TaxTMI 
TaxTMI 
2022 (1) TMI 584
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....loud data and deleting the addition of Rs. 1,21,80,000/- made by the AO on account of unaccounted capital deployed by the assessee. 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 transaction found on cloud data and deleting the addition of Rs. 62,85,000/- made by the AO on account of unaccounted surplus profit earned by the assessee from various projects of Manglam Group. 3. Whether on the facts and in the circumstances of the case and in law, ld. CIT(A)-4, Jaipur is justified in ignoring the transaction found on cloud data and deleting the addition of Rs. 5,75,00,000/- made by the AO on account of undisclosed interest earned on cash loan/capital. 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 transaction found on cloud data and deleting the addition of Rs. 25,62,800/- made by the AO on account of undisclosed interest earned on cash loan/capital. 5. 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 t....
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....nating documents and soft data in the form of hard disk and other electronic storage devices were found and seized. On the basis of seized material it is noticed that you are unofficial partner in the project Crown Square and the share in the profit is as under:- 57.50% - Mohan Ji Sukhani 42.50% - Three partners, Sh. NKG (N. K. Gupta), Sh. VKG (Vinod Kumar Goyal) and Sh. RB (Rambabu Agarwal) having their internal share of 43%, 28,50% and 28.50% respectively. The surplus is being treated as profit component because the narration "being surplus after deletion" itself makes it clear that this amount is surplus of receipts over expenses. Accordingly, all the entries in which surplus is credited to the business partner is considered as share of profit of that partner. Ledger accounts can be summarized as under:- Addition (2013-14 Interest (2013-14) Surplus (2013-14) Mohanji Sukhani crown Square (P/P1) 01.04.2013 800.00 19.12.2013 121000.00 31.01.2014 62850.00 Total 121800.00 62850.00 The....
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....2,800/- on these cash loans. You are requested to show cause why this amount of Rs, 25,62,800/- should not be added to your total income. Furnish your explanation on the above mentioned points on or before 17.12.2018 failing which your case may be decided on material available on record." 4. In response to the show-cause, the assessee through his authorized representative responded denying entering in any such transactions with and relationship with N. Trading Company and the contents of the submissions so filed on behalf of the assessee read as under: "At the outset, the assessee deny the averments, contentions and allegations made in the Show Cause Notice as being absolutely wrong, incorrect and untenable on facts as well as in law. The proceedings initiated against the assessee are liable to be discharged for the facts and grounds stated hereinafter, which are mutually exclusive, and without prejudice to each other. 1. It is submitted that transaction reported in your notice in the name of my client Shri Mohan Sukhani with M/s N. Trading- Company is not related to my client, my client would like to inform you that he has no relationship with N. Trad....
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....nt is ill-legal/not justified and not true on the assessee. 6. Any material which is recorded behind the back of the assesee, cannot be relied upon against him, Thus it is humbly requested that before using any such statement or document against assessee, please provide an opportunity for Cross examination of the witness. 7. It is also submitted that, as there is no iota of evidence against my clients except your presumptions, surmises and conjectures and the alleged documents seized by you which is not at all reliable so far as the evidence is concerned. 8. Thus your allegation-is baseless and not supported by any conclusive evidence. In the circumstances so called surplus, cash loans and interest cannot be presumed, particularly in absence of any evidence." 5. The reply/submission so filed on behalf of the assessee in response to the show-cause was considered but not found acceptable by the AO for the following reasons which read as under: "9.1 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 ....
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....td. 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. To elucidate this point further the statement of Sh. N. K. Gupta, Managing Director of M/s MBDL which was recorded during the course of search needs to be considered. When Shri N.K. Gupta was specifically asked to explain the nature of such transactions, he refused to disclose the name and complete address of these persons from whom such huge cash transactions were made. In the statement given by Shri N.K. Gupta he has submitted it clearly that in order to avoid litigation he will not disclose the names of the parties with whom these unaccounted transactions, were made. Every transaction has to have two parties, one being the recipient and the other being the giver or vice-versa. Cross examination can be fruitful only in a situation where either of the two parties are ready to disclose true information pertaining to the transaction under consideration. In this case on one hand M/s MBDL Pvt. Ltd. has held a decided position throughout the search proceedings and even before the Hon....
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....vided by the assessee to the Manglam Group is being added as his undisclosed investment u/s 69 r.w.s. 115BBE of the Act. Penalty proceedings u/s 271 (1)(c) of the Income-tax Act, 1961 is being initiated for concealment of income. 13. Addition on account of interest earned on cash loans: On analysis of ledger accounts as discussed in the previous paras the total interest earned, on out of books cash loans which have been introduced by the assessee in various projects of MBDL, for the assessment year under consideration, comes to Rs. 25,62,800/. In absence of proper explanation by the assessee, this undisclosed interest income needs to be added to the income of the assessee. Hence, the total interest of Rs. 25,62,800/-is being added as cash credit u/s 68 r.w.s 115BBE in the form of income from other sources. Penalty proceedings u/s 271 (1)(c) of the Income-tax Act, 1961 is being initiated for concealment of income." 6. Being aggrieved with the action of the Assessing officer in making the aforesaid additions, the assessee carried the matter in appeal before the ld. CIT(A) wherein the assessee challenged the action of the Assessing Officer both on legal and merits....
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.... unaccounted capital introduced, loans and advances and interest paid and received was considered for computing the income. Accordingly income of Rs. 15.10 cr. was offered on the basis of cloud data of N. Trading Company. The same is accepted by the Settlement Commission at page 151 of the order dated 16.05.2019. 8.2 In respect of surplus 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 Settlement Commission at page 57 of the order dated 16.05.2019. 8.3 In view of above, 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 consi....
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....he facts and submission so made by the assessee and held that mere mention of name in the ledger of N. Trading Company is not sufficient to prove that it is assessee's name and the transaction in the cloud data in the name of "Mohanji Sukhani" cannot be attributed to the assessee. It was accordingly submitted that the addition cannot be made without bringing on record any corroborative material found in the course of search from third party. It was further submitted that the Assessing Officer has not provided any opportunity of cross examination of the Director of Manglam Group Shri N.K. Gupta from whom the cloud data was seized and which is the basis of making addition in the hand of the assessee. In support, reliance was placed on decision in case of Andaman Timber Industries vs. CCE Kolkata 11 (2016) 55 taxworld (SC). 10. It was further submitted that M/s MBDL has owned up all the entries and transactions in the N Trading Company cloud data before the Settlement Commission and the Settlement Commission has decided the settlement petition filed by Manglam group by passing settlement order u/s 245D (4) and which has been rightly appreciated and considered by the ld CIT(A) as ea....
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.... 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/- (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 alle....
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.... 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, 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, pe....
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....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'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 cap....
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....n 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 Co mmission 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 ....
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....zed during the course of search and the assessment was completed u/s 143(3) r/w 153C wherein addition on account of unaccounted capital employed in crown square project of the Manglam Group amounting to Rs. 1,21,80,000/-, surplus(share of profit) amounting to Rs. 62,85,000/, cash loan introduced in various projects of MBDL amounting to Rs. 5,75,00,000/- and addition on account of interest earned on such cash loans amounting to Rs. 25,62,800/- 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 `peak deposit' of unaccounted Capital introduced, loans and advances and interest paid and received was considered for computing its income and income of Rs. 15.10 cr. was offered on the basis of cloud data of N. Trading Company which was finally accepted by th....