A,C.I.T. CENTRAL CIR.- 2(1), NAGPUR vs. SHRI KAILASHSINGH G. ROTELE, CHIMUR

M/s Shrikant M Bhangdiya (Prop. SMB) (ATCPB1337J) 7 Mitcon Infraproject Pvt. Ltd: (MIPL) (AAGCM1868H) 8 MITZ Infraproject Pvt: Ltd: (AAGCM3047A)_ 9 Sakshi Gruh Nirman Pvt: Ltd. (SGNPL) (AAOCS7974G) Crusher & Infraventure Pvt; Ltd: 10_ Balaji Stone (AADCB5273C) has also entered into joint ventures with various The Bhangdiya Group other civil contradtors; Some of them are as under: 1_ M,G. Bhangdiya Hitbhav Engg: (JV) Ms. (AAOFM4745L) M.G. Bhangdiya & S.5, Patil & Co. (JV) (ABIFS364SL) 2 MJs.

Ms; Darshan Construction (Jv) (AAHFDOSSAN) 4_ M/s M.R. Dhoble & RM: Bhangdiya (JV) (AAPFMO622B) The nature of the business of the Bhangdiya group primarily is executing civil contracts; The group works mainly for Government departments like Ms Vidarbha Irrigation Developrent Corporation ad has been engaged in executing various contracts pertaining to the irrigation projects in the state of Maharashtra_ During the course of search operations incriminating documents were found and seized from the residential premises of Shri 1 to 65 of Annexure-B seized from his Mitesh Bhangdiya, Item no, the diaries containing ledgers, daily cash books and bank residence are books maintained by the Bhangdiya group. A statement of Shri Mitesh LTA, Nos.10Z W) ](M /Nag/2016 69 Asstt Yrs;07-(18, ()8 (9 & 11-12 E Bhangdiya was recorded Qn oath on 20.07.2011. In his sworn statement recorded during the course of search action; Shri Mitesh Bhangdiya was confronted with the entries borne out from the seized diaries marked as B- B-65 and to explain the contents of these diaries; Shri Mitesh 1 to Bhangdiya in his statement recorded has submitted that the entries in the diaries and the ledger pertain to the buisiness receipts and business expenditure; The Assessing Officer In the assessment order has recorded a finding that as per the item nO. 1 to 65 of annexure-B, it is apparent that the amounts withdrawn from the bank accounts of the subcontractors were credited to the daily cash balance of Bhangdlya group which was confirmed Shri Mitesh G Bhangdlya in his statement dated 14/09/2011. The by Assessing Officer has reproduced the statement of Shri Mitesh Bhangdiya recorded o 14/09/2011 in para 6 of the assessment order. The Assessing Officer in the assessment order has also recorded a finding that the seized documents being B-1 to B-65 contain entries of all expenses incurred by the Bhangdiya group in cash from F,Y, 2006-07 onwards and expenses incurred through the bank accounts from FY. 2009-10 onwards Thus; the Assessing Officer found that the actual expenses incurred do not match with those shown to have been incutred in the books; The Assessing Officer thus concluded that the books of account of Shri M.G Bhangdiya maintained for income-tax purpose do not reflect the true business affairs and are not at all reliable. The Assessing Officer has also referred to the statement of Shri Kailashsingh G. Rotele, the assessee; recorded on 19/07/2011 during the course of survey conducted at Camp Chimur, The Assessing Officer has reproduced the statement of Shri Kailashsingh G Ratele in the assessment order, The Assessing Officer , on the basis of the of Shri Kailashsingh G. Rotele; concluded that the bank statement of the assessee were being handled by Shri M.G. Bhangdiya accounts Offficer has given a summary of all the bank group_ The Assessing App EL= 04 am QJn J40 [4L_ LTAA Nos]OZto 10 /Nag/201W Asstt; Yrs:07-08, 0-09 & 11-12 FF accounts maintained by the assessee in the tabular form to show that the deposited by the Bhangdiya group in the bank accounts of the cheques assessee were subsequentiy withdrawn in cash which were found credited cash book seized: On this basis the Assessing Officer made the to daily protective addition in the hands of the assessee in each of the assessment holdling that there were no expenses incurred and no contract work vear was executed by the assessee who; according to the Assessing Officer , name lender to the Bhangdiya group The assessee came in is merely 3 before the CIT(A) challenging the notice issued u/s 153C as well as appeal bank on protective basis. The the additian far cash withdrawals from CIT(A) deleted the said addition in all the years. R; made an application before uS under 3,1 At the outset; learned A Rule 27 of the I.TA.T. Rules in each of the assessment year challenging u/s 153C of the Act as there was no the validity of the notices issued to the assessee found in the course of incriminating material belonging search: It was stated that the assessments in the case of the assessee were framed u/s 153C read with section 143(3) of the Act The assessee before the CIT(A) raised ground No_ 1 and challenged the validity of the notices issued u/s 153C of the Act: The CIT(A) has dismissed the ground challenging the validity of the notices issued u/s 153C ad decided all the appeals of the assessee on merit due to which protective addition made in the hands af the assessee stand deleted; Under these facts; the assessee did not file any appeal or the Cross Objections taking the ground a5 regards to the validity of the notice u/s 153C of the Act It was contended that there is no incriminating material found ad seized for the assessment year 2007-08 to 2011-12 belonging to the assessee in the course of the search at the premises of Shri M.G, Bhangdiya Attention was drawn towards the satisfaction note which refers to item No. 54 and 8 of Annexure-B and Item 1;TA. Nos.102 tx 14M4, /Nug/2016 Asstt: Yrs:07-UXX, ()#F-()9 & 11-12 HZ No_ 27 of Annexure-Bl, It was submitted that in the case of the assessee no satisfaction of the Assessing Officer of the person searched is recorded uls 153C. In absence af non recording of the before issue pf notice the Assessing Officer Qf the person searched, the satisfaction by assessment framed is bad in iaw and the notice issued Ws consequent 153C is bad in law Reliance was placed in this regard on the decision of in the case of Mansi Commodities Ltd in ITANas, ITAT Nagpur Bench 146 to 148/Nag/2014 in which the Tribunal vide order dated 19/12/2016 held that satisfaction for issuance of notice Ufs 153C is to be recorded by the Assessing Officer of the person searched ad in the absence thereof the notice issued u/s 153C is bad in law and consequent assessment framed is bad in law. 4 Learned D. R on the other hand, vehemently relied on the order of the CIT(A) and contended that the assessee has taken ground No 1 about the validity of the issuance of notice U/s 153C before the CIT(A) but the assessee did not press this ground before the CIT(A) Even no submissions were made for which our attention was drawn towards page No. Zl para 12 of the order of CIT(A): Even otherwise On merit the assessee contended that the diary seized during the course of search contains the name of the assessee from whom the cash has been received noted in the diary. Therefore, it cannot be said that incriminating material belonging to the assessee was not found; 5_ We have heard the rival submissions, carefully considered the same orders of the tax authorities below , Coming to the along with the adjudication and admission of ground taken by the assessee about the validity of the notice issued ufs 153C ad consequently cancellation of the I.TA. Nos.[OZto 10+/N28/201_ Asstl. Yrs.07.08,08-09 & 11-12 assessment framed thereupon; we have gone through Rule 27 of the ITAT Rules. We noted that the sald Rule read as under: "The respondent; though he may not have appealed, may support the order appealed against on any of the grounds decided against him. 5.1 On the basis of this Rule; it is apparent that even if the assessee has not filed the appeal against the order of CIT(A) he may support the conclusion of the CTT(A) by taking any ground which has been decided against him. From the facts before uS, it is apparent that the assessee has taken the ground regarding the validity of the notice issued u/s 153C before the CIT(A) and also validity of consequent assessment framed thereupon: We noted that CIT(A) under para 12 of its order dismissed the said ground of the assessee as the assessee neither flled any submission nor pressed this ground during the appellate proceedings Whatever may be the reason, the fact remains that the ground taken by the assessee about the validity of the notice ufs 153C and also the validity of the consequent assessment framed thereupon stands dismissed by the CIT(A) Therefore, in our opinion; the assessee complied with the condition a5 stipulated under Rule 27 of the ITAT Rules and the assessee can always raise this ground in view of Rule 27 before the Tribunal: The Tribunal has the power to adjudicate the ground taken under Rule 27. We accordingly admit the said ground: 5.2 Now coming to the submissions made by both the parties on merit on this ground: We have gone through the provisions of section 153C and noted that this section prior to the amendment made by the Finance Act; 2015 with effect from 01/06/2015 states a5 under: "Notwithstanding anything contained in section 139, section 147, section 148, section 149, sectian 151 and section 153, ik3 I.T:A. Nus,l02 t} 1(4/Nag/2016 Asstt, Yrs-07-4}83 , (#-(1Y & 11-12 blele the Assessing Ofccr {S; satisfied tial @iJY naney bullion, jewellary 0r other valuable article &r tling, L books of account Or documents; seized Or requisitioned, helongs Or belong to 7 person other than t1e person refemed to in Section 1534, th1en the books 0l acCount or documents Or assets Seized Qr reyuisitioned shal h !uanded OvCr to the Assessing Officer having jurisdictian Over such Other person. This seclic" has Suhjsequc'ti; { Z; I2:3: J, Tixo_ACL. 2015 with effec: fron (4/0:2015. Thc: Freixedgl Tec 7l:: liiiuer: "153C Notwithstanding aything contained in section 139, section 147; section 148, section 149, section 151 and section 153, where the Assessing Officer Is satisfied that (a) Any money , bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) Any books of account Or documents; seized Or requisitioned, pertains 0r pertain to, or any information contained therein; relates to; ELi2 3 person other than the person referred to in section 1534 then, the books 0f account or documents or assets, seized or requisitioned shall be handled over to the Assessing Officer having jurisdiction over such other person. The Finance Fil:, 2803 In its mrorandur explailing th: pu-pose For which this anidmont #2; mzcl reads <5 Ill? ; "Section 153C pf ll1e Act relates l0 jssessrlenl Jf income Of' any Oei pcrso}l{. Th : exisling |rOvisns Contained In sub section (1} of" thip said s~cli;: 153C provide that {rithstanimng ~ylivig cQitwm} i{ ; scclilj} 139, Sccbior 147, s2'Ction {48, sertion 149, sctirw) 191 And sctinn 153, where tie Assessing Ofice{ 16 satistieu that any noney; bullion jeweliery Or other valuablz article Orr thing Dr books of account 0r documents seized or requisitioner] belong to any person; OUer than Uve person referrod to in section 1534, then the books Of account Or documents or assets seized or requisilioned shall bee handed QVCr L lhe Assessing Otficer 1xS LT,A. Nos,lOZ to 104/Nag/203 Asstt; Yrs:07-08,08-09 & '11-2 t3 /62ssing {V: '[87 W1"1 41peracin "Isteai%c.cru: Lersn ond iSSu Qfk ixwn cf 7;: "'tice &id 7325 423; 4" w: S'tKw} Sk nSL acrorriznce JSj {? "t"esic:: (i' {He {sp?s I2V jnsen: :8 i0 ;4 0 dru:w &x A" inSanC? knR? "i&" {0 "'e#ei {0obwx"dvy 46 fh:? Xa {b:"; doxmSk: 'X;1'&6w!0 amX tii? 1#a4.} donmen. Asdm; {Aar mn_nsrjndifg anyitwng afunod Scbjn t.l provni: 1~7, s 1+8 sction con!aied {} si'j} 130 Xw S_on; I53, Mk #e Aspessing Officer 144, xion LSJ and Jtzr valuable Sulisfied Uial any money, bullion jewelielY & {5 books of COunt Or artich? Of twing belongs t; (f' Dny requisilioned nertzin Lo; Qr any docum}nts seijed CF relale I} Any {erson; ather irformalion contained Mein onndtomertkw !4M mzn Ms books of tm t? Ce,yon reqimisilii= P2 shall &rcouf Qf" Locuents D! aSs-6 silen iV {sricer Kavng Jurisdiction iz nnue} ffr &i tive AsscSsww AsslsswJ (fker shal 90) Jiner persiw /] {w. Qie Sirh oter {7} L Jgwrscachah #ngc_e {7 ~Ch cbEY {t 5w) 'n: & #v39 Srln IS3A perzo {> ardae VAn UemonsJ: 0j Om No 19 of 2015 dated Sijsevwvi_h, U'ie (EDI I13s 9i UMl Foile LO ': @loviSinr; Of Financc Acty 27/11/2015 by which explainatory riole i! tihe circular relating tO the 2015 ivere Uiscussed The explairatoiy amendexl [rovisign) af scctor 153C reac' 35 Idcr: Of incone &l < p2r.n1 Oth' than the Person '

Assessmeit wwiated €r {ooks Of account in !#iuuse CaSe Search has been reqiisitioned Qlher documents or assets have bee; Incore-tax Act relates to 39 1 Section 153C Of the e ier thon thz person in aSS2ssment Of iricome Of anv Qers bie con:lucted 4J/' rexqjuisition {1a5 Wtiosc CaSC search nas 7T12 provisiuns contaried In Sub-secton (!) of tee {vecnt mde. (izcle by the Acl provided Section 153, before amendrncnt contaired {6} secton 139, thet notwithstanding anything L.T,4. Nos,102 to [(0A/Nag/2016 Asstt, Y1s:[17-(J8, 08.09 & 11-12 Hg 11 sahow] n/ Srt;" 1-3,~7w {~0 ~eG" 40j S4ton 133 o/ tm? Ii!conne {74 'Ll; 114;:: 626 A302 Jfficei ' slsfiid [? Jny {eilz/ {": bah:iye aticle Of tin Ur [Ws ( zii Wa ;',?){. S2iei Q rmimins Ilcaw { 587 '24 p.YW! {#tenoni "0 "7 ScCdu} 153/ (!: "'XTia!'~&x 44", dJu", Uhe {pks Of ~: cowt 0" docin "X; Jsw k S61, '2d Qr requisioned Shal LJe hamicll i6x 20 Ui f~rrng Officer Iwvin jurisiicne ver such) Qlx";oS " 1Wm" | !Asnvsing Officer shal proceed JGMW SlJjv:hJink: D ' ar issn {olicr an: NxS Or {2l33835 Inwn 0 Sice2: person: in aindae !; tne provixons Q/ stir"1SJA. 39.2 Disputz' hiav? arisen 2 to tie imerpetation Lf [e xondds "belong to in rospect Of & dpcument &s For inStnco vilen & Givey} docunl Seized fromn & pensor; is 2 Copy 0/ the original (iocument Acioringly , seclion 1530 }35 bcr) m)ended sO &9 tv pn'vid tlat notihstanxding #'nmg CCnrwd m Srclion 139, section {47 Secton 1-3 SGtW} 149, #dic}) 151 and s'licn 133 0f the Inconwn t} ft Wc" : 0}6 Alss-jwW Offi # s2khed lat Any MCw k; 0..4 "e.fmry Ur jinei vXmiNeemi 'ning {xHo:}gs {8 1'" ,n {i76.2 Cibu h Qr iovi"m &'2 0 :wu a"X:. % 01 A; Mxtetc: -Jmiained Wizrein; {;"s 8, 3#} {2Rw1 "Jew thn tlc' persy) r@ferred Tn in s TS3M0 Uw Inconn-a" 4-, Uin {{i {ocis Or aCuf 0 07;n 7; Nocs 02- 'e U: qisih:wUdd shall fe hndded oY !0 !lic Acsing CVfzer Iavin] juisition Qver SUch Othe peison AW Wlt Ass-zsing Ofricer shall proceed against each Suih Oler person and ISSue notice ad AS3855 Or reasgess ncmi' Ol SuCh Othc person in accurdance (vilh) the provisions Of scction 1534. 1 39.3 Applicability: This amiendmc has tr? cecl fron th: Ist day (1 Junc 2015. 5.3 In Viui 0f tls, it Is appaircnt thal the aniericled section 153C are not retrospective and are applicahle with effert Irom 0:/06/2015 and not prior to thal, Tn thce case of the assessee) Scarch @5 well a5 noiice U}s 153C has been issuli_u prio? to 01/06/2015. Since in the case 0f the assessee action u/s 153C has been taken by issuing the notice dated 16/07/2013 in ET.A. Nus1020 LOA/Nag/zol Asstt Yrs:07-08, 418-019 & 11-_ > of the search carried out on 19/07/2011 therefore, the consequence amended provision of section 153C will not apply: As per the provision of 153C, was in existence during the impugned period, the section a5 condition precedent fot issuing notice us 153C and assessing Or reassessing the income of such other person' is that the money; bullion, jewellery or other valuable article or thing, books of account or document seized OF requisitioned which belong to such person where documents in recovered during search proceedings did not belong to the question assessee, though there was 3 reference to the assessee therein, issue of notice to the assessee u/s 153C, in our opinion, cannot be heid to be valld: Hon'ble Delhi High Court in the case of Pepsi Foods Pvt: Ltd: VS_ ACIT 52 Taxman.com 220 (Del}; we noted has also categorically held that before a notice u/s 153C can be issued, the Assessing Officer is required to arrive at a conclusive satisfaction that the document belongs a person other than the searched person: Unless until it is established that the documents seized did not belong to the searched person; the provision of section 153C did not get attracted; This Is not disputed that the notice In the case of the assessee u/s 153C has been issued in consequence of search seizure action taken ufs 132 in the Bhangdiya Group from whom premises diaries marked B-l to B-65 were found and seized. These diaries belong ta the not to the assessee; Even though the name of the Bhangdiya Group is mentioned in the diary that does not mean that the diary assessee It May be said that the diary contains the belong to the assessee. information regarding the assessee; Iu: (Jr opiricr, even trie ariended prcwision JUPpOls zhee case Ol thi? assexcce Tlie Leyislalicn has amended section 153C with effect from 01/06/2015 arid wrlened rhe scope UJs 153C by substituting in pizce of word 'jelongs Or belorigy' to word 'pertain Or pertzin to or any infcrmation contained tlierein' , Now under the amended provision, even if the material seized dous not belong ta the assessee but It ITA. Nos102to 104/Nag/2016 Asstt Yrs.07-(e, 08-09 & 11-12 1xE h i#o#edin- {g5 Initiated ColAlzali? vis:) ?xparenl; 15 N. Bjl Tiiix 2Wki U/s before uS even though !4/062015, Learned DR_ apj'i ":; Officer but couid not the order Qf the Assessing vehemently relied On prove that the diaries adduce any cogent material or evidence which may Group belong to during the course of search in Bhangdiya Found and seized Bhangdiya Group no Since during the course of search in the assessee: assessee was found the addition made belonging to the material relating to be regarded to issued u/s 153C, in our opinion; cannot therefore; the notice has_beej_taken by Hon'ble Bombay High Court in be valid one. Same_vew vide its order dated Vidyapeeth in ITA No. 923 of 2012 the case of Bharti has made the This fact also finds support as the Revenue 11/09/2014. each of the assessment vear only addition in the hands of the assessee in not satisfied proves that the Revenue was also on protective basis which On this basis material In fact belong ta the assessee with the incriminating issued u/s 153C is order of CIT(A) and hold that the notice we set aside the made is annulled: thereupon; the assessment not valid ad in consequence the assessee under Rule 27 is allowed. Thus, the ground taken by We have heard ground taken by the Revenue: 6 Now coming to the arders considered the same along with the the rival submissions, carefully Officer has made belaw. We noted that the Assessing of the tax authorities of the assessee on Of the assessment year in the case the addition in each receipt in the diary of the cash being shown as protective basis in respect When the matter the course of search in Bhangdiya Group: seized during said addition in all the the CIT(A) the CIT(A) deleted the went before assessment years by observing as under: in hand, it would be Before adjudicating the issue "9.1 of additions made in relevantto briefly discuss the background IxI 1,71'

Nos,102t( 104/Nag/201 € Asstt; Yrs:(7-(13,08-09 & 11-f2 the Case Of Shri Mitesh G. Bhangdiya & Group concerns on the basis of seized evidences as per Annexure-B-1 to 8-65. The Ld. AO has made the total addition of Rs.182.52 Crs in the of various concerns of Bhangdiya group In various hands assessment years falling within the block period on prorata for want of proper correlation between the amounts basis credited to the seized diaries &d the withdrawals made from the bank accounts of the Sub-contractors. Out of the total addition of Rs.182.52 crores; an addition of Rs.54,40 Crs. has on account of entries of withdrawals from the been made bank account of sub-contractors recorded in the seized diaries to the cheque payments made to the Sub- in proportion contractors by Various entities Of the Bhangdiya group; The of the Bhangdiya group had made the various concers payments by account payee cheques to the Sub-contractors AQ after analyzing the bank accounts Of 21 sub- The Ld contractors out of total more than 100 sub-contractors has that the cash withdrawn from the arrived at the conclusion accounts of the subcontractors has been found deposited on the credit side of the seized dlaries marked as Annexure B-l to 8-65 seized from the premises of Shri Mitesh G Bhangdiya. Thus, the Ld, AO had inferred that the Bhangdiva group by modus-operandi had inflated the adopting such expenditure by making cheque payments ad subsequentiv cash from the bank accounts Of the sub- withdrawing the who; according to the AO; are merely name contractors lenders; The contention of Shri Mitesh Bhangdiya was that the cash withdrawn from the account of the subcontractors which in the diaries was kept with Late Shri is found reflected Gotulalji Bhangdiya, father of Shri Mitesh Bhangdiya by such which was being issued to various sites for sub-contractors 35 per the requirements at the the use Of subcontractors Further that the money kept by sub-contractors was site: returned to them or through any of the intermediaries in the course of handling of cash. The Assessing Officer however , declined to agree with the explanation filed by the appellant and has held that all the 21 sub-contractors examined by him are merely name lenders and the amounts paid to them under are bogus payments, therefore; the the head sub-contracts corresponding receipts by Way of witharawals from the bank Of the subcontractors {5 liable to be added 35 accounts income in the hands of various concerns Of unaccounted in various assessment years of the block Bhangdiya group [.T.ANoslUZ to ]0/Nag/2016 Asslt; Yrs;07-08,08-09 & 11-12 Isc 15 period in proportion to the cheque payments made by such group concerns, 9.2 In the case Of Bhangdiya group, the assessments under Section 153A Of IT Act 1961 have been framed for assessment years 2006-07 to assessment year 2012-13 The nature of activity being execution of government contracts was the same during all the assessment vears In assessment vear 2006-07, the nature Of work executed for Vidarbha Irrigation Development Corporation remains the same a5 In the case of assessee for subsequent assessment years, The Sub contractors who have executed the works are also similar in the various assessment years; 9.3 The A.0. has observed that the sub contractors in the case f Bhangdiya group are name lenders and bogus. In this regard it i5 significant to mention that the Sub contractors including the appellant have been assessed by the ACIT, Central Circle-2 (1), Nagpur who is also the A.O. of Bhangdiya group: Notices under section 153C of IT Act 1961 were issued to subcontractors &d returns were submitted by such sub contractors pursuance to receipt of notice under section 153C of IT Act 1961. The assessments have been framed under section 153C of I.T: Act 1961 by the same A,O. wherein the income returned in respect of business income shown arising to such sub-contractors out Of receipt received from the Bhangdiya group have been accepted Thus; the AO. having accepted the business receipts in the hands Of sub- contractors inciuding the appellant for determining the income in the cases of sub-contractors couid not have concluded that the pavments made by Bhangdiya group to such Sub contractors are bogus. 9.4 In view Of the huge variance in the income assessed a5 percentage to receipts by the AO and various infirmities as emanated fram the order of the AQ; net profit has been estimated @ 16% Of gross receipts in the hands of various concerns of the Bhangdiya group in view of the decision of the Hon'ble ITAT, Nagpur Bench, Nagpur in the case Of the Bhangdiya group entities in ITA No.268, 269 & 285/Nag/2012 dated 03/04/2013, A survey action was conducted On 17/02/2009 in the Bhangdiya Group of cases, wherein the similar situation 35 payments to sub-contractors was disputed LT.A. Nos,1QZ to 104/Nag/2016 Asstt; Yrs-Q7-08,0R-(19 & 11.12 and doubted by the AO. The survey action comprises AY 2006-07 to AY 2008-09 which are also forming part of the block periods for the search action conducted on the assessee group On 19.07,2011. The Honble ITAT Nagpur Bench; Nagpur after having considered the similar activity of business and deficiencies in subcontract payments found during the survey action conducted On 17.02.2009 has decided the appeals for AY 2006-07 to 2008-09. The Hon ble ITAT, Nagpur Bench, Nagpur after considering the impounded material has directed the AO to adopt the net profit @ 12% as against net profit adopted by AO @ 14%. 9.5 In view Qf the above facts and circumstances and keeping in view Of various infirmities and various judicial decisions relied upon by the appellant ad to meet ends of justice to my considered opinion; it was considered Fair and reasonable to adopt the net profit 1696 On the gross receipts of Rs.579 Crs ; being the turnover Of the various Bhangdiya group concerns for the block period from AY 2007 08 to AY 2012-13 in the respective years Of the block and bring the same t the taxation On the guidelines determined by the Hon ITAT, Nagpur Bench, Nagpur in ITA No: 268, 269 & 285/Nag/2012 vide order dated 07/03/2013 0n the similar activities of business under the similar circumstances; However; in order to cover up the undisclosed investment of Rs: 26 crores in immovable properties and the undisclosed invvestment in jewellery to the tune Of Rs. 2.37 crores; enhanced net profit @ 16% of total turnover was estimated in the appellate orders dated 31/12/2015 in the Cases Of Bhangdiya group 35 against net profit of 12% estimated by Hon'ble ITAT, a5 the issue of undisclosed investment in assets was_not there before the Hon'ble ITAT in the survey appeals 10, Thus, 1 have considered the submissions made by the appellant and evidence On record. It Is seen that the appellant 15 & sub-contractor and executing work for variOus business entities belonging to Shri Mitesh Bhangdiya group: The assessee has been regularly assessed to income tax much prior to the date of search on Shri Mitesh Bhangdiya group 0n 19/07/2011. In the case of assessee notice has been issued u/s 153C Of IT Act 1961 after there being search On Shri Mitesh Bhagdiya group 19/07/2011 and assessments have LT.A_ Nos.lOZ t0 104/Nag/2016 Asstt Yrs;07-08,08-019 & 11-12 17 been framed for assessment years 2006-07 to 2010-11 & AY. 2012-13 in the month of March; 2014. 10.1 It is seen from the assessment order that the A.0. has reproduced the statement recorded us 132(4) of Shri Mitesh Bhagdiya and has referred to seized documents inventorized a5 B-l to 65. In the case of Shri Mitesh Bhagdiya, the AO has found that the withdrawals made from the bank account of assessee are matching with the credits appearing in the seized documents found at the premises Of Shri Mitesh Bhagdiva. The A0. has concluded that appellant Is only name lender of Shri Mitesh Bhagdiya. The A.O. accordingly observed that Shri Mitesh Bhangdiya is the ultimate beneficiary of the bogus contract payment which laundered through appellant and Is disallowed &d added in the respective assessments framed in Bhangdiya group: The A,0. further observed that the cash withdrawn from the bank i5 added a5 income On protective basis as there was nO expenses a5 nO contract work was really executed. 10.2 The appellant submitted return declaring income from sub-contract work in his regular return a5 well as in the retumn submitted in response to notice issued ujs 153C Of IT Act 1961. In the return of income assessee has shown income arising out of receipts being amount received from the various business entities of Shri Mitesh Bhagdiya group. The perusal Of the assessment order does not indicate any adverse observation with regard to regular books of account on the basis of which income was declared in the return of appellant It is seen that the profit ad loss account ad balance sheet submitted along with the return of income have not been discredited in the assessment framed in the case Of the appellant: The A.0. in fact has assessed income returned withaut inviting any adverse Observation 35 to income declared from sub-contract work; 10.3 It is seen that the withdrawals from the bank account are reflected in the books of account on the basis of which income has been returned The withdrawals from the bank having already been considered for the purpose of determining incame at the hands of appellant as shown in the return cannot separately constitute income liable to be L.T.A. Nos10Z to 104_ /Nag/2016 Asstt Yrs:07-08,08-09 & 11-12 assessed in the hands of 'appellant The addition made by A.O. i5 thus unjustified and unsustainable 10,4 It is further Seen that the A,O. has made observation In the assessment order to the effect that in the case Of Shri disallowance has been made for Mitesh Bhagdiva group claimed On account Qf sub-contract various expenses expenses which includes payment to appellant It is settled Qf law that the substantive assessment must proposition In the facts and precede framing of protective assessment it is difficult to rationalize how circumstances of the case; withdrawals from the bank account can constitute assessable protective basis in the case Of the income much less On The AO. has made disallowance of sub-contract appellant; expenses being amount paid to appellant while determining the income Of business entities of Shri Mitesh Bhagdiya group: Such payments are already considered for income showr in the return and assessed 35 business receipt in the hands of Addition of such amount again On protective the appellant; basis defies logic I do not find any rationale to make Such withdrawals made from bank protective assessment of the in the hands of assessee himself The account f assessee income assessed on protective basis therefore; i5 held to be unjustified and unsustainable on this count as well 10.5 The gross receipts in the case of the appellant a5 well 35 returned income along with the percentage Of income has been tabulated by the appellant for various assessment years ad the same is reproduced herein under; Shri Kailashsingh G Rotele Turnover; returned income ad assessed income Assessment year 2007-08, 2008-09 and 2011-12 ASSESSMENT YEAR 2007-08 2008-09 2011-12 GROSS RECEIPTS 59,26,904 69,37,586 NQ RECEIPT RETURNED INCOME 1,22, 370 2,03,498 64,560 9 Qf GROSS RECEIPTS 2.0696 2.9306 NO RECEIPT [.T'.A. Nns.102 tf 104/N:g/ZU1G Astt Yrs:()7-A)A, (J8-0Y & 11-F2 E9 I5h ADDITTONS UNDER SECTION 153C 52,20, DQQ 72, 78, DQO 41,05,000 ASSESSED INCOME 58, 12,740 77, 51_ 876 41, 69,5G0 D OF GROSS RECETPTS 98.079 111.749 NO RECEIPT 10.6 It Is seen From the above that the income returned has been accepted in the case pf appellant without Inviting ay adverse inference &nd considering the addition made in the hands of assessee the income assessed as percentage of gross receipt clearly reflected absurdity In the action of the Id, A.O._ while determining the income in the hands of assessee The addition made by Id A.O. thus; is unsustainable for the aforesaid reason also. Therefare; the protective addition made in the hands of the appellant is directed to be deleted in al the vears Of the block period, 6.1 We noted that the CIT(A) has given the finding of fact: This is a fact that the substantive addition has been made in the hands of the assessee in respect of the income received by the assessee as sub-contractor in each of the assessment year, The withdrawal made by the assessee from his bank account in which the deposit of the sub-contract receipts has been accepted arises out of the said deposit; Such withdrawal, in our opinion; by no stretch of imagination can constitute assessable income in the hands of the assessee; The Assessing Officer while determining the taxable income of the business entities of the Bhangdiya Group made the disallowance Qf sub-contract expenses being the amount paid to the assessee but these payments were already considered in income shown in the return and receipt as business receipt in the hands of the assessee; Additian of such amount again on protective basis in the hands of the assessee does have any leg to stand. We, therefore, do not find any illegality Or infirmity in the order of the CIT(A) which warrants our interference; The CITIA) has rightly deleted the addition in each of the 153 1T,A. Nos,]02 to J04 VNwg/2165 #ssLL, YTs;07-08,08-09 & 11-12 confirm the order of CIT(A) Thus, the assessment year. We accordingly the assessment year stand the Revenue in each of appeal filed by dismissed, result; all the appeals of the Revenue stand dismissed. 7 In the (Order pronounced in the open court on 22/06/2017 Sd_ Sd]_ P. K BANSAL ) vice President (AMARJIT SINGH) Judicial Member Dated.22/06/2017 #Singh Copx of_the order fonarded_to : 1 The Appellant 2 The Respondent 3 Concerned CIT 4 The CIT(A) 5 DR: 17 341748 &7eq%nA d 707 A5 Svmor Rersorat Assistart Pg ,. Incomiktar APpallate Tribural NAGPUR; Gu4 =le .