Shri Agarwal Technical Education Society, Bhopal V. DCIT.Central-, Bhopal

ITSSA 87/Ind/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5353 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 05-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers; Document seized; Documents seized; TDS; Set aside
• Section: 69; 132; 12; 69C; 11; 143(3); 153A; 12A; 12AA; 250; 143(2); 13

Judgement Text

अपीलȣय अͬधकरण, इÛदौर Ûयायपीठ, इÛदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI RAJPAL YADAV HON'BLE VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER IT(SS)A Nos.83 to 89/Ind/2020 Assessment Year:2006-07 to 2012-13 M/s. Agarwal Technical Education Society, Bhopal बनाम/ Vs. DCIT, Central-2, Bhopal (Appellant) (Respondent ) P.A. No.AATFS6465Q IT(SS)A No.81/Ind/2020 Assessment Year:2009-10 DCIT, Central-2, Bhopal बनाम/ Vs. M/s. Agarwal Technical Education Society, Bhopal (Appellant) (Respondent ) P.A. No. AATFS6465Q Revenue by Shri P.K. Mitra, CIT-DR Respondent by Shri S.S. Deshpande AR Date of Hearing: 09.11.2021 Date of Pronouncement: 17.01.2022 आदेश / O R D E R M/s. Agarwal Technical Education Society 2 PER MANISH BORAD: The above captioned appeals at the instance of Assessee and Appeal by Revenue are directed against the order of Ld. Commissioner of Income Tax(Appeals), (in short ‘CIT(A)’)-3 Bhopal dated 27.02.2020, which are arising out of the order u/s 153A/143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 28.03.2014, framed by DCIT-Central- Bhopal. 2. As the issues raised in these appeals are common and relate to same assessee, at the request of all the parties, all the appeals were heard together and are being disposed of by this common order for sake of convenience and brevity. Assessee has raised following grounds of appeal for A.Y. 2006-07: 1. That on the facts and in the circumstances of the case, the decision of the learned lower authorities is contrary to law, materially incorrect, and unsustainable in law as well as facts. And that all the adverse findings recorded therein are opposed to facts, equity, and law. 2. That on the facts and in the circumstances of the case the issue of notice u/s 153A and the assessment made in pursuant of the IT Act is without jurisdiction and the issue of notice do not satisfy the judicial requirements of the law and therefore the assessment is bad in law and without jurisdiction hence the same be kindly cancelled. 3. That on the facts, and in the circumstances of the case and in law in without prejudice to above grounds that on the date of initiation of search, no assessment or reassessment was pending of the impugned assessment year hence there is no question to abatement and therefore the addition made without incriminating material found in the search, is bad in law and M/s. Agarwal Technical Education Society 3 therefore the said addition be kindly deleted. 4. That on the facts and in the circumstances of the case and in law the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.8,25,910/- for payments made to subcontractors, and therefore, the said unlawful and unjustified addition be kindly deleted. Assessee has raised following grounds of appeal for A.Y. 2007-08: 1. That on the facts and in the circumstances of the case, the decision of the learned lower authorities is contrary to law, materially incorrect, and unsustainable in law as well as facts. And that all the adverse findings recorded therein are opposed to facts, equity, and law. 2. That on the facts and in the circumstances of the case the issue of notice u/s 153A and the assessment made in pursuant of the IT Act is without jurisdiction and the issue of notice do not satisfy the judicial requirements of the law and therefore the assessment is bad in law and without jurisdiction hence the same be kindly cancelled. 3. That on the facts, and in the circumstances of the case and in law in without prejudice to above grounds that on the date of initiation of search, no assessment or reassessment was pending of the impugned assessment year hence there is no question to abatement and therefore the addition made without incriminating material found in the search, is bad in law and therefore the said addition be kindly deleted. 4. That on the facts and in the circumstances of the case and in law the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.22,23,093/- for payments made to subcontractors, and therefore, the said unlawful and unjustified addition be kindly deleted. Assessee has raised following grounds of appeal for A.Y. 2008-09: 1. That on the facts and in the circumstances of the case, the decision of the learned lower authorities is contrary to law, materially incorrect, and unsustainable in law as well as facts. And that all the adverse findings recorded therein are opposed to facts, equity, and law. 2. That on the facts and in the circumstances of the case the issue of notice u/s 153A and the assessment made in pursuant of the IT Act is without jurisdiction and the issue of notice do not satisfy the judicial requirements of the law and therefore the assessment is bad in law and without jurisdiction hence the same be kindly cancelled. 3. That on the facts, and in the circumstances of the case and in law in M/s. Agarwal Technical Education Society 4 without prejudice to above grounds that on the date of initiation of search, no assessment or reassessment was pending of the impugned assessment year hence there is no question to abatement and therefore the addition made without incriminating material found in the search, is bad in law and therefore the said addition be kindly deleted. 4. That on the facts and in the circumstances of the case and in law the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.3,52,200/- for payments made to subcontractors, and therefore, the said unlawful and unjustified addition be kindly deleted. 5. That on the facts and in the circumstances of the case and in law, the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.78,000/- for salary paid, and therefore, the said unlawful and unjustified addition be kindly deleted. Assessee has raised following grounds of appeal for A.Y. 2009-10: 1. That on the facts and in the circumstances of the case, the decision of the learned lower authorities is contrary to law, materially incorrect, and unsustainable in law as well as facts. And that all the adverse findings recorded therein are opposed to facts, equity, and law. 2. That on the facts and in the circumstances of the case the issue of notice u/s 153A and the assessment made in pursuant of the IT Act is without jurisdiction and the issue of notice do not satisfy the judicial requirements of the law and therefore the assessment is bad in law and without jurisdiction hence the same be kindly cancelled. 3. That on the facts, and in the circumstances of the case and in law in without prejudice to above grounds that on the date of initiation of search, no assessment or reassessment was pending of the impugned assessment year hence there is no question to abatement and therefore the addition made without incriminating material found in the search, is bad in law and therefore the said addition be kindly deleted. 4. That on the facts and in the circumstances of the case and in law the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.6,60,000/- for payments made to subcontractors, and therefore, the said unlawful and unjustified addition be kindly deleted. 5. That on the facts and in the circumstances of the case and in law, the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.78,000/- for salary paid, and therefore, the said unlawful and unjustified addition be kindly deleted. M/s. Agarwal Technical Education Society 5 Assessee has raised following grounds of appeal for A.Y. 2010-11: 1. That on the facts and in the circumstances of the case, the decision of the learned lower authorities is contrary to law, materially incorrect, and unsustainable in law as well as facts. And that all the adverse findings recorded therein are opposed to facts, equity, and law. 2. That on the facts and in the circumstances of the case the issue of notice u/s 153A and the assessment made in pursuant of the IT Act is without jurisdiction and the issue of notice do not satisfy the judicial requirements of the law and therefore the assessment is bad in law and without jurisdiction hence the same be kindly cancelled. 3. That on the facts and in the circumstances of the case and in law, the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.1,80,000/- for salary paid, and therefore, the said unlawful and unjustified addition be kindly deleted. Assessee has raised following grounds of appeal for A.Y. 2011-12: 1. That on the facts and in the circumstances of the case, the decision of the learned lower authorities is contrary to law, materially incorrect, and unsustainable in law as well as facts. And that all the adverse findings recorded therein are opposed to facts, equity, and law. 2. That on the facts and in the circumstances of the case the issue of notice u/s 153A and the assessment made in pursuant of the IT Act is without jurisdiction and the issue of notice do not satisfy the judicial requirements of the law and therefore the assessment is bad in law and without jurisdiction hence the same be kindly cancelled. 3. That on the facts and in the circumstances of the case and in law the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.2,49,92,539/- for payments made to subcontractors, and therefore, the said unlawful and unjustified addition be kindly deleted. 5. That on the facts and in the circumstances of the case and in law, the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.1,80,000/- for salary paid, and therefore, the said unlawful and unjustified addition be kindly deleted. Assessee has raised following grounds of appeal for A.Y. 2012-13: 1. That on the facts and in the circumstances of the case, the decision of M/s. Agarwal Technical Education Society 6 the learned lower authorities is contrary to law, materially incorrect, and unsustainable in law as well as facts. And that all the adverse findings recorded therein are opposed to facts, equity, and law. 2. That on the facts and in the circumstances of the case the issue of notice u/s 153A and the assessment made in pursuant of the IT Act is without jurisdiction and the issue of notice do not satisfy the judicial requirements of the law and therefore the assessment is bad in law and without jurisdiction hence the same be kindly cancelled. 3. That on the facts and in the circumstances of the case and in law the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.29,98,146/- for payments made to subcontractors, and therefore, the said unlawful and unjustified addition be kindly deleted. 4. That on the facts and in the circumstances of the case and in law, the learned lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.1,80,000/- for salary paid, and therefore, the said unlawful and unjustified addition be kindly deleted. 5. That on the facts and in the circumstances of the case and in law the Ld. lower authorities had not appreciated and considered the evidences furnished by the appellant and confirmed the addition of Rs.3,90,000/- for expenses claimed and therefore, the said unlawful and unjustified addition be kindly deleted. Revenue has raised following grounds of appeal for A.Y. 2009-10 : 1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in law in deleting the addition of Rs.1,47,34,727/- made by the Ld. AO on account of income over expenditure by disallowing exemption u/s 11 and 12 of the Income Tax Act 1961. 2. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.1,00,000/- made by the assessing officer on account of disallowance u/s 13 of the Income Tax Act, 1961. 3. Facts, in brief, are that the assessee is a Society registered under the Madhya Pradesh Society Registration Act, on 01/06/2002. The assessee society is also registered u/s 12AA by Commissioner of Income Tax. The assessee is a member of Sagar M/s. Agarwal Technical Education Society 7 group of Bhopal and engaged in educational activities. Search operations u/s 132 of the Act were conducted on the college premises of the assessee society as well as on the premises of other concerns / business associates. Since, the various concerns and individuals were inter connected and have business associations, they had been clubbed under the common name ‘Sagar Group’. The group is mainly engaged in the business of builder and developer, contractor, etc. The group is also running various educational institutions at Bhopal under the various societies. The flagship concerns of the group are Agrawal Construction Company, Agrawal Builders etc. which are engaged in the business of civil construction. The main persons of the group are Shri. Sudheer Agrawal and Shri. Sanjeev Agrawal. Consequent to search action, notices u/s 153A of the I.T. Act, dated 09/10/2012 were issued to the assessee to file the returns of income for A.Ys. 2006-07 to 2011- 12. In response to notices issued u/s 153A of the Act, the assessee filed returns of income for A.Ys. 2006-07 to 2011-12 on 12/08/2013. The details related to returns of income are as under:- M/s. Agarwal Technical Education Society 8 A.Y. Date of filing of return u/s 139(1) Returned income (In Rs.) Date of filing of return by the assessee against notice u/s 153A Declared in Return u/s 153A Income (In Rs.) Additional income offered by the assessee (In Rs.) 2006-07 31/10/2006 Nil 12/08/2013 Nil Nil 2007-08 31/10/2007 Nil 12/08/2013 Nil Nil 2008-09 30/09/2008 Nil 12/08/2013 Nil Nil 2009-10 29/09/2009 Nil 12/08/2013 Nil Nil 2010-11 22/09/2010 Nil 12/08/2013 Nil Nil 2011-12 29/09/2011 Nil 12/08/2013 NIL NIL 4. Regular return of income for A.Y 2012-13 was filed on 28.09.2012 declaring total income at Rs. NIL/-. The society had been incorporated with an object to running of educational institutions. The society is running various colleges/schools in Bhopal namely:- i. Sagar Institute of Research and Technology (SIRT) ii. Sagar Institute of Research and Technology, Pharmacy (SIRT-PH) iii. Sagar Institute of Research and Technology, Pharmacy Diploma (SIRT-PHD) iv. Sagar Institute of Research and Technology & Science (SIRTS) v. Sagar Institute of Research and Technology & Science Pharmacy (SIRTs-PH) M/s. Agarwal Technical Education Society 9 5. A consolidated assessment order was passed u/s 153A r.w.s 143(3) for A.Ys 2006-07 to 11-12 and u/s 143(3) for AY 2012-13 making various additions. The brief details of additions made by AO are as under:- A.Y. 2006-07 Income shown in the return Rs. Nil Add: On account of bogus sub- contractors u/s 69C as discussed in Para No. 15.12 Rs. 45,37,215/- Total income assessed Rs. 45,37,215/- Total income rounded off Rs. 45,37,220/- A.Y. 2007-08 Income shown in the return Rs. Nil Add: On account of bogus sub- contractors u/s 69C as discussed in Para No. 15.12 Rs. 75,77,072/- Total income assessed Rs. 75,77,072/- Total income rounded off Rs. 75,77,070/- A.Y. 2008-09 Income shown in the return Rs. Nil Add: On account of disallowances u/s 13 as discussed in Para No. 11.6 Rs. 78,000/- Income over expenditure as discussed in Para No.13. Rs. Nil On account of unexplained investment u/s 69 as discussed in Para No. 16.8 Rs. 17,25,000/- On account of bogus sub- Rs. 18,39,197/- M/s. Agarwal Technical Education Society 10 contractors u/s 69C as discussed in Para No. 15.12 Total income assessed Rs. 36,42,197/- Total income rounded off Rs. 36,42,200/- A.Y. 2009-10 Income shown in the return Rs. 1,54,031/- Add: On account of disallowances u/s 13 as discussed in para No. 11.6 Rs. 78,000/- On account of disallowances u/s 13 as discussed in para No. 12.4 Rs. 1,00,000/- Income over expenditure as discussed in Para No.13. Rs. 1,47,34,727/- On account of bogus sub- contractors u/s 69C as discussed in Para No. 15.12 Rs. 6,60,000/- Total income assessed Rs. 1,57,26,758/- Total income rounded off Rs. 1,57,26,760/- A.Y. 2010-11 Income shown in the return Rs. Nil Add: On account of disallowances u/s 13 as discussed in para No. 11.6 Rs. 1,80,000/- On account of disallowances u/s 13 as discussed in para No. 12.4 Rs. 1,00,000/- Income over expenditure as discussed in Para No. 13. Rs. 87,32,517/- Total income assessed Rs. 90,12,517/- Total income rounded off Rs. 90,12,520/- A.Y. 2011-12 Income shown in the return Rs. 36,54,769/- Add: On account of disallowances u/s 13 as discussed in para No. 11.6 Rs. 1,80,000/- On account of disallowances u/s 13 as discussed in para No. 12.4 Rs. 1,00,000/- Income over expenditure as Rs. Nil M/s. Agarwal Technical Education Society 11 discussed in Para No.13 On account of bogus sub- contractors u/s 69C as discussed in Para No. 15.12 Rs. 3,87,14,821/- Total income assessed Rs. 4,26,49,590/- A.Y. 2012-13 Income shown in the return Rs. 87,54,878/- Add: On account of disallowances u/s 13 as discussed in para No. 11.6 Rs. 1,80,000/- On account of disallowances u/s 13 as discussed in para No. 12.4 Rs. 1,00,000/- Income over expenditure as discussed in Para No. 13 Rs. Nil On account of bogus expenditure as discussed in para No. 14.5 Rs. 3,90,000/- On account of bogus sub- contractors u/s 69C as discussed in Para No. 15.12 Rs. 81,79,286/- Total income assessed Rs. 1,76,04,164/- Total income rounded off Rs. 1,76,04,160/- 6. Against this impugned assessment order passed u/s 153A r.w.s 143(3), the assessee preferred appeals before learned CIT(A) and learned CIT(A) partly allowed the appeals filed by the assessee. Now, we decide the matter ground-wise. 7. Ground nos.1 & 2 are with regard to the issue of validity/legality of the assessment order passed by the AO u/s 153A M/s. Agarwal Technical Education Society 12 r.w.s 143(3) of the Act. This legal issue was raised before the learned CIT(A) and learned CIT(A) decided the issue as under: “I have perused the submissions of the learned AR, the various decision cited, and the assessment order. Once the search has taken place and notices u/s 153A has been issued the jurisdiction is conferred on the assessing officer to pass assessment order ‘to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made’. The assessing officer has specifically mentioned in para 8.2 of the assessment order that various books of accounts, documents, loose papers were seized. The appellant assessee has filled the returns of income in response to notice u/s 153A issued on 09.10.2012 for A.Y 2006-07 to 2011-12 and the assesse filed returns of income for A.Ys 2006-07 to 2012-13 on 12.08.2012. Regular return of income for AY 2012-13 was filed on 28.09.2012. Shri. Manoj Ayachit C.A and authorized representative attended the assessment proceedings before the A.O from time to time and filled written submissions with supporting documents which were placed on record by the A.O. Regular books of accounts were also produced and checked with seized material by the A.O. Inspection and copies of all seized documents was provided by the A.O. 5.1.1 Once the assessee has participated in assessment proceedings before the A.O the appellant assessee cannot claim that issue of notice u/s 153A r.w.s 143(3) for A.Y 2008-07 to 2011-12 is not in order. Once the assesse has been put to notice and has filed returns in response to the notices and has attended the assessment proceedings, it cannot be said that issue of notice u/s 153A is not in order. It is seen that the issue of notice u/s 153A by the A.O for A.Ys. 2006-07 to 2011-12 is in order and issue of notice u/s 143(2) for A.Y 2012-13 is within time. Perusal of the assessment order shows that during search and seizure operations books of account, document, loose papers etc. M/s. Agarwal Technical Education Society 13 were seized. Photocopies of the seized material was also provided to the assessee by the A.O. The seized documents and papers are the incriminating material on the basis of which the additions have been made. In view of the above, the ground taken by the appellant that no incriminating material is found and the issue of notices u/s 153A for A.Y 2006-07 to 2012-13 is not justified, has no merit and is therefore, rejected. Therefore, appeal on these grounds is Dismissed.” 8. Before us, learned Counsel for the assessee submitted that no additions can be made in non-abated assessment years i.e. in A.Y. 2006-07 to 2010-11 without finding any incriminating material as on the date of search i.e. on 21.10.2011, no assessments or re- assessments were pending. The time limit for issuing of notice u/s. 143(2) had also expired on the date of search. It was further submitted that the search commenced on 21/10/2011 and concluded on 24/10/2011 and the papers found at the premises of Agrawal Construction regarding the payments to the contractors were all recorded in books of accounts and could not be said as incriminating documents. Learned Counsel for the assessee also cited various judicial pronouncements and submitted that additions in non-abated assessment years i.e. A.Y. 2006-07 to 2010-11 are unjustified. M/s. Agarwal Technical Education Society 14 9. Per contra, ld. CIT-DR vehemently argued and defended the order of the learned CIT(A). 10. We have considered rival contentions and gone through the material available on record. We find that the assessee is an educational Institute running five technical colleges at Bhopal. It is a society registered with Registrar of firms and Societies, and also registered with the Commissioner of Income Tax u/s. 12A of the Act. For the years under consideration the Society had filed the returns of income before the due dates and claimed the exemption u/s. 11 to 13 of the I.T. Act. The accounts are audited and the necessary audit reports were filed. A search was conducted in the Sagar group on 21/10/2011 which is engaged in the business of builders and developers. The group is also running various educational institutions at Bhopal under the management of various societies. The main companies of the group are Agrawal Construction Co and Agrawal Builders. The Agrawal Construction Co. is situated at plot number 250 Zone II, MP Nagar, Bhopal. The office of the assessee society is also situated in the same building. However the colleges are situated at the outskirts of Bhopal city. Loose papers were found at M/s. Agarwal Technical Education Society 15 the premises of Agrawal Construction Co. On the basis of those papers and statements recorded, the Ld. AO made various additions in the case of Agrawal Construction Co. and the same reasons were copy pasted in the assessment order of the assessee Society. Since the company is in the construction line, the contractors were common for their building construction and the buildings of the assessee Society. During the course of search, the statement of one of the persons was recorded who stated that he is merely a chowkidar and has not done any contract work. The statement of the manager and the material purchase in-charge were also recorded who stated that they don’t know every contractor. During the course of the search the letter-head and the bill books of various contractors were found along with the application of Permanent Account Number. During the course of the assessment proceedings, the Ld. AO has made various additions on account of disallowance of expenses and on account of additions u/s. 69. For the expenses the Ld. AO observed that the contractors are bogus and he disallowed the whole payment made to the contractors. During the course of assessment proceedings, the assessee submitted complete details about the work executed by various contractors. The PAN of the M/s. Agarwal Technical Education Society 16 subcontractors along with the addresses were also furnished. The confirmations of some of the contractors who did the petty jobs could not be filed since they left the site and could not be traced. These petty contractors payments amounted to Rs. 24,21,850/- as is evident from page no.51 of the impugned order. The Ld. AO relied on the statements of Shri Khalak Singh and on the basis of the same, he disallowed the total payment made to the contractors. The Ld. AO further disallowed partly the salary payment to the gaurds whose statements were recorded. Further the Ld. AO disallowed partly the salary payment to Smt Kiran Agrawal who is looking after the day to day administrative work of all the colleges. She has been provided the free services of the driver. The Ld. AO observed that the Society’s funds have been utilized for the benefit of the driver and on this ground he applied for the provision section 13 of the Act. Further on the ground of the excess payment to Kiran Agrawal the Ld. AO has denied the benefit of exemptions with the observation that the provisions of section 13 are applicable. Before the Ld. CIT(A) the additions were challenged on various grounds. It was submitted that no additions can be made in non-abated assessment years i.e. in A.Y. 2006-07 to 2010-11 without finding any incriminating material. M/s. Agarwal Technical Education Society 17 However, learned CIT(A) did not agree with the submission of the assessee on the ground as reproduced hereinabove. However, having gone through the material available on record, we find that on the date of search i.e. on 21.10.2011, no assessments or re-assessments were pending. The time limit for issuing of notice u/s. 143(2) had also expired on the date of search. Further, we find that the search commenced on 21/10/2011 and concluded on 24/10/2011 and the papers found at the premises of Agrawal Construction regarding the payments to the contractors were all recorded in books of accounts and as such, the same could not be said as incriminating documents. We find that on the day of search/survey, the assessment proceeding were pending only for two assessment years i.e. 2011-12 & 2012-13. No assessment proceeding for other assessment years i.e. 2006-07 to 2010-11 were pending on the said date, hence the five assessment years fall in the category of non- abated assessment and the additions were made on the basis of unrelated papers and on the statements of unrelated persons as in the assessment order, the A.O. has not referred to any incriminating material found at the office premises of the various institutions found in the survey suggesting any suppressed income. The A.O. has made M/s. Agarwal Technical Education Society 18 the allegation of the bogus payments solely on the basis of unrelated papers found at the business premises of Agarwal Construction Co. and not on the basis of any incriminating materials found. All the said papers and the statements of persons are related to Agarwal Construction Co. and have been adjudicated and discussed by the A.O. in the assessment of Agarwal Construction Co. and the same conclusion has been copy pasted of the assessment order of the assessee. Under these circumstances, the additions made in the non- abated assessments i.e. A.Y. 2006-07 to 2010-11 are bad in law and deserve to be deleted. Our view is supported by the ratio laid down by the Hon’ble Delhi High Court in case of CIT v. Kabul Chawla, (2016) 2 ITJ Online 869 (Delhi) : (2016) 380 ITR 573 : (2015) 281 CTR 45 : (2015) 234 Taxman 300 and also decision of Pr. CIT v. Meeta Gutgutia, (2020) 8 ITJ Online 273 (Delhi) : (2017) 395 ITR 526. Therefore, totality of facts in view of the relevant judicial pronouncements clearly suggests that that the proceedings initiated u/s 153A of the Act for the A.Y. 2006-07 to 2010-11 being non- abated and completed assessments deserve to be quashed. We, therefore, set aside the findings of Ld. CIT(A) on this ground and hold that proceedings initiated in the case of the assessee for A.Y. 2006- M/s. Agarwal Technical Education Society 19 07 to 2010-11 are without jurisdiction and consequently, assessments framed for these years are quashed and set aside. Accordingly, ground nos. 1 & 2 raised in all the present appeals filed by the assessee are allowed. Since we have quashed the assessments for the A.Y. 2006-07 to 2010-11 as above, the other grounds raised in the appeals of the assessee for the A.Y. 2006-07 to 2010-11 have now become infructuous being academic whereas all the grounds raised in the appeal of the Revenue for the A.Y. 2009-10 is dismissed. Accordingly, assessee’s appeals bearing IT(SS)A Nos.83 to 87/Ind/2020 are allowed whereas appeal filed by the Revenue bearing IT(SS)A No.81/Ind/2020 is dismissed. 11. Now, we take up the assessee’s appeals for the A.Y. 2011-12 & 2012-13 bearing IT(SS)A No.88 & 89/Ind/2020 wherein ground nos.1 & 2 were not pressed during the course of hearing, therefore, same are dismissed as not pressed. 12. Ground no.3 is with regard to confirmation of additions of Rs.2,49,92,539/- A& 29,98,146/- for the Assessment Years 2011-12 & 2012-13, respectively, for payments made to sub-contractors. Facts, in brief, are that the Assessing Officer during the course of M/s. Agarwal Technical Education Society 20 assessment proceedings required the assessee to furnish complete details of sub-contractor debited in P/L account along with complete name, address, copy of ITR, Identity poof and bank statement. The assessee in reply on 15.12.2013 submitted relevant details of the sub-contractors and contended that the society is running a college imparting engineering education and for this purpose, it has constructed the building of college, hostel mess etc. for which the assessee had to purchase material and construct the building with the help of various contractors and sub-contractors. However, the Assessing Officer after considering reply of the assessee did not find the same acceptable and disallowed all the expenses/payments made to sub-contractors on the ground that few of the cash memo/voucher were found to be blank and were debited in P& L account. 13. Being aggrieved, the assesse approached the learned CIT(A) who allowed the ground partly. Learned CIT(A) bifurcated the payments under three different heads. Firstly, the petty contractors who were paid Rs.24,51,850/- and who were not having a PAN and the addresses were not given. Secondly, the subcontractors who were paid Rs.2,96,00,038/- in whose name blank bills/ cash memos/ M/s. Agarwal Technical Education Society 21 vouchers were seized. Thirdly, the subcontractors who were paid Rs.2,75,28,903/- who have got their respective PAN and other details. The Ld. CIT(A) disallowed the claim of the assessee in respect of the first category on the ground that there is no material evidence and other details like addresses, identity proof and bank statements. In respect of the second category, the Ld. CIT(A) upheld the addition relying on the statement of Shri Rupesh Gorkhe and Shri Khalak Singh and observed that various important papers were seized from the premises regarding bank opening form, application for PAN allotment and blank bills. These contactors were not produced for examination. The Ld. CIT(A) observed that the bank account of the sub-contractors shows that the amounts credited include the payments from the assessee society also, as such the payments to the sub-contractors cannot be treated as genuine. However, the ld. CIT(A) allowed the payment to the subcontractors whose PAN and other details were available on the ground that no construction work would be completed without the cost of labour and material. Accordingly, for the Assessment Years 2011-12 & 2012-13, the learned CIT(A) confirmed the additions of Rs.2,49,92,539/- & M/s. Agarwal Technical Education Society 22 Rs.29,98,146/- and deleted the additions of Rs.84,35,482/- & Rs.51,81,140/-, respectively. 14. Being aggrieved, the assessee is in appeals before this Tribunal challenging the confirmation of additions of Rs.2,49,92,539/- and Rs.29,98,146/-, respectively. Before us, the learned Counsel for the assessee reiterated that the addition made by the A.O is not in order as the society is running a college imparting engineering education and for this purpose it has constructed the building of college, hostel mess etc. for which the assessee had purchased material and constructed the building with the help of various contractors and sub-contractors. The direct cost for construction comprises of mainly of two things i.e. material cost and labour cost. Therefore, learned CIT(A) was not justified in granting part relief. 15. On the other hand, ld. CIT-DR vehemently argued and relied on the order of the learned CIT(A). 16. We have considered rival contentions and gone through the material available on record. We find that it was explained that every contractors worked for the construction of the building of the Society. M/s. Agarwal Technical Education Society 23 We find that the papers were found from the business premises of Agrawal Construction Co and not from the office premises of the assessee society. However, the A.O. referred to the statements of various persons and several documents of various sub-contractors found from the business premises of Agarwal Construction Co., 250, Sagar Plaza, M.P. Nagar, Bhopal. We find that the Assessing Officer failed to appreciate the fact that the said premises do not belong to assessee and no part of its activities were functioning at that place as each of the educational institution has its own accounts and finance department at the place of concerned educational institution and all the financial transactions are done independently by each educational institution. The accounts of the educational institution are maintained at the place where the concerned educational institution is located. Therefore, the additions made on the basis of unrelated papers and on the statements of unrelated persons were not justified. Further, the A.O. did not refer to any incriminating materials found at the office premises of the various institutions found in the survey suggesting any suppressed income. The A.O. made the allegation of the bogus payments merely on the basis of unrelated papers found at the business premises of Agarwal M/s. Agarwal Technical Education Society 24 Construction Co. and not on the basis of any incriminating materials found. It is pertinent to mention here that all the aforesaid papers and the statements of persons are related to Agarwal Construction Co. and have been adjudicated and discussed by the A.O. in the assessment of Agarwal Construction Co. and the same conclusion has been copy pasted of the assessment order of the assessee. It was also explained that the persons whose statements were recoded and referred in para 15 of the assessment order were not the employees of the assessee Society but they are employees of Agrawal Construction Co. Therefore, in our view, the additions made on the basis of unrelated papers and unrelated persons were not justified as while framing the assessment, the Assessing Officer did not refer to any of the papers found at the business premises of the assessee. Under these circumstances, we are of the view that no additions can be made in the hands of the assessee. We further find that all the information regarding the contractors and the respective work done by them were submitted before the Ld. Assessing Officer and the ld. Assessing Officer failed to consider the fact that without the labour charges, no construction work can be completed and also the explanation of the assessee that the papers found in the shape of the M/s. Agarwal Technical Education Society 25 letter-heads and the bill books have been kept by the contractors for their convenience in the premises of Agrawal Construction Co. Therefore, looking to the aforesaid explanations by the assessee and discussion hereinabove, we find that the expenditure incurred in respect of payments made to sub-contractors was reasonable and comparable to the total cost of the building. Learned CIT(A) granted part relief but failed to consider the fact that normally the percentage of labour cost to the total construction cost is between 20% to 30% and in the instant case it is 16.4 % as is evident from the page 39 of impugned order. A certificate from a Chartered Engineer to this effect was also filed. Thus, we find that the labour percentage is less than the normal prescribed percentage. We further find that it was explained that the petty contractors who had done the small work had been paid by the cheque and after completion of the work they left the site and were not approachable/traceable and as such could not be produced. However, their work cannot be denied since the work for which the payment has been made is in existence. Under these circumstances the addition cannot be sustained. So far as the disallowance of payments to the sub-contractors whose bill book were found at the premises of M/s Agrawal Construction is M/s. Agarwal Technical Education Society 26 concerned, we find that the same cannot be disallowed, firstly, the bill book, bank statements and the PAN application copies were found at the premises of M/s Agrawal Construction Co and they were kept in the office for the sake of convenience of the contractors, since bills could be raised immediately after completion of a particular work. The bank statements were kept to ascertain the bank balances for withdrawal of money for incurring the expenditure. The PAN was necessary because of quoting them for TDS. It is undisputed fact that all payments to these contractors were made through banking channel and the necessary TDS was made wherever necessary. Thus, totality of facts clearly suggests that the addition confirmed by the learned CIT(A) was also not justified. Therefore, we set the order of the learned CIT(A) on this point. Accordingly, we delete the additions of Rs.2,49,92,539/- & Rs.29,98,146/- for the Assessment Year 2011- 12 & 2012-13, respectively. 17. Ground no.4 raised by the assessee for the Assessment Year 2011-12 & 2012-13 is with regard to confirmation of additions of Rs.1,80,000/- & Rs.1,80,000/-, respectively, for salary paid. Fact, in brief, are that the Assessing Officer treated the salary paid to drivers M/s. Agarwal Technical Education Society 27 u/s 13(2)(d) {AO wrongly used sec 13(1)(d)} as personal benefit to member trustee (specified person). The AO disallowed the entire exemption claimed u/s 11 & 12 of the Act due to operation of section 13(1)(d) {correct section 13(2)(d)} of the Act. The assessee submitted that services of two drivers were provided to the trustee and Chief Administrative Officer in lieu of services rendered for the trust and since no other benefit/remuneration/fees was given to Shri Sanjeev Agarwal, salary paid to drivers should be allowed as deduction. However, the ld. Assessing Officer did not agree with the submission of the assesse and made additions of Rs.1,80,000/- & Rs.1,80,000/-, respectively, for the Assessment Years 2011-12 & 2012-13. 18. Being aggrieved, the assessee approached the learned CIT(A) who confirmed the action of the Assessing Officer observing as under: “I find the argument self-defeating and devoid of any merit. Provision of section 13(2)(d) is very clear which says that if services of trust are made available to specified person without adequate remuneration or other compensation, then such sum shall be “deemed to have been used” for the benefit of specified person. Admittedly these services were provided by assessee trust to Shri Sanjeev Agarwal, without any payment and for free, hence, such expenses are hit by the provision of section 13 of the Act. There is no documentary evidence or otherwise to presume that such M/s. Agarwal Technical Education Society 28 services were made available to the specified person in lieu of his service to assessee trust, so argument remained to be theoretical, nothing more. Therefore, in view of categorical provision of disallowance of Rs. 78,000/- in AY 2008-09 & 2009-10 and Rs. 1,80,000/- in AYs 2010-11 to 2012-13/- added by the AO are upheld, however, exemption u/s 11 & 12 is allowed as discussed in forthcoming paras.” 19. Being aggrieved, the assessee is before this Tribunal. Before us, the learned Counsel for the assessee submitted that the trustee and Chief Administrative Officer were provided the drivers in their respective vehicles. The Society’s colleges are away from Bhopal and these persons visit the colleges practically every day. For that purpose, the drivers were provided. On the other hand, ld. CIT-DR relied on the order of the Revenue Authorities. 20. We have considered rival contentions and gone through the material available on record. We find that learned Counsel for the assessee explained that that services of two drivers were provided to the trustee and Chief Administrative Officer in lieu of services rendered for the trust and since no other benefit/remuneration/fees was given to Sanjeev Agarwal, salary paid to drivers should be allowed as deduction. We find force in the contention of the learned Counsel for the assessee because no excess salary was paid to M/s. Agarwal Technical Education Society 29 Sanjeev Agrawal as compared to other staff members. Thus, no benefit was given to them and as such, the provisions of section 13 were not applicable. We find that it was explained by the learned Counsel for the assessee that Shrri Sanjeev Agarwal is a working Chairman of the society. He is having his own telephone connection, mobile connection and personal servants. He is having his own person vehicles. The colleges of the society are situated at different locations and away from Bhopal main town. He is controlling the administration of all institutions of the assessee Society and practically visiting the institution every day. He keeps arranging meetings with different faculties for the improvement of the institution. He is practically serving/working for the Society as an administrator of all institutions and because of his vision and the planning, the institutions are one of the best known institutions in the State of Madhya Pradesh. For rendering his valuable services, he is neither using the vehicles of the Society nor using the phones of the Society. He is not taking any fee or salary from the Society for this work. The society is not reimbursing any conveyance or telephone expenditure. However, for discharge of his duties, services of drivers have been provided to him, as such the provision of Sec. M/s. Agarwal Technical Education Society 30 13(1)(d) of the I.T. Act are not applicable. Regarding the salary payment to Smt Kiran Agrawal, it was explained by the learned Counsel for the assessee that she is a Chief Administrative Officer, managing and administering the day today activities of the society. Being a Chief Administrative Officer, she visits practically every day. The institutions are located outside the main city areas and, therefore, as per her requirement from time to time, services of driver have been provided to drive her own car. Thus, she is not using the car of the society and being a lady, only the service of the driver are provided. It was further submitted that no excess salary had been provided to her. On consideration of these facts, we are of the view that Revenue Authorities failed to consider these factual aspects in the requisite manner. The services of drivers cannot be said to be personal user. Thus, we do not find any reason to confirm the findings of the ld. Revenue Authorities on this issue. Therefore, we delete the additions of Rs.1,80,000/- & Rs.1,80,000/- for the Assessment Years 2011-12 & 2012-13, respectively. Hence, ground no.4 raised in the appeals of the assessee is allowed. M/s. Agarwal Technical Education Society 31 21. Now, the only ground left is ground no.5 raised in the assessee’s appeal for the Assessment Year 2012-13 bearing IT(SS)A No.89/Ind/2020 wherein the confirmation of addition of Rs.3,90,000/- on account of alleged bogus expenses has been challenged by the assessee. Facts, in brief, as culled out from the record of the Revenue Authorities are that during the course of search, statement of Shri Yashwant Mali, Ramesh Tyogi (Guard) and Shri Nathiya Nagle (guard) were recorded on oath. All three of them stated that they received sum of Rs. 3,500/-, Rs. 3,000/- & Rs. 3,500/-, respectively, as per month salary, however, the assessee debited sum of Rs. 12,500/-, Rs. 15,000/- & Rs. 15,000/-, respectively, as per month salary. Therefore, the AO required the assessee to explain the excess expenditure made. The assessee in reply stated that these three persons spoke lie as the same were not put to confrontation/cross-examination. However, the Assessing Officer did not agree with the submission of the assessee and made the addition of Rs.3,90,000/-. 22. Being aggrieved, the assessee approached the learned CIT(A) who confirmed the action of the Assessing Officer. M/s. Agarwal Technical Education Society 32 23. Being aggrieved, the assessee is before this Tribunal. Before us, the learned Counsel for the assessee submitted that salary actually paid to Yashwant Mali, Ramesh Tyagi and Nathiya Nagale was claimed as an expenditure by the assessee. The statements of these persons have been recorded behind the back of the assessee and such statements were never confronted with the assessee and as such the addition is bad in law. On the other hand, ld. CIT-DR relied on the orders of the Revenue Authorities. 24. We have considered rival contentions and gone through the material available on record. We find that the learned CIT(A) decided the issue as under: “5.4.1 I have considered the facts of the case, plea raised by the appellant and findings of the AO. The assessee before me has claimed that whatever the salary has been paid actually is claimed as expenditure, however, the claim of appellant is in contradiction with statements of the actual beneficiary of the expenditure claimed by appellant society. No prudent person will ever make any false statement regarding his salary. The search party has taken statement of Shri Yashwant Mali, Ramesh Tyogi (Guard) and Shri Nathiya Nagle (guard) were recorded on oath. All three of them stated that they received sum of Rs. 3,500/-, Rs. 3,000/- & Rs. 3,500/- respectively as per month salary. However, the appellant has debited sum of Rs. 12,500/-, Rs. 15,000/- & Rs. 15,000/- respectively as per month M/s. Agarwal Technical Education Society 33 salary which clearly shows that appellant has claimed bogus expenditure towards payments of salary to these individuals amounting to Rs. 3,90,000/-. Therefore, addition made by the AO amounting to Rs. 3,90,000/- is Confirmed. Therefore, appeal on this ground is Dismissed.” 25. On consideration of above facts, we find that learned Counsel for the assessee claimed that whatever salary was actually paid to Yashwant Mali, Ramesh Tyagi and Nathiya Nagale was as it is claimed as an expenditure made by the assesse. Learned Counsel for the assessee also contended that the statements of these persons were recorded behind the back of the assessee and such statements were never confronted with the assesse. Under these facts, we are of the view that it is a settled principle of law that the evidence in the form of statement cannot be used against the assessee unless an opportunity to cross-examine has been provided. The principle of law states that it is the duty of the A.O. to allow cross-examination even though the assessee had not asked for the same as held by the Hon’ble Apex Court in the case of Union of India Vs. T.R. Verma – AIR 1957 SC 882. The Hon’ble Apex Court also in the case of Kishinchand Chelaram Vs. CIT reported in 125 ITR 173 (SC) held M/s. Agarwal Technical Education Society 34 that without the cross-examination of the person, the statement cannot be used against the assessee. Thus, it is clear that the statements referred to in the assessment order are inadmissible piece of evidence and could not be made the foundation of the addition. Further, the DDI who recorded the statement u/s.131 is not an authority prescribed under the said section to record the statement, therefore, the statement so recorded is without the authority of law, hence it is not an admissible piece of evidence to be used against the assessee. Thus, in view of these facts, we are of the view that considering these factual and legal aspects, the learned CIT(A) should have deleted the addition. But, the Revenue Authorities failed to consider the same. Therefore, we do not find any reason to confirm the orders of the Revenue Authorities. Accordingly, we delete the disallowance made at Rs. 3,90,000/- made by the Assessing Officer for the alleged bogus payments. Therefore, ground no.5 raised in the assessee’s appeal is allowed. Accordingly, assessee’s appeals for the Assessment Years 2011-12 & 2012-13 are partly allowed. 26. In the result, the assessee’s appeals bearing IT(SS)A No.83 to 87/Ind/2020 for the Assessment Years 2006-07 to 2010-11 are M/s. Agarwal Technical Education Society 35 allowed, assessee’s appeals bearing IT(SS)A Nos.88 & 89/Ind/2020 for the Assessment Years 2011-12 & 2012-13 are partly allowed and departmental appeal bearing IT(SS)A No.81/Ind/2020 for the Assessment Year 2009-10 is dismissed. Order pronounced as per Rule 34 of I.T.A.T., Rules 1963 on 17.01 .2022. Sd/- (RAJPAL YADAV) Sd/- (MANISH BORAD) VICE-PRESIDENT ACCOUNTANT MEMBER Indore; Ǒदनांक Dated : 17.01.2022 !vyas! Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore