g t h e a d d i t i o n o f R s. 9 , 7 7 , 8 6 , 3 0 6 / - m a d e t o t h e b u s i n e s s i n c o m e o f t h e a s s e s s e e b y r e j ec t i n g t h e b o o k r e s u l t s a n d a p p l y i n g t h e n e t p r o f i t r a t e o f 8 % o n s e l f e x e c u t e d c o n t r a c t s o n n e t p r o f i t o f 5 . 5 % t o c o n t r a ct s f u r t h e r a w a r d e d b y t h e a s s e s s e e . 2 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c a se a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n h o l d i n g t h a t a n y a d d i t i o n du r i n g t h e a s s e s s m e n t u / s . 1 5 3 A h a s t o b e c o n f i n e d t o t h e i n c r im i n a t i n g m a t e r i a l f o u n d d u r i n g t h e c o u r s e o f s e a r c h u / s . 1 3 2( 1 ) o f t h e A c t , e v e n t h o u g h , t h e r e i s n o s u c h s t i p u l a t i o n i n s e c . 1 53 A o f t h e A c t . 3 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n n o t a p p r e c i a t i n g t h a t s e c . 15 3 A r e q u i r e s a n o t i c e t o b e i s s u e d r e q u i r i n g t h e a s s e s s e e t o f u r n is h h i s r e t u r n o f i n c o m e i n r e s p e c t o f e a c h a s s e s s m e n t y e a r f a l l i n g wi t h i n s i x a s s e s s m e n t y e a r s a n d t o a s s e s s o r r e - a s s e s s t h e t o ta l i n c o m e o f t h o s e s i x a s s e s s m e n t y e a r s , a n d t h a t t h e s c h e m e o f a s s e s s m e n t o r r e a s s e s s m e n t o f t h e t o t a l i n c o m e o f a p e r s o n s e a r c he d w i l l b e b r o u g h t t o n a u g h t i f n o a d d i t i o n i s a l l o w e d t o b e ma d e f o r t h o s e s i x a s s e s s m e n t y e a r s i n t h e a b s e n c e o f a n y s e i z e d in c r i m i n a t i n g m a t e r i a l . 4 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e ca s e a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n n o t a p p r e c i a t i n g t h a t w h i l e c o m p u t a t i o n o f u n d i s c l o s e d i n c o m e o f t h e b l o c k p e r i o d u / s . 1 5 8 B B w a s t o b e m a d e o n t h e b a s i s o f e v i d e n c e f o u n d a s a r e s u l t o f s e a r c h o r r e q u i s i t i o n o f b o o k s o f a c c o u n t s , t h e r e i s n o s u c h s t i p u l a t i o n i n s e c . 1 5 3 A a n d s e c . 1 5 3 B I s p e c i f i c a l l y s t a t e s t h a t t h e p r o v i s i o n s o f C h a p t e r - X I V - B , u n d e r w h i c h s e c . 1 5 8 B B f a l l s , w o u l d no t b e a p p l i e d w h e r e a s e a r c h w a s i n i t i a t e d u / s . 1 3 2 a f t e r 3 1 / 5 / 2 0 0 3 . 5 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n n o t a p p r e c i a t i n g t h a t a s s e ss m e n t i n r e l a t i o n t o c e r t a i n i s s u e s n o t r e l a t e d t o t h e s e a r ch a n d s e i z u r e m a y a r i s e i n a n y o f t h e s a i d s i x a s s e s s m e n t y e a r s af t e r t h e s e a r c h I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 - u / s . 1 3 2 i s c o n d u c t e d i n t h e c a s e o f t h e a s s e s s e e , a n d t h a t i f t h e i n t e r p r e t a t i o n o f t h e l d . C I T ( A ) w e r e t o h o l d i t w i ll n o t b e p o s s i b l e t o a s s e s s s u c h i n c o m e i n t h e 1 5 3 A p r o c e e d in g s , w h i l e n o o t h e r p a r a l l e l p r o c e e d i n g s t o a s s e s s s u c h o t h e r i n co m e c a n b e i n i t i a t e d , l e a d i n g t o n o p o s s i b i l i t y o f a s s e s s i n g su c h o t h e r i n c o m e , w h i c h c o u l d n o t h a v e b e e n t h e i n t e n t i o n o f t h e l e g i s l a t u r e . 6 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n h o l d i n g t h a t n o i n c r i m i n a t in g m a t e r i a l w a s m e n t i o n e d b y t h e A . O w h i c h m a y l e a d t h e A . O t o d r a w a d v e r s e i n f e r e n c e a n d t o c o n d u c t i n q u i r y a n d i n v e s ti g a t i o n , e v e n t h o u g h a s p e r t h e a s s e s s m e n t o r d e r s , d u r i n g t h e c o ur s e o f s e a r c h a n d s u r v e y p r o c e e d i n g s s e v e r a l c o n t r a c t o r s / s u p p l i e rs w e r e n o t f o u n d a t t h e i r g i v e n a d d r e s s e s ( p a r a 4 . 4 t o 4 . 6 ) , b as e d o n w h i c h t h e a s s e s s e e h a s s u r r e n d e r e d u n d i s c l o s e d i n c o m e f o r A . Y . 2 0 1 3 - 1 4 ( P a r a 4 . 9 ) . 7 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n n o t c o n s i d e r i n g t h e f i n d i n gs f r o m t h e s e a r c h r e l a t i n g t o s e i z e d i n c a s h b a l a n c e s ( p a r a 1 1. 3 ) , t h e d i f f e r e n c e i n v a r i o u s h e a d s o f b a l a n c e s h e e t a n d P & L A / c . f o r t h e A . Y r s 2 0 1 0 - 1 1 t o 2 0 1 6 - 1 7 i n t h e s e i z e d d i g i t a l d a t a , w h i c h w a s n o t e x p l a i n e d p r o p e r l y b y t h e a s s e s s e e ( p a r a 1 1. 3 ( i v ) , n o t i n g s o f v a r i o u s u n a c c o u n t e d a n d u n a l l o w a b l e e x p en s e s ( P a r a 1 4 . 3 ) e t c . w h i c h r e v e a l e d m a n i p u l a t i o n i n a c c o u n t an d u n d i s c l o s e d i n c o m e w h i l e h o l d i n g t h a t n o i n c r i m i n a ti n g m a t e r i a l w a s f o u n d i n t h e c a s e o f t h e a s s e s s e e . 8 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n d e l e t i n g t h e a d d i t i o n s o n th e b a s i s o f n e t p r o f i t r a t e e v e n i n r e s p e c t o f a s s e s s m e n t y e a r s f o r w h i c h t h e a s s e s s e e h a d h i m s e l f a c c e p t e d u n d i s c l o s e d i n c o m e o n t h e b a s i s o f f i n d i n g s d u r i n g t h e s e a r c h a n d s u r v e y o p e r a t i o n s , on t h e g r o u n d t h a t n o i n c r i m i n a t i n g m a t e r i a l w a s f o u n d , w i t h o u t ap p r e c i a t i n g t h a t i t w a s o n l y b e c a u s e o f t h e i n c r i m i n a t i n g m a t e ri a l f o u n d d u r i n g t h e s e a r c h a n d c o n n e c t e d s u r v e y o p e r a t i o n s an d i n q u i r i e s m a d e t h e r e u p o n t h a t t h e u n d i s c l o s e d i n c o m e w a s s u r re n d e r e d b y t h e a s s e s s e e . 9 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n n o t a p p r e c i a t i n g t h a t t h e se a r c h w a s c o n d u c t e d t o d e t e c t i n c o m e w h i c h w o u l d n o t h a v e b e en d i s c l o s e d i f n o s e a r c h h a s b e e n c o n d u c t e d , a n d t h e f i n d i n g s du r i n g t h e s e a r c h , p r i o r t o t h e s e a r c h a n d a f t e r t h e s e a r c h h as l e a d t o t h e c o n c l u s i o n t h a t t h e a s s e s s e e h a d n o t d i s c l o s e d i t s c o r r e c t i n c o m e i n i t s r e t u r n o f i n c o m e o r d u r i n g t h e e a r l i e r a s s e ss m e n t s a n d t h e f i n d i n g s c o n s e q u e n t t o t h e s e a r c h r e v e a l e d h u g e u n ac c o u n t e d i n c o m e w h i c h s h o u l d b e a s s e s s e d u / s . 1 5 3 A . 1 0 . O n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e a n d i n l a w , t h e l d . C I T ( A p p e a l ) h a s e r r e d i n l a w a n d o n f a c t s i n n o t ta k i n g i n t o c o n s i d e r a t i o n t h a t t h e a s s e s s e e h a s f a i l e d t o p r o v e t h e a u t h e n t i c i t y a n d g e n u i n e n e s s o f s u b - c o n t r a c t o r s a m ou n t i n g t o R s . 4 4 5 . 0 9 c r o r e s a n d s u p p l i e r s a m o u n t i n g t o R s . 4 3 0. 4 2 C r o r e s . I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 - 1 1 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e a n d i n l a w , t h e l d . C I T ( A ) h a s e r r e d i n l a w a n d o n f a c t s i n d e l e t i ng t h e d i s a l l o w a n c e o f R s . 2 , 9 3 , 4 1 9 / - m a d e u / s . 1 4 A r . w . r 8 D h o l d i n g t h a t t h e a d d i t i o n m a d e b y t h e A . O o n a c c o u n t o f e s ti m a t i o n o f N e t P r o f i t a n d o n a c c o u n t o f d i s a l l o w a n c e u / s . 1 4 A of t h e I n c o m e - t a x A c t , 1 9 6 1 w e r e n o t b a s e d o n a n y i n c r i m i n a t i n g ma t e r i a l s e i z e d / i m p o u n d e d d u r i n g t h e c o u r s e o f S e a r c h / S u r v e y p r o c e e d i n g s . 1 2 . O n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e a n d i n l a w , t h e l d . C I T ( A p p e a l ) o u g h t t o h a v e u p h e l d t h e o r d e r o f t h e A O . 1 3 . I t i s , t h e r e f o r e , p r a y e d t h a t t h e o r d e r o f t h e l d . C I T ( A ) b e s e t a s i d e a n d t h a t o f t h e A O b e r e s t o r e d t o t h e a b o v e ex t e n t . ” 5. The grievance of the Revenue is essentially on two counts. Firstly, against the deletion of addition made to the business income of the assessee by rejecting books of accounts and applying NP rate of 8% on self- executed contracts and net profit of 5.5% on the contracts further awarded by the assessee to sub-contractors in the impugned search assessments. Secondly, quashing of disallowance made under section 14A read with Rule 8D holding that the addition made by the AO on account of estimation of net profit and on account of disallowance under section 14A of the Act were not based on any incriminating material seized/impounded during the course of search/ survey proceedings. 6. The brief facts leading to the case is this that a search and seizure operation was undertaken at various business premises of the assessee under section132 of the Act on 21.10.2016 and survey under section 133A of the Act was also carried out at the certain business premises of the assessee. According to the assessee, during the search and seizure operation, the investigation wing of the department did not find any incriminating material in regard to different assessment years including AY 2011-12 the year under consideration. As a corollary to search, a notice under section 153A of the Act was issued on 7.3.2017 for various assessment years to the assessee in response whereof return of income I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 5 - under S. 153A of the Act. It is the plea of the assessee that no income was surrendered on account of undisclosed income per se in the return filed under S. 153A of the Act. It was submitted that income was offered on some specific issues in the ROI but not on the basis of documents found or seized during the course of search. Subsequently, notice under section 143(2) dated 13.7.2017 followed by notice dated 31.10.2018 under section 142(1) was served upon the assessee with a direction to furnish certain details and/or documents and to produce books of accounts and further to explain the findings of the search. The assessee duly provided the requisite details/documents to the ld. AO as claimed. 7. It is relevant to mention that the assessee is engaged in construction business claimed to have been started from 1972 and the same is spread all over India from North-East to South region. The assessee hires both skilled and unskilled labours who are generally not educated, neither the areas were undertaken having any bank facility. At the given point of time, there are 80-90 working sites. The prime raw-materials being the cement, steel and bitumen purchase whereof is hundred percent variable since those industries are organized and mostly supplied by PSUs and corporates. The other items like sand, soil, bricks, water and small consumables are supplied by local suppliers on the basis of self-made vouchers and not pakka one, neither the payment was made through banking channels which includes 20% of contract-costs as sought to be demonstrated by the assessee. 8. Subsequently, by and under a letter dated 06.12.2018, the assessee was directed to adduce documentary evidences in support of the genuineness of the sub-contractors and suppliers details whereof mentioned therein in respect of whom no verification could be carried out by the AO. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 6 - Such documents were directed to be supplied by the assessee within four days. It is stated by the assessee that there are 350 sub-contractors and 400 suppliers involving transaction of Rs.1497.05 crores, and it was not practicable for the assessee to adduce documentary evidences in order to prove the genuineness. 9. However, certain details claimed to have been filed before the AO by the assessee along with forwarding letter dated 19.12.2018, 20.12.2018, 21.12.2018 (2 in number), 24.12.2018 and 26.12.2018 (2 in number) which covered 95% of the sub-contractors and suppliers as further claimed by the assessee. However, the Ld. AO verified the transactions relating to the sub-contractors to the tune of Rs. 444,53,13,805/- and suppliers to the tune of Rs.177,00,42,662/-. The assessee further by and under a representation dated 29.12.2018, raised objections against the limited time provided to the assessee for filing details for rest of the sub-contractors and suppliers supplemented by legal precedents on the further issue as to why its books of accounts should not be rejected and as to why no addition could be made to the income disclosed in the return. However, the Ld. ACIT, Cent. Cir.2(1), Ahmedabad finally on 31.12.2018 completed assessment upon determining the total income of the assessee at Rs.26,58,42,775/- and made addition under section 153A read with section 143(3) of the Act to the tune of Rs.9,77,86,306/- on account of net profit calculated after rejecting the books of accounts under section 145(3) of the Act upon holding the percentage of profit enjoyed by the assessee on the contracts executed by itself would be on higher side than those given on sub-contracts on back-to- back basis. The Ld. AO adopted net profit rate of 8% on the contracts executed by the assessee itself and net profit rate of 5.5% on the contracts awarded by the assessee to the sub-contractors on back-to-back basis. Apart from that an addition of Rs. 2,93,419/- on account of disallowance I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 7 - under section 14A of the Act to the income of the assessee declared in the original return under section 139(1) of the Act was made. In the first appeal against the additions so made, the Ld. CIT(A) deleted the above additions in the appeal preferred by the assessee. Hence, the instant appeal before us. 10. We have heard the rival submissions made by the representative of both the parties and we have also perused the relevant materials available on record. 11. Before going into details of the matter, it is required to give brief status of the entire group of matters commencing from assessment years 2011-12 to 2015-16 being unabated years/proceedings (A.Y.2016-17 and 2017-18). Particulars A.Y. 2011-12 A.Y. 2012-13 A.Y. 2013-14 A.Y.2014-15 A.Y. 2015-16 Return of income u/s.139 Rs. 16,73,31,640* 14,18,81,550 21,50,17,217 19,49,60,610 35,46,52,120 Date of return of income u/s.139 31.07.2011 29.09.2012 09.10.2013 30.11.2014 27.112015 Time limit for issue of notice u/s.143 2 30.09.2012 30.09.2013 30.09.2014 30.09.2015 30.09.2016 Whether assessed u/s.143(3) /144 Yes Yes Yes No Total income assessed u/s.143( 3) Rs. 16,91,21,110*14,.39,25,250 21,75,83,530 N.A. N.A. Date of assessment u/s.143 (3) Date of search 21.10.2016 21.10.2016 21.10.2016 21.10.2016 21.10.2016 Whether unabated Unabated Unabated Unabated Unabated Unabated Return of income u/s.153A (Rs.) 16,77,63,050* 14,26,41,610 33,59,86,450 19,49,60,610/- 35,46,52,120/- Additional Income offered in the return u/s.153A 0 6,86,426 11,87,02,925 0 0 Whether abated Unabated Unabated Unabated Unabated Unabated Addition made by the AO u/s.153A 9,80,79,725 13,29,25,524 27,71,51,411 25,41,67,689 37,38,76,201/- Total income assessed u/s.143(3)r.w.s. 153A 26,58,42,775/- 27,55,67,134/- 61,31,37,861 44,91,28,299 72,85,28,321 I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 8 - Total income after rectification u/s. 164 26,58,42,780 27,55,67,130 54,13,89,410/- 38,47,48,161 62,97,23,030/- Date of order u/s.154 15.03.2019 15.03.2019 15.03.2019 15.03.2019 15.03.2019 * the figures are as per the appellant’s submission and there appears to be typographical errors in the assessment order(s) . 12. In support of its appeal, the assessee filed the following submissions before the first appellate authority: G r o u n d s N o . 1 t o 3 1 . U n d e r t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e t h e As s e s s i n g O f f i c e r h a s e r r e d i n p a s s i n g t h e o r d e r u / s 1 4 3 ( 3 ) / 1 5 3 A o f t h e I n c o m e T a x A c t , 1 9 6 1 w h i c h i s v o i d a b - i n i t i o a n d d es e r v e s t o b e q u a s h e d . 2 . U n d e r t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e t h e As s e s s i n g O f f i c e r h a s e r r e d i n i n v o k i n g t h e p r o v i s i o n s o f s e ct i o n . 1 5 3 A o f t h e I n c o m e T a x A c t 1 9 6 1 w i t h o u t a n y m a t e r i a l f o u n d d u r i n g t h e c o u r s e o f s e a r c h i n c a s e o f c o m p l e t e d a s s e s s m e n t . 3 . U n d e r t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e t h e As s e s s i n g O f f i c e r h a s e r r e d i n g i v i n g t h e f i n d i n g s t h a t t h e as s e s s e e h a s m a d e v o l u n t a r i l y d i s c l o s u r e o f 4 3 . 9 3 C r o r e s i n t h e - s t a t e m e n t r e c o r d e d u / s 1 3 2 ( 4 ) o f t h e I n c o m e T a x A c t 1 9 6 1 . 1 . T h e A p p e l l a n t i s m a k i n g t h e f o l l o w i n g s u b m i s s i o ns i n r e s p e c t o f t h e a s s e s s m e n t o r d e r : ( i ) T h e A s s e s s i n g O f f i c e r h a s r e j e c t e d t h e b o o k s o f a c c o u n t s o f t h e A p p e l l a n t u n d e r S e c t i o n 1 4 5 ( 3 ) o f t h e A c t f or t h e f o l l o w i n g r e a s o n s : a ) T h e A s s e s s i n g O f f i c e r h a s a l l e g e d t h a t e v e n t h o u g h s u b s t a n t i a l p a y m e n t h a s b e e n m a d e b y t h e A p p e l l a n t t o c e r t a i n s u b - c o n t r a c t o r s , t h e s a i d s u b - c o n t r a c t o r s ha v e n o t f i l e d a n y r e t u r n o r h a v e s h o w n m e a g r e i n c o m e . Th e A s s e s s i n g O f f i c e r n a m e d 3 f i r m s v i z . M / s . H o n e y m i n t R e s o u r c e s , M / S C r i m s o n I n f r a - t e c h a n d M / S S i g n a t u r e D y n a m i c s w h e r e a l l e g e d l y t h e r e i s a d i f f e r e n c e b e t we e n t h e p a y m e n t m a d e t o t h e m b y t h e A p p e l l a n t a n d t h e t u r n o v e r s h o w e d b y t h e m i n t h e r e t u r n s f i l e d . I n r es p e c t o f t h e s a i d f i r m s , i t i s s u b m i t t e d t h a t t h e A p p e l l an t h a s a l r e a d y m a d e v o l u n t a r y d i s c l o s u r e t o t h e t u n e o f R s. 1 1 , 8 7 , 0 2 , 9 2 5 / - a n d t h e s a i d d i s c l o s u r e p e r t a i n s t o A . Y . 2 0 1 3 - 1 4 a n d n o t t o t h e c u r r e n t a s s e s s m e n t y e a r . H e nc e , i t h a s n o r e l e v a n c e t o t h e p r e s e n t a s s e s s m e n t y e a r . b ) F u r t h e r , t h e A s s e s s i n g O f f i c e r h a s s t a t e d t h e c a s e o f M / S S i l v e r l i n e D y n a m i c s a n d M / S S t e r l i n g E n t e r p r i s e s w he r e i n t h e p a r t n e r s a n d t h e a d d r e s s e s o f t h e s a i d f i r m s a re s a m e a n d o n t h a t b a s i s h e l d t h a t t h e s a i d f i r m s a r e b o g u s a n d t h e r e b y t h e p a y m e n t s m a d e t o t h e m b y t h e A p p e l l a n t a r e I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 9 - a l s o b o g u s . I n t h i s r e g a r d , i t i s s u b m i t t e d t h a t i t m a y b e t h a t t h e s a i d f i r m s b e l o n g t o a g r o u p o f f i r m s a n d m a y b e u n d e r t a k i n g d i f f e r e n t n a t u r e o f w o r k . H o w e v e r , t h e A s s e s s i n g O f f i c e r m a d e n o e f f o r t s t o v e r i f y t h e s a me , O n t h e b a s i s o f t h e a f o r e s a i d i n f o r m a t i o n , t h e A s s e s s in g O f f i c e r c a m e t o h i s o w n c o n c l u s i o n , " I t i s e s t a b l i sh e d f a c t t h a t e n t r y o p e r a t o r s i n K o l k a t a u s e s a s i n g l e a d d r es s f o r h u n d r e d s o f c o n c e r n s w h i c h a r e b o g u s a n d n o t g e n u i ne i n n a t u r e , s i m i l a r f a c t s a b o u t t h e s e c o n c e r n s c l e a r l y s u g g e s t t h a t t h e s e t h r e e e n t i t i e s a r e n o t g e n u i n e i n n a t u r e. " I t i s s u r p r i s i n g t h a t t h e A s s e s s i n g O f f i c e r c a m e t o t h e a f o r e s a i d c o n c l u s i o n j u s t o n t h e b a s i s o f t h e a d d r es s e s o f t h e s a i d f i r m s b e i n g i d e n t i c a l , w i t h o u t e v e n v e r i f yi n g t h e t r a n s a c t i o n ( s ) b e t w e e n t h e A p p e l l a n t a n d t h e s a i d fi r m s , t h e n a t u r e o f w o r k c a r r i e d o u t , t h e r e t u r n o f i n c o m e f i l e d , t h e t u r n o v e r , e t c . F u r t h e r , t h e A s s e s s i n g O f f i c e r h a s n o t e s t a b l i s h e d a n y w h e r e t h e m a n n e r o f o p e r a t i o n o f t h e a l l e g e d e n t r y o p e r a t o r s a n d t h e m a n n e r i n w h i c h . i t i s c o n n e c t e d t o t h e A p p e l l a n t . T h e A s s e s s i n g O f f i c e r h a s g i v e n a l i s t o f c o n t r a c t or s a l l e g e d l y S h o w i n g t h e s a m e c h a r a c t e r i s t i c s a s t h e ab o v e - n a m e d f i r m s . I t i s s u b m i t t e d t h a t - i n t h e l i s t , o n ly M / S S i l v e r l i n e D y n a m i c s a n d M / S S t e r l i n g E n t e r p r i s e s a n d H a n s a j i R a m j i R a j p u t a n d M a n g a l s i n g h H a n s a j i R a j p u t h a v e t h e s a m e a d d r e s s e s . I n a n y e v e n t , d e t e r m i n a t i on o f g e n u i n e n e s s o f a n e n t i t y o n t h e b a s i s o f i t s a d d r e ss i s a r b i t r a r y a n d f u t i l e . T h e r e n o l a w b a r r i n g t w o f i r ms t o h a v e t h e s a m e a d d r e s s e s . I n a n y e v e n t , t h e A p p e l l a n t c a n n o t b e b l a m e d f o r t h e s a m e a n d t h e p a y m e n t s m a d e t o t h e s a i d f i r m s b y t h e A p p e l l a n t h e l d a s b o g u s . T h e A p p e l l a n t h a s p r o d u c e d t h e n e c e s s a r y d o c u m e n t s a n d t h e b o o k s o f a c c o u n t s b e f o r e t h e A s s e s s i n g O f f i c e r r e c or d i n g t h e p a y m e n t s m a d e t o t h e s a i d f i r m s . T h e A s s e s s i n g O f f i c e r h a s f a i l e d t o p o i n t o u t a s t o h o w t h e o t h e r 8 8 s u b - c o n t r a c t o r s a r e b o g u s . I t i s s e t t l e d la w t h a t t h e A s s e s s i n g O f f i c e r h a s t o p o i n t o u t s p e c i f i c d e fe c t s i n t h e b o o k s o f a c c o u n t s o f t h e A p p e l l a n t i n o r d e r t o r e j e c t t h e m . H o w e v e r , t h e A s s e s s i n g O f f i c e r h a s m a d e a g e ne r a l s t a t e m e n t i n r e s p e c t o f t h e o t h e r 8 8 s u b - c o n t r a c t or s w i t h o u t d i s c l o s i n g a s t o h o w t h e s e s u b - c o n t r a c t o r s a r e s u s p i c i o u s . I t i s p e r t i n e n t t o m e n t i o n h e r e t h a t a c o n s i d e r a b l e n u m b e r o f s u b c o n t r a c t o r s a n d s u p p l i e r s h a v e b e e n v e r i f i e d b y t h e A s s e s s i n g O f f i c e r o n t h e b a s i s o f t h e d e t a i l s / d o c u m e n t s s u b m i t t e d b y t h e A p p e l l a n t v i d e it s l e t t e r s d a t e d 1 9 . 1 2 . 2 0 1 8 , 2 0 . 1 2 . 2 0 1 8 , 2 1 . 1 2 . 2 0 1 8 a nd 2 4 . 1 2 . 2 0 1 8 . ( c ) I n p a r a n o s . 1 0 , 1 0 . 1 , a n d 1 0 . 2 , t h e A s s e s s i n g O f f i c e r h a s g i v e n c h a r t s w h i c h r e f l e c t t h e f o l l o w i n g d e t a i l s : A . I n p a r a 1 0 , a s p e r c h a r t g i v e n t h e r e i n , t h e A p p el l a n t h a s p a i d R s . 3 7 , 5 5 , 5 9 , 2 2 1 / - i n t h e r e l e v a n t a s s e s s m e n t y e a r to I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 0 - s u b c o n t r a c t o r s h a v i n g P A N a n d t o s u b - c o n t r a c t o r s n ot h a v i n g P A N w h o h a d d o n e w o r k o f m o r e t h a n R s . 1 0 l a k h s , w h i l e R s . 3 3 , 0 1 , 6 3 , 0 6 1 / - h a d b e e n p a i d t o s u pp l i e r s P A N a n d R s . 2 8 , 5 8 , 3 4 , 9 1 1 / - t o s u p p l i e r s w i t h o u t P A N f r o m w h o m s u p p l i e s o f m o r e t h a n R s . 1 0 l a k h s h a d b e e n p u r c h a s e d ; B . I n p a r a 1 0 . 1 , t h e A s s e s s i n g O f f i c e r h a s m a d e . a n a l ys i s o f s u p p l i e r s a n d s u b c o n t r a c t o r s w h o h a v e r e p l i e d t o t he n o t i c e u / s 1 3 3 ( 6 ) o f t h e A c t . T h e b r e a k - u p g i v e n i n t h e s a i d p a r a s i s a s u n d e r : a ) S u p p l i e r s w h o h a v e r e p l i e d t o t h e s a i d n o t i c e s a n d p a y m e n t s h a v e b e e n v e r i f i e d - R s . 2 6 , 2 1 , 6 6 , 1 2 2 / - b ) S u b - c o n t r a c t o r s w h o h a v e r e p l i e d t o t h e s a i d n o t i c es a n d p a y m e n t s h a v e b e e n v e r i f i e d - R s . 9 , 7 8 , 5 7 , 3 7 2 / - C . I n p a r a 1 0 . 2 n u m b e r o f s u b - c o n t r a c t o r s a n d s u p p li e r s w h o h a v e n o t r e p l i e d t o t h e n o t i c e s u / s 1 3 3 ( 6 ) o f t h e Ac t a r e g i v e n - a ) S u b - c o n t r a c t o r s – R s . 2 8 , 6 0 , 5 4 , 7 6 0 / - b ) S u p p l i e r s – R s . 1 1 , 3 2 , 0 0 , 1 3 2 / - c ) S u b - c o n t r a c t o r s / s u p p l i e r s w h o c o u l d n o t b e c o n t a c t e d i n a b s e n c e o f a d d r e s s e s n o t b e i n g s u p p l i e d b y t h e a s s e s s e e – R s . 6 , 6 0 , 4 8 , 0 5 6 / - d ) S u b - c o n t r a c t o r s i n w h i c h t h e n o t i c e s h a v e b e e n r e t u r n e d b y t h e p o s t a l a u t h o r i t i e s w i t h t h e r e m a r k s l e f t / i n c o m p l e t e a d d r e s s / r e f u s e d / n o t k n o w n / d o o r l o c k e d / a d d r e s s c a n ' t b e l o c a t e d e t c . R s . 4 , 6 8 , 1 0 , 6 5 4 / - e ) S u p p l i e r s i n w h i c h t h e n o t i c e s h a v e b e e n r e t u r ne d b y t h e p o s t a l a u t h o r i t i e s w i t h t h e r e m a r k s l e f t / i n c o m p l e t e a d d r e s s / r e f u s e d / n o t k n o w n / d o o r l o c k e d / a d d r e s s c a n ' t b e l o c a t e d e t c . R s . 1 8 , 1 2 , 4 9 6 /- O n t h e b a s i s o f t h e d e t a i l s m e n t i o n e d a b o v e , t h e A s s e s s i n g O f f i c e r s e n t t h e l e t t e r d a t e d 0 6 . 1 2 . 2 0 1 8 t o t h e A p p e l l a n t t o v e r i f y t h e d e t a i l s of s u b - c o n t r a c t o r s a n d s u p p l i e r s i n v o l v e d i n t r a n s a c t i o n s a m o u n t i n g t o R s . 1 4 9 7 . 0 5 c r o r e s w i t h i n 4 d a y s . T h e A p p e l l a n t r e p l i e d v i d e l e t t e r s d a t e d 1 9 . 1 2 . 2 0 1 8 , 2 0 . 1 2 . 2 0 1 8 , 2 1 . 1 2 . 2 0 1 8 , a n d 2 4 . 1 2 . 2 0 1 8 a n d s u b m i t t e d d o c u m e n t a r y e v i d e n c e i n r e s p e c t o f 9 5 % o f t h e s u b - c o n t r a c t o r s a n d s u p p l i e r s. H o w e v e r , i t s e e m s i n h a s t e o f f i n i s h i n g t h e a s s e s s m e n t a n d p a s s i n g a n a s s e s s m e n t o r d e r , t h e A s s e s s i n g O f f i c e r d i d n o t v e r i f y t h e s u b - c o n t r a c t o rs a n d s u p p l i e r s p r o p e r l y a n d o n l y t o o k R s . 4 4 4 . 5 3 c r o r e s a s t h e v e r i f i e d a m o u n t i n r e s p e c t o f t h e s u b c o n t r a c t o r s a n d R s . 1 7 7 c r o r e s a s t h e v e r i f i e d I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 1 - a m o u n t i n r e s p e c t o f t h e s u p p l i e r s . T h e A s s e s s i n g O f f i c e r s e n t t h e l e t t e r d a t e d 2 6 . 1 2 . 2 0 1 8 t o t h e A p p e l l a n t t o v e r i f y t h e r e m a i n i n g s u b- c o n t r a c t o r s a n d s u p p l i e r s . ( i i ) T h e A p p e l l a n t s e n t a d e t a i l e d r e p l y v i d e l e t t er d a t e d 2 9 . 1 2 . 2 0 1 8 , w h e r e i n i t e x p l a i n e d t h e r e a s o n s a s t o w h y t h e a s s e s s m e n t f o r A . Y . 2 0 1 1 - 1 2 s h o u l d n o t b e r e - o p e n e d u n d e r S e c t i o n 1 5 3 A a n d w h y i t s b o o k s o f a c c o u n t s c a n n o t b e r e j e c t e d b y t h e A s s e s s i n g O f f i c e r . H o w e v e r , t h e A s s e s s i n g O f f i c e r f a i l e d t o a p p r e c i a t e t h e r e a s o n s g i v e n b y t h e A p p e l l a n t a n d p a s s e d t h e A s s e s s m e n t O r d e r o n a r b i t r a r y , w h i m s i c a l a n d b a s e l e s s g r o u n d s . ( i i i ) I t i s s u b m i t t e d t h a t t h e A s s e s s i n g O f f i c e r c o u l d n o t h a v e r e - o p e n e d t h e a s s e s s m e n t o f A . Y . 2 0 1 1 - 1 2 a n d r e j e c t e d t h e b o o k s o f a c c o u n t s o f t h e A p p e l l a n t a s t h e r e g u l a r a s s e s s m e n t i n r e s p e c t o f A . Y . 2 0 1 1 - 1 2 w a s c o m p l e t e d a n d , t h e r e f o r e , i t s a s s e s s m e n t c o u l d n o t h a v e b e e n r e - o p e n e d u n d e r S e c t i o n 1 5 3 A u n t i l a n d u n l e s s s o m e i n c r i m i n a t i n g m a t e r i a l w a s f o u n d d u r i n g t h e s e a r c h p e r t a i n i n g t o t h e A p p e l l a n t . I t i s a n e s t a b l i s h e d fa c t t h a t n o i n c r i m i n a t i n g d o c u m e n t h a s b e e n f o u n d d u r i n g t h e s e a r c h p e r t a i n i n g t o A . Y . 2 0 1 1 - 1 2 . I t i s s e t t l e d l aw t h a t a d d i t i o n o f i n c o m e c a n o n l y b e d o n e i n r e s p e c t o f a p a r t i c u l a r a s s e s s m e n t y e a r i f s o m e i n c r i m i n a t i n g d o c u m e n t h a s b e e n f o u n d p e r t a i n i n g t o t h e a s s e s s m e nt y e a r . I n t h i s r e g a r d , r e l i a n c e i s p l a c e d o n t h e f o ll o w i n g j u d g e m e n t s : a ) C o m m i s s i o n e r o f I n c o m e - t a x - I v . J a y a b e n R a t i l a l S o r a t h i a [ 2 0 1 4 ] 2 2 2 T a x m a n 6 4 ( G u j a r a t ) ( M A G ) — T h e H o n ' b l e G u j a r a t H i g h C o u r t h e ld t h a t e v i d e n c e f o u n d i n r e s p e c t o f t h e a s s e s s m e n t y ea r s 2 0 0 6 - 0 7 a n d 2 0 0 7 - 0 8 c a n n o t b e a v a l i d b a s i s f o r t h e a s s e s s i n g o f f i c e r t o m a k e a d d i t i o n s i n r e s p e c t o f th e a s s e s s m e n t y e a r 2 0 0 5 - 0 6 w i t h o u t t h e r e b e i n g a n y i n c r i m i n a t i n g d o c u m e n t o r c o r r o b o r a t i n g m a t e r i a l . b) Principal Commissioner of Income-tax v. Saumya Construction (P.) Ltd. [2016] 387 ITR 529 (Gujarat) - The Hon’ble Gujarat High Court held: "16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion 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 strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 2 - purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six nears preceding the assessment near relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition.. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the Appellant which would include income declared in the returns, if any, furnished by the Appellant as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the Appellant filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.11,05,51,000/- on the basis of the material which, was not found during the course of search but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the Appellant under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made." I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 3 - C) Jai Steel (India), Jodhpur v. Assistant Commissioner of Income-tax [2013] 219 Taxman 223 (Rajasthan) - The Hon’ble Rajasthan High Court has comprehensively analyzed Section 153A and succinctly laid down the position of law as 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 requisition under Sections 132 and 132A of the Act, it is apparent that: (a) the assessments or reassessments, 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 that has already been assessed, the assessment will be made on the basis of incriminating material; and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Though such a claim by the Appellant for the first time under Section 153A of the Act is not completed, the case in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated." d) PCIT v. Meeta Gutgutia [2017] 395 ITR 526 (Delhi) - The Hon'ble High Court had decided as follows: "Section 153A is indeed an extremely potent power which enables the revenue to re-open at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under section 132 incriminating material justifying the re-opening of the assessments for six years is found that the invocation of section 153A qua each of the assessment years would be justified.” The judgment of the Hon'ble Delhi High Court was affirmed by the Supreme Court in Principal Commissioner of Income-Tax v. Meeta Gutgutia [2018] 257 Taxman 441 (SC) e) In addition thereto, the Hon'ble Supreme Court in the ease of CIT v. Singhad technical Education Society [201 7] 397 ITR 344 (SC) has reiterated this position of law, "where loose papers found and seized from residence of President of Appellant, an educational institution, indicating capitation fees received by various institutions run by the Appellant did not I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 4 - establish co-relation document-wise with assessment years in question notice issued under section 153C had rightly been quashed and set-aside." f) The same position of law was earlier expounded by the Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi.) g) The Appellant also seeks to place reliance on the following judgments with regard to above-mentioned proposition: A. Suncity Alloys (P.) Ltd. v. ACIT 12009] 124 TTJ 674(JD); B. DCIT v. Royal Marwar Tobacco Product (P.) Ltd. [2009] 29 SOT 53(AHD)(URO); C. CIT v. Anil Kumar Bhatia [2012] 24 Taxmann.com 98 (Del.) D. In Kusum Gupta v. DCIT (ITA Nos. 4873/Del/2009 (2005- 06);1TAT Delhi Bench E. Anil Kumar Bhatia v. ACIT [2010] 1 ITR (Trib.) 484 (Del) F. Singhad Technical Education Society v. ACIT [2011] 57 DTR 241 G. LMJ International Ltd. v. DCIT [2008] 14 DTR 540 (Kol Trib.) H. ACW v. Gambhir Silk Mills [2010] 6 ITR 376 (Ahd. Trib.) It has been held in all the above-mentioned cases that in the absence of any specific material found during search, no addition can be made u/s 153A where regular assessments have been completed. The judgments relied upon by the Assessing Officer in para 11.2 of the Assessment Order pertain to the issue that notice under Section 153A of the Act has to mandatorily issued by the assessing officer despite there not being any incriminating material. The Appellant is not disagreeing with this proposition of law, however, it is submitted that the Assessing Officer has failed to appreciate the judgments relied upon by the Appellant that an assessing officer cannot re-open the completed assessment proceedings in respect of a particular assessment year under Section 153A unless incriminating material relating to such assessment year is found during search. Therefore, the question of rejection of books of accounts under Section 145(3) does not arise. Ground No. 4 – Under the facts and circumstances of the case the Assessing Officer has erred in invoking the provisions of section 145(3) of the Income Tax Act 1961 and apply the NP rate of 8% on direct contract executed by the assessee and 5.5% on contracts executed by giving sub- contracts on back to back basis and thereby making an addition of Rs. 9,77,86,306/-on account of net profit inspite of original assessment completed u/s 143(3) of the Income Tax Act, 1961 accepting the trading results declared by the assessee. 1. Without prejudice to the submission made in ground no. 1 and 2, it is submitted that the Assessing Officer could not have rejected the books of accounts of the Appellant even otherwise. During the regular assessment in respect of A.Y. 2011-12, the original assessment order was passed after carefully perusing the books of accounts of the Appellant and making necessary I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 5 - enquiries whereby the turnover and the rate of Net Profit mentioned by the Appellant in its return of income for A.Y. 2011-12 was duly accepted. The books of accounts cannot be rejected unless a specific defect is pointed out by the Assessing Officer. Further, the Assessing Officer could not have rejected the books of accounts of the Appellant for the following reasons: A. The Appellant is engaged in the construction business since the year 1972. The business of the Appellant is spread all over India between north-east and south region. In this nature of business the Appellant has to hire skilled as well as unskilled labour from local areas who are generally illiterate and the areas have no banking facilities. At given, point of time, there are 80-90 working sites. Further, purchase of cement, steel and bitumen is 100% verifiable since cement, steel and bitumen industries are organized and the supplies are made by PSUs and corporates. In case of sand, soil, bricks, water and small consumable items, supply is by local suppliers which is done on the basis of self-made vouchers and not pakka vouchers and payment is not made through banking channels. 20% of the contract cost is towards the aforesaid items. Thereby meaning that 20% of the expenditure is very difficult to verify because of the nature of this business and not due to any infirmity in the books of accounts of the Appellant. This fact, has also been admitted by the Assessing Officer in para 6 of the Assessment Order wherein he has categorically stated, "There are 47 subcontractors to whom the Appellant has paid Rs. 127,63,10,624/- in last 7 years (F.Y. 2010-11 to F.Y. 2016-2017) and whose PAN is not provided by the Appellant company. In the absence of full details and due to nature of business trade it was very difficult to ascertain exact sub-contractors for further verifications." B. The Appellant has always deducted TDS whenever payments have been made above the exempted limit. C. Further, the documents seized during the search do not pertain to this particular year, and documents of another year cannot be made the basis for this particular year to reject the books of accounts. D. It is pertinent here to revisit the analysis made by the Assessing Officer in his assessment order, which has been reproduced above. This re-visit must come with the caveat that there has to be specific evidence to show that some income has been earned beyond what has been reflected in the books of account, or that true income cannot be computed on the basis of books of account which are not correct and complete. Now an analysis of the findings of the Assessing Officer shows the following: I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 6 - (i) With regard to the sub -contractors and suppliers in whose case payments made have been checked and verified, there is no doubt about the veracity and genuineness of the identity of these suppliers and sub-con tractors, and the payments made to them. (ii) With regard to the suppliers/sub-contractors who have not replied to the notices u/s 133(6) of the Act, it is submitted that the fact that the notices have been served proves the identity and address of the suppliers/sub-contractors to be correct. If the suppliers/sub-contractors have not replied then it is the duty of the Assessing Officer to issue summons u/s 131 of the Act to enforce their attendance. The Appellant has no power or authority to ensure attendance, and it is for the Assessing Officer to exercise his statutory powers to do so. On the basis of the fact that the suppliers/sub- contractors have not replied the notice u/s 133(6) of the Act, it cannot be said that the expenses are non-genuine and the payment made to them are non-genuine. (iii) With regard to the suppliers/sub- contractors who could not be contacted because their addresses were not supplied by the Appellant, it is submitted that information about these suppliers/sub-contractors has been sought after a time-period of 7-8 years, and the Appellant cannot be expected to maintain and preserve the addresses of such suppliers/sub- contractors who are spread in a number of sites, in various geographical regions. Sometimes contact is lost with them since other suppliers/sub-contractors are engaged. This does not mean that they are not genuine, or the payment made to them is not genuine. Also, the Appellant has no power to force such people to appeal before Income-Tax Authorities. On the other hand, the Assessing Officer has been given wide powers under the Income-Tax Act to summon such persons. Details of these sub- contractors/suppliers are available in the books of the Appellant, including their ledger account, the bills raised by them giving their addresses, the work done by them etc. The books of account are audited, hence, they are complete as far as the paperwork is concerned. If the Assessing Officer had any doubts about the identity of such persons or the veracity/genuineness of payments made to them, he could have issued summons u/s 131 of the Act and forced their attendance. The I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 7 - Assessing Officer did no such exercise, hence it cannot be said, only on the ground that their current address is not known to the Appellant, that the payments are not genuine. (iv) With regard to the suppliers/sub- contractors wherein notices have been returned by the postal authorities with remarks of left / incomplete address / refused / not known / door locked / address can't be located. All these remarks do not indicate that the parties were non-genuine. It is obvious that after the passage of 7-8 years, these parties have moved elsewhere because of which they cannot be traced, or the address that they had supplied to the Appellant was not detailed enough for the postal authorities to locate them. That, again, may raise a doubt out cannot be a substitute for evidence/proof, if the notices were returned with these remarks, the Assessing Officer should have conducted inquiries about their whereabouts based on bills etc. available on file. For example, in the case of “door locked” remark, the postal authorities should have made a second visit, or the Inspector of the department should have inquired form neighbours etc. Since the payments were substantial the parties were riot fly-by-night entities, and could have been traced with some effort. But no inquiry worth the name was conducted by the Assessing Officer who assumed that all these parties were non-genuine or non-existent. This conclusion was obviously incorrect. As far as remarks "refused" was concerned, the Assessing Officer should have used his statutory powers to enforce attendance. (v) Further, it is important to point out that the sub-con tractors and suppliers over Rs.10 lakhs who had PAN, as per the Assessing Officer's own admission totaled to Rs.70,57,22,282/-. To that extent the parties were identifiable, and could have been traced. They must also be filing returns of income. It begs the question as to how the Assessing Officer was not able to trace them at least. All in all, the Assessing Officer did not make any inquiry worth its name to try and locate these parties, nor did he issue summons u/s 131 to them to enforce attendance. He assumed that all these parties were non-genuine even though they were evidently traceable. It is important to emphasize again that the Appellant can supply the address he has on record, and do no more. It is for the Assessing Officer to use his statutory powers I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 8 - to enforce attendance, and subject them to questions. However, the Assessing Officer has acted on surmises, suspicions and conjectures without giving proper opportunity to the Appellant to verify and confirm the subcontractors and the suppliers thereby violating fundamental rules of justice. In this regard, reliance is placed on the judgment of the Hon’ble Supreme Court in Dhakeshwari Cotton Mills Ltd. v.Commissioner of Income-tax [1954] 26 ITR 775 (SC), wherein the Hon'ble Court held: "In this case we are of the opinion that the Tribunal violated certain fundamental rules of Justice in reaching its conclusions. Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to the company to rebut the material furnished to it by him, and lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The result is that the assessee had not had a fair hearing. The estimate of the gross rate of profit on sales, both by the Income-tax Officer and the Tribunal, seems to be based on surmises, suspicions and conjectures. It is somewhat surprising that the Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills without showing that statement to the assessee and without giving him an opportunity to show that that statement had no relevancy whatsoever to the case of the mill in question. It is not known whether the mills which had disclosed these rates were situate in Bengal or elsewhere, and whether these mills were similarly situated and circumstanced. Not only did the Tribunal not show the information given by the representative of the department to the appellant, but it refused even to look at the trunk load of hooks arid papers which Mr. Banerjee produced before the Accountant Member in his chamber. No harm would have been done if after notice to the department the trunk had been opened and some time devoted to see what it contained. The assessment in this case and in the connected appeal, we are told, was above the figure of Rs.55 lakhs and it was meet and proper when dealing with a matter of this magnitude not to employ unnecessary haste and show impatience, particularly when it was known to the department that the books of the assessee were in the custody of the Sub-Divisional Officer, Narayanganj. We think that both the Income-tax Officer and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion. It is thus a fit case for the exercise of our power under article 136." In the present case also, the Assessing Officer has not given proper opportunity to the Appellant to clear his doubts I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 1 9 - regarding veracity of the sub-contractors arid the suppliers. The Assessing Officer also did not give an opportunity to the Appellant to rebut the NP rate of 8% taken by him. In order to hastily pass the Assessment Order, the Assessing Officer did riot grant a fair hearing to the Appellant. In the absence of concrete evidence that the parties were not genuine, or they denied receipt of money shown as given to them, it cannot be said that the accounts are not correct and complete and that the expenditure claimed is false or non- genuine. The addition made by rejecting the book results is incorrect and baseless. E. It is further submitted that in regard to the NP rate, the Appellant gave NP rate of other firms engaged in similar business and the Appellant also stated that the NP rate declared by it is more than the NP rate of those other firms. However, the Assessing Officer, withoutmaking due enquiries, summarily rejected the contention of the Appellant and applied the NP rate at 8% which is wholly incorrect, arbitrary and baseless. The Appellant relies on the following case laws: 1. S. Sarabhiah Setty& Sons v. CIT [1967] 64 ITR 175 (AP); 2. Yaggina Veeraraghavelu & Mavuleti Sanaraju & co. v. CTT [1966] 62 ITR 528(AP); 3. Seth Nathuram Munnalal v.C1T 25 ITR 216 (Nag.); 4. Mysore Fertilizer Co. v. CIT, 59 ITR 268 (Mad.) 5. CIT v. Margadarsi Chit Funds Pvt. Ltd. [1985] 155 ITR 442 (AP) 6. Marnilal Kher Ambalat& co. v. 1TO [1989] 176 ITR 253 (Bom.) It has been held in the above-mentioned cases that where the accounts are consistently maintained on a basis that has been accepted in the past and there is no material to indicate how it was defective, the Assessing Officer cannot reject the method of accounting merely because, in his view, a different system of accounting would be better suited. F. The basis on which the turnover and rate of profit are estimated should be furnished to the Appellant and he must be given an opportunity to rebut the same. In this regard, reliance is placed on the judgment in Koyammankutty v. ITO (Addl.) (Fourth) [1965] 58 ITR 871(Ker.) G. The Assessing Officer should record a clear finding that the correct profit cannot be deduced from the method of accounting followed before rejecting the book results. In this regard, reliance is placed on the judgment in Vikas W.S.P. Ltd. v. CIT [2008] 307 ITR 304(P & H). H. The findings in the original assessment order cannot be disturbed unless it is proven that the said findings are perverse, or there is a substantial ground or there is a material change in I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 0 - the facts justifying the assessing officer to take different view. In this regard, the Appellant relies on the following judgments: (i) Radhasoami Satsang v. Commissioner of Income-tax [1992] 60 Taxman 248 (SC) - The Hon'ble Supreme Court held as under: "13. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 14. On these reasonings in the absence of any material change justifying the revenue to take a different view of the matter — and if there was no change it was in support of the Appellant — we do not think the question should have been reopened and contrary to what had been decided by the Commissioner in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under sections 11 and 12." (ii) Commissioner of Income-tax v. Neo Poly Pack (P.) Ltd. [2000] 112Taxman 363 (Delhi) - The Hon’ble Delhi High Court held that for the sake of consistency, the same view should continue to prevail unless there some material change in facts. The Hon'ble Court has held as under: "5. Having heard Mrs. PremLata Bansal, the learned counsel for the revenue and Mr. Salil Aggarwal, the learned counsel, for the. respondent, we are of the view that no fault can be found with the order of the Tribunal declining to make reference on the proposed question. It is true that each assessment year being independent of each other, the doctrine of res judicata does not strictly apply to the income-tax proceedings, but where an issue has been considered and decided consistently in a number of earlier assessment years in a particular manner, for the sake of consistency, the same view should continue to prevail in the subsequent years unless there is some material change in facts. In the present case, the teamed counsel for the revenue has not been able to point out even a single distinguishing feature in respect of the assessment year in question which could have prompted the Assessing Officer to take a view different from the earlier assessment years in which the same income was brought to tax as income from business." (iii) CIT v. Hindustan Motors 192 ITR 619 (Cal.) -The Hon'ble Calcutta High Court held that there should be substantial I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 1 - grounds for taking a different view from the earlier assessment years. The Hon’ble Court held as under: "It should also be noted in this connection that the agreements were all entered into long before the relevant accounting periods. The royalty has been paid -since 1971-72. Payments have been allowed for all these years up to the assessment year 1975-76 as revenue expenditure without any dispute. It is for the first time in course of the assessment year 1976-77the ITO took the stand- that these expenditures were not allowable. It was contended on behalf of the department that there was no res judicata in income- tax cases. It is true that there was no res judicata but there must be some substantial ground for one ITO to differ from the view taken by another ITO in an earlier assessment year." I. The Assessing Officer has miserably failed to prove the earlier findings as perverse or there is a substantial ground or a material change in facts in order for him to take a different view man the view taken in the earlier assessments. The Assessing Officer has alleged in the Assessment Order that there is difference between the Cash-in-hand balance shown in Trial Balance and in the Balance Sheet of the Appellant. In this regard, it is submitted that for the purpose of assessment, the audited financial statements of the Appellant are relevant. The Balance Sheet does not show any discrepancy in opening and closing balance of Cash-in-hand. Further, the Assessing Officer has relied on some seized digital data, however, he has not mentioned any details of this digital data including the place from where it was seized, its source, its last modified date, the person who had prepared it, etc., and in absence of any specific details verifying its authenticity, the said digital data cannot be compared to audited financial statements and cannot be the basis for rejection of the books of accounts. J. In continuation of the above, it is submitted that an issue has been made also of difference in cash-in-hand in the books of the Appellant, firstly as on 31.03.2015 and 01.04.2015, and secondly, as on the date of search, i.e. on 21.10.2016. Much has been made of the fact that Shri Agarwal could not explain the difference in his statement recorded u/s 132{4) of the Act It is submitted that no normal person can explain such differences while the search is going on since it entails deep examination and verification of the books, and figures in various accounts. Subsequently, during post-search inquiries and proceedings detailed submissions were made which are reproduced at page 54 of the assessment order. It was submitted that there is no difference in the cash-in-hand since the cash available at various sites where work was going on was not considered. Detailed site-wise cash-in-hand was submitted which clearly showed that there was no difference between cash-in-hand shown in the books and as found during I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 2 - search, or as reflected in the trial balance and balance-sheet. The Assessing Officer has not been able to controvert the evidence so produced except to say that supporting evidence has not been produced. Nothing stopped the Assessing Officer from calling for the accounts maintained at various sites which were more than 80-90 in number, and verifying the claim of the Appellant. It is submitted that there was no discrepancy in the cash-in-hand as shown in the books of account and in the trial balance etc. The books are correct and complete on this aspect. K. In addition to the above, the Assessing Officer has relied on case-laws to state that rule of consistency is subject to exceptions, one of them being if there has been a bona fide mistake made in the earlier assessment. However, in the present case, the Assessing Officer has failed to show any bona fide mistake committed in the earlier assessment. L. The net profit rate declared by the other assessee's who are in the same fields and under the similar circumstances has declared following NP rate which is lesser than the assessee. Assessment Year Name of Company Net Profit Turnover M.P. Ratio 2013-14 Rithwik Projects Pvt. Ltd. -36,31,92,000 4,34,83,73,000 -8.35% 2015-16 Soma Enterprise Ltd. -1,19,34,01,946 14,81,48,21,654 -8.06% 2016-17 Soma Enterprise Ltd. 8,45,97,393 19,90,14,82,652 0.43% 2016-17 Sadbhav Engineering Ltd. 1,60,03,10,000 31,81,65,36,000 5.03% 2017-18 Soma Enterprise Ltd. -63,65,22,814 17,44,60,60,360 3.65% 2017-18 Sadbhav Engineering Ltd. 1,87,84,53,000 33,20,30,52,000 5.66% Therefore there is no justification for application of higher NP rate in the case of the assessee when the rate declared by the assessee is 5.37%.” 13. The assessee asserted before the CIT(A) that no incriminating documents were found during the course of search in respect of impugned assessments concluded and not pending at the time of search. The assessee at the very threshold challenged no additions were permissible in law under search assessments under S. 153A until and unless some incriminating material was found during the search pertaining to the assessee. In support I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 3 - of the contentions made by the assessee, various judicial pronouncements were also relied upon. It was further contended by the assessee that the AO did not make any inquiry under S. 133(6) to collect information from parties, neither any summon under section 131 of the Act was issued to them to enforce attendance. Even though these parties are evidently available the ld.AO wrongly assumed that those parties are not genuine. The AO, therefore, acted on surmise and conjecture without affording an opportunity to the assessee to verify and confirm the sub-contractors, thereby violating fundamental principle of natural justice. Such contentions made by the assessee were further supported by various judgments pronounced by the different judicial forums. 14. The assessee has further raised the following contentions before the first appellate authority and before us as well by way of written submissions: “4. The learned AO has referred various discrepancies in the assessment order for invoking the provisions of section 145(3) of the IT Act 1961. The learned AO has mainly referred in various tables the incomplete digital data regarding accounting of the assessee firm. These data are incomplete data which were prepared during the process of preparation of final accounts when all the data are clubbing for making final balance sheets of the various years. These data were not deleted but final data were prepared and were saved in the system. In this process the incomplete data were saved by the employees and were not deleted after preparation of final accounts. The learned AO has not mentioned that final tally data were also found and they were matched and tallied with the audit report as well as return of income filed by the assessee company prior to the date of search. Therefore no specific addition was made on this account by the learned AO. He referred the incomplete digital data only for the justification of invocation of provisions of section 145(3). The learned AO has not given any justification or finding that the incomplete digital data are actual data and the return filed were not correct and not showing the actual profit of the assessee company. During the assessment proceedings the learned AO has not seek any clarification regarding incomplete digital data. If he has any concern then show cause notice must be issued by him before using them against the assessee. This exercise has not been done by the learned AO. Therefore the allegation made by the learned AO and argued by the DR is not correct and far from the reality. 5. This is a case where originally regular assessments for all the years were completed u/s 143(3) accepting the net profit rate as disclosed by the assessee. The Learned Assessing Officer completed the assessment by applying I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 4 - NP rate of 8% on Contracts executed by the assessee and 5.5% on sub-contract receipts without any basis. 6. The assessee has made detailed submission before the learned AO as well as before the learned CIT(A) that in the case of the assessee there was no incriminating material found and seized during the search conducted on 21.10.2016. In view of this additions were not warranted by way of rate application on contract and sub-contract receipts. The submissions of the assessee were well supported. 7. However the Learned Assessing Officer has stated that during the course of search page no. 10 on annexure A-9 and page no. 27 of annexure A- 15 were found and have been discussed in the assessment order in para 6 page no. 69 and 70 of the assessment order. Similarly the Learned Assessing Officer has further stated that some diaries were found and impounded as per annexure A-I, A-2 and A-7. The Learned Assessing Officer has also reported that annexure LF-I was also found. The Learned Assessing Officer has stated that these seized papers relate to unaccounted cash expenditure. The assessee furnished explanation during the assessment proceedings and the explanation was accepted, therefore the learned AO has not made any addition on this account. If the learned AO was not satisfied with the explanation of the assessee then he would have made addition on this account. The above documents which includes annexures annexure A-9 and page no. 27 of annexure A15 and A-I, A-2 and A-7 are not related to assessment year 2011-12, 2012-13, 2013-14 and 2014-15. These are related to only assessment year 2015-16 and 2016-17. Some of the documents are related to projected expenses for different projects and were accounted for in different heads. If the learned AO has found that these expenses are unaccounted expenses he would have made addition u/s 69C of the Income Tax Act 1961 which has not been made by him. These papers relate to Assessment Year 2015-16 and 2016-17 and not to Assessment Year 2012-13 to 2014-15. Secondly these papers relate to very small amount of cash payments and the Learned Assessing Officer has not established that these relate either to the business of the assessee or these expenses are unaccounted cash expenditure. Lastly even if additions were warranted on account of these papers the same should have been restricted to the amount mentioned in these papers for Assessment Year 2015-16 and Assessment Year 2016-17. In view of this it is submitted that there was no case for making any addition in Assessment Year 2012-13 to 2014-15. 15. As pointed out on behalf of the Assessee, a regular assessment was carried out for all the assessment years in question under S. 143(3) accepting the net profit rate as disclosed by the assessee. However, in contrast, the Learned Assessing Officer completed the search assessment by applying NP rate of 8% on contracts executed by the assessee and 5.5% on sub-contract receipts purely on estimations dehors any tangible material and without any sound basis. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 5 - 16. The arguments as advanced by the Ld. DR sought to justify the addition in the hands of the assessee with reference to the discrepancy in cash and discrepancy in the books of accounts, with reference to the digital data seized during the course of search. In rebuttal, the appellant contended that no such addition was made with reference to the cash discrepancy, neither any digital data was made available to the assessee during the course of assessment proceedings. On the contrary, the Ld. AO considered only the balance sheet and head office books as contended by the Ld. Counsel for the assessee before us. Though the opening cash balance as per the balance sheet includes cash balance of all sites, the Ld. AO has considered only the opening balance of head office. It was further argued that complete details were filed and opening cash balance as well as cash balance as on the date of search was also reconciled and no discrepancy was found on this account and no addition has been made for cash discrepancies. So far as the reference to the inquiry conducted regarding bogus expenditure claimed in respect of sub-contractors as made by the AO is concerned, the appellant denied such contentions made by the Revenue by stating that there is not a single material seized during the course of search and hardly warranted any addition by way of net profit rate; neither any record suggests that the appellant has booked bogus expenditure. 17. The assessee has made detailed submissions before the learned AO as well as before the learned CIT(A) that in the case of the assessee, there was no incriminating material found and seized during the search conducted on 21.10.2016. In view of these estimated additions by adopting a different rate were not warranted on contract and sub-contract receipts. The submissions of the assessee were well supported. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 6 - 18. Having regard to the position taken by the Assessee towards total absence of any incriminating material per se, as detected in the course of search, a letter being CIT(A)-12/DRAIPL/Report/2019-20 dated 06.05.2019 was issued by the first appellate authority, addressing the Ld. AO seeking few inputs, contentions whereof are as follows: “In view of the appellant’s assertion that the additions made by the AO in the assessment orders were made without there being specific & materially relevant incriminating material found during the course of search, a letter vide no.CIT(A)-12/DRAIPL/Report/2019-20 dtd. May 06, 2019 was written to the AO seeking few inputs. The contents of the said letter is reproduced below. The Appellant, M/S. Dineshchandra R. Agrawal Infracon Pvt. Ltd. (DRAIPL in short) has filed appeals against various assessment orders made u/s 153A r.w.s. 143(3) wherein additions have been made on account of an estimated NP (after rejection of books of accounts u/ s 145(3)) and on account of disallowance u/s 14A. During the appeal proceedings, it has been contended by the appellant that during the course of search no incriminating material was found which could have Zed the AO to make those additions. Relying upon host of case laws including the judgement of jurisdictional ITAT Ahmedabad and jurisdictional High Court of Gujarat in Saumya Construction and similar other cases, the legality of assessment order u/s 143(3)/ 153A at least for the unabated assessment years — A. Y.2011-12 to A. Y.2015-16 have been challenged by the appellant. 2. From the perusal of the assessment order, it is seen that as per the AO, the search resulted into seizure/ impounding of incriminating documents in which unaccounted and undisclosed transactions were recorded and on the basis of such incriminating documents/ evidences, the persons of the searched group had admitted the unaccounted income and made voluntary disclosure of Rs.43.93 crores in statements u/ s 132(4) and 131 (IA). 3. In this regard, it is required to know — i) the reference page numbers and annexure of seized/impounded documents during the search/survey for each of the assessment year relied upon / which led the AO to make the additions in the case of DRAIPL in respective assessment years, ii) the reference of pages seized/ impounded which made the various persons of the searched group to make the voluntary disclosure of Rs.43.93 crores. In this regard, person-wise and assessment year-wise break-up of the disclosure and the reference of seized/ impounded materials may be furnished, iii) it is also seen that the appellant itself has surrendered Rs.6,86,426/for A.Y.2012-13 for A.Y.2013-14 over and above disclosure A. Y.2017-18. In this regard, the references of seized/ impounded materials may be furnished. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 7 - iv) whether there was any reference / comparable instance(s) for adoption of NP rate of 8% and 5.5% in the case of the appellant for purpose of these assessments. 3. For the purpose, the copy of submission made for appeal against the assessment order for A. Y.2011-12 is enclosed. 4. Please note that the cases are required to be disposed on priority. You are requested to send the report through your Jt. CIT Range at the earliest say by 21/05/2019.” 19. In response to the same, the remand report dated 20.05.2019 was submitted by the Ld. AO, the relevant details whereof are reproduced hereinbelow for ready reference: 2. In connection with the above subject, point wise report as called for is submitted hereunder: (i) The reference page numbers and annexure of seized/impounded documents during the search/survey for each of the assessment year relied upon/which led the AO to make the additions m the case of DRAIPL in respective assessment years. In this connection it is submitted that Search & seizure action u/s 132 of the I T Act was conducted in the DRA/SRA Group arid its associates on 21.10.2016. Various premises were also covered u/s 133A of the IT Act. During the course of search proceedings various incriminating documents/loose papers were found and seized/impounded. During the course of assessment proceedings the seized/impounded materials/books of account were duly verified. In the assessment order these documents have been discussed in detailed. Some of the in eliminating documents discussed in the assessment order are as under:- (a) During the course of survey proceedings carried out u/s 133A of the IT Act at the office premises of assessee situated at 407, Atlantic Heights, Opp. Gawalia Sweets, Baroda some loose papers were found and impounded. In these loose papers page no. 10 of Annexure A-9, Page No.27 of Annexure A-15 are containing details of unaccounted and unexplained cash expenses transactions which are discussed in detailed in the assessment order at Para No. 6 (page No 69 & 70 of assessment order). (b) In the aforesaid survey premises situated at 407, Atlantic Heights, Opp. Gawalia Sweets, Baroda some diaries were found and impounded as per Annexure A-l, A-2 & A-7. These diaries were written by Shri Bharatbhai Omprakash Agrawal director of the assessee company. During the course of survey proceedings his statement was recorded u/s 131(1A) w.r.s. 131 of the IT Act wherein he admitted that these are notings of the expenses related to the projects undertaken by the Baroda Branch office of the DRAIPL. Further, he stated that he is not aware whether these expenses are accounted for or not accounted in the books of account of M/s DRAIPL. These annexure are discussed in detail at page no.76 to 82 of the assessment order of M/s DRAIPL. (c) Annexure LF-1 was seized during the course of search proceeding carried out on 21.10.2016 at B-2/503, Green Acres, Nr. Auda Lake Prahladnagar Road, I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 8 - Ahmedabad in the case of Shri Rajeev R Goel. These documents also reveal that payments amounting to Rs.73,50,260/- during 01.04.2014 to 31.07.2016 were made to various govt. Authorities which are not recorded in the books of accounts of the assessee. All payments reflected in Annexure LF-1 are related to assessee's project carried out at Dahod and Kushalgarh as stated by the assessee. (d) There was difference of Rs 5,18,07,738/- in closing cash in hand balance as on 31-3-2015 and opening cash balance as on 1-4-2015 in the books of accounts of the assessee . This fact was confronted to Shri Vashrambhai R Chouhan main accountant of the assessee company while recording his statement u/s 132(4) of the Act. He was unable to explain this discrepancy. This issue is mentioned in detail in the assessment order. (e) There was difference of Rs 5,83,78,367/- in cash in hand balance as on date of search i.e. as on 21-10-2016 in the books of accounts of the assessee. (f) Discrepancy was found in the books of accounts of the assessee (from the comparison of the return of income data available on ITD/ITBA data and digital data and seized digital data which is mentioned in detail in the assessment order. (g) During the course of search proceedings certain sub contractors were found bogus and it was admitted by Shri Dineshchandra R Agarwal M D of the M/s DRAIPL that payment made to them was bogus. During the course of post search investigation various sub contractors/ suppliers were found to be bogus/suspicious. Detailed analysis of these bogus /suspicious sub contractors and suppliers are discussed in detail in the assessment order. Considering the aforesaid so many defects, the books of accounts of the assessee was not four reliable and net profit was estimated which is discussed in detail in the assessment order. From, the above, it is clear that the assessments have been, made mainly on the basis of the seized/impounded incriminating documents. (ii) The reference of pages seized/impounded which made the various persons of the searched group to make the voluntary disclosure of Rs.43.93 Crones. In this regard, person-wise and assessment year-wise break-up of the disclosure and the reference of seized/impounded materials may be furnished. In this regard it is mentioned that n Para No..2.1 of the assessment order total voluntary disclosure of Rs.43.9 Crores are related to group cases which were covered during the course of search /survey/ post search/survey proceedings. The bifurcation, of the same is as under:- Sr. No. Name of Group Disclosed amount (in Rs.) 1 DRA 26,76,96,995/-* 2 SRA 11,06,36,733/- 3 TC Link projects Pvt. Ltd., New Delhi 6,10,00,000/- Total 43,93,33,728/- *The detail of total disclosure of Rs 26,76,96,995/- related to DRA Group as made by the assessee before the Investigation wing. Copy of the same is enclosed herewith for kind perusal. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 2 9 - (iii) It is also seen that the appellant itself has surrendered Rs.6,86,426/-for A.Y. 201.2- 13 and Rs.11,87,02,925/- for A.Y. 2013-14 over and above disclosure of Rs.6,06,10,649/- for AY 2017-18. In this regard, the references of seized/impounded materials may be furnished. • In this connection it is mentioned that Rs 4,92,56,000/- was disclosed by the assessee on account of unaccounted investment in construction of house No. 4,5 & 22,23 Hermitage Villa Nr. Amrit Baugh Party plot Ambli Bopal Road, Ahmedabad. On the basis of annexure A-l to A/3 seized from 401-403 Grand mall S M Road Panchwati, Ahmedabad. This disclosure was admitted by Shri Dineshchandra Agarwal, Managing Director of the DRAIPL in the statement recorded u/s 132(4) of the Act. Financial year wise breakup of Rs 4.92 Crores is as under:- Financial year Expenditure incurred Annexure No. Page No. 2015-16 38,70,060 A/1 1-33 2015-16 2,13,28,149 A/2 1-92 2014-15 75,47,512 A/2 93-140 2014-15 50,71,339 A/3 104-147 2013-14 54,83,074 A/3 63-103 2012-13 47,75,086 A/3 24-62 2011-12 4,87,61,646/-* *Other expenses incurred Rs 4,94,354/- during Financial Year 2015-16 and total unaccounted investment in construction of house is Rs 4,92,56,000/-. Disclosure of Rs.11,87,02,925/- was made in the case of Ms DRAIPL related to AY 2013-14. This addition was made as the following three sub-con tractors Kolkata based were non existing parties. During the course of search/survey proceedings inspector visited on the addresses given. However, as per Inspector report no such parities are residing there on the given addresses. The details of the sub contractors are as under:- (a) M/s Honeymint Resources:-Rs.4,12,89,816/- (b) M/s Crimson Infratech :-Rs.4,00,70,036/- (c) M/s Signature Dynamic :-Rs.3,73,43,073/-] During the course of search proceedings Shri Dineshchandra Agarwal, Managing Director of the M/s DRAIPL while recording his statement u/s 132(4) on 23.10.2016 was unable to produce any details regarding these sub contractors. Subsequently, while on asking page wise explanation of the seized/impounded material by the assessee he has admitted that these payments are booked bogus in the books of accounts of the DRAIPL. • During the course of assessment proceedings, assessee was asked to furnish detail of total disclosure made during the course of search & post search proceedings. Thereafter, Rs.6,06,10,649/- was disclosed in the revised return of income filled by the assessee as the assessee have not disclosed true and full disclosure in the return of Income against notice u/s 153A of the IT Act. (iv) Whether there was any reference/comparable instance(s) for adoption of NP rate of 3% and 5.5% in the case of the appellant for the purpose of these assessments. • In this connection, it is submitted that in the case of M/s Laxroi Construction, Ahmedabad which is run by Shri Shyarnsunder Agarwal brother of Shri Dineshchandra Agarwal known SRA Group, a survey action I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 0 - u/s 133A of the Act was carried out on 21-10-2016 along with M/s DRAIPL group cases. Both the group DRA & SRA group are engaged in the infrastructure Development activities awarded by various Central Government & state government agencies, local authorities etc. M/s La:xmi construction approached the Income Tax Settlement commission, Mumbai offering net profit @ 8% on the contract work executed by itself and @ 4% on contract work given on back to back basis to the various sub contractors. However, the same was not accepted by the Hon’ble Settlement Commission and profit rate of 8% (Instead of 4% as disclosed by the applicant] was applied on the amount of contract work give on back to back basis to the sub contractors, which remained unverified. In the case of the assessee, the total amount of such unverified sub-- contractors/ suppliers is Rs.875.51 crores. In view of these facts, a reasonable view was taken and, in the case of the assessee, N.P. percentage is taken @ 8% on own contract work executed by the assessee itself and NP rate @ 5.5% is taken on the sub contract work given on back to back basis. Apart from above, detailed reasons have been given in the assessment order itself for adopting the above NP rate, which may kindly be appreciated. 20. In rejoinder to the remand report of the AO, the assessee submitted the following before the CIT(A): 1. No addition u/s 153A when no incriminating material is seized: - (i) This is a case where originally regular assessment was completed accepting the net profit rate as disclosed by the assessee in the contract work. Subsequently on account of search operation on 21.10.2016 notice u/s 153A was issued in the case. The Learned Assessing Officer completed the assessment by applying NP rate of 8% on Contracts executed by the assessee and 5.5% on sub-contract receipts. (ii) The assessee has made detailed submission before the learned CIT(A) that in the case of the assessee there was no incriminating material found and seized during the search conducted on 21.10.2016. In view of this additions were not warranted by way of rate application on contract and sub-contract receipts. The submissions of the assessee were well supported. (iii) However now in the remand report the Learned Assessing Officer has stated that during the course of search page no. 10 on annexure A-9 and page no. 27 of annexure A-15 were found and have been discussed in the assessment order in para 6 page no. 69 and 70 of the assessment order. Similarly the Learned Assessing Officer has further stated that some diaries were found and impounded as per annexure A-l, A-2 and A-7. The Learned Assessing Officer has also reported that annexure LF-1 was also found. The Learned Assessing Officer has stated that these seized papers relate to unaccounted cash expenditure. The assessee furnished explanation during the assessment proceedings and the explanation was accepted, therefore the learned AO has not made any addition on this account. If the learned AO was not satisfied with the explanation of the assessee then he would have made addition on this account. The above documents which includes annexures annexure A-9 and page no, 27 of annexure A-15 and A-l, A-2 and A-7 are not related to assessment year 2011-12, 2012-13, 2013-14 and 2014-15. These are related to I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 1 - only assessment year 2015-16 and 2016-17. Some of the documents are related to projected expenses for different different projects and were accounted for in different heads. If the learned AO has found that these expenses are unaccounted expenses he would have made addition u/s 69C of the Income Tax Act 1961 which has not been made by him. These papers relate to Assessment Year 2015-16 and 2016-17 and not to Assessment Year 2012-13 to 2014-15. Secondly these papers relate to very small amount of cash payments and the Learned Assessing Officer has not established that these relate either to the business of the assessee or these expenses are unaccounted cash expenditure. Lastly even if additions were warranted on account of these papers the same should have been restricted to the amount mentioned in these papers for Assessment Year 2015-16 and Assessment Year 2016-17. In view of this it is submitted that there was no case for making any addition in Assessment Year 2012-13 to 2014-15. (iv) The Learned Assessing Officer has further justified his action of making addition in the hands of the assessee with reference to discrepancies in cash and discrepancies in the books of accounts with reference to digital data seized during the course of search. It is submitted that no addition has been made with reference to cash discrepancies and as far as digital data is concerned nothing of this sort was made available to the assesssee during the course of assessment proceedings. As such there is no justification of making additions on these grounds. Because the learned AO has considered only balance sheet and head office books only. The opening cash balance as per balance sheet: includes cash balance of all sites whereas the learned AO has considered opening cash balance of head office only. Likewise on the date of search the learned AO has considered the cash balance in the books of head office and he did not consider the cash available at sites. Subsequently complete details were filed and the opening cash balance as well as cash balance as on date of search was also reconciled and no discrepancy was found on this account and no addition has been made for cash discrepancies. (v) The Learned Assessing Officer has also referred to enquiries conducted regarding bogus expenditure claimed in respect of sub-contractors. Suffice to say that this is not a material seized during the course of search and hardly warranted any addition by way of NP rate. There is nothing on record which suggests that the assessee has booked bogus expenditure. No material, no documents were found during the course of search. It is only the assessee who surrendered the amount of bogus expenditure which has been utilized for construction of house and other investment. Therefore the provisions of section 153A are not applicable for making extra addition on this account without bringing any material on record. (vi) That the Laxmi Construction Group has nowhere business connection with the assessee group. The assessee group is engaged in the construction of roads, highways, airports and other infrastructure facility whereas the Laxmi Construction Group is engaged in construction of water supply system, drainage and other water related projects and not. engaged in construction of highways and other infrastructure facilities. Therefore the case of the assessee is not comparable with Laxmi Construction or SRA Group. The GP and NP rate is also not comparable with the assessee group as the business of the both groups are different. (vii) As far as the surrender is concerned the assessee group has made surrender of Rs. 11,87,02,925/- which has been honoured and due tax has been paid by I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 2 - filing the return u/s 153A of the Income Tax Act 1961. The surrender made by DRAIPL is application of income in individual hands of various family members of the assessee group. (viii) Conclusion - In view of the aforesaid submission the Learned Assessing Officer had no case for making addition u/s 153A. The Learned Assessing Officer has also forwarded a copy of decision of Delhi High Court dated 07.08.2012 in the case of Chetan Das Lachman Das. The Learned Assessing Officer has drawn support on the basis of this decision for making addition in various Assessment Year on the basis of seized material relating to one Assessment Year just on presumption basis. In this regard it is submitted that that the decision of the Hon'ble Delhi High Court stand superseded by the decisions of Apex Court of a later date cited below: (a) CIT vs. Technical Education Society (20171 397 ITR.344 (SC) dated 29.08.2017 If the seized material did not establish any co-relation document wise with the relevant Assessment Year ... ... notice u/s 153A was without jurisdiction. (b) PCIT vs. Meeta Gutgutia(2018) 257taxman441 (SC) Section 153A is indeed an extremely potent power which enables the revenue to re-open at least six years of assessments earlier to .the year of search. It is not to be exercised lightly. It is only if during the course of search under section 132 incriminating material justifying the re-opening of the assessments for six years is found that the invocation of section 153A qua each of the assessment years would be justified. The aforesaid decisions were also quoted in the submissions made earlier. It appears that the Learned Assessing Officer has not appreciated the submissions made while sending the remand report. In the light of the aforesaid decisions of the Apex Court it is the position of law that no addition/action u/s 153A is warranted in the absence of specific seized material relating to the Assessment Year. 2. Rejection of accounts u/s 145f31/Trading addition not justified: - (i) This is a case where originally regular assessment was completed u/s 143(3) accepting the net profit rate of 3.93% disclosed by the assessee in the contract work. Subsequently on account of search operation on 21.10.2016 notice u/s 153A was issued in the case. The Learned Assessing Officer completed the assessment by making addition by applying NP rate of 8% on Contracts executed by the assessee and 5.5% on sub-contract receipts. (ii) It is submitted that the Learned Assessing Officer while applying NP rate of 8% and 5.5% on contract works executed by the assessee and on sub contract got executed by different persons respectively has not made out a case that there was any incriminating material found and seized during the course of search which required enquiries in respect of the contract work. This is not the case of the Learned Assessing Officer that any of the seized material found and seized during the course of search indicated any bogus claim of expenditure relating to the contract work. The exercise undertaken by the Learned Assessing Officer by subjecting the expenditure of contract work to re-scrutiny was without jurisdiction as the same stood decided in the assessment completed originally u/s 143(3).In view of this the entire additions on account of rate applications are without jurisdiction. This is supported by well establish position of law in support of which decisions stand quoted in the earlier submissions. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 3 - (iii) The Learned Assessing Officer has applied provisions of section 145(3) rejecting the books of accounts without any justification. The only grounds on the basis of which the Learned Assessing Officer has resorted provisions of section 145(3) are as under:- (a) There were discrepancies in cash. (b) There were discrepancies in the books of accounts with respect to digital data seized during the course of search. (c) Certain expenditure in respect of sub-contract work and of suppliers did not stand the test of scrutiny. In the above regard it is submitted that after establishing that the case discrepancy and discrepancy with respect to digital data., specified additions could have been made instead of making additions by way of rate application. It is not the case of the Learned Assessing Officer that the cash discrepancy pertains directly to contract expenditure. Similarly discrepancies in respect of digital data should have been disclosed to the assessee before utilizing the same for purposes of assessment. This having not been done the same could have been made the base for rejecting the books of accounts. It is also submitted that enquiries conducted in respect of sub-contract work and also in respect of suppliers may have disclosed that the same remained unverified being the concerned person and parties not been, available. This was so because the enquires were being made after a lapse of five year period since the contracts were executed. Persons and parties who executed the work of the assessee are not. expected to remain stationery. Further non verification of the expenditures does not amount to bogus expenditure. The sum and substance of the submission is that in a case of nature of the assessee which involved execution of contract works it is the net profit rate which matters. The Learned Assessing Officer has also ultimately and finally rested his findings by applying NP rates. But the moot point is was there any case for applying NP rate different and higher than which stood originally accepted. The expenditure claimed is the same which was considered and scrutinized in the originally assessment proceedings. As such it is a case where the Learned Assessing Officer acted beyond jurisdiction both in causing enquiries relating to contract work without having any incriminating seized material and applying higher NP rate. The addition therefore deserves to be knocked down. 3. Unlawful disallowance u/s 14A_being not based with reference to search material: - The issue of disallowance u/s 14A also stood decided in the original assessment proceedings. There was no case for reviewing the same as absolutely no incriminating material was found justifying any action in this regard by the Learned Assessing Officer. Therefore the disallowance made is without jurisdiction. The earlier submission made in this regard have remained uncontreverted by the Learned Assessing Officer. Therefore the addition deserves to be deleted. Therefore you are requested to decide the issue in favor of the assessee and oblige.” I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 4 - 21. Apart from that, the assessee explained the following in regard to the net profit rate by way of written submissions dated 24.05.2019 before the Ld. CIT(A) with the following contentions. “With reference to above and for application of NP rate in case of back to back contract or where contract awarded to the assessee has been sublated to the other person after retaining 2 to 2.5% margin. The maximum margins retained by the assessee was only 3%. During the assessment proceedings the assessee has submitted number of agreements and other documents to the learned AO wherein it has been established that the assessee has retained only 2 to 2.5% margin in sub-contract and sub-lated work. The ld.AO has applied the rate of 5.5% on sub-lated contract which is totally unjustified and contrary to the facts of the case. Therefore, it is humbly prayed that maximum 2.5% margin can be applied as NP rate on sublated contract.” 22. The Ld. CIT(A) ultimately, with the following observations deleted the addition made by the Ld.AO: “9. The impugned assessment orders have been perused and the appellant's submissions have been considered. 9.1 Before the adjudication of the issues for the respective Assessment Years - AY 2011-12 to AY 2017-18 is taken up, it appears appropriate that the basis of addition made by the AO is taken up first which may have been the part of the facts of the case narrated briefly in the beginning. 9.2 The income returned and total income assessed is summarized in the table below:- A.Y. Total income as per return u/s.139 (in Rs.) Total income assessed u/s.14(3)(in Rs.) Income surrendered in the return u/s.153A (in Rs.) Total income as per return u/s.153A (in Rs.) Total income assessed u/s. 143(3) r.w.s. 153A(in Rs.) 2011-12 16,73,31,640 16,91,21,110 0 16,77,63,050 26,58,42,775 2012-13 14,18,81,550 14,39,24,250 6,86,426 14,26,41,610 27,55,67,139 2013-14 21,50,17,220 21,75,83,530 11,87,02,925 33,59,86,450 61,14,71,881 2014-15 19,49,60,610 NA 0 19,49,60,610 44,91,28,229 2015-16 35,46,52,120 NA 0 35,46,52,120 72,85,28,321 2016-17 46,96,49,320 NA 0 46,96,49,320 74,44,75,625 2017-18 66,34,11,080 N.A. 6,06,10,649 72,40,21,724 89,45,61,311 The AO, based on the various facts discovered after investigation, has held that M/s. Honeymint Resources and M/s. Crimson Infratech did not exist at the known address and were mere paper concerns without any physical existence and actual business activities. It is also noted that the appellant had admitted the amount of Rs. 11,87,02,925/- on account of payment made for bogus expenses booked in the books of accounts for A.Y. 2013-14 as under:- 1. M/s. Signature Dynamics of Rs.3,73,43,073/-. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 5 - 2. M/s. Homeymint Resources of Rs.4,12,89,816/-. 3. M/s. Crimson Infratech of Rs.4,00,70,036/-. 9.3 The AO noted that, the admission of amount of Rs. l1,87,02,925/- for A.Y. 2013- 14 was not the final figure of bogus sub-contractor's expenses booked by the appellant. Accordingly, during the post search investigation, details of financial year-wise payments to various sub-contractors by the appellant in F.Y. 2010 11 to F.Y. 2016-17 were called for from the appellant. The appellant provided details of 698 sub- contractors out of which, the parties having transaction of Rs.10.00 lacs and above were picked up for verification. 217 sub-contractors with PAN and 47 sub-contractors without PAN were picked up for further investigation. Summons u/s.131(1A) were issued to 158 parties out of which, 105 parties were found to be suspicious on the basis of enquiries/verifications conducted by issuing summons and also on the basis of analysis of their returns of income. Various sub-contractors - Balram Ram, Hansaji Ramji Rajput, Jitenderkumar Dahyalal Parmar, M/s. Silveriine Dynamics, M/s. Sterling Enterprises, M/s. Choudhary Contractor, Mangalsingh Hansaji Rajput, Mohammed Zoheb, Sagar Construction, Sahadev Singh Solanki, Sridevi Dasgupta, Yogi Construction, Naval Kishore - Pawan Mans and Fortune Realtors were found to be mere paper concerns having no real business activities to justify huge payments made to them by the appellant. 9.4 As to the parties having no PAN, effort was made to determine the PAN of those parties and their ROI, turnover and payments were examined. Based on these investigations, the appellant was asked to adduce all the documentary evidences in support of genuineness thereof and it was conveyed that if it failed to do so, suitable addition on this account would be made to the total income. As per the AO, after allowing sufficient time and opportunities to the appellant, genuineness of a number of suppliers/contractors could not be established by the appellant as under: Sub-contractors Description Amount in Rs. Total amount of above Rs.10 Lacs 1141,49,30,320 Verified by the Dept. u/s 133 (6) (-)251,87,07,220 Verified on the basis of your replies (-)444,53,13,805 Sub-contractors unverified 445,09,09,295 Suppliers Description Amount in Rs. Total amount of above Rs.10 Lacs 855,36,93,237 Verified by the Dept. u/s 1 33 (6J_ (-)247,93,79,679 Verified on the basis of your replies (-)177,00,42,662 Sub-contractors unverified 430,42,70,896 9.5 The appellant was show caused with various findings e.g. Annexure-A containing details of 176 sub-contractors wherein notices u/s.133(6) were issued, but no reply was received, Annexure-B containing details of 248 suppliers were notices u/s 136 were issued, but no reply was received, Annexure-C containing details of 76 sub- contractors/suppliers where notice u/s. 133(6) could not be issued due to non- availability of addresses, Annexure-D containing details 82 sub-contractors wherein notices u/s. 133(6) were issued, but the same were returned by the postal authority with remarks ‘left’/‘incomplete address’ ‘refused’/ ‘not known’/‘door locked’/ ‘address cannot be located’ etc. on them and Annexure-E containing details of 141 suppliers I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 6 - wherein notices u/s. 133(6) were issued, but the same were returned by the postal authority with remarks ‘left’/‘incomplete address’/‘refused’/‘not known’/ ‘door locked’/ ‘address cannot be located’ etc. on them. In the said show cause, it was mentioned that the appellant had not been able to get verified genuineness of Rs.445.09 crores of sub- contractors' expenses and Rs.430.42 crores of suppliers expenses and it was proposed to reject the books of accounts u/s. 145(3) of the Act and to apply a rate of 8% on the gross receipt so as to assess the total income. 9.6 In this regard, the appellant had submitted that it was in the given line of business since 1972 and various NP rates of 5.37% (A.Y. 2011-12), 3.91% (A.Y. 2012- 13) and 3.87% (A.Y. 2013-14) were accepted by the Department in the assessments u/s. 143(3), that the NP rate was rising from F.Y. 2013-2014 onwards from 3.8% in F.Y. 2013-14 to 6.28% in F.Y. 2016-17. The appellant also submitted N.P. ratio of other parties Like M/s. Rithwik Projects Pvt. Ltd. (-8.35%), M/s. Soma Enterprises Ltd. (- 8.06% to 0.43%) and M/s. Sadbav Engineering Ltd. (5.03% to 5.66%). The appellant also made a case of different net profit in the case of contract executed by itself (that never reached 8%) and contract executed through sub-contract work (which was much lesser than the NP in the case of self-executed contract). It was contended by the appellant that suppliers could not be doubted as they were supplying goods to sites and that all the materials purchased have been used for the purpose of business and therefore, the suppliers cannot be treated as bogus and books cannot be rejected. 9.7 The AO relied upon the judgment of the Jurisdictional High Court in CIT vs. Rajkumar Arora(2014) 367 ITR 517 and of the Kerala High Court in E.N. Gopakurnar vs. CIT, noted the admission of the appellant, that "In this line of trade, the maintenance of stock and other raw-material consumption record is next to impossible for maintenance. The profits can only be estimated' and statement of Shri Dineshchandra R. Agarwal, Director of the appellant u/s. 132(4) dated 23.10.2016 admitting that he was unable to produce any details regarding these sub-contractor or work done by him at that time and that subsequently while submitting page-wise explanation of the seized/impounded material before the Investigation Wing, an amount of Rs.11,87,02,925/- was admitted/offered as additional income on account of payment made for bogus expenses booked in the books of accounts of the appellant for A.Y. 2013-14. 9.8 The AO also noted the difference of cash (Rs.5,18,07,738/- as per trial balance on the day of search 21/10/2016) and closing cash in hand balance (Rs.3,83,37,515/-) as on 31.03.2015 and opening cash balance (Rs.9,01,45,253/-) as on 01.04.2015 in the books of accounts and the same was not explained by Shri Vashrambhai R. Chauhan, the accountant of the appellant company. It was also not explained by Shri Girishchand R. Agarwal, M.D. of the appellant company. Similar differences were noted as on 01.04.2015 - Rs.9,01,45,253/- as per trial balance for F.Y. 2015-16 and Rs. 11,68,02,467/- as per details submitted by the appellant. These have been dealt with at page no.48 to 50 of the assessment order for A.Y.2011-12 and page No. 52 and 53 of the assessment order for A.Y. 2016-17. 9.9 The AO also noted that difference in cash in hand was found on the day of search also. The details are at page No. 54 to 57 of the assessment order for the A.Y. 2016-17. 9.10 The AO has also noted other discrepancies found in the books of accounts from the comparison of ROI data available on ITD/ITBA data and seized digital data. They are dealt at page No.59 to 67 of the assessment order for A.Y. 2016-17. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 7 - 10. Reference by the AO is also made to page No. 10 of Annexure-A/9 (scanned image at page No.69 of the assessment order for A.Y.2016-17 which shows payments in cheque as well as in cash), to page No. 27 of Annexure-A/15 (scanned image at page No.70 of the assessment order for A.Y.2016-17 which shows payment of Rs. 12,00,000/- and Rs. 4,00,000/- in cash for A.Y. 2015-1 and A.Y. 2016-17). 10.1 Reference by the AO has also been made to documents impounded (vide Annexure-A/1, A/2 and A/7 - the diaries maintained by Shri Bharatbhai Omprakash Agarwal, Director of the appellant company who handles the Baroda Branch of the appellant and the projects undertaken by the said Branch) during the course of survey u/s.133A at the Branch Office of the appellant at Baroda. The pages of these annexure show illegal expenses incurred by the appellant in cash for various payments to various officials. They are dealt at page No.80 to 81 of the assessment order for A.Y.2016-17. It is the case of the AO that expenses totaling to Rs.39,77,000/- are not entered in the books of accounts. Similarly, Annexure-LF-1 seized during the search in the case of Shri Rajiv R. Goyal showed payment of Rs.53,39,260/- for the A.Y. 2016-17 and Rs.20,11,000/- for A.Y. 2017-18 which were claimed to be related to projects carried out at Banswada, Sajjangarh, Dahod and Kushalgarh, but there was no specific reply furnished by the appellant. This is at page 82 of the assessment order for A.Y.2016-17. 10.2 Based on such other findings, the AO has held that the contentions of the appellant that no material of incriminating nature was found during the search and the books of accounts cannot be rejected u/s. 145(3) were devoid of merits. The AO has rejected the books of accounts and proceeded to estimate the income by adopting an appropriate NP rate. The AO has adopted NP rate of 8% on the contracts executed by the appellant itself and of 5,5% on contracts awarded by the appellant to other sub- contractors on back-to-back basis for the various years - A.Y. 2011-12 to A.Y. 2017-18. The complete table is at page No.81 of the assessment order for A.Y. 2011-12 and for A.Y. 2013-14. The result of the enquiry made by the AO and the additions m? after rejection of books of accounts can be summarized as under:- A.Y. Net profit @ 5.5% (in Rs.) Net profit @ 8% (in Rs.) Total net profit (in Rs.) Addition made after allowing for profit shown by the appellant (in Rs.) 2011-12 1,79,17,922 22,40,68,026 24,19,86,018 9.27,50,857 2012-13 2,59,55,959 25,32,98,480 27,92,14,439 13,12,32,332 2013-14 3,95,95,481 39,37,15,335 43,33,10,815 27,52,17,656 2014-15 3,77,75,559 35,65,63,047 39.43,38,606 25,26,81,213 2015-16 12.94,20,982 50,09,51,350 53,03,72,333 37,23,77,905 2016-17 16,08,19,373 54,59,67,455 70,67,86,829 26,80,70,796 2017-18 23,20,05,745 58,50,64,808 81,70,70,553 16,47,17,819 10.3 During the appellate proceedings, it has been brought to the notice by the Ld. AR that the incomes assessed U/S.153A in various years have been subsequently rectified u/s. 154 of the Act. The revised total income is tabulated as under:- A.Y. Total income as per return u/s,153A (in Rs.) Total income assessed u/s.143(3) r.w.s. 153A(in Rs.) Total income after rectification u/s.154(in Rs.) 2011-12 16,77,63,050 26,58,42,775 26,53,42,780 2012-13 14,26,41,610 27,55,67,139 27,55,67,130 I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 8 - 2013-14 33,59,86,450 61,14,71,881 54.13,89,410 2014-15 19,49,60,610 44,91,28,229 38,47,48,161 2015-16 35,46,52,120 72,85,28,321 62,97,23,030 2016-17 46,96,49,320 74,44,75,625 74,44,75,630 2017-18 72,40,21,724 89,45,61,311 39,45,61,310 10.4 The assessment orders for all the years are almost identical, discussions of issues are common except that the references page numbers vary in each of the assessment order. Thus, for the sake of adjudication, the assessment years in appeal can be divided in three groups as under:- 1) A.Y. 2011-12, 2014-15 and 2015-16 which are unabated and no additional income has been surrendered by the appellant in the return in response to notice u/s.153A. 2) A.Y. 2012-13 and 2013-14 which are unabated assessment years, but additional income has been offered by the appellant, in the returns in response to notice u/s.153A. 3) A.Y. 2016-17 which is an abated assessment year and A.Y. 2017-18 which is related to Financial Year in which the search was conducted where the Assessing Officer is not constrained by the Hon'ble Courts to confine the additions to the incriminating material found during the course of search. 11. In the 1 st and 2 nd grounds of appeals, the appellant has challenged the jurisdiction of the Assessing Officer in passing the assessment orders u/s.153A r.w.s. 143(3) without any incriminating material found during the course of search in the case of assessments completed earlier. In this regard, from the reading of the Income Tax Act and various judgments of various Courts and Tribunals on the issue, it is law as of now that while as per the provisions of Section 153A(1), the Assessing Officer is required to issue notice u/s.153 requiring the person searched to furnish within specified period, the returns of income in respect of each assessment year falling within 6 assessment years immediately preceding the assessment year relevant to the previous year in which search u/s.132 is conducted (or requisition u/s.132A is made), the additions during reassessment u/s.153A for the assessment years which are elapsed/unabated (i.e. the assessment years for which, the assessments have already been completed or the assessment year for which, the period for issue of notice u/s.143(2) has elapsed on the day of search) can be made only if there are incriminating material(s) found during the course of search and are relevant for the additions being made. With respect to the date of search in the case of the appellant being 21.10.2016, the assessment years 2011-12 to 2015-16 are unabated assessment years and therefore, any addition during the reassessment u/s.l53A has to be confined to the incriminating materials found during the course of search. For such unabated assessment years, the AO is prohibited from traversing beyond the incriminating materials found during the course of search. This position of law is covered by the judgments of the Jurisdictional ITAT of Ahmedabad and the Jurisdictional High Court of Gujarat in Saumya Construction Pvt. Ltd. and host of other cases and of the Supreme Court in Singhad Education Society and various other cases which have been relied upon by the appellant and are part of appellant's submission reproduced before. 11.1 I am of the considered view that the above narrated restriction is for the reassessment u/s.l53A of the unabated assessment years i.e. A.Y. 2011-12 to A.Y. 2015- 16 only. For the assessment years falling u/s.153A(2) including the assessment years which have abated under 2 nd proviso to sub-section-1 of section 153A, the AO is not I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 3 9 - restricted to be confined to the incriminating material found during the course of search for the purpose of making additions and that the AO can traverse beyond the materials found and conduct enquiries and investigations and make the addition based on the findings therefrom. With respect to the date of search in the caseof the appellant being 21.10.2016, the A.Y. 2016-17 is an abated assessment year (i.e. the time limit for issue of notice u/s. 143(2) has not elapsed) and the A.Y. 2017-18 pertaining to the previous year in which search was conducted for which, the appellant is not protected by the case laws relied upon for challenging the jurisdiction of the AO and his competency to make additions without there being relevant incriminating materials found during the course of search. 11.2 As the Assessment Years - 2011-12 to 2015-16 are unabated and therefore, in principle, the appellant is protected by the relied upon decisions that no addition could have been made by the AO without the basis of incriminating material related thereto found during the course of search and such additions if made would be void and therefore such additions are required to be quashed and once such additions are deleted or, legality, there would remain no need to examine the merits of the additions and submission if any, made by the appellant would become mere academic and would require no adjudication. 11.3 However, it has to be taken into cognizance, for the purpose of distinguishing that, for the A.Y.2012-13 and A.Y. 2013-14 in the returns of income filed in response to notice u/s. 153A, the total income declared includes offer/surrender of additional income of Rs.6,86,426/- and Rs.11,87,02,925/- respectively over and above the income returned u/s.139 or the income assessed u/s.143(3). A question arises whether for an unabated assessment year, where additional income has been surrendered in the return U/S.153A, is the appellant still eligible to be protected by the case laws relied upon in general for all the unabated assessment years? 11.4 One view can be that the law laid down by the Courts in connection with addition in the assessment u/s.153A vis-a-vis material increment relevant to such addition found during the course of search has to be strictly applied i.e. in other words, whether there is additional income offered or not either in the statement u/s.132(4) or in the return u/s.l53A, the protection shall be available to the appellant and no further addition can be made by the AO if there is no relevant incriminating material. The other view can be that by offering additional income either in the statement u/s. 132(4) or in the return u/s.153A whether suo moto or for buying peace of mind, the appellant has waived his rights for the said protection which would have been otherwise available to the appellant and in such a case, if any addition is made by the AO based on his enquiries/investigations and without the material basis of the incriminating material being found during the search, the appellant cannot challenge the same on their legality. In this regard, it is asserted by the appellant that the said additional income for A.Y.2012-13 and A.Y.2013-14 is suo moto and voluntarily offered without reference to any material found during the course of search and without any incriminating material identified and without undisclosed income detected by the search team of the Income Tax Department. 11.5 In this regard, it has been submitted by the appellant that pursuant to the. search action u/s 132 carried out in the DRA Group of cases on 21.10.2016 and in response to notices u/s 153A dated 07.03.2017 returns have been filed surrendering the following income - Assessment Year Amount surrendered (in Rs.) Amount disclosed in the return of income (in Rs.) 2012-13 686426 686426 I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 0 - 2013-14 118702925 118702925 2017-18 60610649 60610649 Total 180000000 In support of the above, copies of return along with computation of income for the A.Yrs. 2012-13, 2013-14 and 2017-18 have been enclosed and it has been asserted that the additional incomes offered were suo moto by the appellant and they were not based on incriminating material(s) found during the course of search let alone there being any such material identified by the Department. 12. On careful and analytical reading of the provisions of the Income Tax Act and the case laws relied upon by the appellant, I am of the view that the additions made by the AO for the unabated assessment years - A.Y. 2012-13 and A.Y. 2013-14 cannot be made on the basis of enquiries made and on rejecting the books of accounts based such enquiries in absence of incriminating material(s) found during the course of search. In these years also, such additions without live link with the incriminating material found during the search would be legally void and would be required to be quashed and that the submissions made by the appellant on the merit of such additions would become mere academic and not required to be adjudicated upon. The related grounds of appeal would succeed. Under the circumstances, other grounds of appeal would become either infructuous or no more required to be specifically adjudicated in view of the additions having been directed to be deleted. 12.1 It may be relevant to mention that in view of the appellant's submission that no incriminating documents related to the addition made by the AO were found during the search, vide letter dated 6/5/2019, the AO was specifically requested to specify the specific seized documents/materials relied upon for additions made in the assessment order. Vide report dated 20/5/2019, the AO has reiterated the position as in the assessment order, and but for the few instances on unaccounted expenses, specific co- relation between the material found in search and the additions made/the rejection of books of account was not brought out. Vide letter dated 22/5/2019, attention was drawn by the AO to the judgement dated 7/8/2012 of the Delhi High Court in CIT Vs. Chetan Das Lachman Das. Subsequently on specific request, the AO was also called and heard as recorded in the note sheet. These are already reproduced in this order before. But the fact remains that there should be co-relation between the additions made to the total income and the materials found during the search and the same is found lacking in the impugned assessment orders and whichever incriminating material existed for unaccounted income/ expenses, no specific addition has been made by the AO probably because either the additional income was offered by the appellant or the books were rejected and the estimated NP ratios were adopted to determine the profit and the total income. 12.2 Having discussed and laid down the basic framework above for the appeals under consideration, the appeals for respective assessment years are dealt with below. A.Y. 2011-12 13. The impugned assessment order for A.Y. 2011-12 has been perused and the appellant's submissions have been considered. From the perusal of assessment order, it is seen that the return of income u/s.153A was filed on 22.03.2017 declaring total income of Rs.1,17,69,410/- as against income shown of Rs.2,49,610/- in the return u/s.139 filed on 31.07.2011. (There appears to be typographical error in the amount in the assessment order as in the computation of total income itself the returned income u/s.153A adopted is Rs. 16,77,63,050/-, and the returned income u/s 139 as per the I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 1 - appellant was Rs. 16,73,31,640/-). The assessment u/s. 143(3) r.w.s. 153A was completed determining total income at Rs.26,58,42,775/- with addition of Rs.9,77,86,306/- as per para 16.1 of the assessment order (i.e. on rejection of the books of accounts u/s. 145(3) and adoption of net profit @ 5.5% in contracts assigned back- to-back to other sub-contractors arid @ 8% in contracts executed by the appellant itself) and of Rs.2,93,419/- as per para 18.4 of the assessment order which is by way of disallowance u/s. 14A. 13.1 The A.Y. 2011-12 is an unabated assessment year where assessment u/s. 143(3) was completed before the date of search arid where the income was already determined at Rs.16,91,21,110/-. Being so, as per the case laws relied upon by the appellant and applicable in the case, the additions which are not based on incriminating material found during the course of search have to be deleted. 13.2 It is also seen that though the AO has mentioned in the assessment order and subsequently in his remand report dated 20.05.2019 that various documents and assets were found during the course of search which were incriminating in nature, it is evident that these observations and assertions are mere genetic and over-sweeping, and there is no identification of such incriminating materials in relation to the rejection of books (and therefore the additions made in the assessment order). In the context of issues related to additions made, there is no specific mention of any such incriminating material by the AO which might have led the AO to draw adverse inferences and to conduct any enquiry/investigation in relation thereto. It is abundantly clear from the assessment order that the AO had formed the hypothec that there is bound to be inflation of expenses especially in the context of sub contractors and suppliers and therefore conducted the enquiries and verifications and also required the appellant to prove the genuineness of those transactions adducing with documentary evidences. The resulting discrepancy or non-verification/non-confirmation cannot be held to be on the basis of incriminating materials having live link with the additions made. 13.3 It is also noted from the assessment order (para 2.1 of the assessment order) that as per the AO, the search resulted into seizure/impounding incriminating materials in which, unaccounted and undisclosed transactions were recorded and on the basis thereof, the persons of the searched group admitted the unaccounted income and made voluntary disclosure of Rs.43.93 crores in statements recorded u/s. 132(4) and u/s. 131(1A) of the Act. This again is a very generic statement/observation of the AO and moreover, in the context of the appellant the assessment year under consideration and the additions impugned by the appellant: there is no specific mention of any specific incriminating material which might have been relied upon by the AO to make the impugned additions in the assessment. Rather one view can be that if additional income has been offered, the amount shall be capable of absorbing/explaining incriminating materials, if any and this further weaken the case for addition to the total income during the assessment. 13.4 It is further worth noting from para-2.3 of the assessment order for A.Y.2011- 12 (page 4) that the basis of the enquiry related to sub-contractors and suppliers was that "Civil construction sector is a unique sector with regards to the modus of tax. evasion and generation of unaccounted income as much as that in almost all the cases of the assessee engaged in the civil construction work cannot fudge its receipts as in most of such cases contract allotment has been found to be done by the Government of Semi-Government Agencies give the project work to such contractors on. contract basis under agreed terms and conditions which are binding on. both the parties. Therefore, the only way of generating unaccounted income/black money in the case of civil contractors remains, is showing lower overall profit from such receipts. There, are mainly two ways of lowering the eventual net profit in the case of a civil contractor: I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 2 - i) By way of booking bogus sub-contractor expense in the name of bogus or fictitious entities or persons in the regular hooks of accounts of the concern. ii) By way of booking bogus purchase expenses for the purchase of goods and materials from bogus or fictitious entities or persons in the regular books of accounts of the concern". This clearly signifies that the AO had no specific incriminating material as laid down by the Hon'ble Courts in the context of reassessment u/s.153A which can be held to have live link with the additions made in the assessment order. Thus, to such an extent, the additions made by the AO cannot be upheld being legally void. 13.5 At para-11 on page No.68 of the assessment order for A.Y.2011-12 , the AO has held that the claim of the appellant that no incriminating material has been found in its case is purely misplaced as number of discrepancies of incriminating nature have been found in this case on the basis of investigation before and during the search as well as seized data and that with due regard to the Hon'ble Courts, the decision of which have been relied upon by the assessee in this respect, the decisions were distinguishable from the facts of the case of the appellant for they have been delivered in the cases where no incriminating material was found. In this regard, it is noted that there is no mention of any incriminating material found during the course of search whatsoever by the AO and the AO has also not cited as to how the facts of the case relied upon by the appellant were different from the facts of the appellant. The entire para-11 of the assessment order is an over generalized statement based on mere, surmises and conjectures and without any basis of documents or evidences. 13.6 From para-11 and 12.1 on page No.68 of assessment order for A.Y.2011-12, it is noted that it was also the case of the AO that the appellant's assertion that the books of accounts in its case cannot be rejected u/s. 145(3) because in its case, assessment was earlier completed u/s. 143(3) and the NP rate declared by it in its return u/s. 139 was not acceptable. The AO held that the contention of the appellant on merits itself holds no ground because in the A.Y. 2013-14 which was a completed assessment, the appellant itself had admitted an amount of Rs. l1,87,02,925/- on account of payment made for bogus expenses booked in the books of accounts. In this regard, without going into the merits of such assertion of the AO, the facts remain that there is no suo moto/voluntary offer of any additional income for A.Y. 2011-12 and therefore, even if the argument of the AO is conceded, it is not applicable to the A.Y. 2011-12 under consideration, it would be pertinent to reiterate here itself that there is no dispute that the addition to the total income cannot be made without there being incriminating materials in possession of the Department as a result of the search. The restriction on the AO is for addition without the relevant basis of the incriminating material found during the search and in fact any additional income offered in the return of income will be capable of explaining the incriminating materials weakening the case for addition to the total income during the assessment. 13.7 For the purpose of addition based on rejection of books of accounts and adoption of net profit ratio, it is seen from par-14 and 14.1 of the assessment order for A.Y. 2011-12 that the AO held that there were huge discrepancies of incriminating nature found in the books of accounts of the appellant in the seized data and that submitted to the Income Tax Department, that the appellant had also admitted an amount of Rs.11,87,02,925/- on account of payment made for bogus expenses in the books of accounts for the A.Y. 2013-14, that there was sizeable difference in the cash balances between that shown in the books of accounts and that found during the search, that other discrepancies were also found in the books of accounts of the appellant (from the comparison of return of income data available on ITD/ITBA data and seized digital data) and therefore, the objection of the appellant regarding rejection of books of accounts u/s.145(3) was not acceptable (refer to para 12.3 on page No.17 of the I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 3 - assessment order). The AO was not satisfied with the correctness of books of accounts of the assessee and hence rejected the books of accounts and proceeded to finalize the assessment adopting a net profit (NP) (refer to para-13 of the assessment order for A.Y.20] 1-12). The AO compared the net profit of the appellant itself for various financial years from 2010-11 to 2016-17 and net profit of other concerns such as M/s. Rithwik Projects Pvt. 7^td., M/s. Soma Enterprises Ltd. and M/s. Sadbav Engineering Ltd. 13.8 However, from the perusal of the assessment order arid the subsequent report, obtained from the AO, this is the undisputed fact is that the AO has failed to pinpoint anyspecific incriminating material found during the search which could have led the AO to reject the books of accounts for the A.Y. 2011-12 and to estimate the income by adopting an appropriate net profit ratio. Thus the additions so made fail on die test of legality as laid down by the Tribunals and the Courts on the issue in the context. The 1 st and 2 nd grounds of appeal succeed. Accordingly, the addition of Rs.9,77,86,306/-being illegal and void, the AO is directed to delete the said addition.” The CIT(A) thus held that in the absence of nay incriminating material, the completed assessments could not be disturbed under S. 153A proceedings and the estimated additions carried out by the AO is not permissible in law. 23. Upon perusal of the records particularly the remand report submitted by the Ld. AO, we find that the Ld. A.O. referred inquiries conducted regarding bogus expenditure claimed in respect of sub-contractors but no evidence is discernible to suggest that the assessee had booked bogus expenditure. Apart from that the Ld. AO alleged incorrectness of the books of accounts of the assessee and thus rejected the books of accounts and proceeded to finalise the assessment adopting net profit of the assessment year in question. While doing so the assessing officer relied upon the case of M/s. Laxmi Construction known as SRA group, engaged in infrastructure development activities where a survey action was carried out under section 133A on 21.01.2016 and before the Income Tax Settlement Commission, Mumbai the said assessee offered net profit @ 8% of the contract work executed by itself and @ 4% on contract work given on back-to-back basis to various subcontractors. Relying upon the rate applied by the Settlement Commission in the said case, the Ld. AO herein adopted I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 4 - the rate of 8% on the net profit on the contract work executed by the assessee before us and net profit @ 5.5% to the contracts further awarded by the assessee. Relevant to mention that the assessee has been able to point out that the work contract executed by the said Laxmi construction group is completely different from that of the assessee before us. Therefore, taking into consideration of the entire aspect of the matter comparing the construction work of the said Laxmi construction or SRA group with the assessee before us and finalising the assessment upon rejecting the books of accounts and adopting net profit at the rate of 8% on direct contract executed by the assessee and 5.5% on contracts executed by giving subcontracts on back-to-back basis and thereby making and addition of Rs. 9,77,86,306/- on account of net profit in a completed assessment proceeding under section 143(3) of the Act without specifying any incriminating material found during the search is erroneous, arbitrary, opposed to law and consequently unsustainable. The CIT(A) thus rightly reversed the additions so made. 24. We have further considered various judicial pronouncements of different judicial forums on this aspect. There is no doubt that in every case where there is any search or requisition, the assessing officer is obliged to issue notice to such person to furnish returns of income for the 6 years preceding to the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition for the assessment years which stood concluded and remained unabated at the time of search. In that event the Hon’ble jurisdictional High Court in the case of Principal Commissioner of Income Tax vs. Saumya Construction (P) Ltd, supra referring the judgment passed by the Hon’ble Rajasthan High Court clearly decided that in case no incriminating material I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 5 - is found, the earlier assessment would have to be reiterated. In the case in hand no specific mention of any such incriminating material found during the course of search proceedings by the Ld. AO which might have led him to draw adverse inference and to conduct any inquiry/investigation in relation thereto. 25. It further appears from the order impugned that the Ld. CIT(A) made an elaborate discussion on the issue itself considering the entire aspects of the matter, both on the point of maintainability of jurisdiction as well as on merit. The Ld. CIT(A) inter alia found the lack of jurisdiction to assess the income without any incriminating document in respect of concluded assessments. He has referred to various documents as relied upon by the Ld. AO in the assessment order and in the remand report dated 20.05.2019 which claimed to have been found during course of search, and allegedly incriminating in nature. But CIT(A) observed a main lacunae on the part of the Ld. AO in no showing any document which could be identified as incriminating materials in relation to the rejection of the books, which goes to the root of the matter. It was further observed by the Ld. CIT(A) that there is no specific mention of any such incriminating material found during the course of search proceedings by the Ld. AO which might have led him to draw adverse inference and to conduct any inquiry/investigation in relation thereto. Since the AO has failed to point out any specific incriminating material found during the search, which could have led him to reject the books of accounts for the year under consideration and to estimate the income by adopting an net profit ratio, the additions made by the AO were found to be without any basis and thus applying the ratio laid down by different judicial forum as discussed hereinabove, the Ld. CIT (A) deleted the impugned addition which according to us is without any ambiguity so as to warrant interference. The CIT(A) in our view, has dealt I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 6 - with the issue objectively and rightly deleted the estimated additions based on some incomplete digital data regarding accounting of assessee firm found in the course of search. The CIT(A) has taken note of the fact that the impugned data are incomplete one which were prepared & saved during the ongoing process of preparation of final accounts. The CIT(A) has noted the plea of the assessee that the income was offered based on final data matched and tallied with the audit report as well as return of income which was simultaneously found in search along with incomplete data saved. We find force in the plea of the assessee that actual profits shown is always on the higher side compared to figures given in incomplete digital data. An example was quoted that for AY 2011-12, the actual net profit offered was Rs. 10,93,56,090/- whereas as per seized incomplete data, it was zero. The incompleteness was mainly on account of the fact that data pertaining to all branches were not considered. No evidence of any bogus expenditure were found at the time of search. Without reiteration of each and every assertion, we express our concurrence with the process of reasonings and findings of the CIT(A). The appreciation of facts and circumstances by the CIT(A) is well reasoned. In the absence of any incriminating documents found per se, the additions could not have been carried out by the AO in the light of large number of judicial precedents. The additions made by indulging in estimations in respect of unabated assessments by rejecting books without any sound basis and making estimations of GP / NP ratio is wholly unwarranted. The CIT(A) has rightly analysed the underlying facts to come to the conclusion that rejection of books of accounts under S. 145(3) and trading additions made by resorting to additions is without any justifiable basis. Hence, the plea on behalf of assessee for endorsement of action of CIT(A) deserves to be accepted. Consequently, the grounds of appeal preferred by the Revenue seeking to challenge the first appellate order is found to be devoid of any merit, and thus dismissed. I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 7 - 26. So far as the addition of Rs. 2,93,419/- on account of disallowance under section 14A of the Act is concerned, as it is not found to be related to any incriminating material found during the search, the Ld.CIT(A) found the same as beyond the scope of assessment under section 153A of the Act and to our considered opinion rightly deleted the same. There being no error, we decline to interfere. The order of CIT(A) is endorsed in toto. 27. The grounds of appeal preferred by the Revenue are found to be devoid of any merit and thus dismissed. IT (S S) A No s. 4 10 t o 4 13 /A h d/ 20 19( A. Y. 20 12 -1 3 to 2 01 5 -16 ): - 28. The identical issue involved in the case has already been dealt with by us in IT(SS)A No. 409/Ahd/2019 for A.Y. 2011-12 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the grounds preferred by the Revenue are dismissed. 29. In the co mbined result, the appeal preferred b y the Revenue in (i) IT(SS) A No. 409/A/2019 is dismissed. (ii) IT( SS) A No. 410/A/2019 is dismissed. (iii) IT(S S)A No . 411/A/2019 is dismissed. (iv) IT( SS) A No. 412/A/2019 is dismissed. (v) IT(SS) A No. 413/A/2019 is dismissed. S d / - S d / - PRADIP KUMAR KEDIA ( A C C O U N T A N T M E M B E R ) MADHUMITA R OY ( J U D IC IA L M E M BE R ) T A N M A Y T R U E C O P Y A h m e d a b a d : D a t e d 1 1 / 0 1 / 2 0 2 2 O r d e r p r o n o u n c e d o n 1 1/0 1/ 2 0 22 b y p l a c i n g t h e r e s u l t o n t h e N o t i c e B o a r d a s p e r R u l e 3 4 ( 4 ) o f t h e In c o m e T ax ( A p p e l l a t e T r i b u n a l ) R u l e , 1 9 6 3 . I T ( S S ) A N o s . 4 0 9 t o 4 1 3 / A h d / 1 9 [ A C I T v s . M / s . D i n e sh c h a n d r a R A g r a w a l I n f r a c o n P v t . L t d . ] A . Y s . 2 0 1 1 - 1 2 t o 2 0 1 5- 1 6 - 4 8 - आदेश क त ल!प अ"े!षत / Copy of Order Forwarded to:- 1. राज व / Revenue 2. आवेदक / Assessee 3. संबं*धत आयकर आय ु ,त / Concerned CIT 4.आयकर आय ु ,त- अपील / CIT (A) 5. 0वभागीय 3त3न*ध,आयकर अपील य अ*धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड9 फाइल / Guard file. By order/आदेश से, उप/सहायक पंजीकारआयकर अपील य अ*धकरण,अहमदाबाद । 1 . D a t e o f d i c t a t i o n o n 2 . D a t e o n w h i c h t h e t y p e d d r a f t i s p l a c e d b e f o r e t he D i c t a t i n g M e m b e r 3 . D a t e o n w h i c h t h e a p p r o v e d d r a f t c o m e s t o t h e S r .P . S . / P . S . 4 . D a t e o n w h i c h t h e f a i r o r d e r i s p l a c e d b e f o r e t h e D i c t a t i n g M e m b e r f o r p r o n o u n c e m e n t 5 . D a t e o n w h i c h t h e f a i r o r d e r c o m e s b a c k t o t h e S r. P . S . / P . S 6 . D a t e o n w h i c h t h e f i l e g o e s t o t h e B e n c h C l e r k 1 1. 0 1 . 2 0 2 2 7 . D a t e o n w h i c h t h e f i l e g o e s t o t h e H e a d C l e r k ... ... ... .... 8 . T h e d a t e o n w h i c h t h e f i l e g o e s t o t h e A s s t t . R e gi s t r a r f o r s i g n a t u r e o n t h e o r d e r ... ... ... ... ... ... ... ... 9 . D a t e o f D e s p a t c h o f t h e O r d e r ... ... ...