A,C.I.T. CENTRAL CIR.- 2(1) vs. SHRI SAMEER S.RACHALWAR, CHIMUR

Nos.139 to 143/4.8/2016 Asstt. Yrs:2f07-O#lto 2011-12 recorded during the course of search action, Shri Mitesh Bhangdiya was confronted with the entries borne out from the seized diaries marked as B- 1 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 and business expenditure: The Assessing Officer in the assessment order has recorded a finding that as per the item no L to 65 of annexure-B, it i5 apparent that the amounts withdrawn fram the bank accounts of the subcontractors Were credited to the daily cash balance of Bhangdiya group which was confirmed by Shri Mitesh G Bhangdiva in his statement dated 14/09/2011. The Assessing Officer has reproduced the statement of Shri Mitesh Bhangdiya recorded 0n 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 onwatds and expenses incurred through the bank accounts from F.Y. 2009-10 onwards: Thus; the Assessing Officer found that the actual expenses incurred do nat match with those shown to have been incurred 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 Sameer S. Rachalwar, the assessee, recorded On 29[08/2011 during the course of survey conducted at Gurudev Ward, Chimur, The Assessing Officer has reproduced the statement of Shri Sameer S. Rachalwar in the assessment order, The Assessing Officer, on the basis of the statement of Shri Sameer 5. Rachalwar; concluded that the bank accounts of the assessee were being handled by Shri M.G. Bhangdiya group_ The Assessing Officer has given a sunmary of all the bank accounts maintained by the assessee in the tabular form to show that the Ia/ Qni I32 1.'T.4, Nos.135 to 143/N:4/2016 Asslt. Yrs:2007-08 tc 2011-12 0# the Bhangdiya group In the bank accounts of the cheques deposited by assessee were subsequently withdrawn in cash which were found credited tp daily cash book seized. On this basis the Assessing Officer made the protective addition In the hands of the assessee in each of the assessment year holding that there were no expenses incurred and no contract work was executed by the assessee who; according to the Assessing Officer, a name lender to the Bhangdiya group. The assessee came in is merely appeal before the CIT(A) challenging the notice issued u/s 153C as well as for cash withdrawals from bank on protective basis, The the addition CIT(A) deleted the said addition in all the years: At the outset; learned A_ R. made an application before US under 3.1 Rule 27 of the I,T.A.T. Rules in each af the assessment year challenging notices issued u/s 153C of the Act as there Was no the validity of the incriminating material belonging to the assessee found in the course of search: It was Stated that the assessments in the case of the assessee were framed ujs 153C read with section 143(3) af 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 valldity 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 of the assessee stand deleted. Under these facts, the assessee did not file any appeal or the Cross Objections taking the ground as regards to the validity of the notice u/s 153C of the Act: It was contended that there is no incriminating material found and seized for the assessment Year 2007-08 to 2011-12 belonging to the assessee in the course 0f the search at the premises of Shri M,G. Bhangdiya. [t was submitted that in the case no satisfaction of the Assessing Officer of the assessee the person of searched is recorded before issue of notice u/s 153C. In absence of non of the satisfaction by the Assessing Officer of the person recording ja3 IT.A. Nos,139 to 143/Nag/2ol6 Assul Yrs-20O}7-(IR 0 2011-12 searched_ the consequent assessment framed is bad in law and the notice issued u/s 153C is bad in law, Reliance was placed in this regard on the decision of ITAT Nagpur Bench in the case of Mansl Commodities Ltd. in ITANos. 146 to 148/Nag/2014 in which the Tribunal vide order dated 19/12/2016 held that satisfaction for issuance of notice Ujs 153C is to be recorded by the Assessing Officer of the person searched and in the absence thereaf the notice Issued u/s 153C is bad in law and consequent assessment framed is bad in law 4_ Learned D R,, an the other hand, vehemently relled 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 befare the CIT(A) Even no submissions were made for which our attention was drawn towards page No. 22 para 12 of the arder of CIT(A): Even otherwise on merit the assessee contended that the diary selzed 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 along with the orders of the tax authorities belaw _ Coming to the adjudication and admission of ground taken by the assessee about the validity of the notice issued u/s 153C and consequently cancellation of the 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 appeated against on any Of the grounds decided against him ladt_ L.T.A Nus.139 t0 143/Nag Zolen Asstt, Yrs;2007-08t0 20}1-12 & 5.1 On the basis of this Rule; it Is apparent that even if the assessee ha- not filed the appeal against the order of CIT(A} he may support the conclusion of the CIT(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 pefore the CIT(A) and also validity of consequent assessment framed thereupon; We noted that CITA} under para 12 of its order dismissed the said ground of the assessee a5 the assessee neither filed 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 u/s 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 as 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 as under: "Natwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Oficer is satisfed that any money; bullion, jewellery or other valuable article Or thing, Or books Of account or documents seized Dr requisitioned; belongs Or belong to 0 person other than the person referred to in section 1534, then the bpoks Of ccotint Or documents Or a5sc5 seized Or requisilioried shall be handed ~c tQ the Assessing Officer having jurisdiction Over such other person. 1.I:A4. Yos.[39 to 143/Nag/2016 Asstt. Yrs'2007-08 to 2011-12 Thi > 'Gin; 16.3t 2115 with elTe? (rorn01/c?U:5 T:` 77 "153C Notwithstanding anything contained in section 139, section 147 section 148, sectian 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 or pertain to; or any information contained therein, relates tO, 2 person pther than the person referred to in section 1534 then, the books of account or documents or assets, seized or requisitioned shall be handled over ta the Assessing Officer having jurisdiction over such other person. The Finance Fill, 2005i* ! mejorani'. exrlciing ;3TYefor which this z6%C:Jcm:? {" PEL "Secvn 1S3C U Uxc: Aci n al Ir' irnsian "/ iXCO z of any Uter pcnsn {nc CxstxG {Wkr:) 7~}f ir {6; suf- Gon (1} CV fi- sa '. 3 {"na tnat nohiitiznkU; cis 7,1"? 1;0 X1Uon 147, seclin} [48, Sectin 1+Y {: 1&! ~i"CCun 153, wher the Assessing Offces 1 Siiisieid Zxl }y {oney; Duliion, jewellery &x" @llicr valuablc &ride Qr tiwng Or bnoks Of account Or docunenls Seized 0r rrquisitian. bclrij to any person; ptier L{va/ {he person neterred to in) si-clicut 4534, then fhe books Qf <cout Or (orubenfs Ur .aS3ets sei7ed Qr requisitioned shrill bo hended Oker L0 th1e Ashes5ing Ofncer having jurisdiction over Such Othei person ad Uiat Assessing Officer shall proceed againsl eaci} Such Oler person and iSsue Sich Othcv person rotice &nd 75S1S9 O; {LaSSLss i IConle Qf such Olher person in ~crordang wth tie' prowsi:: 0f srction 1534, Disputes have arisen], 25 {0 {he; intcrxxt 'Lilun) 31 {hle wors "belungs to" in respect < (Iocniewl &8 fan ins.ance wher} 2 given docuncnt seized from} & {Jerson i< 4 COpy Qf the a5 hR6 [LT'A.N0s39 [o 143/Nag/z01c Asslt, Xrs;2007-Q8t0 2011-12 'Yi ~{ 3naw 'e Dioncsd S.imo7 0 puvie' An; "wng 737_ 4" IY {+X ~ii. 149 serliji: 151 03 nTn {3 w1. rne Aw6fX06"ierr is Sdlisiied!no: .3K MOE'] uJn} ;e-eh{w clner valvabie a1tick O;" rhrk' bchcrs {6 05" w; boo8 Jf rcOUnt Or Oocurent- seized Of equicitoned pJewtawn] to; (} riny intornidtion comnaiiel mlmv Tuxic: lv c' pesi ither Wian} {{Je' pen$} nfmedtu"ocCui {Sh, fien tne Dois Of 2CcOtn}t Qr documents &r asts spp {ejusitionexd shal pc? |widzdd Jiu { {H12 Assesm!y 3oc" mving }iisdiction Ccr Qh 0lkey {%"j; "0"11 {22: '&y,v Omer Shah prucutoi @O.nSn eL} wh oU :!"s_' New?sJ:tner ptiyon njlke .%] &CG2!0 j} 'E0w063 #iLeWna Df SUch Jtier person in jrcondace !iU lie pnomycm: Uf &in ISJA. Subsequently , the CBDT has brought Qui Circulai Nc. 19 Qf 2015 dated 27/11/2015 bvy which explainatory not to tc Frnvision (f Finance Act, 2015 wore discussed. The exlinatry (l 1 {l1e circulai relaling to the amerced prjvision Of &rzibjn [53CTezl:: Unlei "34 /xsess6em Jn mvne O; m{rnrn in1 GvX {no pirson {01 I#exq :vr? Senh }3s bocn" i 0r {6132&40MnG 0188.07MM31 { JsSets {;3ve }~!cVon}ww Jy,f Seti 1530 0f [A}2" {wcn)"o-d04 Ic 'Ans to asS4S mevt 0 "COMO 0l AWY persom Olhei Unan tha pers:n in whse' Cxsr s2unch {Jas Deen €orductcd 3F requistion h1as hrn Made. 112 provisions conlained in sub-s:rtion {1} f tho Sortion 133C before amendmert made !Y the Act; proviced thal notivithstanding anything Ccmlained in} Selion 139, section 147, secrion ]48, sertion [49, sction [S1 and Seclion 153 of the Incne-tax Acl; where Lhe Assessing Officer is satisficd lhat any money; bullion jewelory or Other valuable a/ticle Or tfiing pr books Df acount Qr dorients sized Or requisitioned belong t0 any person; othe than the person refere [ i0! secticw? 534 0; tlit [(BCOUTNC'-[k?: Act, tIjen the books Qf 3ccOlm} Ot dorim:els O5 aSscts Seizer Or reruisilioned shall be nanda- n3 2} Ie Assesssin:} Officer having} jurixdiction Over -uCI! [WX" VetsW} ad Hlat Alssessing Officer shall prorkod againSl e:Ch such other person and iSSuG 1e 1:TA.Nos]39 to 143/a9/2016 E Asstt Yrs;2(07-(8l0 20}41.12 4+ 'unrj 7""e_: %. # 39,2 Daspuc? nw" #M5 &S{0hvien C%c ivonds "bcHong [2' X1/ {Lsurvi &f & ru k &10 jon"c %"?u g:vcn dorivn}entshL&l f 4p'3"iaGV & [vugmizi dcxcument Alw imyy: secUon l3( h.#6 {o0k?n: :nlenned S0 &S to prowdo U: ihthstonding JmynW iMs"ainyfion 139, sen' "{' &w" 146; Q8? {39 27vm?) 151 &nndi Sction 153 Q; ik Incon}'-Ie /nt 1XRs thk ASsessing Onnc i5 mntixtiekd Hin ,ny {; {X"S 6''"yo _ficr VaU?We"i (w:W iX 3 &:tu}l OC dn &no Sen` Q) :X: (3 2, inkoation Cmiumicd {:Jenu :c;L5 {i. 22;6 ;"n: Jter thzn the febsomned lo in} siw: {X {nnomn'-tax Kc; t8iqm} fhWa books Of &3COUm! ({x7/6: #xts %73 0 raquisincd sha De handed Jvc" lu UJ' As_oxng Offictr Iidviig jisalitkv) Cvc SGh cihenvsw a1 L'A# Asse"sing Officer sheli prucerdd Agwinst ej.h scn &her person a08 iSsue notice rd dsC83 (; 'Exsscss inoyc f Sih (th ?h person in ~ordance !ith the provisions:v su:Jnn 1534 39,3 Applicaby: Tn6 MXc: {{l" Js1Jayjn--N "0t15 {{ {0 @ncrt {ron 5.3 I0 wew; / FrIs; !jb #Jarlil th: '"Jwd:hetion 133Care not retrrspcctv? ancl ale &i"&1e %i 1 077i {;iwloi) 0 c not prior to lhail. LM1 he rase of +ne' MSoess0e, #: wc-l : hre Us 153C has beci} issllu prioi to 01/062015. Since in the case of the assessee action us 153C has been taken by issuing the notice dated 16/07/2013 in consequence of the search carried out on 19/07/2011 therefore, the amended provision of section 153C will not apply. As per the provisian of section 153C, a5 was in existence during the impugned period, the condition precedent for issuing notice Ws 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 Or requisitioned which belong to such person where documents in question recovered during search proceedings did not belong to the 138 E.TA. Nos.13V {0 143/Nag/2016 #T 212 Asstt. Yrs;2u07-(8to 2011-12 assessee, though there was a reference ta the assessee therein; issue notice to the assessee u/s 153C, In our opinion; cannot be held to be valid. 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 u/s 132 in the Bhangdiya Group from whom premises diaries marked B-l to B-65 were found and seized; These diaries belong to the Bhangdiya Group not to the assessee Even though the name of the assessee is mentioned in the diary that does not mean that the diary belong to the assessee; It may be said that the diary contains the information regarding the assessee. i: : Qp;II i7; #vi Llie amended pcviio SUPPPCHs thc Case G1 thC ac923-82 Tvi? Lwislalon hus amended secliijn 53C wizh 2lfec; #in; l/Oo}lifjalx vrdeed the scone Ds 153C by sIlsstuling I plece 3i chn ij 0 7c:k;n!' Lc; wOid 'FerLain Dr perlaiv: t0 or any #formaticr (ntaine: therei' Niw under ttie arnended provision, ever if Ihe matexial seized does nct let;iy lo the assessee but it coritains the information relating Ic the a sessee, thz proceedings initiated Ws 153C wil: be valid. But ihis amznced provision, as is apparent; is applicabie fron (91/06/2015. Learned DR; before uS even though vehemently relied On the order of the Assessing Officer but could not adduce any cogent material or evidence which may prove that the diaries found and seized during the course of search in Bhangdiya Group belong to the assessee Since during the course of search in Bhangdiva Group no material relating to the addition made belonging to the assessee was found 139 Eei L.4'44 N0s,139 to 143/N:8/2016 Ilntn Asstt, Yrs;2uu7-OB to 2011-12 #; therefore, the notice issued U/s 153C, in our opinion, cannot be regarded to be valid one, Same_view_has_been taken by Hon'ble Bombay High Court in the case of Bharti Vidyapeeth in ITA No. 923 of 2012 vide its order dated 11/09/2014, This fact also finds support as the Revenue has made the addition in the hands of the assessee in each of the assessment year only on protective basis which proves that the Revenue was also not satisfied with the incriminating material in fact belong to the assessee On this basis we set aside the order of CIT(A) and hold that the notice issued uJs 153C is not valid and in consequence thereupon, the assessment made is annulled Thus; the ground taken by the assessee under Rule 27 is allowed. 6, Now coming to the ground taken by the Reverue We have heard the rival submissions; carefully considered the same along with the Orders of the tax autharities below We noted that the Assessing Officer has made the addition in each of the assessment year in the case of the assessee 0n protective basis in respect of the cash being shown as receipt in the diary seized during the course of search in Bhangdiya Group When the matter went before the CIT(A); the CIT(A) deleted the said addition in all the assessment years by observing a5 under; PE "9.,1 Before adjudicating the issue in hand it would be relevant to briefly discuss the background of additions made in the case of Shri Mitesh G, Bhangdiya & Group concerns 0n the basis of seized evidences &s per Annexure-B-1 to B-65. The Ld AO has made the total addition Of Rs.182,52 Crs in the hands Of various concerns of Bhangdiya group in various assessment years falling within the block period on prorata basis for want Of proper correlation between the amounts credited to the seized diaries and the withdrawals made from the bank accounts Of the sub-contractors. Out of the total addition of Rs.182.52 crores, &n addition of Rs.54.40 Crs. has been made On account of entries of withdrawals from the bank account of sub-cantractors recorded in the seized diaries in proportion t0 the cheque payments made to the sub- contractors by various entities 0f the Bhangdiya group. The 30 I;TA. Nos.139 l0 143/Nag/ZOl Asstt. Yrs:2007-08t0 2O[1-l- various concerns Of the Bhangdiya group had made the payments by account payee cheques to the sub-contractors: The Ld AO after analyzing the bank accounts Of 21 Sub- contractors Out f total more than 100 sub-contractors has arrived at the conclusion that the cash withdrawn from the accounts of the subcontractors has been found deposited on the credit side of the seized diaries marked &5 Annexure B-I to B-65 seized from the premises of Shri Mitesh G. Bhangdiya. Thus, the Ld AO had inferred that the Bhangdiya group by adopting such modus-pperandi had inflated the expenditure by making cheque payments &d subseguently withdrawing the cash from the bank accpunts of the sub- contractors who; according to the AO; are merely name lenders: The contention of Shri Mitesh Bhangdiya was that the cash withdrawn from the account af the subcontractors which 15 Found reflected In} the diaries was kept with Late Shri Gotulalji Bhangdiya , father of Shri Mitesh Bhangdiya by such sub-contractors which was being issued to various sites for the use Of subcontractors 35 per the requirements at the site: Further that the money kept by sub-contractors was 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 flled 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 the head sub-contracts are bogus payments, therefore, the corresponding receipts by way of withdrawals from the bank accounts Of the subcontractors is liable to be added a5 unaccounted income in the hands of various concerns of Bhangdiya group in various assessment years of the block period in proportion to the cheque payments made by such group concerns: 9.2 In the case of Bhangdiya group; the assessments under section 1534 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 years. In assessment year 2006-07, the nature of work executed for Vidarbha Irrigation Development Corporation remains the same as 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: #i 1.'1A. Nos.139 to 143/Nag/2016 415 Asstt Yrs-2(0?-498 tn 2011-12 I3i 9,3 The A.Q. has observed that the sub contractars in the case of Bhangdiya group are name lenders and bogus: In this regard; it is 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 and 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 IT: Act 1961 by the same A,O. wherein the income returned in respect of business income shown arising to Such sub-contractors out af receipt received from the Bhangdiya group have been accepted. Thus; the A.0, having accepted the business receipts in the hands f sub- contractors including the appellant for determining the income in the cases Of sub-contractors could not have concluded that the payments 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 from the order or 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, 4 survey action was conducted On 17/02/2009 in the Bhangdiya Group Of cases; wherein the similar Situation as payments to Sub-contractors was disputex and doubted by the AO, The survev 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 Hon'ble ITAT, Nagpur Bench; Nagpur after having considered the similar activity of business and deficiencies in subcontract payments found during the sunvey action conducted O7 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% a5 against net profit adopted by AO @ 14%. 9.5 In view of the above Facts and circumstances and keeping in view of various infirmities and various judicial decisions relied upon by the appellant &d to meet ends of I32_ Ii; LTT.A. Nos.I39 t0 [43/Nag/201 Asstt Yrs.2007-08 to 2011-12 16 justice; to my considered opinion, it was considered Fair and reasonable to adopt the net proft @ 16%h On the gross receipts 0f 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 vears of the block and bring the same to 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 on 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 investment 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 cCases Of Bhangdiya grOup as against net profit of 12% estimated by Hon 'ble ITAT; &s the issue of undisclosed investment in assets was not there before the Hon'ble ITAT in the survey appeals. 10, Thus; I have considered the submissions made by the appellant ad evidence on record. It is seen that the appellant i5 & sub-contractor ad 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 us 153C of IT Act 1961 after there being search n Shri Mitesh Bhagdiya group 19/07/2011 and assessments have been framed for assessment years 2006-07 to 201O-Il & A.Y: 2012-13 in the month of March; 2014. 10.1 It is seen from the assessment order that the A.O. has reproduced the statement recorded uls 132(4) of Shri Mitesh Bhagdiya ad has referred to seized documents inventorized as B-] to 65, In the case Of Shri Mitesh Bhagdiya, the AO has found that the withdrawals made fram the bank account Of assessee are matching with the credits appearing in the seized documents found at the premises of Shri Mitesh Bhagdiya. The AO. has concuded 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 and added in the respective assessments framed in Bhangdiya group: The AO. further observed that the cash withdrawn from the bank Is added &s income On 133 L.T.A. Nos.139 12 143/Nag/2016 6 Asstt, Yrs:Zon7-(Rfo 20}11-12 Hi4 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 return submitted in response to notice issued u/s 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 and 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.

In fact has assessed income returned without inviting any adverse observatian 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 0n the basis of which income has been returned The withdrawals From the bank having already been considered for the purpose Of determining income at the hands of appellant a5 shown in the return cannot separately constitute income liable to be assessed in the hands of appellant The addition made by A.O. is thus unjustified and unsustainable; 7 ) 10.4 It is further seen that the AO: has made observation in the assessment order to the effect that in the case Of Shri Mitesh Bhagdiya group disallowance has been made for various expenses claimed On account Of sub-contract expenses which includes payment to appellant It is settled proposition Of law that the substantive assessment must precede framing of protective assessment In the Facts and circumstances of the case, i is difficult to rationalize how withdrawals from the bank account can constitute assessable income much less 0n protective basis in the Case of the appellant The A.O; has made disallowance Of sub-contract expenses being amount paid to appellant while determining the income of business entities 0f Shri Mitesh Bhagdiya group Such payments are already considered for income shawn in the return and assessed as business receipt in the hands of the appellant Addition of such amount again On protective Jmi LT,A. N0s.139 [o} 143/Nag/2016 Asstu Yrs:2007-08 to 2011-12 basis deties logic I do not find ay rationale to make Such withdrawals made from bank protective assessment of the in the hands of assessee himself The account af assessee assessed on protective basis therefore, is held to be income unjustified and unsustainable on this count a5 well The gross receipts in the case of the appellant a5 weli 10.5 35 returned income along with the percentage of income has been tabulated by the appellant for various assessment years and the same i5 reproduced herein under: Shri Sameer $. Rachalwar Turnover, Returned income and assessed Income Assessment vear: 2007-08 to 2011-12 20007-08 2008-09 2009.10 2010-11 2Q11-12 ASSESSMENT YEAR GROSS RECEIPTS 50,00,223 41,36,537 39,07,514 37,40,796 57,13,415 RETURNED INCOME 1,25,550 1,03,960 3,3B,1S0 3,14,420 5,06,280 Wo OF GROSS RECEIPTS 2.519 2.5106 3.650/ 8.419 18,8692 ADDI TIONS UNDER SECTION 153C 37,65,Q00 39,85,0O0 19,88,00Q 27,50,000 38,0D,ODD RSSESSED INCOME 38,90,550 40,88,960 23,26,150 30,64,420 43,06,280 %a QF GROSS RECEIPTS 77.B106 98.85%0 59.5390 81.9290 75.3796 10.6 It is seen from the above that the income returned has been accepted in the case Of appellant without Inviting ay adverse inference ad considering the addition made in the hands Of assessee; the income assessed as percentage of receipt dearly reflected absurdity in the action Of the Id. ArOss retilepteterriningececincomne in the hands of assessee Ahe additeordetedeirbyg Id,eA.GOthus; {s unsustainable for the aforesaid reason also. Therefore; the protective addition made In the hands of the appellant i5 directed to be deleted in all the years Of the block period. We noted that the CIT(A) has given the finding of fact: This is a fact 6.1 that the substantive addition has been made in the hands of the assessee of the income received by the assessee as sub-contractor In each in respect of the assessment year. The withdrawal made by the assessee from his lt 135 LTA Nos,139 to 143/N.g/2016 Asstt Yrs.2(07-D8to 2011-12 49 A 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 af imagination can constitute assessable income in the hands Qf the assessee, The Assessing Officer while determining the taxable income of the business entities of the Bhangdiya Group made the disallowance of 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, Addition 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 CIT(A) has rightly deleted the addition in each of the assessment year; We accordingly confirm the order of CIT(A) Thus; the appeal filed by the Revenue in each of the assessment Year stand dismissed. 7 In the result; all the appeals of the Revenue stand dismissed. (Order pronounced in the open court on 22/06/2017 Sd/_ _ (AMARJIT SINGH) Judicial P. K BANSAL ) Member Vice President Dated:22/06/2017 *Singh Copy of_the_order forwarded_to 1 1 The Appellant 2 The Respondent 3, Concerned CIT 4. The CIT(A) DR. 5 Cu 2 Asstt-Registraf 86,0.8 ,