TaxTMI 
TaxTMI 
2022 (1) TMI 477
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.... deleting the addition of Rs. 1,90,08,157/- made by the AO. 2. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A)-4, Jaipur is justified in ignoring the fact that the asset sold was stock in trade of the assessee and deleting the addition of Rs. 3,65,421/- made by the AO on account of disallowance of indexation cost. 3. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A)-4, Jaipur is justified in treating the shops sold as capital asset instead of stock in trade. 4. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A)-4, Jaipur is justified in ignoring the fact that entries pertaining to 'On-money' were found in N Trading cloud and thus addition of 'on money' was on the basis of incriminating seized data. 5. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A)-4, Jaipur is justified giving relief to the assessee on the ground that the Manglam Group had owned up the entire entries in the N Trading on cloud data before the Hon'ble ITSC. The order of Hon'ble ITSC has already been challenged in writ before the Hon'ble High Court." 3. ....
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....d whereby the assessee was to get 30.60% of the share of Goyal family. 6. It was further submitted by the ld PCIT/DR that during the course of search at the office premises of M/s MBDL Pvt. Ltd., a cloud tally data by the name of N. Trading Co. was seized. From this tally data, evidences were found that 'on money' had been received in the JEM project by the Goyal family and the Developer which was distributed by the owner of the said developer in the ratio of 40:60. It was submitted that basis the said documents and data found during the course of search that the assessee had received "on money" on sale of shops in the JEM Complex, a show cause was issued to the assessee on 20.12.2018. Further, our reference was drawn to the findings of the Assessing Officer, after considering the submissions so filed by the assessee, which are contained at para 7.1 to 7.6 of the assessment order which reads as under:- "7.1 Firstly, the assessee has simply denied having any knowledge of the N. Trading Co. Cloud entries found in his name. Now the moot question arises that can denial on the part of the assessee be treated as proof of the fact that the entries found in the cloud do not per....
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....long or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. In this case the assessee has simply tried to shift the onus on the department by resorting to denial. Denial does not have any evidentiary value, on the other hand the incriminating cloud data is a speaking document of evidentiary value, as the same has been owned up in totality by M/s MBDL Pvt. Ltd. before the Hon'ble ITSC. The admission in this case has been made by M/s MBDL Pvt. Ltd. and MBDL has continuously refused to disclose the details of the persons with whom this transaction was made. In such a scenario the N Trading entry under consideration perta....
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....e Settlement Commission has not been accepted by the Revenue and the same has been challenged in writ before the Hon'ble Rajasthan High Court which is currently pending adjudication. 8. Per contra, the ld. AR submitted that in search of the assessee, no document or material was found to indicate that the assessee has received any 'on money' on sale of the shops/office at JEM Project. The addition has been made on the basis of the alleged tally data found from the premises of MBDL. On the basis of these data, no addition can be made in the hands of the assessee for the following reasons:- (i) The assessee is only a land owner. She is not participating in day to day activities relating to this project and all the development work as well as sale, booking, etc. All these work are carried out by MBDL. She neither has any knowledge of the alleged 'on money' collected by the builder nor received any 'on money' from the builder. (ii) The documents and soft data referred by the AO were seized from the business premises of MBDL and not from the residence of the assessee. Hence these data can't be used against the assessee. (iii) During the course of search of a....
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....; (Third Party). In search these papers were not confronted to the assessee. From the assessment order it was not borne out whether 'A'(Third Party) had stated these papers as pertaining to the assessee. No presumption could be drawn against the assessee u/s 132(4A) in respect of paper not recovered from him. No addition can be made on the basis of documents found from third party in the absence of corroborative evidence. Therefore, the Assessing Officer as well as the Commissioner of Income Tax(A) erred in making the addition on the basis of said papers in the hands of assessee. Hence, the entire addition made on the basis of papers found from 'A' (Third party) was to be deleted. * Prarthana Construction (P) Ltd. Vs. DCIT (2001) 118 Taxman (Magz.) 112 (Ahmedabad) (Trib.) It has been held that loose papers and documents seized from premises of third parties and statement recorded at back of assessee without it being afforded opportunity to interrogate said documents and without bringing on record any supporting evidence, could not be made basis for adding undisclosed income in hands of assessee. * ACIT Vs. Miss Lata Mangeshkar (1974) ITR 6....
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....der & Developer Ltd. (MBDL) had already owned up all the data found in cloud as belonging to them. On the basis of same, MBDL filed the settlement petition before Settlement Commission which was accepted. Accordingly, Hon'ble ITAT held that since the amount had already been subjected to tax in the hands of MBDL and related entities, therefore, Ld. CIT(A) has rightly deleted the addition. 11. In view of above, it was submitted that the ld CIT(A) has rightly appreciated the facts and circumstances of the case and has deleted the additions so made by the AO and our reference was drawn to his findings which read as under: "6. Careful perusal of the order passed by the AO indicates that the Ld. AO has based his decision to make the addition on the basis of the following:- (i) Appellant has not given any proof that no such amount of 'on money' is received. Simply denying the receipt cannot be accepted. (ii) MBDL has owned up the transaction while filing the petition before Settlement Commission. Thus, where one party has accepted the transaction, the same is correct for other also. (iii) As per section 292C, the presumption provides that whe....
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....resumption of section 292C is that where any books of accounts or other documents etc. is found in the possession and control of any person in course of search u/s 132, it may be presumed that such books of accounts or other documents etc belonging to such persons and the contents of the same are true. Therefore the data found from the premises of the MBDL can be considered as true only in case of MBDL, unless and until any material is brought on record that the same is also true in respect of the person in whose name such data is recorded. It is not the case of the AO that the director of MBDL has stated that the 'on money' recorded in the tally data has been shared with the assessee. (vii) MBDL has owned up all the data found in cloud as belonging to them. On the basis of the same it filed settlement petition before Settlement Commission on 28.03.2018. As per the petition filed by MBDL before the Hon'ble Settlement Commission the following 'On money' receipts were considered for computing the income:- Particulars Total Receipts of 'On money' Amount of such 'On money' receipts related to JEM as declared by MBDL Booking Recei....
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....s of M/s. Mangalam Group, Jaipur and pursuant to this the AO issued notice u/s 153C of the Act for the assessment years 2014-15 to 2016-17 to the assessee. In compliance of the notice, the assessee has filed his return of income which has been tabulated in preceding paragraph of this appeal. The assessee has also filed his return of income on 30-10-2017 for the assessment year 2017-18 declaring total income at Rs. 3,32,32,940/-. Thereafter, the AO completed the assessment u/s 143(3) read with Section 153C of the Act for the respective assessment years 2014-15 to 2017-18 as per the following total income tabulated as under:- AY Dated Assessed income (Rs.) Addition made by the AO 2014-15 28.12.2018 20,21,48,150/- (i) Addition of Rs. 10,34,68,000/- u/s 69 of the Act on account of alleged undisclosed capital employed by the appellant in various projects of Manglam Group on the basis of cloud data. (ii) Addition of Rs. 2,46,25,600/- on account of surplus share profit in projects of Manglam Group on the basis of cloud data. (iii) Addition of Rs. 85,00,000/- on account of interest earned on the basis of cloud data. 2015-16 28.12.2018 8,78,62,760/- ....
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....37-138 of the Hon'ble Settlement Commission order "UNACCOUNTED CASH LOANS - CHAPTER VII OF THE RULE 9 REPORT: (page no. 128-180 of the Report):-As offered by the Applicants: Cash Peak Of Cash Loans And Capital Transactions: Rs. 15,10,77,500/- .As was the case with the capital introduction by the partners, in the Data found in tally P1 and P2 and also in the seized cash book, all seized pursuant to search, there were found recorded entries with regard to cash loans introduced in the business shown to have been received from various persons directly as well as through certain finance brokers. Repayment of the said loans along with interest on the same was also all found recorded in the Tally data. The line of business of the Applicant group, as has been discussed earlier, was such that required huge sums of cash. For purposes of the said, huge sums of unsecured loans in cash were thus taken from the market to meet the requirements and as cash was generated from booking of flats/units/plots, the said loans were periodically repaid. Interest on the loans all in cash, were also paid.In the search conducted, in the seized data, all such complete recordings of loan received, ....
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....get further force from the fact that the entries based on which applicants have computed the Peak value, are recorded in the data found in search and seizure. Based on the above the contention of the applicants on the quantum of the peak as offered as undisclosed income of Rs. 15,10,77,600/- is hereby accepted." 3.11 In respect of surplus, the ld. CIT(A) observed that it may point out that as per the petition filed by MBDL before the Hon'ble Settlement Commission the 'on money' of received by the Group on its various projects was considered for computing the income. In its admissions made before the Hon'ble Settlement Commission, MBDL has explained the nature of such 'surplus' which was credited to the partner's accounts. .In fact the same represent 'on money'. Accordingly income of Rs. 80.07 cr. (Rs. 72.33 cr. + Rs. 7.75 cr.) was offered on the basis of cloud data of N. Trading Company. The same is accepted by the Hon'ble Settlement Commission at page 57 of the order dated 16.05.2019. The relevant extract of the final order wherein this issue is discussed is reproduced as under:- Para 21.2 of Page. 11 of the Hon....
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.... funds for its proper utilisation for purposes of the Projects. The Term "Surplus" was a nomenclature used to identify the Settled on money which was put under the control of the Partners/Directors. o These entire receipts thus are booking receipts, which are revenue in nature and have already been considered and offered as revenue on-money income in our working. o Further regarding the utilization of the funds as pointed out the Ld. PCIT, it is submitted that above-mentioned surplus, being revenue in nature (earned by way of on money), was utilized was meeting various expenditures like utilization of land, for other construction cost and all other expenses related to business. Para 6.8 of Page. 57 of the Hon'ble Settlement Commission order Based on the above the total undisclosed income of the applicants of the Group is settled at Rs. 80,07,69"990/- on the issue of cash profit. The amount of undisclosed income settled in respect of the applicants in the respective assessment years are given in the following table.'' In view of above, the ld. CIT(A) observed that it is evident that the surplus being referred to by the Ld. AO is not p....
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....es, there is no infirmity in action of the ld CIT(A) in deleting the same in the hands of the assessee and appeals of the Revenue for all the three years were dismissed. 15. In the instant case as well, we find that pursuant to search action in case of M/s Manglam Group and where the assessee's premises were also searched, the action was taken in the hands of the assessee u/s 153A of the Act based on transactions in "N Trading Company" found on cloud data found and seized during the course of search at the office premises of M/s MBDL and the assessment was completed u/s 143(3) r/w 153A wherein addition on account of "on money" found in N Trading Company cloud data relating to JEM project amounting to Rs. 1,90,08,157/- were made by the Assessing officer. On appeal by the assessee, the ld CIT(A), while adjudicating the merits of the case and which are under challenge before us, has again recorded a similar findings, as recorded by the Coordinate Benches in the aforesaid decision, that M/s Manglam Builder & Developer Ltd had owned up all the "N Trading Company" data found in cloud as belonging to them and basis the same, it filed settlement petition before Settlement Commission on ....