The DCIT, Central Circle-2, Surat V. Shri Shyamlal G.Bhandari, Surat

ITSSA 538/AHD/2012

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1818 (ITAT-SURAT)
• Duration Of Justice: 6 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RINIVAS T BIRARI
• Assessee Lawyers: RASESH SHAH
• Keywords: Set aside
• Section: 32; 131; 132; 12; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCHS, SURAT BEFORE: SHR I AMARJIT SINGH , ACCOUNTANT MEMBER AND MS. MADHUMITA ROY , JUDICIAL MEMBER THE DCIT, CENTRAL CIRCLE - 2, SURAT (APPELLANT) VS SHRI SHYAMLAL G. BHANDHARI, 103, CITY PARK APPT. BHATAR ROAD, SURAT - 395001 PAN: AASPB3725F (RESPONDENT) REVENUE BY : S H RINIVAS, T. BIRARI , CIT - D . R. ASSESSEE BY: SHRI RASE SH SHAH, A.R. DATE OF HEARING : 22 - 11 - 2 018 DATE OF PRONOUNCEMENT : 29 - 01 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2010 - 11 , ARI SES FROM ORDER OF THE CIT(A) - II, AHMEDABAD DATED 30 - 08 - 2 012 , IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE U1. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT GIVING THE AO OPPORTUNITY TO OFFER HIS COMMENTS ON THE NEW EVIDENCES AND SUBMISSIONS MADE BEFORE HIM AS REQUIRED UNDER RULE 46A(3) OF THE L.T.RULES, BECAUSE SUCH SUBMISSIONS/EVIDENCES SUBMITTED BEFORE THE CIT(A) ARE DIFFERENT FROM ONE SUBMITTED BEFORE THE AO DURING THE COURSE OF ASSESSMENT - PROCEEDINGS. I T (SS) A NO . 538 / A HD/20 12 A SS ESSMENT YEAR 2010 - 11 I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 2 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1,37,308/ - MADE ON ACCOUNT OF UNACCOUNTED ADDITIONAL COMMISSION INCOME ON WORK SU PERVISED 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.41,53,675/ - MADE ON ACCOUNT OF UNDISCLOSED INCOME FROM PROJECT WORKS. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.46,91,973/ - OUT OF TOTAL ADDITION OF RS.48,23,470/ - MADE ON ACCOUNT OF UNEXPLAINED CASH RECEIPTS. IT IS, THEREFORE, PRAYED, THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 3. THE ASSESS EE WAS A STRUCTURAL ENGINEER ENGAGE D IN THE ACTIVITY OF PROVIDING A STRUCTURAL DESIGNING AND SUPERVISION SERVICES T O VARIOUS CONSTRUCTION SITES UNDER HIS PROPRIETARY CONCERN M/S. CAMP UTECH ENGINEERS . A S E ARCH U/S. 1 32 OF THE ACT WAS CARRIED ON 11 TH MARCH, 2010 AT THE PREMISES OF THE ASSE SSEE ALONG WITH SEARCH ACTION IN THE CASE OF SURANA BUILDERS. DURING THE COURSE OF SEARCH ACTION, CERTAIN FDR IN THE NAME OF ASSESSEE W AS FOUND FOR WHICH THE ASSSESSEE HAS DISCLOSED ADDITION INCOME OF RS . 8 LACS AND OFFERED THE SAME FOR TAX IN HIS RETURN OF INCOME. FURTHER FACTS OF THE CASE ARE DISCUSSED UNDER THE DIFFERENT GROUNDS OF APPEAL AS UNDER: - GROUND NO. 2 ADDITION OF RS. 1,37,308 4. D URING THE ASSESSMENT ON PERUSAL OF THE FOLLOWING IMPOUNDED MATERIAL THE ASSESSING OFFICER OBSERVED THAT TOTA L CONTRACT VALUE WORK DONE DURING THE YEAR WAS TO THE AMOUNT OF RS. 4576946/ - . SR. NO. ANNEXURE NAME OF THE PARTY AMOUNT (RS.) 1 BF - 1 AND BF - 15 ANILKUMAR BOTHRA 8,50,000 2 BF - 2. BF - 5ANDBF - 15 T.N. KAPADIA 8,16,946 3 BF - 3 RENU G . SONI 25,00,000 I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 3 4 BF - 7 BHARAT MASALAWALA AND KHATIWALA 1,05,000 5 BF - 7 BHARAT MASALAWALA AND KHATIWALA 1,05.000 6 BF - 2 DEVJANI U NAFC 1,00.000 7 BF - 2 RAJBAHADUR R. SHARMA 1,00.000 TOTAL 45,76,946 THE ASSESSING OFFICER ALSO O BSERVED THAT THE ASSESSEE HA S BEEN OFFERING FEES INCOME AT AROUND 2% OF THE CONTRACT VALUE IN HIS REGULAR BOOKS OF ACCOUNT. HOWEVER, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CHARGED FEES OF RS.5 ,000/ ON CONTRACT VALUE OF RS.1 ,00000 WHICH WORK ED OUT TO A RATE OF 5% FROM TWO CLINE T S VIZ. SMT. DE V JANI U . NAY I K ( PAGE NO. 7 OF ANNEXURE BF - 2) AND SHRI RAJBAHADUR R. SHARMA ( PAGE NO. 8 OF ANNEXURE BF - 2) . ACCORDINGLY, THE ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE HAD CONCEALED FEES INCOME TO THE EXTENT 3% ( 5% AS CHARGED FROM TWO PERSONS ABOVE 2% SHOWN IN THE RETURN OF INCOME). ON QUERY, THE ASSESSEE EXPLAINED THAT IN NORMAL CASES HE WAS CHARGING FEES ONLY @ 2%. H OWEVER, IN SOME CASES HAVING LOW CONTRACT VALUE HE HAS CHARGED LUMP SUM FE ES THEREFORE LUMP SUM FEES OF RS. 5000 WERE CHARGED ON SMALL VALUE CONTRACT LISTED AT PAGE NO.7 AND 8 OF THE SEIZED ANNEXURE BF - 2. SINCE THE SAME WERE VERY SMALL CONTRACT AND S A ME FEES CANNOT BE APPL IED TO THE OTHER CONTRACT WHICH W ERE MUCH BIGGER IN SIZE. HOWEVER , THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND MADE ADDITION OF RS. 1 , 37 , 308/ - AFTER APPLYING 3% ( DIFFERENCE OF 5% - 2%) OF CONTRACT VALUE OF RS. 4 5 , 76 , 946/ - . I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 4 5 . AGGRIEVED ASSESSEE HAS FILE D APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. RELEVANT PART OF DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 4.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE ORDER OF THE A.O. AND THE SUB MISSIONS OF THE APPELLANT. IT IS SEEN T HAT THERE IS NO DISPUTE AS REGARD S THE COST OF RS. 45,76, 946/ - PERTAINING TO THE YEAR UNDER CONSIDERATION BETWEEN THE APPELLANT AND THE AO AND THE ONLY DISPUTE IS THE INCOME EARNED BY THE APPELLANT FROM THE SAID PROJECTS. ON INQUIRING AS TO WHAT RATE OF IN COME HAS BEEN ACCEPTED BY THE AO IN THE EARLIER YEAR I.E. F.Y. 2008 - 09 AS REGARDS, THE BALANCE AMOUNT OF PROJECT COST OF RS . 91,25,553/ - (I.E. TOTAL RS. 1,37,02, 499 - RS. 45,76,946 PERTAINING TO THE CURRENT YEAR), THE APPELLANT SUBMITTED THAT IN THE EARLIE R YEAR, HE HAD EARNED INCOME OF RS. 2,10,000/ - @ 2.30% ON THE SAID PROJECT COST OF RS. 91,25,553/ - WHICH HAS BEEN ACCEPTED BY THE AO AND THER E IS NO ADDITION IN THAT YEAR. FURTHER, ON GOING THROUGH THE IMPOUNDED ANNEXURE BF - 1,2,3,5 &7 IT IS SEEN THAT THE SAID ANNEXURES ARE DIFFERENT NOTE BOOKS FOR DIFFERENT PROJECTS WHEREIN THE DATE, THE PROJECT RECEIPT, THE PROJECT PAYMENT, THE NATURE OF THE PAYMENT AND THE BALANCE AMOUNT HAS BEEN MENTIONED. ON GOING THROUGH ANNEXURE BF - 1, IT IS SEEN THAT THE TOT AL PROJEC T COST IS RS. 8,50,000/ - OUT OF WHICH RS. 15,000/ - HAS BEEN RECEIVED BY THE APPELLANT AS HIS FEES WHICH WORKS OUT TO 1.76%. ON GOING THROUGH ANNEXURE BF - 2&5, IT IS SEEN THAT IT CONTAINS DETAIL OF PROJECT OF ONE SHR I T.N. KAPADIA OF RS. 56,81,946/ - OUT OF WH ICH FEES PAID TO THE APPELLANT HAVE; BEEN MENTIONED AS RS. 1,05,000/ - WHICH WORKS OUT TO 1.85%. THE SAID ANNEXURE BF - 2 ALSO CONTAINS DETAILS OF 2 OTHER PROJECTS OF RS. 1,00,0 00/ - EACH OF DEVYANI UDAY NAIK AND RAJBAHADUR R. SHARMA ON PA GE 7 & 8 WHEREIN THE F EES OF THE APPELLANT H AVE BEEN MENTIONED AS RS. 5,000/ - EACH WHICH WORKS OUT TO 5%. ON GOING THROUGH ANNEXURE BF - 3, IT IS SEEN THAT THE TOTA L PROJECT COST IS RS. 25,00,000/ - OUT OF WHICH CONSULTANCY FEES PAID TO THE APPELLANT ON 2 OCCASIONS TOTALS TO RS. 6 0,000/ - WHICH WORKS OUT TO 2.40%. ON GOING THROUGH ANNEXURE BF - 7, IT IS SEEN THAT IT CONTAINS DET AILS OF PROJECT OF RS. 1,00,000/ - EACH PERTAINING TO THE EARLIER YEAR I.E. F.Y. 2008 - 09 IN RESPECT OF MR. KHATIWALA AND PERTAINING TO F.Y. 2009 - 10 IN RESPECT O F MR. BHARAT MASALAWALA, ON WHICH THE APPELLANT HAS RECEIVED FEES OF RS. 5,000/ - EACH WHICH WORKS OUT TO 5%. THUS, ON GOING THROUGH THE IMPOUNDED MATERIALS THE APPELLANT'S CONTENTION IS FOUND TO BE CORRECT THAT THE FEES RECEIVED BY HIM ARE MENTIONED IN EAC H NOTE BOOK FOR EACH OF THE PROJECT AND THEREFORE, THE RATE OF 5% AS WORKED OUT IN CASE OF SMALL PROJECTS CANNOT BE APPLIED TO THE OTHER PROJECTS. ACCORDINGLY, HOLD THAT THE AO IS NOT CORRECT IN ADOPTING THE RATE'OF5% ON THE TOTAL PROJECT RECEIPTS OF RS. 4 5,76,946/ - AS WORKED OUT FROM THE SAID ANNEXURES AND MAKING AN ADDITION FOR THE BALANC E 3% AFTER DEDUCTING 2% INCOM E SHOWN - BY THE APPELLANT. THE SAID EXERCISE OF THE AO OF ADOPTING 5% RATE WOULD HA VE BEEN JUSTIFIED HAD THE OTHER ANNEXURES CONTAINING THE DE TAIL OF OTHER PROJECTS NOT MENTIONED THE FEES RECEIVED BY THE APPELLANT, HOWEVER, WHEN THE SAID DETAILS ARE ALREADY MENTIONED IN THE LOOSE PAPER THERE IS NO QUESTION OF RESORTING TO ANY ESTIMATION OR GUESSWORK. FURTHER, IN THE IMPOUNDED MATERIAL ANNEXURE B F - 7, THERE IS AN INSTANCE OF LUMPSUM FEES OF RS. 5,000/ - RECEIVED BY THE APPELLANT IN THE EARLIER YEAR I.E. F.Y. 2008 - 09 IN RESPECT OF PROJECT OF RS. 1,00,000/ - OF MR. KHATIWALA, HOWEVER, THE AO HAS NOT APPLIED THE SAID RATE OF 5% TO THE INCOME SHOWN BY TH E APPELLANT IN THE EARLIER YEAR I.E. F.Y. 2008 - 09 WHERE THE TOTAL INCOME SHOWN BY THE APPELLANT IS 2.30% OF THE PROJECT COST. I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 5 ACCORDINGLY, I HOLD THAT THE AO IS NOT JUSTIFIED IN ADOPTING THE RATE OF 5% OF CONSULTANCY / COMMISSION INCOME ON THE TOTAL PROJEC T COST OF RS. 45,76,946/ - AND THEREBY MAKING AN ADDITION FOR THE BALANCE 3% AFTER DEDUCTING 2% INCOME AS SHOWN BY THE APPELLANT AND THEREFORE, THE ADDITION OF RS. 1.37.308/ - AS MADE BY THE AO IS HEREBY DELETED. IN THE RESULT, THE GROUND OF APPEAL NO. - 1 S TANDS ALLOWED. GROUND NO. 3 : ADDITION OF RS. 4153675/ - ON ACCOUNT OF UNDISCLOSED INCOME FROM PROJECT WORK 6. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS ON PERUSAL OF PAGE NO. 41 TO 43 OF SEIZED ANNEXURE BF - 15 T HE ASSESSING OFFICER OBSERVED THAT TH ESE PAGES CONTAIN MA NUAL AND COMPUTERIZED LIST OF CLIENT S OF THE ASSESSEE FOR WHOM THE ASSESSEE HAS UNDERTAKEN VARIOUS WORKS. IN RESPONSE TO THE SAME IN THE STATEMENT RECORDED U/S. 131 OF THE ACT, T HE ASSESSEE EXPLAINED THAT THESE PAPER S WERE M ERE IN DEXED FILES CONTAINING ONLY THE SERIAL NO . AND NAME OF THE CLIENT S PERTAINING TO THE LAST 20 YEARS AND THE C ONSULTING INCOME WERE ALSO PERTAINED TO THAT PERIOD. THE ASSESSEE HAS ALSO SUBMITTED YEAR - WISE CHART SHOWING INCOME FROM EACH OF THE 95 CLIENTS FOR 10 5 PROJECTS PERTAINING T O THE LAST SIX YEARS WHICH WORKED OUT TO BE RS. 326751 1 / - . HOWEVER, THE ASSESSING OFFICER WAS NOT AGREED WITH THE SUBMISSION OF THE ASSESSEE AND COMPUTED THE TOTAL NUMBER OF CLIENT S OF THE ASSESSEE AT 227 I.E. 95+132 BY A DDING BOT H THE MANUAL AND THE COMPUTERIZED LIST OF CLIENT AS AGAINST THE DET AIL OF 95 CLIENTS FURNISHED BY T H E ASSESSEE. THEREAFTER, THE ASSESSING OFFICER WORKE D AVERAGED FEES @ 5% OF THE PROJECT AND WORKED OUT COMMISSION INCOME PER CLIENT AT RS. 32 , 695/ - . AFTER APPLYING THE AVERAGE FEES OF RS. 32 , 692/ - PER CLIENT TO THE TOTAL NO. OF CLIENTS 227 THE ASSESSING OFFICER HAD ESTIMATED THE TOTAL FEES OF T H E ASSSSEE AT RS. 74 , 21 , 816/ - . THE ASSESSING OFFICER REDUCED THE AMOUNT OF FEES OF RS. 32 , 67 , 511/ - SH OWN BY THE ASSESSEE IN THE LAST 6 YEARS AND MADE ADDITION FOR THE DIFFERENTIAL AMOUNT I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 6 OF RS. 41 , 53 , 675/ - (TOTAL ESTIM ATED FEES RS. 74 , 21 , 186/ - FEES AS PER BOOKS RS. 32 , 67 , 511/ - ) 7 . AGGRIEVED ASSSESSE E HAS FILED APPEAL BEFORE THE LD . CIT(A) AND THE LD. CI T(A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE RELEVANT PART OF DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 5.3 1 HAVE CONSIDERED THE FACTS OF THE CASE, THE ORDER OF THE A.O. AND THE SUBMISSIONS OF THE APPELLANT. ON GOING THROUGH PA GE NO. 41 TO 43 OF ANNEXURE BF - 15, IT IS SEEN THAT THE SAID PAPERS CONTAINED ONLY THE SR. NO. AND THE NAME OF THE CLIENT AND NO OTHER DETAIL WHATSOEVER. IT IS ALSO SEEN THAT PAGE 41 IS A COMPUTERIZED LIST OF CLIENTS STARTING FROM SR. NO. 70 AND ENDING AT S R. NO. 132. SIMILARLY, PAGE 42 & 43 ARE A MANUAL LIST OF CLIENTS STARTING FROM SR. NO. 1 TO SR. NO. 95. ON COMPARING BOTH THESE LISTS, IT IS SEEN THAT T HE CLIENTS AT SR. NO. 70 TO 94 IN THE COMPUTERIZED LIST ARE EXACTLY IDENTICAL WITH THE S AME SR. NOS. IN THE MANUAL LIST, WHICH PROVES THAT THE MANUAL LIST OF CLIENTS HAS BEEN SUBSEQUENTLY COMPUTERIZED BY THE APPELLANT. ON COMPARISON OF THE COMPUTERSIED AND THE MANUAL LIST, I AGREE WITH THE APPELLANT THAT THE TOTAL NUMBER OF CLIENTS IS 132 AS CONTAINED IN THE COMPUTERIZED LIST AND NOT 227 AS COMPUTED BY THE AO BY ADDING THE MANUAL LIST AND THE COMPUTERIZED LIST SINCE THE SAME IS DUPLICATION. FURTHER, AS ALREADY HELD HEREIN BEFORE IN GROUND NO. 1 I HOLD THAT THE AO IS NOT JUSTIFIED IN ADOPTING THE AVERAGE CONSULTANCY / COMMISSION INCOME EARNED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION AT 5% INSTEAD OF 2.12% SHOWN BY THE APPELLANT. NOW ON CORRECTING THE AFORESAID 2 MISTAKES OF THE AO I.E. THE TOTAL NUMBER OF CLIENTS AND THE AVERAGE COMMISSION INCO ME, THE TOTAL ESTIMATED COMMISSION INCOME EARNED BY THE APPELLANT OVER THE LAST 6 YEARS, ON THE HYPOTHESIS THEORY OF THE AO HIMSELF WOULD WORK OUT AS FOLLOWS. AVERAGE CONTRACT VALUE NO. OF CONTRACT UNDERTAKEN 1 INCOME REALISED RATE OF COMMISSION COMMISS ION FROM EACH PROJECT TOTAL COMMISSION (RS.) 653849 132 2.12% RS. 13,862 (2.12% OF RS. 6,53,849/ - ) 18,29,784 THUS, THE AVERAGE INCOME OF THE APPELLANT FROM 132 CLIENTS FOR THE LAST 6 YEARS ON HYPOTHEC ATION BASIS WORKS OUT TO RS. 18,29, 784/ - AS AGA INST RS. / 32,67,511/ - SHOWN BY THE APPELLANT AND THEREFORE, THERE IS NO QUESTION OF MAKING ANY A DDITION IN THIS REGARD. I AM OF THE OPINION THAT THE ABOVE HYPOTHETICAL THEORY AS WORKED OUT BY AO IS ALL RIGHT FOR ARRIVING AT SOME BASIS FOR VERIFICATIO N BUT THE SAME CANNOT BE APPLIED FOR DETERMINING THE INCOME WITHOUT ANY CORROBORATIVE EVIDENCE WH ATSOEVER, MORE PARTICULARLY WHEN THE IMPOUNDED PAPERS CONTAINS NO SUCH DETAILS AND N O UNACCOUNTED ASSETS OTHER THAN FDR OF RS 8,00, 000/ - HAVE BEEN FOUND DURING THE COURSE OF SEARCH. ACCORDINGLY, I DELETE THE ADDITION OF RS. 41,53,675/ - AS MADE BY THE AO PURELY ON ESTIMATE, GUESSWORK AND FACTUAL MISTAKES WITHOUT ANY CORROBORATIVE EVIDENCE WHATSOEVER. IN THE RESULT, THE GROUND OF APPEAL NO. 2 STANDS ALLOWED. I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 7 G - 4 : - DELETING THE ADDITION OF R S. 46 , 91 , 9 73/ - OUT OF TOTAL ADDITION OF R S. 48 , 23 , 470/ - 8 . DURING ASSESS MENT, ON PERUSAL OF THE PAPER OF SEIZED ANNEXURE BF - 15 , THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD RECEIVED TOTAL AMOUNT OF RS. 41 , 33 , 371/ - (RS. 2 1 , 13 , 380/ - + RS. 20 , 19 , 99 1/ - ) IN RESPECT OF PROJECT . THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH EXPLANATION FOR T HE SAME. THE ASSESSEE EXPLAINED THAT THIS WAS AN ACCOUNT STATEMENT OF B.K. SINGH IN RESPECT OF CONTRACT WORK OF RAJ POLIFINS RAJPIPLA WHICH WAS UNDERTAKEN BY HIM FROM SHRI B.K. SINGH AND THE PROJECT AMOUNT WAS RS. 21 , 33 , 380/ - AND NOT RS. 41 , 33 , 37 1 / - . HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF T HE ASSSESSEE STATING THAT NO EVIDENCE OR DOCUMENTS HAVE BEEN FURNISHE D BY THE ASSESSEE IN RESPECT OF ITS CLAIM AND IN THE ABSENCE THEREAFTER THE SAID PROJECT RECEIP T HAVE TO BE TREATED AS UNACCOUNTE D RECEIPT IN THE HAND OF THE AS SESSEE. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE SAID AMOUNT OF RS. 41 , 33 , 37 1 / - AS UNACCO UNTED RECEIPT OF THE ASSESSEE AND MADE ADDITION FOR THE SAME WHICH FORMED PART OF TOTAL ADDITION OF RS. 48 , 23 , 470/ - (RS. 41 , 33 , 37 1/ - + RS. 3 , 14 , 000+2 , 74 , 645+RS. 1 , 00 , 454 ) . 9 . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DE LETED THE ADDITION MADE BY THE ASSESSING OFFICER . RELEVANT PART OF DECISION OF LD. CIT(A) IS AS UNDER: - 6.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE ORDER OF THE A.O. AND THE SUBMISSIONS OF THE APPEL LANT. ON GOING THROUGH PAGE NO. 1 OF ANNEXURE BF - 15, IT IS SEEN THAT THE SAID PAPER CONTAINS DETAILS OF NOT ONLY THE RECEIPTS BUT ALSO THE EXPENDITURE AND THE PROFIT. THE SAID PAPER ALSO CONTAINS THE NAME OF B.K. SINGH AND THE APPELLANT I.E. SHYAM. THE SAID PAPER ALSO MENTIONS T HE AMOUNT DUE TO THE APPELLANT I.E. SHYAM AND AMOUNT RECEIVABLE BY THE APPELLANT FROM B.K. AS ALSO THE AMOUNT LYING WITH B.K. AS RECEIVED FROM THE PRINCIPLE PARTY. ACCORDINGLY, I AM OF THE OPINION THAT WHEN THE SEIZED PAPER CONTAINS DETAIL OF RECEIPTS, EXP ENDITURE, PROFIT, AMOUNT RECEIVABLE AND PAYABLE, THE AO IS NOT JUSTIFIED IN I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 8 MAKING ADDITION OF ONLY THE PROJECT RECEIPTS MENTIONED ON THE SAID PAPER AND IGNORING ALL THE OTHER DETAILS OF EXPENDITURE, PROFIT, AMOUNT RECEIVABLE AND PAYABLE AS ARE MENTIONED O N THE SAME PAPER. FURTHER, IT IS SEEN THAT IN RESPECT OF THE OTHER IMPOUNDED ANNEXURES, I.E. ANNEXURE BF - 1,2,3,5&7 AS DISCUSSED EARLIER IN GROUND OF APPEAL NO. 1 WHICH CONTAINED THE PROJECT RECEIPTS AND EXPENSES BOTH, THE AO HAS COMPUTED ONLY THE ADDITIONA L COMMISSION INCOME OF THE APPELLANT @ 3% ON THE PROJECT RECEIPTS AND HAS NOT ADDED THE ENTIRE PROJECT RECEIPTS IN THE HANDS OF THE APPELLANT CLEARLY ACCEPTING THE FACT THAT THE APPELLANT IS ONLY A CONSULTANT / SUPERVISOR AND IS NOT THE OWNER OF THE PROJEC TS AND THUS, THE ENTIRE PROJECT RECEIPTS CANNOT BE ADDED IN HIS HANDS BUT ONLY THE INCOME EARNED THEREFROM CAN BE BROUGHT TO TAX. HOWEVER, IN RESPECT OF PAGE NO. 1 OF ANNEXURE BF - 15, THE AO HAS TAKEN AN ALL TOGETHER DIFFERENT STAND AND ADDED THE PROJECT RE CEIPTS IN THE HANDS OF THE APPELLANT AS IS INCOME INSTEAD OF TAXING ONLY THE CONSULTANCY / COMMISSION :COME I.E. THE PROFIT IN RESPECT THEREOF, WHICH IS CLEARLY WORKED OUT IN THE SAID IMPOUN DED PAPER. I AM OF THE OPINION THAT THE APPELLANT HAS BEEN ABLE TO SATISFACTORILY EXPLAIN EACH AND EVERY NOTING ON THE SAID SEIZED PAPER BY FIRST OF ALL SHOWING THAT THE FIRST RECEIPT OF RS. 20,12,380/ - HAS BEEN RECEIVED BY B.K. SINGH OUT OF WHICH B.K. SINGH DISBURSED RS. 18.98.601/ - TO THE APPELLANT AND THUS, BALANCE AM OUNT OF RS. 1.13.779/ - RETAINED BY B.K. SINGH. ACCORDINGLY, I HOLD THAT THE AO IS NOT JUSTIFIED IN TOTALING THE 2 RECEIPTS OF RS. 20,12,380/ - + RS. 18,98,601 AND THE SUBSEQUENT REC EIPTS OF RS. 1,01,000/ - , RS. 68, 000/ - RS. 15J92/ - , RS. 30JOO/ - AND RS. 6,898/ - IN THE HANDS OF THE APPELLANT AMOUNTING TO RS. 41,33,371/ - . SECONDLY, THE APPELLANT HAS CLEARLY SHOWN THAT OUT OF THE RECEIPT OF RS. 18,98,601 / FROM B.K. SINGH, HE HAD INCURRED EXPENDITURE OF RS. 19,95,582/ - AND ACC ORDINGLY, DUE BALANCE OF RS. 96, 981/ - (RS. 18,98,601 - RS. 19,95,582) HAS BEEN WORKED OUT ON THE SAID SEIZED PAPER. THIRDLY, THE APPELLANT HAS SHOWN THAT AFTER DEDUCTING THE AMOUNT RECEIVED FROM B.K. SINGH FROM THE EXPENDITURE INCURRED THERE I S A FINAL DUE BALANCE OF RS. 22,423 / - RECEIVABLE BY HIM FROM B.K. SINGH FOR PAYMENT TO VARIOUS SUPPLIERS AND B.K. SINGH HAS A BAL ANCE OF RS. 89, 029/ - LEFT WITH HIM FROM THE INITIAL AMOUNT OF RS. 21,13,380/ - RECEIVED FROM THE PRINCIPLE PARTY TO BE SENT TO THE APPELLANT AND THUS, THE PROFIT TO THE APPELLANT IS THE DIFFERENTIAL AMOUNT OF RS. 66.606/ - (I.E. RS. 22,423 EXCESS EXPENDITURE LESS AMOUNT RECEIVABLE OF RS. 89.029/ - ). IT IS FURTHER SEEN THA T THE PROFIT / INCOME OF RS. 66, 606/ - AS WORKED OUT ON THE SAID SEIZED PAPER IN RESPECT OF THE PROJECT RECEIPT OF RS. 21,13,380/ - WORKS OUT TO 3.15% WHICH IS MORE THAN THE AVERAGE RATE OF AROUND 2% AND HENCE, I HOLD THAT THE SAID PROFIT OF RS. 66, 606/ - IS REQUIRED TO BE ADDED IN THE HANDS OF THE APPELLANT AS HIS INCOME AND NOT THE PROJECT RECEIPTS. ACCORDINGLY, I DELE TE THE ADDITION OF RS. 41,33,371/ - AS MADE BY THE AO AND DIRECT THE AO TO BRING TO TAX THE PROFIT OF RS. 66,606/ - IN THE HANDS OF THE APPELLANT AS HIS INCOME IN THE YEAR UNDER CONSIDERATION FROM THE SAID PROJECT. IN THE RESULT, THE GROUND OF APPEAL NO. - 3 IS PARTLY ALLOWED. 10 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 9 1 ST GROUND OF APPEAL : THE LD. DR HAS SUBMITTED A PAPER BOOK CONTAINING DETAIL OF MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH ACTION I N THE CASE OF THE ASSESSEE. A NUMBER OF JUDICIAL PRONOUNCEMENT WERE ALSO REFERRED PERTAINING TO VIOLATION OF RULE 46A BUT THE REVENUE FAILED TO DEMONSTRATE HOW THESE WERE APPLICABLE TO THE FACTS OF IN THE CASE OF THE ASSESSEE. DURING THE COURSE OF APPELLA TE PROCEEDINGS THE REVENUE FAILED TO SUBSTANTIATE SPECIFICALLY THAT HOW THE LD. CIT(A) HAS VIOLATED RULE 46 A ON PERUSAL OF THE FINDINGS LD. CIT(A) AND MATERIAL ON RECORD, WE OBSERVE THAT THERE IS NO CASE OF ADMISSION OF NEW EVIDENCES UNDER RULE 46A(3) O F THE I.T. RULE 1962. THE LD. CIT(A) HAS CONSIDERED THE NATURE OF MATERIAL IMPOUNDED DURING THE SEARCH AND THE NATURE OF ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF THE IMPOUNDED MATERIAL. IN HIS FINDINGS THE LD. CIT(A) HAS ELABORATED WITH REA SONING THAT THE ASSESSING OFFICER HAS INCORRECTLY MADE ESTIMATED ADDITION WITHOUT CONSIDERING THE RELEVANT MATERIAL IMPOUNDED DURING THE SEARCH ACTION. THE LD. CIT(A) IN HIS FINDINGS DEMONSTRATED THE SPECIFIED MATERIAL IMPOUNDED DURING THE SEARCH AND THE CONTENTS OF THE MATERIAL ALONG WITH DEFECT IN THE ASSUMPTION OF THE ASSESSING OFFICER ON ESTIMATING THE INCOME WITHOUT CONSIDERING THE RELEVANT MATERIAL. AFTER CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL THEREFORE THE SAME STANDS DISMISSED. GR.NO.2 THE ASSESSING OFFICER HAS DETERMINED THE TOTAL CONTRACT VALUE OF WORK DONE BY THE ASSESSE ON THE BASIS OF SEIZED MATERIAL AS PER ANNEXURE BF - 1 TO B F - 5 & FB - F - 7, BF - 15 TO THE AMOUNT OF RS. 45,76,946/ - . THE ASS ESSEE HAS NOT DISPUTED THE VALUE OF CONTRACT AS PER THE ABOVE CITED ANNEXURES TO THE I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 10 PANCHNAMA CO MPRISING MATERIAL IMPOUNDED DURING THE COURS E O F SEARCH ACTION U/S. 132 OF THE ACT. THE ASSESSING OFFICER HAS DISPUTED THE ACTION OF THE ASSESSEE OF WORKING OUT CONSULTANCY COMMISSION @ 5% AGAINST THE ACTUAL INCOME SHOWN BY THE ASSESSEE @ 2.12%. ON PERUSAL OF THE PAGE NO. 7 & 8 OF ANNEXURE BF - 2 IN THE CASE S OF TWO PARTIES I.E. SHR . DEVJANI U . NAIK AND SHRI RAJABAHADUR R. SHARMA ON THE C ONTRA C T VALUE OF RS. 1 , 0000 0 EACH THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS CHARGES COMMISSION INCOME OF RS. 5000/ - FRO M BOTH THE PARTIES WHICH WORKED OUT TO BE 5% OF THE CONTRACT VALUE. ON COMPARING THE SAME WITH THE OTHER CASE , THE ASSESSING OFFICER OBSERVED THAT THE A SSES S EE HAD BEEN OFFERING THE COMMISSION INCOME 2% OF THE CONTRACT VALUE . T HEREFORE, THE ASSESSING OFFICER OPINED THAT THE ASESSEE HAD CONCEALED INCOME T O THE EXTENT OF 3% OF THE CONTRACT VALUE DURING THE Y EAR UNDER CONSIDERATION. AFTER PERUSAL OF MATERI AL ON RECORD IT IS OBSERVED THAT T HE ADDITION OF RS. 1,37,308/ - ESTIMATING ADDITIONAL INCOME @ 3% HAS BEEN MADE ON THE BASIS OF PAGE NO. 7 AND 8 OF THE ANNEXURE BF - 2. IT IS NOTICED THAT THE SAID DETAILS CONTAINED THE DETAILS OF ONLY TWO SMALL CONTRACT O F RS.1 , 00000/ - EACH ON WHICH THE ASSESSEE HAS RECEIVED CONSULTATION FEES OF RS. 5 , 000/ - @ 5% ON BOTH THE PROJECTS. HOWEVER, IT IS NOTICED THAT AS PER THE IMPOUNDED MATERIAL ON THE CONTRACT VALUE OF HIGHER AMOUNT THE ASSESSEE HA S RECEIVED CONSULTANCY INCOM E F R O M 1.76% TO 2.40% OF THE CONTRACT VALUE. IT IS NOTICED T HAT IN CASE OF BIGGER PROJECT THE CONSULTANCY FEES CHARGES WAS LESS COMPARED TO THE SMALL PROJECT. AFTER INCLUDING ALL THE CONSULTANCY RECEIPTS THE AVE RAGE INCOME FOR THE ASSESSEE FRO M THE CONTR ACT WAS WORKED TO BE 2.12% . THE ASSESSING OFFICER HAS IGNORED THE MATERIAL FACT THA T THE IMPOUNDED MATERIAL CLEARLY DEMONSTRATE THAT T H E CONSULTANCY FEES RECEIVED ON THE DIFFERENT I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 11 PROJECT AT DIFFERENT RATE. W ITHOUT BRINGING ANY SUPPORTING MATERIAL RELEV ANT TO T H E OTHER PROJECT THE ASSESSING OFFICER HAS APPLIED 5% OF THE CONSU LTANC Y INCOME TO ALL THE PROJECT S . THESE FACTS DEMONSTRATE THAT ASSESSING OFFICER HAS APPLIED THE 5% RATE ON PRESUMPTION BASIS WITHOUT DISPROVING THE MATERIAL FACT THAT ASSESSEE HAS CHARGED CONSULTANCY FEES FROM DIFFERENT PROJECTS AS EVIDENT FROM THE IMPOUNDED MATERIAL. IN THE LIGHT OF THE ABOVE FACTS AN D DETAILED FINDINGS OF THE LD.CIT(A) WE DO NOT FIND ANY ERROR IN THE DECISION LD. CIT(A). THEREFORE , THIS GROUND OF APPEAL OF THE APPEAL OF THE REVENUE IS DISMISSED. GROUND NO. 3 THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 41 , 53 , 675/ - AS UNDIS CLOSED INCOME FROM PROJECT WORK. DURING THE ASSESSMENT , THE ASSESSING OFFICER OBSERVED THAT PAGES NO. 41 TO 43 OF THE SEIZED ANNEXURE B - 15 CONTAINED THE L I ST OF THE CLIENTS OF THE ASSESSEE FOR WHOM THE ASSESSEE HAD TAKEN V ARIOUS CONTACT S . O N QUERY THE ASSESSEE EXPLAINED THE LIST OF 95 CLIENTS PERTAINING TO 105 PROJECTS CARRIED OUT BY HIM IN T HE LAST 6 YEARS. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSION OF THE ASSESSEE. T H E ASSESSING OFFICER HAD ADDED BOTH THE CLIENTS AS PER MANUAL LIST AND COMPUTER LIST TOTALING TO 227 I.E. (92+ 132) AS AGAINST T H E DETAIL OF 95 CLIENTS FURNISHED BY THE ASSESSEE . THE ASSESSEE HAS SUBMITTED A YEAR WISE CHART SHOWING INCOME FROM EACH OF THE 95 CLIENTS FOR 105 PROJECTS PERTAINING TO LAST 6 YEARS WHICH WOR K ED OUT TO RS. 32,67,511/ - . T THE ASSESSING OFFICER HAS WORKED OUT THE COMMISSION INCOME OF THE AS SESSEE AS PER CLIENT AT RS. 3 2, 692/ - (I.E . AVERAGE PROJECT VALUE OF RS. 6 53849 @ 5% ) AND APPLIED THIS AVERAGE FEES OF RS . 32,692/ - TO THE TO T AL NUMBER OF 227 CLIENTS AND COMPUTED THE EST IM ATED TOTA L COMMISSION OF R S. 74,21,186. AFTER REDUCING I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 12 THE COMMISSION OF RS . 32,67 , 5 11/ - S H OWN BY T H E ASSESSE E THE ASSESSING OFFICER H A S MADE ADDITION FOR THE DIFFERENTIAL AMOUNT OF RS. 41 , 53 , 675/ - TO THE TOTAL INCOME OF THE ASSESEE. WE HAVE GONE THROUGH THE MATERIAL ON RECORD AND OBSERVED THAT T HE ASSESSING OFFICER HAS ADDED THE NAME APPEARING IN THE MANUAL LISTS AND TH E N A ME OF CLIENT APPEARING IN THE COMPUTERIZED LIST FOR ARRIVING AT TOTAL CLIENT OF 227 WITHOUT CONSIDER THAT IN T H E BOTH THE LIST THERE W E RE REPETITION OF THE SAME NAME OF CLIENTS . IN THE ABSENCE OF ANY SUPPORTING RELE VANT MATERIAL THE ASSESSING OFFICER ON ASSUMPTION BASIS ESTIMATED THE COMMISSION @ 5% AS AVERAGE COMMISSION INCOME OF RS. 32692/ - AND AFTER APPLYING THE SAM E TO THE TOTAL NUMBER O F CLIENTS OF 227 WORKED OUT TOTAL COMMISSION TO THE AMOUNT OF R S. 74,21,186/ - . THE ASSESSING OFFICER HAS NOT CONSIDER ED THAT THERE WAS DUPL ICATION OF SAME CLIENTS APPEARING IN THE MANUAL LIST AND COMPUTERIZED L IST . W E ALSO OBSERVE THAT THE ASSESSING OFFICER HAS ALSO FAI LED TO SUBSTANTIATE T H E BASIS OF APPLYING T HE COMMISSION INCO ME @ 5% FOR THE REASON AS ADJUDICATED IN THE 2 ND GROUND OF APPEAL AS SUPRA IN THIS ORDER. IN THE LIGHT OF THE ABOVE FACT, IT IS CLEAR THA T THE ASSESSING OFFICER HAS ESTIMATED THE IMPUGNED ADDITION ON ASSUMPTION BASIS WITHOUT THE SUPPORT OF RELEVANT MATER IAL AND EVIDENCES. THEREFORE , WE ARE INCLINED WITH THE DECISION OF LD. CIT(A) AND DO NOT FIND ANY MERIT IN THE APPEAL. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. GROUND NO. 4 ON PERUSAL OF THE PAGE NO. 1 OF THE SEIZED ANNEXURE BF - 15, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RECEIVED A TOTAL AMOUNT OF R S. 41 , 33 , 37 1 / - (I.E. 21 , 13, 380/ - +RS. 20 , 19 , 8991/ - ) IN RESPECT OF A PROJECT . T HE ASSESSING OFFICER HAS NOT CONSIDERED THE MATERIAL FACTS THAT T H E SEIZED PAPER CONTAINS DETAI LS OF RECEIPT , EXPENDITURE, PROJECT, AMOUNT RECEIVABLE AND I.T.A NO. 538 /AHD/20 12 A.Y. 2010 - 11 PAGE NO D CIT VS. SHRI SHYAMLAL G. BHANDHARI 13 PAYABLE. THE ASSESSING OFFICER H A S ADDED ONLY THE PROJECT RECEIPTS WITHOUT TAKING INTO CONSIDERATION THE CORRESPONDING EXPENDITURE AND THE UNDISPUTED FACT THAT ASSESSEE WAS A CONTACTOR AND HI S NA TURE OF I NCOME WAS COMMISSION ON THE VAL U E OF CONTRACT OF THE PROJECT. THE ASSESSING OFFICER HAS NOT BROUGHT THE COMPLETE MATERIAL FACTS OF THE NATURE OF RECEIPTS / EXPENDITURES CONTAINED ON THE SEIZED PAPER AND JUST MADE THE IMPUGNED ADDITION WITHOUT ANY SUPPORTING MATERNAL AND EVIDENCES . THEREFORE WE DO NOT FIND ANY ERROR IN THE DECISION OF THE LD. CIT(A). 5TH GROUND OF APPEAL OF THE REVENUE IS OF GENERAL NATURE WHICH DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. 1 1 . IN THE RESULT ALL THE FIVE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 29 - 01 - 201 9 SD/ - SD/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 29 /01/2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,