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TMI Blog2010 (1) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 210 to 216/Ind/2007 for the assessment years 1999-2000 to 2005-06. 3. The assessee has raised following additional grounds in appeals no. I.T.(SS)A No. 210 to 214/Ind/2007. "1. On the facts and in the circumstances of the case, the order u/s 153A r/w Section 153C is bad in law, untenable, illegal, barred by limitation, without jurisdiction and is liable to be quashed. 2. On the facts and in the circumstances of the case, no satisfaction as required u/s 153C was recorded. 3. On the facts and in the circumstances of the case, conditions as specified u/s 153C have not been complied. In I.T.A.No.216/Ind/2007, in addition to these additional grounds, following additional ground has also been raised :- "4. On the facts and in the circumstances of the case, the ld. AO could not initiate proceedings u/s 153C for relevant assessment year." 4. The Learned counsel for the assessee submitted that the issues raised in these additional grounds were purely of legal nature and no inquiry into the facts was required as all the evidences were on record. Hence, the same could be admitted. The Learned counsel further relied on various judicial decisions in this regard. On a query from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings in the hands of the assessee firm. Hence, existence of material could not be doubted and, therefore, the relevant contentions of the assessee were without any merit. The ld. CIT DR further contended that the satisfaction note as required by law did exist, hence, the A.O. had complied with the requirements of law i.e. the A.O. had recorded a finding dealing with the assessment of a person, where search was conducted that the document/income belonged to third person and such satisfaction was recorded by the Assessing Officer before issue of notice u/s 153-C read with Section 153A of the Income-tax Act, 1961. He further contended that notice u/s 153C read with Section 153A had to be issued for six preceding assessment years and not in respect of only those years in respect of which some material/assets were found, because the provisions of Section 153-A/153-C did not give any leeway/discretion to the A.O. in this regard nor it was contemplated that jurisdiction under these sections was restricted only to the years in respect of which some documents/assets were found. The ld. CIT DR, thereafter, contended that provisions of Section 143(2) were to be applied only in respect of gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barred assessment under both the provisions. He further contended that the provisions of Section 153A and 153C differed in scope i.e. jurisdiction u/s 153A was based upon the action u/s 132 or 132A and provisions of Section 153C had to be invoked on the basis of material found during the course of search and, therefore, jurisdiction u/s 153C could be invoked only in respect of such assessment years, where some material had been found. He further contended that as against the block assessment scheme, wherein one notice was required to be issued for the entire block period, as per the new scheme notice u/s 153A or 153C read with Section 153A had to be issued for each year and income of each year was to be assessed separately as per normal provisions of law i.e. at normal rates and liable to penalty or interest also, which fact strongly support the claim of the assessee that assessments in respect of assessment years other than 2004- 05 & 2005-06 were null and void. The Ld.Authorized Representative also contended that absurdity would arise if six years were reopened inspite of having no material for all the six years and it would also result into unbridled powers in the hands of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings were liable to be quashed merely for this defect. In our opinion, such arguments have got no merit, because for making an assessment, in case of person referred to in section 153C, the provisions of section 153A have to be applied. Even otherwise, such technical defects are covered within the scope of provisions of section 292B of the Act. Accordingly, we dismiss additional ground no. 2 of the assessee. 10. Having sated so, now, we shall deal with the core issues involved. The learned counsel for the assessee has vehemently argued that completed assessments could be reopened under section 153C only when any money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized or requisitioned, belong to a person other than the person searched under section 153A and were relatable to such completed assessments. To put it differently, it is the case of the assessee that under section 153C the assessments for all the six back assessment years cannot be reopened unless some material/document is found for all such years. The learned CIT DR, on the other hand, has contended that jurisdiction for all the six years was automatic even if seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y action u/s 132 can be directed against three types of persons: (1) those who have omitted or failed to produce books or documents as required by any summons or notice issued to them; (2) those who, whether so summoned or not to produce documents, will not or would not produce books of account or documents; and (3) those who are believed to be in possession of money, bullion, jewellery or other valuable article or thing representing either wholly or in part, income or property which has not been disclosed for purposes of taxation or would not be disclosed for the purposes of taxation." 12. Thus, what this section requires is that the document things etc. should be useful or relevant to the proceedings under the Act and, therefore, a sweeping search or seizure of documents or things irrespective of their relevancy to or usefulness for some proceedings under the Income-tax Act is not permitted. Similarly, search warrant cannot be issued with a view to make roving and fishing enquiries. The Hon'ble Supreme Court in the case of ITO v. Seth Brothers as reported in 74 ITR 836 made it clear that section 132 did not confer any arbitrary authority upon the Revenue Officers. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal over it." 13. Thus, another principle that emerges is that there must be "reason to believe" with the competent authority for exercising powers under section 132 of the Act. This term needs no further elaboration as it is the most stringent safeguard used by the legislature to prevent arbitrary use of not only such sweeping powers by the revenue authorities but in other provisions of the Act whereby the finality of concluded assessments can be disturbed. Thus, in nutshell, the operation under section 132 presupposes existence of some undisclosed income or the income which would not be disclosed, hence, this cardinal aspect cannot be ignored in spite of the fact that different assessment procedures have been in place in respect of search cases at different points of time. Originally i.e. prior to block assessment procedure, the position was that for final quantification of tax liability the procedure was governed by section 147 of 1961 Act relating to assessment / reassessment of income which had escaped assessment and such fact of escapement came into the knowledge of department as a consequence of action u/s 132 or 132A or through the normal procedure of assessment unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of any year falling within the period of six back assessment years shall not be affected which is very significant as this provision indicates that concluded assessments would not be demolished in toto as such appeal proceedings are continuation of original assessment proceedings and, thus, scope of provisions of section 153A is required to be analyzed after taking into consideration this factor also. The other significant feature is that the provisions of section 132(5) and 132(7) are not on the statute now because the legislature has intended to shorten the time duration of completion of assessment in search cases and to avoid over-lapping proceedings. The Provisions of section 132B in respect of application of seized or requisitioned assets are entirely different from section 132(5)/132(7). The jurisdiction under section 153A, though assumed by the Assessing Officer by issuing notice thereunder, is inherently related to search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A of the Act. Hence, in our humble opinion, it would be highly inappropriate to say that existence of some undisclosed material or assets or do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the areas in respect of which some material or documents or assets have been found. To further buttress our view-point on the aspect that section 153A provides for an outer limit up to which concluded assessments could be reopened and does not give a blanket jurisdiction to the Assessing Officer to reopen the cases of six back assessment years without having any material, we can envisage a situation for a moment that no material is found during the course of search then, what purpose could be served by reopening the six concluded assessments because in such a situation, there cannot be an intention of the legislature to empower the Assessing Officer to reopen such assessments again and to take a different view on concluded matters without passing through the test of change of opinion particularly, when under the plain scheme of Act, power of review has not been conferred on any Income Tax Authority. To put it differently, an order can be rectified u/s 154 or assessment or reassessment can be done u/s 147 read with section 148 or revision can be done u/s 263 and such action/powers are entirely different from the power of review. In this regard, we further of the opinion that what ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r books, or documents are found during search are ripped open and the assessment/reassessments shall be framed afresh. 9. As the issue under consideration is new and no direct legal precedents are available on the point, we take aid from the principles of statutory interpretation and also from a judgment of the Hon'ble Jharkahnd High Court in the case of Abhay Kumar Shroff v. CIT[2007]290 ITR 114, where the new provisions of assessments of search cases have fallen for consideration although in a different context. 10. The basic principle of interpretation of a statute is that where the words of a statute are clear, plain or unambiguous, the Courts should give effect to that meaning irrespective of consequences. As we have seen above, the language of section 143A is not unambiguous and is not susceptible to only one meaning. In the circumstances, the principle of literal construction is of no help. We, therefore, would like to take recourse to other guiding rules like rule of harmonious construction, regard to consequences, rules relating to provisos and the external aids like contemporanea expositio. 11. One of the salutary rule is rule of harmonious construction. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed income unearthed during search and the same is to be added with the regular income assessed under section 143(3) or computed under section 143(1) for each of the six preceding assessment years. Where any prepaid taxes are there, the same are required to be given credit for computing the further tax payable by the assessee. The assessee is also required to pay interest under sections 234A and 234B on the tax due on the basis of new calculation. Where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed in our considered view. 14. The construction that the department seeks to place on the impugned provisions would lead to serious hardship, inconvenience, injustice, absurdity and anomaly. Suppose in the course of a search, nothing incriminating was found. Does this mean that an honest citizen be unduly harassed by facing automatic reopening of the concluded assessments merely because there was search action against him ? The absurdity of the construction get all the more pronounced when say, no incriminating material is found relating to the "other person" but the material found indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o such assessment year." A reading of the above mentioned circular clearly indicates that the appeal, revision etc. Arising out of earlier assessments shall not abate. In other words, there is no merger of the earlier assessments with the assessments done under the new scheme, i.e. section 153A or 153C. 16. The Hon'ble Jharkhand High Court in the case of Abhay Kumar Shroff (supra), has held recently that there shall be assessment of undisclosed income of six assessment years preceding that in which search was conducted under the new scheme of assessment. [Emphasis supplied]. 17. The Ld.CIT(DR) has mainly relied upon the literal construction of the provision. We have elaborately dealt with the issue and for the reasons stated hereinbefore, we are unable to subscribe to this view. The ld. CIT(DR) has also referred to the provisions of sections 234A and 234B wherein section 153A has been inserted after new scheme of search assessments was brought in the statute book. A careful perusal of the said provisions reveals that the amendment enables the department to levy interest under sections 234A and 234B on the undisclosed income unearthed during search. The amendment made in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is only to avoid two parallel proceedings of assessment of particular year of the same person i.e.one as a regular assessment and another as an assessment under section 153A of the Act and it is not so because the whole exercise of assessment is to be made afresh in respect of completed assessments. Thus, a new claim of deduction or allowance in case of completed assessments on the date of initiation of action under section 132 or requisition made u/s 132A cannot be made. This is also so because when the Assessing Officer cannot disturb the finality of concluded assessments without any material and assessments under section 153A are in relation to determination of undisclosed income in such cases. This view is further supported by the decision of the Tribunal in the case of Sun City Alloys (P) Limited v. ACIT as reported in 124 TTJ page 674 wherein the Tribunal, after considering various judicial decisions including that the Hon'ble Jharkhand High Court in the case of Abhay Kumar Shroff v. CIT as reported in 290 ITR 114 held as under:- "14. From the reading of s. 153A of the Act, it is evident that this section starts with non obstante clause and overrides ss. 139, 147, 148, 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year, which has been abated under second proviso to s. 153A, shall stand revived from the date of receipt of the order of such annulment by the CIT. This goes to show that the assessing authority cannot and shall not destroy such returns from his record. Furthermore, the proceedings that are supposed to be abated are in relation to assessment or reassessment to be made by the officer of original jurisdiction i.e., the AO and not all other proceedings such as appeal, revision or rectification, which are continuation of assessment or reassessment proceedings as is evident from the Board in its Circular No. 7 of 2003 dt. 5th Sept., 2003 reproduced hereinbefore. The appellant's reference to Hon'ble apex Court's judgment in the case of S. Sankappa & Ors. Vs. ITO (1968) 68 ITR 760 (SC) is also relevant to understand the concept of "pending assessment". The Hon'ble apex Court while defining assessment have laid that the word assessment is used in the IT Act in a number of provisions in a comprehensive sense and includes all proceedings, starting with the filing of return or issue of notice and ending with determination of the tax payable by the assessee. In this view, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od in each section with reference to the context in which it has been used as laid down by the Hon'ble apex Court in A.N. Lakshman Shenoy vs. ITO (1958) 34 ITR 275 (SC), 291. Thus in s. 153A the expression signifies merely computation of undisclosed income that shall form part of "total income" within the meaning of s. 2(45) of the Act in respect of each of the assessment falling within such six assessment years that is required to be aggregated with the income already assessed in cases of completed assessments, more so when s. 132 of the Act comprehends action to search of a person in possession of undisclosed income or property. In those cases where assessments are pending at the time of initiation of action under s. 132, the computation of total income has to be done in a normal manner. In our humble opinion, the computation of total income so made shall meet the requirement of s. 4 of the Act. 18. The judgement rendered by the Hon'ble Jharkhand High Court in the case of Abhay Kumar Shroff vs. CIT (2007) 210 CTR (Jharkhand) 602 : (2007) 290 ITR 124 (Jharkhand) relied by the appellants. Also clearly states that after 31st may, 2003, the earlier provision of block assessment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Bhagwati delivering the judgment of the Hon'ble Supreme Court set out this definition of 'pending' legal proceeding and then observed." Similar are the observations of Jessel M.R. in, In re clagett's Estate Fordham vs. Clagett (1982) 20 Ch. D 637,653 (CA) : "What is the meaning of the word 'pending'? In my opinion, it includes every insolvency in which any proceeding can by any possibility be taken. That I think is the meaning of the word 'pending'...... A cause is said to be pending in a Court of justice when any proceeding can be taken in it. 'That is the test'." 21. Thus the entire overthrow or destruction or termination of pending assessment before the assessing authority who can take original cognizance is only to avoid two parallel proceedings of assessment of a particular year of the same person, i.e. one as regular assessment and another as assessment under s. 153A of the Act and not that the whole exercise of assessment to be made afresh in respect of completed assessments. 22. The issuance of notice s. 153A for all the six assessment years also does not entail altogether a fresh exercise of making fresh assessment. In fact, the apparent and logical purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the regular assessments are shown as completed assessment on the date of initiation of action under s. 132 of the Act. Such a ground in all appeals stands rejected." 19. The learned CIT DR has also argued that all the assessments were to be construed as made under section 143 and in this regard, he, has placed reliance upon several decisions as mentioned hereinbefore. However, from a perusal of these judicial decisions and in view of the settled position that the term "assessment" has got varied meanings i.e. it may include complete assessment procedure i.e. consideration of return till the realization of taxes and penalty, after quantification of total income and tax liability or it may include some of these aspects. It is further noteworthy that section 143 of the Act has got two dimensions i.e. firstly, it confers jurisdiction on the Assessing Officer to verify the return, examine the claims of the assessee and quantify the total income in accordance with the provisions of the Act and the second dimension is related with the compliance of principles of natural justice by affording an adequate opportunity of hearing to the assessee to substantiate its claim and to satisfy the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said order are reproduced as under for the sake of ready reference :- ix. "We have considered the submissions made by both the sides, material on record and the orders of the authorities below. x. The issues, which require adjudication by us, can be summarized as under : (i) Whether assessment for the previous year in which search is initiated u/s 132 or requisition u/s 132A is made has to be done in accordance with the provisions of Section 153A/153B of the Act. (ii) If so, then whether time limit for service of notice u/s 143(2) of the Act shall also apply and how such time limit shall be determined. xi. Before proceeding further, we consider it relevant to reproduce relevant provisions of Section 153A & 153B as under :- 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of] section 153A, within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed : 12. If we analyze the provisions of Section 153A again, then, it emerges that this Section operates in the following fields :- 1. It gives jurisdiction to the A.O. to issue notice for six back assessment years and to assess or re-assess total income of such six assessment years. 2. The A.O. has to assess or re-assess the total income in respect of each assessment year falling within such six assessment years. 3. The pending assessment or re-assessment relating to any assessment year falling within the period of such six assessment years shall abate. Page 50 of 149 4. The tax is to be charged at the rate or rates as applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be wider i.e. it would also cover the matters of Section 143 of the Act. Thus, in nut-shell, Section 153A can be summarized as a combination of Section 143, Section 147 and factually for assessment or re-assessment of total income in respect of cases covered by Section 132 or Section 132A. 14. It is further pertinent to note that new scheme of assessment in respect of search conducted after May 31, 2003, is materially different from special procedure of search assessment contained in Chapter XIV-B which was abandoned as to controversies sprung up questioning treatment of particular income as undisclosed and whether there was any material found during the course of search relatable thereto. In this background, when we read the provisions of Section 153A, it is noted that it starts with a non-obstante clause overriding the provision of section 139,147,148,149,150,151 and 153. It is also noted that return u/s 153A has to be in prescribed form. The other important effect of provision of Section 153A(1) is that it gives a jurisdiction to the A.O. to initiate assessment proceedings by issuing notice under this Section. This section also creates an outer limit of the six back asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be levied as per the general provisions of the Act applicable to such assessment year, hence, there cannot be any prejudice to the assessee merely because an A.O. proceeds to make an assessment in case of year of search as per the provisions of Section 153A read with section 153B, particularly when time limit of service of notice u/s 143(2), subject to provisions of Section 153B, would also be applicable (reasons on this aspect are given later in this order). 16. We also find that as per Explanation (i), time limit prescribed u/s 153B for completion of assessment u/s 153A is to override the time limit provided for completion of assessment u/s 143 or 144 in Section 153 of the Act. We further find that the heading of Section 153B is "Time limit for completion of assessment u/s 153A". It is a settled principle that heading of a particular section also indicates about nature and scope of such provision and if viewed in this perspective, then, it would again be clear that assessment of the previous year, in which search took place, is required to be completed as per the provisions of Section 153A read with Section 153B of the Act. In this regard, memorandum explaining the Finance Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer having jurisdiction over such other person receives the books of account or documents, etc. before the due date of furnishing the return of income for such assessment year, then also, the assessment would be completed in the manner provided under section 153A of the Act because in that case, the AO can assess/re-assess u/s 153C(1) in routine course. We are, accordingly, of the view that if under specific circumstances as provided u/s 153C(2) assessment of a person covered under section 153C has to be completed in the manner provided in section 153A of the Act, then, there should not be any no doubt that the assessment in case of a searched person for the year of search has to be completed under section 153A read with section 153B of the Act. 19. In view of the above discussion, we hold that the Ld. CIT(A) was not correct in law in holding that assessment for the previous year in which search took place or requisition was made had to be completed under the normal provisions of the Act. 20. Now, we shall deal with the second issue. The ld. Departmental Representative has contended that though the notice u/s 143(2) was required to be served, however, time limit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of an assessee as per provisions of law and, secondly, it requires that in doing so, the A.O. shall follow the principles of natural justice by giving due opportunity to the assessee before completing the assessment and, therefore, when reassessment is made u/s 147, then only the second aspect of the provisions of Section 143 comes into play. We are further of the view that the second aspect as mentioned above rather makes it obligatory on the part of the A.O. to serve the notice u/s 143(2) within the time limit prescribed thereunder as there is no exemption from such requirement in Section 153A, 153B and 153C of the Act. We are further of the view that the provisions of Explanation (i) to Section 153A are materially different from the provisions of Section 158BC(b) as in that Section, the words " so far as may be" existed and such words are not used by the Legislature in such explanation. Having stated so, it is also important to note that in case of block assessment u/s 158BC inspite of having a different wordings, judicial opinion was that notice u/s 143(2) was required to be served in the manner as specified in Section 143(2) to pass a legal valid order u/s 158BC. In this reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or service of notice under section 143(2) of the Act is the outer limit for making an assessment under section 143(3) as such or under section 143(3) read with section 147 of the Act. Hence, such time limit has to be exercised in a manner so as the Assessing Officer can complete the assessment u/s 153A or u/s 53C r.w.section 153A within the time limit prescribed under section 153B(b) of the Act. To put it differently, time limit prescribed u/s 143(2) for service of notice cannot extend the time limit prescribed for completion of assessment under section 153B(1)(b) of the Act. This is also so because as per Explanation (i) to section 153A, the time limit prescribed for completion of assessment proceedings u/s153 B(1)(b)would prevail over the limit prescribed as per the provisions of section 143(2) of the Act. Accordingly, we hold that condition of time limit for service of notice u/s 143(2) shall also apply to assessment/reassessment proceedings contemplated u/s 153A and it would start from the end of the month in which return is filed in response to notice issued u/s 153A/142(1) and, in case, no such notice has been issued, then, it shall be construed from the end of month in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh the assessment proceedings for A.Yrs.1999-2000 to 2003-04.Consequently, assessment of such years are declared null and void. Thus, additional grounds no. 1and 3 are allowed. 24. Since the assessment for the years other than assessment years 2004-05 and 2005-06 have been quashed on the basis of legal issues, hence, we do not consider it necessary to express any opinion on the merits of the issues involved therein. Now, the remaining appeals are Nos. 215 & 216/Ind/2007 filed by the assessee and I.T.A.Nos. 6 & 7/Ind/2008 filed by the Revenue for assessment years 2004-05 and 2005- 06. The grounds raised in these appeals are reproduced as under :- GROUNDS IN I.T.A.NO. 215/IND/2007: 1. That on the facts and in the circumstances of the case, the ld. CIT erred in confirming the invoking the provisions of Section 145(3) of the Act by rejecting the books of account without accepting the explanation offered by the appellant. 2. That on the facts and in the circumstances of the case, the ld. CIT erred in confirming the addition of ₹ 7,44,836/- out of total addition of ₹ 1,08,82,309/- by estimating the net profit @ 6 % on account of suppressed net profit without considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery GROUNDS IN I.T.A.NO. 07/IND/2008: On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in - (1) deleting the addition of ₹ 3,13,82,675/- made by the Assessing Officer by applying net profit rate of 8 % on account of suppression of net profit out of total addition of ₹ 3,49,44,614/-. (2) directing to include ₹ 1,00,15,487/-being the amount surrendered during the search operation for the calculation of net profit. (3) deleting the disallowance of ₹ 1,20,000/- made by the Assessing Officer on account of payment of salary to Smt.Rekha Jain. (4) deleting the disallowance of ₹ 50,000/- made by the Assessing Officer for unrecorded expenditure. (5) deleting the addition of ₹ 4,57,499/- made on account of letting on hire of plant and machinery 25. The ld. Departmental Representative had stated that in all these appeals common issues were involved and A.O. had passed a consolidated order for the sake of convenience, hence, the LD CIT DR argued on the common issues by referring to Revenue's appeal in I.T.A.Nos. 1/Ind/2008 for assessment year 1999-2000. Though the assessment proceedings for this year have been qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 2001-02. The A.O. also examined the books of account for the post search period of assessment year 2005-06 and on the basis of these efforts observed that the assessee did not maintain quantitative details and most of the payments were made in cash, which were unverifiable also. He further held that reasonability of labour expenses and consumption of material vis-à-vis contract receipts also remained unsubstantiated. Thereafter, he noted that the auditors had also made certain observations in their audit report in the impugned assessment years, which mainly pertained to confirmation of balances by the respective parties and some of the muster rolls not being produced before the auditor. The A.O. also found that there were some deficiencies in report vis-à-vis actual facts in relation to the payment of salaries/other payments to partners and related persons. The A.O. also held that when the books of account and record for assessment year 2005-06 had been seized by the Department, then, how the auditors could certify that they had carried out the audit as per books of account maintained by the assessee. The A.O. further found various discrepancies regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gi & Company, Bhopal, who had declared net profit before salary and interest to partners @ 5.1 %. The A.O. also analyzed trading results of other subcontractors for assessment year 2005-06 with the quantum of job receipts. The A.O. also found that some of the sub contractors were actually employees of the assessee and this technique was adopted by the assessee to suppress its actual profit margin. The A.O., accordingly, formed an opinion that the net profit @ 8% before salary and interest to partners would be the most reasonable. Accordingly, he worked out the suppressed net profit of the assessee firm and made the addition on this basis in different years. 29. Aggrieved by this, the assessee carried the matter into appeal before the ld. CIT(A), wherein the assessee challenged the A.O's action of invoking provisions of Section 145(3) for the reason that the books of account were duly audited u/s 44AB of the Income-tax Act, 1961, and the audit report had been attached with the return of income and, therefore, merely because the books of account could not be produced due to theft just few days before the search, the assessee's book results could not be rejected as minor mistakes/def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the assessee and Revenue are in appeals before us. 30. The ld. CIT DR submitted that assessment for assessment year 2001-02 had been completed before search u/s 143(3), wherein books of account/vouchers required by the Assessing Officer were not produced. The ld. CIT DR further submitted that as a result of investigation by the A.O., the assessee revised original return, wherein the rate of net profit was increased to 6.25% as against 1.53 % originally declared by the assessee. He further drew our attention to page 12 of the assessment order regarding fact of books of account/other records and filing of FIR by the assessee on 14.11.2004 barely 10 days before the search, which also reflected the approach of the assessee to hide the material facts from the Department. He further contended that various discrepancies were found by the Assessing Officer, which resulted in to such estimation and the A.O. had not applied rate of 8 % on the basis of provisions of Section 44AD, but on the basis of such discrepancies, hence, his action was liable to be confirmed. The ld. CIT DR in support of his claims referred to page 18, 20, 21, 22, 23, 38 and 39 of the assessment order. In nut-shell, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a sum of ₹ 7, 00, 000/- in A.Y.2004-05 and ₹ 50,000/- on account of seized material indicating unrecorded expenditure and ₹ 1 Crores in A.Y. 2005-06 on account of sundry creditors. Thus, primary condition of existence of some material for invoking provisions of section 153C is satisfied. The return of income for A.Y. 2004-05 was filed by the assessee on 1-11-04, barely 23 days before the search, hence, the same is to be treated as a case of abatement of pending assessment for the reason that time for making an assessment under section 143 is available and the Assessing Officer of both searched persons and assessee being the same, hence, it is logical to make an assessment under section 153A read with 153C, especially when the scope of such assessment proceedings would be no different from the scope of assessment proceedings under section 143 and there being no other prejudice to the interests of the assessee. Consequently, we hold that the assessment for assessment year 2004-05 is to be framed under section 153A read with section 153C. Further, the assessment for the assessment year 2005-06 is also to be made as per the provisions of 153A read with section 153C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration entire facts and circumstances, we hold that the order of the ld. CIT (A) is correct in law. Accordingly, the relevant grounds in Revenue's appeals for A.Y. 2004-05 and 2005-06 are dismissed. Further, ground no.1 of assessee's appeals in I.T.A.No.215/Ind/08 and 216/Ind/08 is also dismissed. 36. Ground no. 2 reads as under :- 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of ₹ 44, 10,314/- made by the Assessing Officer treating the sundry creditors shown in the Balance sheet as unexplained. 37. The facts, in brief, are that the A.O. in the course of assessment proceedings found that following sundry creditors were appearing in the balance sheet of respective years pertaining to impugned assessment years. A.Y Alleged Sundry creditors as on 31st March 1999-2000 4410314 2000-01 200350 2001-02 1676300 2002-03 9035683 2003-04 12368801 2004-05 26469416 2005-06 3864696 Total 58025560 38. The A.O. based upon the statement of Shri G. C. Jain, partner of the assessee firm, wherein sum of ₹ 1 crore had been surrendered on account of assessee's failure to file vouchers of sundry creditors f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive further submitted that the addition made on account of suppression of profit was not sufficient to cover the addition made by the Assessing Officer on account of bogus sundry creditors. He, in particular, referred to assessment year 2005-06, wherein the returned income plus surrender of ₹ 1 crore made by the assessee on account of bogus sundry creditors was below the rate of net profit adopted by the CIT(A). 41. The Learned counsel for the assessee, on the other hand, reiterated the submissions made before the Ld. CIT(A) and also placed strong reliance on the order of Ld. CIT(A). 42. We have considered the submissions made by both the sides, material on record and the orders of the authorities below. 43. It is noted that in the course of search or assessment proceedings subsequent thereto, no incriminating material or documents have been found to suggest that such creditors were bogus. It is further noted that having regard to the volume of business of the assessee, and nature thereof, the existence of sundry creditors as on the date of the balance sheet, cannot be ruled out. It is further noted that payments to sundry creditors have also been made in the subsequent ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was contended that the remuneration paid to partners was duly authorized by the original partnership deed Dated 1.4.1995, which was mis-placed. However, it was produced subsequently, hence, disallowance made by the Assessing Officer was not correct. As regards to the status of Smt.Rekha Jain as a working partner, it was submitted that the statement given by her during the course of search was under pressure and also factually misunderstood by her as she thought that the question was asked regarding detailed working of the firm including supervision at sites. However, she was looking after the business affairs of the firm at the Head Office only. Hence, this disallowance was also not correct. The Ld. CIT (A), considering these submissions of the assessee deleted both these disallowances. Aggrieved by this, the Revenue is in appeal before us. 48. The ld. DR narrated the facts and placed reliance on the order of the AO. The ld. counsel for the assessee, on the other hand, placed strong reliance on the order of the ld. CIT(A). 49. We have considered the submissions made by both the sides, material on record and the orders of the authorities below. 50. It is noted that the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and income from such activity had not been recorded in the books of account. Thus, in our opinion, the action of the AO is in the realm of suspicion only and, therefore, we hold that the ld. CIT(A) has rightly deleted the impugned addition. Thus, ground no. 5 of the Revenue for both these years is also dismissed. 57. In I.T.A.No. 06/Ind/2008 for the assessment year 2005-06 a new issue of deletion of disallowance of ₹ 7 lakhs out of total addition of ₹ 7, 09,700/- made by the Assessing Officer on account of unrecorded expenditure is involved. 58. The facts, in brief, are that during the course of search, the statement of Shri G. C. Jain was recorded and his clarifications were sought on a diary found during the course of search, wherein transactions of expenses relating to various sites were noted. The A.O. held that during the course of assessment proceedings, the assessee failed to give any satisfactory reasons as to why this expenditure should not be treated as its undisclosed income as admitted by one of the partners during the course of search. Hence, he made an addition of ₹ 7,009,700/- in assessment year 2004-05 and ₹ 50,000/- in assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books. The ld. CIT(A) held that the quantum of addition on account of estimation of suppressed net profit had to be worked out after taking into consideration such surrender made by the assessee in the return of income, because surrender was in connection of the business income. Aggrieved by this, the Revenue is before us. 63. The ld. Departmental Representative placed strong reliance on the order of the AO, whereas the ld. Counsel for the assessee placed strong reliance on the order of the ld. CIT(A). 64. We have considered the submissions made by both the sides, material on record and orders of the authorities below. 65. It is noted that impugned surrender is inextricably linked with the computation of business income, hence, after estimation of net profit ratio and gross quantum of net profit, the net addition, in our opinion, has to be made after giving credit of such surrender. Thus, we hold that the order of the ld. CIT(A) is correct in law. Hence, we dismiss this ground of the Revenue. 66. In assessee's appeals for the assessment year 2004-05 and 2005- 06, ground no. 4/3 is related to chargeability of interest under section 234B, which is of consequential nature, hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithdrawals of ₹ 1,24,866/-. Hence, the addition made by the Assessing Officer was not justified. It was also contended that no incriminating material were found during the course of search to indicate that house hold withdrawals shown by the assessee were not correct and, therefore, such addition could not be made. For this proposition, the assessee relied on various judicial decisions. The Ld. CIT(A) after considering the fact of the case and for the reason that normally the responsibility of house hold expenditure was of the husband and not of the wife, he held that the addition was to be made on substantive basis in the hands of assessee's husband Shri G. C. Jain only. He further restricted the quantum of addition to ₹ 10,053/- in his hands and deleted the addition made in the hands of the assessee. Aggrieved by this, the Revenue is in appeal before us. 70. The ld. Departmental Representative narrated the facts and placed strong reliance on the order of the A.O. The Learned counsel for the assessee placed strong reliance on the order of the CIT(A). 71. We have considered the submissions made by both the sides, material on record and the orders of the authorities be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income did not arise. The Ld. CIT(A),accordingly, deleted the addition. Aggrieved by this, the Revenue is in appeal before us. 75. The ld. Departmental Representative, besides placing strong reliance on the order of A.O. submitted that it was an undisputed fact that books of account of M/s. S.K.Jain were not produced. Hence, how the assessee could claim that such deposits were made out of withdrawals by her from that firm. He further referred to relevant pages of paper book, wherein the assessee had shown the source of deposits from such firm and it was also contended that there was time gap also and, therefore, nexus was also not established. It was also contended that the Ld. CIT(A) did not even call remand report from the A.O. on this new claim made by the assessee during the course of appellate proceedings. He further contended that purpose of withdrawal was also not known. 76. The Learned counsel, on the other hand, reiterated the submissions made before the Ld. CIT(A) and also placed strong reliance on the order of the CIT(A). 77. We have considered the submissions made by both the sides, material on record and the orders of the authorities below. 78. It is noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only a nominal difference of 9.13 % between the cost of construction stated by the assessee and determined by the DVO, hence, acceptable. The A.O., however, held that there were several items, which had not been included by the DVO in estimation of cost. The assessee vide its letter submitted that items worth ₹ 27,67,178/- were considered by the DVO. The A.O., however, held that out of such items, furniture and fixture worth ₹ 8,56,800/- were in connection with large number of movable items found in the photography done by the Department, which was not covered by the report of the DVO. Similarly, some other items were also found by the A.O. Accordingly, he reduced the cost of construction of ₹ 89,54,509/- by this sum of ₹ 27,67,178/- and worked out the cost of construction at ₹ 61,87,331/- and compared this figure with the cost of construction estimated by DVO and worked out difference at ₹ 35,84,533/-. The A.O. also found that additional items worth ₹ 18,95,000/- were also found during the course of photography done and since the year of investment of such items was not known, hence, he treated the same as unexplained investment in assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, he held that no addition was to be made on this account. Aggrieved by this, the Revenue is in appeal before us. 82. The ld. CIT DR narrated the facts, drew our attention to relevant pages of assessment order. He further contended that search took place in the month of November, 2004, whereas the assessee claimed to have completed the construction in August, 2004. The ld. CIT DR further contended that as per the valuation done by the Registered Valuer of the assessee for bank authorities, the value of built up area plus additional construction was roughly ₹ 1,22,00,000/-, hence, the valuation of D. V. O. and the approach of the A.O. stood justified. He further contended that cost of loan was further to be added. He also submitted that on the one hand, the assessee stated the cost of lawn at ₹ 89.54 lakhs approximately and at one place, it was stated by the assessee at ₹ 1.04 crores. Hence, the assessee was not coming out with correct figures. In this regard, he referred to page 139 of the paper book, wherein the assessee had stated the cost of construction at ₹ 89.54 lakhs approximately. However, when his attention was drawn to last line of first para of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of years falling in the impugned period. It is further noted that as per the initial estimates/details given by the assessee, the cost of such property amounted to ₹ 1.04 crores approximately. The assessee also made an investment of ₹ 2,31,500/- in assessment year 2005-06, which resulted into the cost of construction being increased to ₹ 1.07 crores approximately. As per the valuation of DVO, the cost of construction was 1.02 crores approximately excluding the extra items as considered by the AO separately. The valuation as per the assessee for bank purposes as noted by the AO from the Registered Valuer's report is roughly ₹ 1.22 crores. The other facts which are crucial are that the DVO have taken the CPWD rates to arrive at the cost of construction where-from a reduction of 10 to 15 % is generally given to arrive at the rate at Bhopal, because CPWD rates are generally adopted as per the rates prevailing at Delhi. It is further to be noted that assessee is herself a contractor; hence, a margin for 10% on account of self supervision should be given as against 7.5% given by the DVO. Similarly, having regard to the fact of assessee's line of business, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 2005-06 and four succeeding assessment years. Accordingly, the disallowed the interest on loan so claimed by the assessee and determined the A.L.V. of rented property at ₹ 25,200/-. Aggrieved by this, the assessee carried the matter into appeal before the ld. CIT(A), wherein it was contended that in assessment year 2003-04, the assessee had claimed interest on rent, which had been accepted by the Assessing Officer u/s 143(1) and in the course of search, no incriminating material or contrary facts were found as regard to the completion of this property in assessment year 2003-04. It was also contended that it was a huge property having multiple floors, hence, the assessee occupied the part of that and started repaying the loan and, therefore, the property was to be treated as self-occupied in the year under consideration and consequently, such interest on borrowed capital was liable to be allowed as a whole in the year under consideration. The Ld. CIT(A) held that the assessee was residing in the same house and A.O. had not brought any material on record to show that it was not so. He further held that repayment of such loan indicated that construction had been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 101. The facts, in brief, are that the assessee filed a capital account, wherein opening balance of house loan account as on 1.4.2002 was ₹ 17,24,774/- and the closing balance in this account was ₹ 24,37,696/-. Thus, there was an increase of ₹ 7,12,922/-. The A.O., however, further analyzed the capital account and observed that actual increase in the housing loan was ₹ 9,20,424/-, hence, the amount of ₹ 2,07,502/- had been repaid by the assessee out of its undisclosed sources. Accordingly, he made an addition of ₹ 2,07,502/-. Aggrieved by this, the assessee carried the matter into appeal before the ld. CIT(A), wherein it was contended that the amount had been paid by the assessee out of withdrawals from M/s. S.K.Jain. Hence, no addition was warranted. The Ld. CIT(A), after accepting these contentions, deleted the addition so made by the Assessing Officer. Still aggrieved, the Revenue is in appeal before us. 102. The ld. Departmental Representative narrated that this issue was more or less connected with the other issues raised in I.T.A.No. 28/Ind/2007, wherein it had been argued that there was no evidence or material on record to show the with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and in the circumstances of the case, the Ld. CIT(A) has erred in directing to allow the credit of ₹ 2,36,522/- on account of interest on housing." 115. The issue raised in ground no. 5 is identical to issue raised in ground no.3 of I.T.A.No. 29/Ind/2008. Hence, following the same reasons, we dismiss this ground of the revenue. 116. Now, we shall take up the appeal of Revenue in I.T.A.No. 31/Ind/2008 for the assessment year 2005-06. 117. Ground no. 1 reads as under :- "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 3,49,000/- made by the Assessing Officer on account of unexplained expenditure for house hold purposes." 118. The issue raised in this ground is identical to issue raised in ground no.1 raised in I.T.A.No. 28/Ind/2008. Hence, following the same reasons, we allow this ground. 119. Ground no. 2 reads as under :- "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 16,95,000/- out of total addition of ₹ 18,95,000/- made by the Assessing Officer towards unexplained investment in construction of the house property." 120. The fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... band Shri G. C. Jain has shown an expenditure of ₹ 2,94,000/- in respect of make over and construction of garden in financial year 2004-05. These findings of the Ld. CIT(A) have remained uncontroverted before us, hence, we dismiss this ground of Revenue. 124. In the result, the Revenue's appeal is partly allowed. 125. Now, we shall take up assessee's appeal in I.T.A.No. 32/Ind/2008 for the assessment year 2002-03. 126. Ground no. 1 reads as under :- "That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of ₹ 2,20,000/- being the entire amount of short term loan received during the year without accepting the explanation offered by the assessee. " 127. The facts, in brief, are that AO required the assessee to explain the investment made by the assessee in immovable properties during the year under consideration. The assessee submitted that she had taken short term loans of ₹ 3 lakhs. However, she did not give the necessary details such as name of the persons, confirmations and their capacity documents. The AO, accordingly, held that such loans were non-genuine, hence, he added the same as the income of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) was not pressed, hence, this part of this ground is dismissed as not pressed. The other issue in this ground is regarding chargeability of interest u/s 234-B, which is of consequential nature, hence, no decision is required thereon. 133. Ground no. 3 is regarding initiation of penalty proceedings u/s 271(1)(c) is of premature nature, hence, dismissed. 134. In the result, the assessee's appeal stands partly allowed. 135. Now, we shall take up assessee's appeal in I.T.A.No. 33/Ind/2008 for the assessment year 2005-06. 136. Ground no. 1 reads as under :- "That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of ₹ 2,00,000/- out of total addition of ₹ 18,95,000/- being investment in construction of house without accepting the explanation offered by the assessee that the same is duly reflected in the statement of affairs attached with the return of income filed for the year and the DVO has done the valuation in 2006-07 and there is no major difference in the cost as per DVO and the cost as shown by the assessee." 137. The issue involved in this ground is connected with ground no.2 of Revenue's appeal in ITA no. 31/I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of ₹ 25000/- the entire amount of short term loan received during the year without accepting the explanation " 147. The facts, in brief, are that the A.O. from the statement of affairs filed by the assessee noted that the assessee had shown opening balance of ₹ 6,51,100/- and against this fixed assets at ₹ 2,99,100/- had been shown in the assets side alongwith land at Jat Khedi plus cash in hand. The A.O. required the assessee to furnish the nature of opening balances by submitting necessary documentary evidences. The assessee gave certain replies. However, the A.O. held that these were not sufficient to prove the claims of the assessee and onus. Accordingly, he added the said opening balance as income of the assessee. The A.O. further held that the loan of ₹ 25,000/- allegedly received by the assessee in the year under consideration also remained unsubstantiated. Hence, he also added the same. Aggrieved by this, the assessee carried the matter into appeal before the ld. CIT(A), wherein the assessee submitted cash flow statement for various earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und is identical to ground no.2 of I.T.A.No. 32/Ind/2008, hence, following the same reasons, we dismiss this ground. 153. Ground no. 5 reads as under :- "That on the facts and in the circumstances of the case, initiation of penalty proceedings u/s 271(1)(c) is not justified. 154. The issue raised in ground no.5 is identical to ground no.3 of I.T.A.No. 32/Ind/2008., hence, the same is dismissed following the same reasons. 155. In the result, the assessee's appeal is partly allowed. 156. Now, we shall take up the appeal of the assessee in I.T.A.No. 35/Ind/2008 for the assessment year 2000-01. 157. Ground no. 1 reads as under :- "That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of ₹ 72,619/- out of total additions of ₹ 1,38,919/- on account of low withdrawals for household expenses without accepting the explanation offered by the assessee and without considering the standard of living, size of the family. It is further submitted that during the course of search no incriminating document were found which could form the basis for making addition for withdrawals for household expenses. Thus, the addition made fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) is not justified." 170. The issue raised in this ground is identical to ground no. 3 of I.T.A.No. 35/Ind/2008, hence, the same is dismissed for the same reasons. 171. In the result, the assessee's appeal stands partly allowed. 172. Now, we shall take up assessee's appeal in I.T.A.No. 37/Ind/2008 for the assessment year 2002-03. 173. Ground no. 1 reads as under :- "That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of ₹ 10,053/- out of total additions of ₹ 88,053/- on account of low withdrawals for household expenses without accepting the explanation offered by the assessee and without considering the standard of living, size of the family. It is further submitted that during the course of search no incriminating document were found which could form the basis for making addition for withdrawals for household expenses. Thus, the addition made for low house hold withdrawal is purely arbitrary, unjustified, without any basis and thus deserves tobe deleted." 174. The issue raised in ground no.1 is identical to the issue raised in ground no.1 of I.T.A.No. 34/Ind/2008, hence, allowed for the same reasons. 175. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that u/s 153-A, the scope in respect of completed assessment is limited and in the absence of any material found during the course of search, no such addition can be made. We further find that ld. CIT(A) has not given any finding on this contention raised by the assessee before him. Hence, the order of ld. CIT(A) cannot be considered as covering all the aspects. Thus, in the background of these facts and circumstances, we hold that the impugned addition cannot be made u/s 153-A. Accordingly, we delete the same. Thus, this ground of the assessee stands allowed. 181. Ground no.3 reads as under :- "That on the facts and in the circumstances of the case, charging of interest of ₹ 3,337/- u/s 234A, ₹ 20,524/- u/s 234B and ₹ 6,296/- u/s 220(2) is not justified." 182. The issue raised in ground no.3 is identical to ground no.4 of I.T.A.No. 34/Ind/2008, hence, the same is dismissed. 183. Ground no. 4 reads as under :- "That on the facts and in the circumstances of the case, initiation of penalty proceedings u/s 271(1(c) is not justified." 184. Ground no. 4 is identical to the issue raised in ground no.5 of I.T.A.No. 34/Ind/2008, hence, the same is dismissed. 185 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis for making addition for withdrawals for household expenses. Thus, the addition made for low house hold withdrawal is purely arbitrary, unjustified, without any basis and thus deserves to be deleted." 196. The issue raised in above ground is identical to ground no.1 of I.T.A.No. 35/Ind/2008, hence, following the same reasons, we allow this ground. 197. Ground no. 2 reads as under :- "That on the facts and in the circumstances of the case, charging of interest of ₹ 8,656/- u/s 234A, ₹ 20,124/- u/s 234B, ₹ 2,132/- u/s 234C and ₹ 9,387/- u/s 220(2) is not justified." 198. Ground no. 2 is identical to issue raised in ground no. 2 of appeal in I.T.A.No. 35/Ind/2008, hence, dismissed for the same reasons. 199. Ground no. 3 reads as under :- "That the on the facts and in the circumstances of the case, initiation of penalty proceedings u/s 271(1)(c) is not justified." 200. The issue raised in this ground is identical to ground no. 3 of I.T.A.No. 35/Ind/2008, hence, dismissed for the same reasons. 201. Now, we shall take up the assessee's appeal in I.T.A.No. 47/Ind/2008 for the assessment year 1999-2000. 202. Ground no. 1 reads as under :- "On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 5,44,500/- made on account of unexplained money." 213. The facts, in brief, are that the assessee made an investment of ₹ 5,44,500/- in purchase of land at Sarvdharam. The source of such investment was shown as funds generated from loans returned by the persons to whom such loans had been given in earlier years, out of withdrawals from M/s. S.K.Jain amounting to ₹ 71,500/- and out of loan taken from Smt. Rekha Jain. The A.O., however, added as unexplained investment in the hands of the assessee. In this process, the A.O. also took not of seized documents. Aggrieved by this, the assessee carried the matter into appeal before the ld. CIT(A), who, after considering the submissions of the assessee that the same investment had been made out of loan returned back in the year under consideration and loan taken from Smt. Rekha Jain and cash in hand available with the assessee. Aggrieved by this, the Revenue is in appeal before us. 214. The ld. DR narrated the facts and placed reliance on the order of the AO. The ld. counsel for the assessee, on the other hand, placed strong reliance on the order of the ld. CIT(A). 215. We find that the assessee has shown the sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 3 reads as under :- "That on the facts and in the circumstances of the case, initiation of penalty proceedings u/s 271(1)(c) is not justified." 225. This ground is of premature nature, hence, the same is dismissed. 226. In the result, the assessee's appeal is dismissed. 227. Now, we shall take up the assessee's appeal in I.T.A.No. 73/Ind/2009 for the assessment year 2005-06. 228. Ground no. 1 reads as under :- "That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not accepting that the notice issued u/s 153BC and the assessment completed u/s 153C read with Section 153A is invalid and bad in law because there is no basis for issuing the notice u/s 153C. 229. The Learned counsel for the assessee did not press this ground of appeal, hence, the same is dismissed as withdrawn. 230. Ground no. 2 reads as under :- "That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not confirming the addition of ₹ 60,844/- out of total additions of ₹ 1,38,844/- on account of low withdrawals for household expenses without accepting the explanation offered by the assessee and without considering the standard of living, size of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record by the assessee to prove the fact of withdrawals from that firm. The A.O. made the addition. However, set off the same from other addition made by him in respect of unexplained cash credits in the Bank account. Aggrieved by this, the assessee carried the matter into appeal before the ld. CIT(A), wherein the assessee submitted the details of Bank flow statement wherein the receipts from M/s. S.K.Jain, the contract receipts and house hold withdrawals were clearly shown. The assessee also submitted that the A.O. was not justified in making addition of ₹ 6,31,000/- being the amount of gross receipts from contract work and it was also submitted that if at all any addition was to be made, it could be only of profit earned thereon. The Ld. CIT(A), accordingly, treated 10 % of such receipts as amount of profit and directed the A.O. to tax the same. The Ld. CIT(A), however, deleted the other addition of unexplained cash credit. Aggrieved by this, the Revenue is in appeal before us. 240. The Learned counsel narrated the facts and reiterated the submissions made before the Ld. CIT(A). 241. The ld. DR narrated the facts and placed reliance on the order of the AO. The ld. couns ..... X X X X Extracts X X X X X X X X Extracts X X X X
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