The assessee was engaged in the business of carrying out painting of pavements, roads and runways on job work as a sub-contractor. The Assessing Officer reopened the assessee’s assessment on receiving information from the Joint Commissioner following a search action taken u/s. 132 of the Income-tax Act, 1961 on a D group company during which it was gathered that D had generated unaccounted money by way of booking bogus expenses on sub-contractors and materials. The assessee was one of the entities who was shown to have received amounts against sub-contractor expenses by D. The Assessing Officer taxed the assessee’s receipts in terms of section 68 read with section 115BBE.

Tribunal held that the Assessing Officer had not cross-verified the averments of the assessee with the relevant organisation but instead made the addition to the assessee’s total income based merely on the information gathered from the search, which was of a general nature. The records produced by the assessee were neither disputed nor tested for their correctness. A decision could not be made merely based on some information based on which no grounds were discussed, nor the assessee confronted. The assessee had demonstrated that the work order was issued by D and to be carried out at the military organisation wherein entry and attendance were strictly monitored. There was no reason to believe, nor could the Revenue prove, that the work had not been carried out.

As regards the estimation of the assessee’s profit, in the case of a civil contractor declaration of profit at 8 percent was considered reasonable and, hence, the addition made by the Assessing Officer was to be vacated as the assessee had already declared profit at 8% of the receipt.  (AY. 2013-14)