TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 477
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....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. Briefly stated, the facts of the case are that the assessee has filed her original....
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....her 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 pertain to him. The answer is "No." In order to discharge the burden the assessee needs bring fort....
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....he 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 pertain to the assessee. 7.4 The assessee has alleged that the evidence of 'on money' found against him is nothing but a presumption and assumption. Howev....
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....ication. 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 assessee, statement of Shri Munna Lal Goyal, family head of assessee was recorded wherein certain questions relating to Jaipur Electronics Market was put to him. In response to these questions, Sh. ....
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....n 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 696 (Mumbai) It has been held that on appreciation of evidence on record, that entries in the ledger of a firm (third party) did not represent assessee's income from undisclosed sources, was finding of the fact not giving rise to any referab....
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....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 where any books of accounts, documents etc. are found in the possession or control of any person in course of search u/s 132 then it is presumed that the same belongs to such person. 7. I have perused the written submissions submitted by the Ld. AR and the order of the AO. I have also gone through the var....
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....n 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 Receipts 6,90,12,13,000 14,09,03,400 Settled Booking Receipts 3,67,74,14,100 18,76,04,460 Total 10,57,86,27,100 32,85,07,860 From this on money after considering the expenditure incurred, MBDL has offered additional income of Rs. 72.32 cr. before the settlement commission which was accepted by it at page 53 to 58 of the order u/s 245D(4) dated 16.05.2019. 8.2....
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....e 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/- (i) Addition of Rs. 2,82,97,500/- on account of surplus share profit in projects of Manglam Group on the basis of cloud data. (ii) Addition of Rs. 1,00,00,000/- on account of surplus interest from Manglam Group on the basis of cloud data. 2016-17 28.12.2018 28,56,88,120/- (i) Addition of Rs. 1,50,00,000/- u/s 69 of the Act on account of alleged undisclosed capital in cash employed by the assessee in various projects....
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....rd 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, repaid and interest paid was all found. However, during the course of the search itself, since these entries could not be explained by filing confirmation of parties, these cash loans were accepted to be the undisclosed income of the Applicant group in order to buy peace.Thus based on the above, therefore, to determine the net funds generated in business, peak of the loan accounts (including the capital cash entries) was worked out. It was the contention of the....
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....up 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'ble Settlement Commission order 21.2 Amount of Settled Booking Advances in Tally Data The Applicant Group received booking advances from its various customers in various projects in cash, which got "settled" when the entire 'on-money' due from the customer was received. In the tally data, such receipts have been distributed in capital account directly with account description 'surplus'. The nature of these booking advances was identical to unsettled booking advances as explained above, however, in such cases, no mo....
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....us 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 profit from the projects but the receipts of 'on money' credited to the capital accounts of the partners which has been considered in the additional income offered by MBDL and accepted by the Hon'ble Settlement Commission. 3.12 Thus on merits also since the amounts had already been added by the AO and the same had already been subjected to tax in the hands of MBDL and related entities, therefore, the ld. CIT(A) after considering all those facts had correctly deleted the addition made in various assessment years. The Bench also noted that no new facts have been brought by the Revenue in contro....
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.... 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 28.03.2018 and the "On money" receipts relating to various real estate projects totaling to Rs. 1057.86 cr including 32.85 cr pertaining to JEM project has been declared by MBDL and after considering the expenditure incurred, MBDL has offered additional income of Rs. 72.32 cr before the Settlement Commission and which has been accepted by the Settlement Commission in its order dated 16.05.2019 and accordingly, where "on-money" received in JEM project belong to MBDL and MBDL has offered the same which has been accepted and no evidence was found in search to indicate that the appellant has received any share in "on-mo....