A,C.I.T. CENTRAL CIR.- 2(1), NAGPUR vs. M/S & M.G. BHAANGADIYA & HITBHAV ENGINEERS (JV), NAGPUR

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ITA 71/NAG/2016Status: DisposedITAT Nagpur30 June 2017AY 2008-0923 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal noted that similar issues had arisen in the case of Mitesh Gotulalji Bhangadiya, where the CIT(A) had directed the AO to estimate income by applying a net profit rate of 16%. The Tribunal, in that prior case (ITA Nos. 56 to 61/Nag/2016 and 261 to 265/Nag/2016), had found that the AO's approach of applying a uniform 14% NP rate was incorrect. While acknowledging discrepancies in vouchers, bills, and sub-contract accounts, the Tribunal had observed that the assessee group offered an additional income of Rs. 11 crore. In that context, the Tribunal had held that adopting a 12% NP rate would meet the ends of justice, with a clarification that if the assessee's declared NP rate was higher than 12%, that rate would apply. The Tribunal also noted that the CIT(A) in the present case had directed estimation at 16% based on the detection of unaccounted assets and jewellery. However, the Tribunal disagreed with this, noting that the total disclosures (Rs. 11 crore during survey and Rs. 26 crore during search) amounted to Rs. 37 crore, which covered the unaccounted assets and jewellery (Rs. 28.37 crore). Therefore, the Tribunal set aside the CIT(A)'s order to the extent of directing estimation at 16% and directed the AO to estimate net profit on gross receipts at 12%, aligning with the rate estimated and returned by the assessee group. The Tribunal confirmed the CIT(A)'s deletion of additions, as the assessee was not in appeal. Consequently, the Revenue's appeals were dismissed.

What were the facts?

The Revenue filed appeals against the order of the CIT(A) for assessment years 2008-09 and 2010-11. The appeals concerned additions made by the Assessing Officer (AO) based on seized documents and statements during a search and seizure operation. The CIT(A) had deleted these additions, directing the AO to tax income based on a presumed net profit rate. The Revenue's grounds of appeal challenged the CIT(A)'s decision to ignore seized documents, not affording the assessee an opportunity to be heard, deleting additions on account of bogus sub-contract payments, and holding that incriminating diaries did not belong to a particular concern. The Revenue also contested the deletion of additions for unaccounted income and the estimation of income at a presumed percentage.

What were the issues?

1. Whether the CIT(A) was justified in ignoring seized incriminating documents and directing the AO to tax income on a presumed percentage, thereby thwarting the purpose of search and seizure provisions under Section 132 of the Income Tax Act, 1961? 2. Whether the CIT(A) erred in deleting the addition of Rs. 58,22,614/- on account of bogus sub-contract payments, without appreciating seized materials and statements indicating that sub-contractors were name lenders who did not execute any work? 3. Whether the CIT(A) erred in holding that incriminating diaries seized from the Managing Director's residence could not be attributed to the assessee's concern, despite admissions that entries pertained to cash flow and were not fully recorded in books? 4. Whether the CIT(A) erred in deleting the addition of Rs. 1,71,02,862/- representing unaccounted income, without appreciating seized evidence? 5. Whether the CIT(A) erred in directing the AO to adopt total income at 16% of gross receipts, ignoring the AO's findings on bogus sub-contractors, unaccounted income, and gratification payments? Assessee's contentions (implied from Revenue's grounds and the Tribunal's discussion): The sub-contractors kept deposits with the assessee group for safe custody, which were recorded on the credit side of diaries. Amounts were later withdrawn for site expenses. Payments made to sub-contractors cannot be treated as non-genuine if receipts were accepted for assessing income in the hands of sub-contractors. Unaccounted payments or unallowable expenses like gratification had no corroborative evidence. Revenue's contentions: The CIT(A) ignored seized documents, did not provide an adequate hearing, wrongly deleted additions for bogus sub-contract payments, wrongly attributed diaries, and wrongly estimated income at a presumed percentage, ignoring seized materials and admissions.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 139,Section 40A(3),Section 40A(2),Section 68,Section 69,Section 69C

AI-generated summary — verify with the full judgment below

I1X3 4gt I.T ANos.7I & 72/Nag/2016 Assessment Years:2008-09 & I0-11 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P. K: BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH; JUDICIAL MEMBER ITA, Nos. 71 & 72/Nag/2016 Assessment year;2008-09 & 2010-11 ACIT CENTRAL CIR 2(1), 3RP FLOOR, ROOM NO, 312, AAYAKAR BHAWAN, TELANGKHEDI ROAD, NAGPUR 440 ,001_ Vs M.G. BHANGADIYA & HITBHAV ENGINEERS (IV) 909, B WING, LOKMAT BHAVAN, WARDHA RQAD, NAGPUR 440010 PAN:_AAQFM474SL 5rzri(Respondent) 34arei(Appellant) Appellant by Respondent by_ Shri_A R Nnawe (DR) Shri KP. Dewani (AR) Date of Hearing Date of Pronouncement 19.06.2017 30.06.2017 3et QRQER PER PKBANSAL_VB:: Both these appeals have been filed by the Revenue against the order of thie CITIA) dated 30.12,2015. In both these appeals the Revenue has taken following grounds of appeal except the change in the figure: 1 Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was right in thwarting the very purpose of search and seizure provisions of the Act by ignoring seized incriminating documents and thereby directing the AO to tax the income on presumed percentage based on surmises, 4 2 Whether On the facts ad circumstances of the case and in law the Ld. CIT(A) was right in not affording the opportunity to #x II4 I.T.A.Nos.71 & 72 /Nag/2016 Assessment years;2008-09 & 10-11 flx" 1) 0 being heard during appellate proceedings despite AO IkJs; spucifically asked Qf being heard vide his letter dated '9.02.2015 ad thereby passing order in undue haste nrovisions of the Act ignoring 3 Whether on the facts and In the circumstances Of the and in law; the Li CIT(A) Was right In deletng Che addhtioraSf Rs; 58,22,614/- made On account of bogus sub-contract payments? 4 Whether on the facts and in the circumstances of the and in law; the Ld CIT(A) was justified in "deleting 5te #ditioe Of Rs. 58,22,614/- made On account Of bogus sub-contract payments without appreciating the fact revealed from the seized materials and statements recorded that the ub-contractors are only name lenders and have not executed any sub-contract? 5 Whether On the facts and circumstances of the case and in law the Ld CIT(A) erred in holding that the incriminating diaries seized from residence of the Managing Director cannot be said to beicbelonging to particular concern ignoring the documentary evidence and the admission of Shri Mitesh Bhangdiya himself that the entries in the diaries pertain to the details of cash flow of assessee's business activity ad the entries In the diaries were not completely recorded in the books of account 6, Whether On the facts ad in the circumstances of the and in Iaw; the Ld, CIT(A) was right in deleting che additioraSf Rs. 1,71,02,862/- Of being unaccounted income? 7, Whether O the facts and in the circumstances of the and in law, case the Ld. CITIA) was justified in Of deleting the Rs; 1 addition 71,2 02,862f- being unaccounted income without appreciating the eviderces found and seized during and seizure action? the Search; 1 3 Oni 8 Whether on the facts &d in the circumstances of the case and in law; the Ld. CIT(A) was justified in directing AO to adopt total income of the assessee at the rate of 16% of by ignoring the findings given by the AO regardingtogueseibt bogus sub- contractors, unaccounted income and gratification payments? 1145 t3z I.T.A_Nos.71 & 72/Nag/2016 Assessment vears:2008-09 & 10-21 9 On the fact ad circumstance of the case and in law the Ld. CIT(A) erred in accepting assessee's contention that various sub contractors used to keep deposit of money withdrawn by them from bank with the assessee group for safe custody which was recorded On the credit side of the inciminating diaries without appreciating that if the contention Of the assessee is true then the credit entries shall be in the name of the sub- contractors but the fact is otherwise a5 only names of the banks were found written there: 10. On the fact &d circumstance of the case ad in law the Ld CIT(A) erred in accepting assessee's contention that the Sub contractors kept their money for safe custody with the assessee group and amounts in small quantities were later withdrawn by them for meeting the expenses at sites by ignoring the fact that none Of the names of the sub contractars appeared on debit side of the incriminating diaries 11 On the fact ad circumstance of the case ad in law the Ld CIT(A) erred in not calculating exact unexplained expenditure and unaccounted investment mentioned in seized incriminating diaries a5 well a5 inflated claim of expenditure in various projects and directing the AO to assume certain percentage RPinE 12, On the Fact and circumstance Of the case ad in law the Ld. CITA) erred in holding that having been accepted receipts from the assessee for assessing the Income in the hands of sub contractors the payments made by assessee group to such sub contractors cannot be treated as non genuine; ignoring the fact that sub contract payments were assessed in the hands of the assessee group 55 bogus sub contract payments and in the hands of the Sub contractors protective assessments were made by treating the entire receipts as income 35 no contract was executed 13. On the fact ad circumstance 0f the case ad in law the Ld CIT(A) erred in observing that unaccounted payments Or unallowable expenses like gratification paid to various politicians and: government employers have no corroborative evidence Qn record t hold that assessee has made payments of any Illegal gratification The anus in on the assessee to prove that the payments were genuine and incurred legally, As the cash payments were not recorded in the regular books of account and 0 I.T.ANos.71 & 72/Mag/2016 Assessment vears;2o08-09 & 10-11 HsH 14e a5 the assesse2 failed to substantiate those payments, the CITTA) ought to have upheld that the entire amount Of Rs 171.10 crores i5 unaccounted expenditure; 14 On the fact ad circumstance of the case ad in Iaw the Ld. CIT(A) erred in relying o1 the decision of Hon'ble ITAT in Bhangdiya group Of cases 25 at that time the information contained in incriminating diaries was not available either to the AO Or to the appellate authorities while restricting it to 12%. The CIT(A) ought not have relied on the decision of Hon ble ITAT when seized documents prove clear concealed income and unexplained expenditure 15 On the fact and circumstance of the case ad in law the Ld. CIT(A} ought to have appreciated the fact that In the case of assessee's group it is not feasible to estimate the net profit at a particular ratio a5 Qut of gross receipts Of 579 crores the assessee group made unaccounted payments to the tune of Rs 171 Crores and hence spent only Rs. 408 crores towards execution of contract work, Whatever profit was derived On execution of the contract work by the assessee group, to that profit unexplained unrecorded expenses of Rs. 171 crores were required to be added to arrive at the correct taxable income Of the assessee: 16. On the fact ad circumstance of the case ad in law the Ld. CIT(A) failed t0 appreciate that the taxable income need not be equal to the actual net profit derived by the assessee &5 it may include addition towards variQus other provisions like section 40A(3}, 4(a)(ia), 68, 69, 69C etc: and in the case of the assessee group addition ufs. 69C is applicable.

2.

The facts involved in both the appeals are common Both the parties agreed that the similar issue has arisen in the case of Mitesh Gotulalji Bhangadiya in whose case also the Revenue has made the similar addition but the same were deleted by the CIT(A) ad the CIT(A) has directed the Assessing Officer to estimate the total income of the assessee by applying a net profit @169_ It was Submitted that whatever view this Tribunal may taken in the case of Mitesh Gotulalji Bhangadiya in in I.TANOs. 56 to CPpel Iojni Vyt ts KT,A.Nos.71 & 72/Nag/2016 Assessment years;Zod8-09 & I0-11 5 61/Nag/2016 and 261 to 265/Nag/2016, the same view may be taken in these appeals also. 3 We have heard the rival submissions, carefully considered the same along with the orders of the tax authorities below. We noted that the similar issue has arisen in Revenue5 appeal in the case of Mitesh Gotulalji Bhangadiya in in I.T.A.Nos 56 to 61/Nag/2016 and 261 to 265/Nag/2016 in which also the additions were made by the Assessing Officer on the basis Qf the material found during the course of search by locating the receipt recorded in the diary being Item No; 1-65 of Annexure-B_ When the matter went before the CIT(A}; the CIT(A) has directed thie Revenue to estimate the income of the assessee by applving the net profit rate 169. Against the order of the CITIA) in each of the assessment years, has come in appeal before US; In the instant cases, the Revenue has come in appeal but the assessee has not come in appeal. In that case the Tribunal under para 12 has held as under:

"

12.

We have heard the rival submissions, carefully considered the same along with the orders of the tax authorities below. We noted that the facts and the issue involved in all the years under appeal in the case of the assessee are similar and Identical The CIT(A) has passed a consolidated order The undisputed facts in the case Of the assessee and the group concern are that a search and seizure action ufs 132 of the Act was carried out in the Bhangdiya Group Of cases on 19/07/2011. Simultaneausly, the business and residential premises of the assessee were also searched, During the course of search conducted, incriminating papers and documents were found and seized Shri Mitesh Gotumal Bhangdiya is the kev person 0f the group. Shri Mitesh Bhangdiya has two sons namely Shri Kirtikumar M Bhangdiya ad Shri Srikant M, Bhangdiya and one daughter Neha. The business of the Bhangdiya group is being looked after by Shri Mitesh Bhangdiya and his two Sons: The other key persons associated with the group are Shri Sanjay Rameshchandra Heda, husband of Mitesh Bhangdiya's sister, Smt Pradnya; resident of #Alt ii4e ET.ANos.71 & 72/Nag/2016 Assessment years;2o08-09 & 10-11 Amavati and Smt: Manisha 0 Maniyar , widowed sister Of Shri Mitesh Bhangdiya Who lives with Bhangdiya family. 12.1 The main business concerns of the group (including those discovered as & result of the search action) are a5 follows 1 Mfs MG Bhangdiya (AERPB2503E), (Prop. MGB); converted into 3 company MJs MK.S; Constro-venture Pvt; (AAHCM0383T) Ltd. from 01.04.2011, 2. Ms Mahendra Construction, Prop: Shri Sanjay Heda (MC) (AADPHZ109J) 3 Ms Mahendra Construction 85 MG Bhangdiya (AANFMSSSBB) (JV) Ms Kirtikumar M; Bhangdiya (Prop. KMBJ; converted into 9 company Ms MKS Acme Buildcon Pvt Ltd (AAHCMO38ZK) from 01.04.2011. (AGYPB16S9G)

5.

Ms KM, Bhangdiya & Mahendra Construction (AAKFKI8Z0C) (JV) 6, Ms Shrikant M. Bhangdiya (Prop: SMBY ATCPB133ZJ) Mitcon Inftaproject Pvt Lta: (MIPL) (AAGCM1868H)

8.

Lokshahi Publications Pvt Ltd: (LPPL)(AABCL6673L) 9 MITZ Infraproject Pvt: Ltd (AAGCM304ZA)

10.

Sakshi Gruh Nirman Pvt: Ltd, 1I (SGNPLJAAOCS7974G) Balaji Stone Orusher Infraventure Ltd: (AADCB5273C) Pvt )) Qojni 12.2 The group has also entered into joint various other civil contractors of the ventures Wi city to secure some Cil contracts: A few Of them are listed below: 1. Ms MG Bhangdiva & Hitbhav Engg (JV) (AAOFM474SL) 3 Ms MG Bhangdiva & 5 5, Fatil & Co (JVXABIFS3645L) Ms Darshan Construction (JV) (AAHFDO6SAN) 4 M/s M R Dhoble &s K M Bhangdiya (JVJ(AAPFMO6ZZB) 12.3 The nature of the business of the Bhangdiya primarily Is executing divil contracts, The group Government group works mainly for departments like Mjs Vidarbha Irrigation Veviolrcoert Corporation and has been engaged in ereguting various contracts pertaining to the irrigation projects in the state Of Maharashtra, During the course 0f incriminating search documents were found and eeized Ororationg the 1139 I.T.A.Nos.71 & 72/Nag/2016 Assessment years:2008-09 & 10-11 83 residential premises of Shri Mitesh Bhangdiya. Item no. 1 to 65 Of Annexure-B seized from his residence are the diaries containing ledgers, daily cash books and bank books maintained by the Bhangdiya group: 36 Cash books contained entries for the period from 26/07/2006 to 18/07/2011 & 27 diaries relate to the financial year 2006-07 to 2010-11 whereas the remaining two diaries were maintained for house hold and miscellaneous expenses: A statement of Shri Mitesh Bhangdiya Was recorded on oath on 20.07.2011. In his sworn statement recorded during the course pf search action; Shri Mitesh Bhangdiya was confronted with the entries borne out from the seized diaries marked aS B-f to B-65 and to explain the contents of these diaries; Shri Mitesh Bhangdiya in his statement recorded has submitted that the entries in the diaries and the ledger pertain to the business receipts ad business expenditure The Assessing Officer In the assessment order has recorded a finding that per the item no: 1 to 65 of annexure-B; it Is apparent that-the ampunts withdrawn from the bank accounts Of the sub-- contractors were credited to the daily cash balance of Bhangdiya group which was confirmed by Shri Mitesh G Bhangdiya In his statement dated 14/09/2011. The Assessing Officer has reproduced the statement of Shri Mitesh Bhangdiya recorded on 14/09/2011 in para 6 af the assessment order; The Assessing Officer in the assessment order has also recorded & finding that the seized documents being B-1 to 8-65 contain entries of al1 expenses incurred by the Bhangdiya group in cash from FX 2006-07 onwards and expenses incurred through the bank accounts from FX 2009-10 anwards; Thus, the Assessing Officer found that the actual expenses incurred do not match with thase shown to have been incurred in the bopks The Assessing Officer thus conduded 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 analyzed the entries in the diaries and took the view that On receipt side various receipts inciuding the withdrawal from the bank of the assessee group concerns were recorded and on payment side entries 0f expenses like interest payment; repayment Of Joan; deposit into bank account; household expenses, personal expenses, payment to various persons in cash ad investment in properties are found recorded. It was also noted by the Assessing Officer that some of the entries made in the seized diaries were found reflected in the books of account maintained by the Bhangdiya Group: 03tf J2e2 I.T.ANos.71 & 72/Nag/2016 Assessment Years:2008-09 & I0-11 Statement of Mitesh Bhangdiya was recorded on 20/07/2011. During the course of search, Mitesh Bhangdiya was confronted with the entries borne out from the seized diaries marked B-1 to B-65, In reply to question No 30 of his statement Mitesh Bhangdiva submitted that the entries In the diaries &nd ledgers pertain to the business receipts and business expenditure but at present it is very difficult for him to state whether the entries recorded in the seized diaries an accounted in the regular books of account and same can be explained only after verification Of the entries of the diaries with rhe regular books of account maintained by the Bhangdiya Group. Shri Mitesh Bhangdiya, reply tp question No; 38, we noted voluntarily offered additional unaccounted income of Rs,26 crores for the block period including the current financial year over and above the regular income declared In the return filed for the assessment year falling within the block period The income Sp declared are summarized 35 under; RAWNGQIYA GRQUL AY (6+7 Patdcular aY 2007+8 Ay Z00R-0g ay 2009-[Q AY Z0[0-!] AY 2011-12 Grand Tclal AY 2012-13 {Rs,} MMG_Bhacju Contract Income &$ per Ddginal retum 22,00,540 28,96,131 10,61,863 56,30,712 543,18,322 7f4,82,707 281,70275 Additlcnal Incane declared durng Surxey nddibinai Inc-e Ofered Durlng Search 23,97,961 13,94,009 27,04,312 1,50,336 60,48,018 5,09,460 27,18,952 576,81,675 255,[7,293 865,27,783 Contract Income Dejared 45,97,90 43,q0,0o0 45,66,175 85, ,U0o 120,), (uQ 970,02,QQ 2014,64,076 MKS Copslta Yentre ELtd Conbact Income a5 per Orglnal return 182,75,373 182,75,373 Addibonai Inkontig dectared durin; Sunvey Addilicnal Income Dffertd During Searth 164,74,627 164,7+,627 Conbert licnt Declared 347,S0,QQQ 3+7,50,000 MaHlabendm Scitwctio [ae| tE I.T.A,Nas.71 & 72/Nag/Z016 Assessment Years:2008-09 & I0-11 Contact Irome 35 per orgina! return 3,77,5656 125,10,051 26,48,924 20,60,665 73,38,074 35,26,315 7,5a,4BB 366,20,134 Andibonal Ercbme dedared during Survey Addytlonal Income QFered During Sear 40,41,39 49,17,076 1,14,[12 11.13,224 107,06,300 26,8),448 37,72,473 18,36,964 9,26,[[0 128,61,926 :01,73,605 26,41.512 347,91,518 Contact Incoit Declared 104,00,doD 212,00,@Q 52,00,ow0 40.Q,0 Zo2,02,0Q [78,0,000 J4,0,02 B22 _ ,QQ,[NQ @Us_Habenta Osi*G Bhogdixz l Contacl Ircome 35 per origlnal return 157,47,756 J10,92, 74} 715,14,407 JSR,J5,320 74,77,3J6 1617,,302 Addlbnnal Inrone declaned duing Survey Icdltnal Incone (Yffeed Durng Search 157,19,564 193,98,115 492,69,033 843,87,142 257,16,820 150,24,590 172,22,684 619,64,16, Contract Incorne Decard 3j4,67,720 504,90,858 {465,Q,Q00 549,00,od 247,Q4,02 309d,98,5?0 FELt Mi KM Bhanggliz Contart bncom a5 per Onginal return 10,18,705 32,36,715 27,20,4}1 21,21,306 61,66,570 32,99,214 186,00,111 Ardltional Incbmne cicared durlng Sunvey Addillonal Income Olered During Sardh 14,12,344 25,22,355 19,09,J6Q 7,50,653 65,94,712 0,90,45 10,70,23g ZR,41,041 51,33,J30 31,00,766 139,76,226 Conbrat Intomc Declarzd 24,J1,049 67,0,0m0 S7,Q0,00 57,00,DDQ 120,Q0,0QQ 66,ODGIW 391,11,049 MKigcme Buil Lm Crntract Income 35 per DFiginal rebm 14,70,653 34,70,653 Additlonal Inicore declared dunng Suyey Additlonal Intome Ciered Ding Search 16,29,347 16,29,347 Contract Income Dedared 51,00,000 S1,0,0w 3 14ce 1203 I,T A.Nos.71 & 72/Nag/2016 Assessment %ears:2008-09 & 10-11 MSMG Ebzngdixz Jud Hibbhax Fnollx Contract Income a5 Per orlgmal return Additlontal Incame declared durng Survey Addittonat Inton anered During Search Z6,B4,32} 2,20,167 4,63.957 11,60,994 38,37,905 5,67,583 30,144 5,93,927 2,49,469 1,31,006 180,475 Contract Incore Declared J2,46,310 5,0q,d0Q 463,497 6,0,Q00 48,12,307 MJst Lehngdin end Ss PAThly Contatt Inome 35 per orlglnal nturn 4,65,923 4,77,544 9,43,467 Addditional Inccvnx delared durng Sunvey Addlonal Incume Ohared Durlng 6,01,929 8,78,506 14,40,515 40,CQQ 4,02 Income 10,67,852 13,46,130 40,D0p 24,23,982 NZS K M Abangdixz # Cotract [nicome 35 Per Giginal return 5,44,551 9,32,461 J4,47,012 Additidrzl Incomc declared dunng Survey' Addlbonai Intome Onfered During Search 5,35,449 14,67,539 17,52,980 Contract ]ncome Dadlared 11,04,0CQ 21,00,400 320,0m Hitrron Inha Eulgte Contrart Income 35 per Qnglnal returh 60,39,000 43,96,429 53,20,051 157,57,480 Adltipnal Inconx dedlared durlng Sunvey Addiicnal Income Ottered Diuring Search 62,61,@QQ {1[,0L,67 9,19,949 182,62,520 Conbaot IninE Declared 123,0Q,q0n 155,J0Q00 62,40,D0Q 340,40,001 mojn 1203 tz% IT.A.Nos-71 & 72/Nag;2016 Assessment years;2008-09 & 10-11 I1 axibiqnallrjue Qleqelin S2E25 @ Indiwdual Mitesh Bhangdiya 74,75,442 74,79,442 Kitikumar Dhangdiya 30,Uo DDO JQ,oo,ddo Shrikarx Bhangdya 35,00,004 35,00,j0 Keshar Singh Rotele 10,42,59) 12,D1,0g7 90,93,260 10J,30,910 Conboldated For A4 Eqttzt Conbatt Inkcn? 35 per ontainal heturn 68,96,901 349,06,656 414,86,202 B15,34,B 1107,15,934 956,85,4}6 278,24,5G5 3990,40,752 Additlonal Income declared dunng Sunvey Additlonaf Incne Onered During Seardh 70,51,6Q} 251,55,333 261,28,068 513,11,59C 1104/46,592 26,A0,443 5[,73,SB1 29,07,203 321,92,4792 1022,48.363 686,14,524 216,65,435 2356,81,648 Contart [ncie Druared 174,28,950 652,35,572 705,21,473 1652,40,Q04 2124,63,997 1643,0Q,q00 49400N" 7#6,= 70,322 Addkitlonal [nccne In case5 of Individual 10,42,553 12,01,097 0Q,93,260 19,79,4425= 041,f8,j1z 12.4 From the statement of Shri Mitesh Bhangdiya , 'it ' Is apparent that the diary found and seized belongs to the assessee group and the assessee group did not disown these diaries even though in the subsequent statement recorded on 27/07/2013 Shri Mitesh Bhangdiya stated that these diaries were primarily maintained bY his father Gotumal Bhangdiya. The Assessing Officer , we noted, has also observed that these selzed diaries also contain the payment made in cash for probable extraneous gratification to various persons including politicians; government officers/officials which are recorded along with their names, dates of payment and amount paid, We noted that the Assessing Officer has not examined these persons for bringing the corroborative evidence On record In support of his finding that the cash has been paid by the assessee group for probable extraneous gratification: We noted that the Assessing Officer made a exercise to match the entries of the tax payment and receipt with the entries in the regular books Of account Of Bhangdiya Group. The Assessing Officer came to the conclusion that the receipts are predominantly withdrawals from te bank account by way Of creating bogus sub-contract expenditure The Om Jasx Iac} I.T,ANos.71 & 72/Nag/2016 Assessment vears:Z008-09 & 10-11 Assessing Officer found that the assessee group hasdeducted & Sum of Rs361 crores towards the sub-contract payment against the gross receipts aggregating to R5.579 crores, It was found by him after verifying from 21 contractors that 3 Sum Of Rs.54.40 crore is attributable to the amount deposited in the bank account of the sub-contractor by account payee cheques by various concerns Of Bhangdiya Group; which waS subsequently withdrawn in cash and i5 reflected on the receipt Side of the seized diaries The total amount so reflected in the diaries On the receipt side was computed at Rs.182.52 Crore; The Assessing Officer added the said unaccounted amount Of Rs.182.50 crore in the Income Of the assessee group concer; A sum of R5.54.40 crore was added in proportion to the amount of cheque credited by respective group cancern in the hands of the respective group concerns: For the balance amount Of Rs.128.12 Crore; the Assessing Officer added the same in proportion to the contract receipt shown by the group concern in the respective assessment years to the total turnover of the group concern in that year, Now the question before US arises whether the Said sum @f Rs.182.52 crores; found recorded in the diaries found during the course of search a5 receipt being withdrawal from the bank account Of the group concem 35 weil a5 from the bank account of the Sub-contractor can be regarded to be the unaccounted income of the assessee At the micro level if we look into the nature of the receipt; it is not denied by the Revenue that the receipt has come from the bank account- the assessee group concern ad part of the receipt &d has: come out of the cash withdrawn by the sub-contractor t whaxl the assessee group concern had made the payment Ta: assessment has been made by the Assessing Officer ujs 153A in the case of the assessee as well a5 assessees group concem: Proceedings have also been initiated by the Assessing Officer in the case of the sub-contractor ujs 153C of the Act The Sub- contractor has submitted the return in response to the notice ujs 153C The sub-contractor has shown the income from the contract receipt being amount paid to them by assessee group. The said income has duly been accepted by the Assessing Officer on Substantive basis in the hands of the Sub-contractor: The Assessing Officer thus has duly accepted while framing the assessment of the Sub-contractor that the payment received by the sub-contractor from the assessee 35 well a5 the assessee group concern were not bogus but were the payment received by performing the obligation for 2 consideration entrusted O O28 1305 H3 I.T.ANos.71 & 7Z/Nag/2016 Assessment vears:2008-09 & 10-11 Exa them under the sub-contract This denotes that the relationship of the assessee 25 well as assessee group concern with the sub_ contractor, 3s genuine has duly been accepted by the Assessing Officer: Once the sub-contractor has been assessed and their income has duly been accepted by the Revenue, in our view, the Revenue; On the basis Of the same facts In the Case af the assessee; cannot take the view that the payment made to the sub-contractor were bogus. Further it is not the case of the Revenue that the Revenue has disallowed the payment made to the sub-contractor It i5 & case where the Revenue has added the impugned receipt from the Sub-contractor entered into the diaries found ad seized during the course Of the search. Fram the analysis Of these diaries; the Assessing Officer ha5 categorically given tte finding that the diaries consist Of the receipt being the withdrawal made by the Sub-contractor as weli a5 the withdrawal made by the assessee from the bank account of the group: The diary aso consists of the payment _ some Of which relate to the site expenses; expenses recorded in the books Of account; investment in the immovable property; personal expenses expenses for the jewellery as well a5 money transferred ad the amount paid to various persons. It is not the case Of the Revenue that the assessee has debited the amount paid tp various persons into his regular books of account ad claimed the deduction so that these expenses Can be disallowed by applying the explanation to section 37 of the Act In fact the assessee has not claimed deduction of these expenses: The Assessing Officer added the receipt being amount withdrawn by the contractor as income of the assessee The receipt in fact is coming out of the Sub contract receipt of the sub-contractor 35 weli 35 assessee and group concerns, Which has already been assessed to income tax by the Assessing Officer: The source of the receipt therefore; is apparent Where the nature and source of the receipt stands explained, it cannot be added to the income of the assessee On this basis itself; in our view; no addition in view Of the cash withdrawn from the bank account af the group concern and the Sub-contractor which are duly disclosed to the department; can be added in the income or the assessee 12.5 This {5 not the Case Of Revenue that these cash withdrawals are from the bank account which have not been disclosed to the Revenue or in which the assessee has deposited 3 4et+ 7 Iac6 I.T.A.Nos.71 & 72/Nag/2016 Assessment Years:2008-09 & 10-11 the cash outside the books of account So for the source Of the receipt is concerned; it Is not denied that the business of the assessee is executing the Government contract and a1i the receipts in the bank account of the assessee is generated only through the contract receipt from the contract taken from the State Government No cogent material or evidence was brought to Our knowledge which may prove that the State Government has made the payment to the assessee outside the books of account On this basis Itself; we confirm the order of CIT(A) that the addition cannot be sustained on the basis of cash receipt found recorded out of the cash withdrawal by the assessee Or the contractor from their bank account We also noted that the Assessing Officer has not only analyzed the receipt side of the diaries but has also analyzed the payment side of the diaries and found from the payment side that & sum Of Rs.24.05 crore has been invested in the immovable property outside the books of account ad similarly , a sum Of Rs.8.47 crore has been utilized as expenses outside the books of account; As regards tp observation of outgoings observed by the Assessing Officer in respect 0f seized document; it is noted that the Assessing Officer has mainly drawn adverse inference without there being any material evidence on record for such conclusion- Even before US; no corroborative evidence were referred to ad brought on record. Thus, the outgoingfinvestment to the extent of Rs.32.52 Core can be regarded to have been incurred by the assessee outside the books Of account but the Same are spent out of money withdrawn from bank the SOurce thereof cannot be regarded to be unexplained We noted that in this case the assesseg as well as assessee group concern, during te course of search; surrendered a sum f Rs,26 crore and accordingly, filed the return in response to the notice ufs 153A. At the most the Assessing Officer could have made the addition in respect of the unaccounted investment provided they are not covered by the amount surrendered by the assessee during the block period In fact; in our view; the source of the said expenditure shown in the diary is also coming out of the cash withdrawal from the banks of the group concern 25 well as of sub-contractor which has already been disclosed tp the Revenue and the receipt thereof has already been assessed to Income tax. 3 ZNF 12.6 We noted that the business income assessed by the Assessing Officer in percentage of the grass receipt in the hands |327 +rs= 0 I.T,A Nos.71 & 72/Nag/2016 Assessment vears:2008-09 & 10-11 1t15: of the various group concern varies from 9,34% to 129.92% as is apparent from the following chart: Particular 4Y 2006- AX 2007_ 4Y 2OQ8- AY 2005- AY Zo10- AY Z0lf- Ax ZOfZ 07 018 09 10 11 12 13 Ms M.G. Bhangdiya 1[.7946 41,274& 35,6096 18,6096 27 .4696 49.50Q MKS Constro Venture P Ltd 9,3496 Ms_ Mahendr Constructlon 10,780 43.13%6 25,4436 11.0406 21.7980 33.059 27.7390 Mts Mahendra Const; & M,G_ Ahangdiva JV 49,530 73,4406 17. 6990 41.81% 16,0306 M/ s.K M Bhangdiva 11.9706 23.3954 26.76P0 26,2696 15.2296 13.940 MKS Acme Build P Ltd 10.2890 MJS,M G Bhargdiya and HItbhav Engg Jv 66.539 11.98Q0 27 ,8390 0.0Q% Ms M G Bhangdiya and 55 PATIL JV 54,8296 129,920 13.180 MYS K M Bhangdiya JV 25.2&06 39,5296 Micon Infra Froject P Ltd 10.0736 10.Q0% 10.0046 Consolidated 12.360 47,0190 74 _3690 18,524 34,259 49.9706 44.5900 In the Case Of the assessee graup the assessment ufs 153A have been framed for assessment vear 2006-07 to assessment year 2011-12 whlle assessment for the assessment year 2012-13 ufs 143(3) of the Act The nature Of the activity being execution of government contract was the same during all the assessment years In assessment year 2006-07, the nature or the work executed for Vidarbha Irrigation Development Corporation remains the same &5 in the case of the assessee for subsequent assessment years: The sub-contractors; who have executed the wOrk are also similar in various assessment years: The Assessing Officer; we noted; in the case Of the assessee group for the assessment year 2006-07, has accepted the income as stown by the assessee group in the return about 12% Of the gross receipts. The Assessing Officer, a5 is apparent from the aforesaid chart; has assessed the income on different footing in the subsequent assessment years under the similar circumstances There had been search in the case of the Omi +oe 1228 IT A.N0S.71 & 72/Nag/2018 Assessment yearszzoob-0g & 10-11 14 assessee: The nature Of the business Of the assessee remains the same No other business activity or the business were found from where the income is derived pr generated, In varous noting in the seized documents 6e. diaries are part of the gross receipt Of the contract receipt Of the group entity , is not disputed The Assessing Officer, while making the addition, observed that the amount withdrawn from the diary is utilized for unaccounted payments which are not allowable like gratification paid to politician and Government officials. However; the Assessing Officer does not refer to any corroborative evidence On record t hold that the assessee has made payment a5 illegal gratification: He has taken 4 view by observing that payment made in cash is probable extraneous gratification: During the course of search, statement of Shri Mitesh Bhangdiya was recorded on 20/07/2011 and he in answer to question No: 30 explained that the seized documents are details of cash flow. During the assessment proceedings Shri Mitesh Bhangdiya has explained that the diaries are noting for the movement Of the cash In reply to question No. 23, in the statement recorded on 27/07/2013. It was also explained by him in the course of the assessment proceedings that the sub- contractors on the withdrawal of the money gave to his father fr safe custody , the amount which are found to be noted in the seized documents. In the statement recorded, the assessee has clearly explained that the notings made in the seized documents has nothing to do with the political leaders as much as political leaders have no business transactions with Bhangdiya group. Even we noted that the Assessing Officer has not brought out on record ay specific evidence to show that payment i5 made to ay politician Or the Government officerjofnicial to whom the gratification payment have been given by the assessee group. We noted that the Assessing Officer out of the Sum of Rs.182,52 crores, added Rs.54.40 crores on the basis of deposition of the sub-contractor for which when the assessee ha5 asked for the cross examination; the cross examination was not allowed to the assessee; which is contrary to the principles of natural justice: Hon ble Supreme Court in the case of Andman Timber Industries VS; Commissioner of Central Excise; Kolkata (Civil Appeal No. 4228 of 2006), under the similar circumstances, when the adjudicating authority did not allow the croSs examination of the witnesses; held a5 under: APPEt Qmoja 1321 +or7 I.T.A.Nos.71 & 72/Nag/zo16 Assessment vears:2008-09 & 10-11 17 "According to U5, not allowing the assessee to Cross examine the witness by the Adjudicating Authority though the statements Of those witness were made the basis of the impugned order is 3 serious flaw which makes the order nullity inasmuch a5 it amounted to violation of principles f natural justice because Of which the assessee was adversely affected In view of the above we are Of the opinion that if the testimony of these two witness is discredited; there was no material with the Department On the basis Of which it could justify its action, 25 the Statement of the aforesaid two witness was the only basis of issuing the Show Cause Notice: We; thus, set aside the impugned order a5 passed by the Tribunal and allow this appeal" Following the said decision of Hon'ble Supreme Court; the statement Of the sub-contractr; in our View, cannot be relied Qn; Even otherwise also, we noted that no corroborative evidence being brought On record to prove that the receipts, which has been added by the Assessing Officer in the income of the assessee is the undisclosed income 0f the assessee In fact the receipts For which the addition has been made by the Assessing Officer represents the part of the gross receipts of the assessee and assessee group concern and the sub-contractor; which has duly been taxed to income tax As pointed by 4S earlier; due to this addition; there has been huge variance in the income assessed a5 percentage with the receipts by the Assessing Officer: The CIT(A) therefore, was correct in rejecting the basis of making the addition by the Assessing Officer: In the facts of the present case; it is seen that regular assessment came to be made as net profit percentage Of receipts ad which were also upheld in appellate proceedings ad have achieved finality. The returns u/s 1534 have a/5o been filed a5 percentage of receipts in this group entities It will anly appropriate to determine the income as percentage of receipts as the same are available on record which are accepted by the assessee &nd the Revenue authorities without dispute 12.7 We may mention that in the case af the assessee group; survey action was conducted on 17/02/2009 wherein under the similar situation, the payment to sub-contractor was disputed Om J2eg- k= Ia0 I,T.A.NOs-7I & 72/Nag/2016 Assessment vears;2008-0g & 10-1I ad doubted by the Assessing Officer, The survey action relates to the assessment year 2006-07 to 2008-09, which are part Of the block period for the search action conducted on 19/07/2011 The Assessing Officer while making the assessment applied & net profit @14% but when the matter reached to the Tribunal the Tribunal Nagpur Bench in LTA.NoS, 268, 269 and 285/Nag/2012 vide order dated 03/04/2013, after considering the impounded material, directed the Assessing Officer to adopt the net pronit @123 a5 against the net profit adopted by the Assessing Officer @I4%, There are also the similar type of defects found a5 have been found in the course of search. We noted the CIT(A) has in the impugned assessment years made in consequence of search, directed the Assessing Officer to estimate the profit @16% and not @12%. Even though the CIT(A) was fully aware of that during the assessment year 2006-07 to 2009-10, the assessee group has surrendered additional income at Rs.li crore and the Tribunal has directed the Assessing Officer to estimate the net profit @1z%6, The Tribunal in that order under para 4 Observed a5 under; "

4.

Brief facts of the case are that & survey ufs. 133A 0f the Income Tax Act; 1961 was carried out in the business premises of the assesses and his associates on 17.02.2009. During the course Of survey operations it was found that most of the bills; vouchers and other evidence in support Of the entries: in cie books of account like labour charges; material purchases, 'machine hire charges, site expenses, sub contract expenses; ojl ad lubricants,repairs ad maintenance etc: pertaining to 'this AX were not available Statement of Sri Mitesh Bhangadiya was recorded under Section 1334 and uJs. 131 of the Act on behalf of the assesse: In the Statement dt.24.02.2009 and 13.03.2009, in response to various questions relating to the genuineness of the payments to third party sub contractors and in respect to other deficiencies, the assessee admitted additional income {n group cases Of Rs, 1l crore ad proportionately were allocated between ali the assessment years relating to these four assessee For the Year under consideration 1&. for assessment Year 2006-07 in case Of Sri Mithesh Bhangadiya, the additional income was offered at Rs.23,97,361f- besides the income shown priginally at Rs.23,63,910/-, Due tax was paid before the issuance f notice under Section 148 a5 admitted by the AO in para 2 of his order; The important contents of submission recorded On 24-02-2009 and 13-3-2009 Of Sri Mithesh SPEL > At 2 Jmooo} 14v1 1es I.T.A,Nos.71 & 72/Nag/2016 Assessment years;ZO08-0g & 10-11 4o Bhangadiya are incorporated in the order of the AO. In query Of question No: 1l, it was answered that during the course Of Sunvey; it was noticed that there are certain discrepancies and omissions and to cover up all such discrepancies we have made out mind to offer additional income over ad above the regular income: We are under the process to determine such additional income to avoid litigation and , to bUY peace Of mind. Thereafter in response to question Nos. 18 & 1g of the statement recorded 0n 13-3-2009, it was answered that the sub contractors were awarded the sub contract work by our firms 25 per contract notes ad the nature of sub contractors has been that labour charges and machine hire charges The sub contractors by and large illiterate and therefore; their bOOks of accounts found to be incomplete, without maintenance of any bills and vouchers; The expenses incurred by our firm has been on the basis Of the 50 called vouchers raised by them &d therefore; there appears the discrepancies in the expenses claimed It was further stated that the assessee has admitted in his previous statement recorded during the course of survey that there are certain discrepancies and anomalies in the sub cantract expenses in their books of accounts, non availabillty of bills and vouchers for the past three assessment years Accordingly , it was submitted that there were certain discrepancies and anomalies In the Sub contract accounts; in books of accounts for assessment years 2006-07 to 2009-10. The assessee declared the additionti income Of Rs:. 11 crore in their firm ad the five sister concerns in the assessment year 2006-07 to 200g-10. The working of the additional income of Rs; 1l crores will be done accordingly and the same wilI be shown: These part of the statements have been incorporated in the order of the AO a5 state above Thereafter the AO started scrutiny of the case, The AO noted that the assessee has shown various expenses under the head labour & wages; machine hire charges; site expenses and sub contract expenses etc; on very higher side, which are not supported by valid vouchers Neither any further evidence was filled: It was also observed by the AQ that since there are various deficiencies in accounts of sub contracts and the assessee has offered a Sum Of Rs. 23,97,361/- on account of discrepancies in respect to sub contract; therefore; he proceeded tp make further addition on account of various deficiencies L.e. in absence Of bills and vouchers; excess claim towards machinery hire charges; verification of applicability of provision Of Section 194C ad denial of alleged sub contractors regarding #aer 3x I.T.A.Nos.71 & 72/Nag/2016 Assessment years:2008-09 & 10-11 the sub contract given by the assessee, AlI these discrepancies are noted by the AO in his order. Thereafter in para 7, the AQ has observed that after having rejected the books of account of the assessee under Section 145(3) of the Act; the profit of the assessee has to be estimated reasonably. The AO also observed that the assessee has declared net prafit ratio of 6c/ and 7% of the total turnover in assessment years 2006-07 & 2007-08, After offering additional income Of Rs.23,97,360/- for assessment year 2006-07, the results In revised net profit comes to 12.87% Of the contract receipts. However; this net profit was found by the AO on lower side The AO noted that in One of the group case namely; Ms: Mahendra Construction & MG Bhangadia (JV) who had declared additional income Of Rs. 1,57,47, 760/- in the Assessment Year 2007-08, which gives a net profit ratio 0f 13.84% of the net contract receipts. In view of these facts the AO adopted 14% net profit Thereatter the AO completed the assessment and made addition Of Rs;, 30,12,722/- against additional income shown by the assessee at Rs 23,97,360/-, which resulted further addition Of Rs.6,15,362}- and ultimately under para 7 as reproduced hereunder; estimated net profit @12%: "7, After considering the submission ad perusing the matasial On record, we find that the assessee deserves to succeeq in his appeal in part; We noted for the year under consideration ie: far' assessment year 2006-07, the assessees NP rate comes to 12.879, for assessment year 2007-08, the assessee's NP rate comes to 10.53%, respectively: We also noted that ir the NP rate Of all the concerns are taken into consideration then it is seen that ali the assesse5 have Shown government receipt at Rs.258,55,37,850/- ad income an these contracts have been shown by these assessee at Rs.6,49,57,111/- which gives & NP rate of 6,38%. The assessee has ffered additional income declared during the survey at Rs, 11, 03,85,877/-, which gives a NP rate of 4.27% and the total NP rate in all these concers comes to 10.65%. Of course the additional income of Rs 11 Crore Or odd was segregated proportionately On the basis Of contract receipts In the hands Of each concern. In case of Mfs Mahendra Construction & MG, Bhangadia (JV) the NP rate comes to 13,84% i.e. for assessment year 2007-08 and this rate has been adopted by the AO and has applied the NP rate of 14% O5m 1243 #tt I.T,A.Nos-71 & 72/Nag/2016 Assessment Years:2008-09 & 10-11 In ali the years in case Of all these assesses on whom a survey was conducted. In view, this approach of the AO was not correct approach. In case Of M.G. Bhangadiya, the NP rate of three years come to 9,879 whereas in case Of other assesses I.e Sanjay Heda, Mfs Mahendra Construction & MG, Bhangadiya (JV) the NP rate comes to 9.50% and in case Of Mfs Mahendra Construction & M.G, Bhangadiya (JV) the average NP rate of three years cpmes to 11.289 and in case of Mfs KirtikumarBhangadiya, the NP rate comes to 8.72% ad in case of M.G Bhangadiya and Mjs Mahendra Construction & MG Bhangadiya (JV) the NP rate comes to 6.1296 , In case Of MG, Bhangadiya ad S.S, Patil & M.G Bhangadiya , the NP of three years comes to 1l.55%. As stated above, the average NP rate of ali the assesses for ali the three years comes to 10.659. Therefore; in Otr view; a rational approach should have been adopted by the AO or by the learned CIT (A). For one case i.e MJs Mahendra Construction & M.G. Bhangadia (JV); the NP rate was 13.849 ad if this rate is applied in all other cases, which in our view, is not justified. However; there is also no dispute that there were So many discrepancies in maintaining vouchers, bills, sub contracts accounts and other , heads, which were not verifiable; therefore; the assessee and his group came forward to offer an additional Income Of Rs. 11 crore an the same has also offered and due tax has been paid. Since a5 stated above ; there are certain discrepancies; we are Of the view; that if NP rate of 129 is adopted instead of 14%, that will meet the end of justice: We made it clear that where MP rate shown by the assessee in any year is more than 1Z% then the more NP rate shown by the assessee has to be taken a5 assessee has declared himself and in other years where NP rate shown by the assessee Is lower than 12%, then 12% NP rate has to be taken The AQ will recomputed the income accordingly: For the sake Of clarification; in case Of assessee for assessment year 2006-07, the NP rate comes to 12.879h after showing the additional income; therefore; the income shown by the assessee has t0 be accepted However; for assessment years 2007-08 & 2008-09, the NP rate shown by the asseSsee after additional income comes to 10.69% and 10.539. The AQ will adopt the rate of 12% and will compute the income accordingly. F @ 12.8 We noted that the CIT(A) even though followed the order Of the Tribunal in the case of the assessee For the assessment year 2006-07 to 2009-10 but directed the Assessing Officer to Omi 42+ IR1H I.T.A Nos.71 & 72/Nagf2016 Assessment years;Z008-09 & 10-11 estimate the net profit during the block period @16% an for that he has given the reasons that there is material difference in the years under appeal i.e. search action has al50 resulted into detection of the unaccounted assets to the tune Of Rs.26 crores and unaccounted jewellery of Rs.2.37 crores which has not been disclosed by the assessee group in their respective returns filed nor the source of such acquisition Of such assets could be explained satisfactorily. We do not agree with such finding of CITIA) a5 we noted that during the block period, the assessee has surrendered Rs.11 crore during the course of survey for the assessment year 2006-07 to 2008-09 and further during search a sum Of Rs,26 crore was surrendered Thus, 2 sum Of Rs,37 crore was available with the assessee which assessee could have utilized far investment In the assets a5 weli &s for the purchase of jewellery. The unaccounted assets a5 well a5 unaccounted jewellery is only Rs.28.37 crore; which i5 much less and is duly covered by the disclosure Of Rs.37 crore during the block period made by the assessee ; Rs.1I crore during the survey and Rs.26 crore during the block period. Even otherwise also, the Assessing Officer , we noted, has gathered the information of unaccounted assets and unaccounted jewellery out Of the documents found during the course of search which shows the utilization of the amount which the assessee has received by way of withdrawal from the bank account af the group concern as welt 25 from the bank account of the sub-contractor which cannot be regarded to be undisclosed We; therefore, do not agree with the reasoning of the CIT(A) in adopting the net profit @16% of the gross receipts, In Qur opinion; no addition Or account &f unaccounted assets to the extent Of Rs,26 crores and unaccpunted jewellery of Rs.2.37 crores could be made We, therefore, after considering the facts of the case, past history, relevant case laws and nature Of the activities carried on by the assessee; are of the view that the estimation of the income by the CIT(A) is at a higher side and is not justified. Therefore; we set aside the order of CIT(A) to the extent of directing the Assessing Officer to estimate the net profit @16% of the gross receipts & direct the Assessing Officer to estimate the net profit on the gross receipt @12%h 35 has been estimated and returned by the assessee group in their respective returns filed in response to the notice issued ufs 153A and ufs 139 of the Income Tax Act; 12ps tadZ I.T.A.Nos,7! & 72/Nag{2016 Vt Assessment Years:2008-09 & 10-11 4 Respectfully following the decision of this Tribunal, we confirm the order of CIT(A) deleting the addition made, Shnce the assessee is not In appeal before US, we also confirm the order of CITIA) estimating the income @169 of the gross receipts. 5, In the result; both the appeals of the Revenue are dismissed. (Order pronounced in the open court 0n 30/06/2017 Sd]- _ (AMARJIT SINGH) Judicial Member P. K: BANSAL ) Vice President Dated:30/06/2017 #Singh Copy of the order forwarded tq 1 The Appellant 2 The Respandent 3 Concerned CIT 4 The CIT(A)

5.

DR,, G4m Arks AsstE | (Registrar Roi4t Felatr Asslstznt Regktrar aro *iaia srrt; Income Tex Apeetato Trlbuna} TTT w4ia / Noppur- Banch

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