TaxTMI 
TaxTMI 
2022 (12) TMI 579
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....2021. Since the issues involved are common in both the appeals of the revenue and cross objections of the assessee are also on similar issues, we have heard together both the parties in the matter and are being disposed off by this consolidated order. 2. At the outset, the ld. AR has submitted that the matter pertaining to Shri Alok Malpani in ITA no. 334/JPR/2022 & Co. No. 23/JPR/2022 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are exactly identical. The ld. DR did not raise any specific objection against taking the lead case of Shri Alok Malpani as a lead case. Therefore, for the purpose of the present discussions, the case of Shri Alok Malpani is taken as a lead case. 3. In ITA No. 334/JP/2022 for A.Y 2019-20, the revenue has taken following grounds of appeal, which is reproduced here in below: "1. Ground 4. "The Ld. CIT(A) erred in law and on facts in granting relief by holding that peak credit theory was applicable even through the assessee failed to explain the source & destination of the amounts, and identities an....
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.... The appellant craves leave to add, amend or withdraw any of the grounds of the appeal during the course of appellate proceedings. All the grounds of appeal are independent and without prejudice to each other." 5. The brief facts of the case as culled out from the records is that the search and seizure action u/s 132 of I.T. Act, 1961, was carried out on 13.02.2020 at the residential and business premises of the assessee group and his family members i.e. Saini Gupta Jain Malpani Somani Group of Ajmer. Various assets had been found at the time of search and some of them were also seized at various places of the group at the time of action u/s 132 of I.T. Act. Certain incriminating documents/Loose papers/Books of accounts etc. were also found, inventorized and some of them also seized or impounded at the time of search/survey u/s 132/133A of the I.T. Act. On account of search action, the case of the assessee was centralized vide order under section 127 of the Act dated 12.05.2021 and thus the jurisdiction was assigned to DCIT, Central Circle, Ajmer. The assessee has filed his original return of income for the year under consideration on 28.08.2019 declaring income of ....
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.... cash balance on dated 07.06.2018 of Rs. 1,67,70,585/- and which has been divided equally between Alok Malpani & Mukesh Kumar Somani. We have prepared a sheet showing profit earned in all the divisions of Rs. 10,17,27,513/- which has been divided equally between Alok Malpani & Mukesh Kumar Somani. Thus, the total income of each partner of these businesses tune to Rs. 5,92,49,049/- and we already have declared business income of Rs. 5,09,35,160/- and the balance income remains of Rs. 83,13,889/- which have been adjusted in next year. The ld. AO not found satisfactory with the reply of the assessee. The ld. AO on perusal of the data of the tally as tabulated noted that that the capital of Rs. 52,46,69,253/- was introduced first time in the year under consideration. Since, the assessee has owned up the Net Profit figure shown in the above table and declared the same in the income tax return and paid due taxes thereon, then the onus is upon the assessee to explain the source of capital introduction of Rs. 52,46,69,253/- also. But the assessee failed to give any satisfactory explanation with regard to the sources of this capital introduction. The assessee simultaneously failed to provid....
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....ngs and case laws relied upon by the appellant. It is observed that the AO has made an addition of Rs. 26,23,34,627/- in the hands of the appellant, being the capital introduced for the first time in the year under consideration, though the appellant has contended it to be opening capital brought forward from earlier years. The AO has made the impugned addition u/s 69 of the Act on the basis of Tally data found and seized in the 8 pen drives found during the course of search from the residential premises of the appellant. I find that the appellant has owned up the net profit figure shown in the table based on the aforesaid Tally data and declared the same in his Income Tax Return and has paid due taxes thereon. The fact remains that the AO has accepted the opening stock, gross profit and net profit figures on the basis of the aforesaid Tally data, however, he did not accept the opening capital reflected in the aforesaid table and did not accept the contention of the appellant that the figures are opening capital brought forward from previous years. The present AO in the appellate proceedings, vide order sheet entry dt. 22.04.2022 has admitted that the addition of the opening capita....
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....estment Corporation Pvt.Ltd. reported in (1994) 207 ITR 364 (Raj), wherein the Hon'ble jurisdictional Rajasthan High Court held as under "6. We have considered the matter. In accordance with Section 132(4A), if any document is found in the course of a search, then by legal fiction, a presumption has to be drawn that such document belongs to the person from whose possession or control it was found and the contents of such documents are true. In accordance with the provisions of Section 132(4A), we are of the opinion that a presumption has to be drawn that the seized documents belongs to the assessee and is a true document". 2. Glass Lines Equipment Co Ltd v/s CIT 256 ITR 454 (Guj.) Interpretation of documents Documents must be read as a whole. It is well settled canon of interpretation that a document has to be read as a whole. It is not permissible to accept a part and ignore the rest of the document. 3. Hissariar Brothers v/s ACIT 22 Taxworld684 (Jpr.) Held that the seized documents has to be read in its entirety and the parties are not allowed to read only that part which is suitable to it. 4. Lal Chand Agarwal v/s ACIT 21 Taxworld....
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....sstt. CIT 1995) 51 TTJ (Pune) 513: (1995) 52 ITO 412 (Pune), Glass Lines Equipment Co. Ltd. v. CIT (2001) 170 CTR (Guj) 470 (2002) 253 ITR 454 (Guj). Mehta Parikh & Co. vs. CIT (1956) 30 ITR 181 (SC) and Chander Mohan Mehta va, Asstt. CIT (Inv.] (1999) 65 TTJ (Pune) 327: (1999) 71 ITD 245 (Pune) applied. (vi) Thus, as per provisions of section 292C and 132(4A) of the Income Tax Act, 1961, the contents of such books of account and other documents seized during the course of search are true and the contents of the seized documents are itself confirmation and prove the contention of the appellant. If the ld. AO was not satisfied about the correctness and truthfulness of such documents, then he was supposed to make the inquiries to disprove the same. The Id. AO cannot shift his task on the appellant and cannot make the addition by brushing aside the established and accepted provisions of the law. (vii) Further, the presumption of section 292C of the Income Tax Act, 1961 that the information as available in the seized records are correct unless otherwise proved to be wrong, is squarely applicable in the appellant's case. The provisions of section 292C of the Income....
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....on has to be exercised judiciously. If the AO ignores the preponderance of probabilities then it could not be said that such discretion was exercised judiciously. For invoking s. 69, the AO has to establish that the investment belongs to the appellant. In the present case, onus cast on the AO to establish that the investments belonged to the appellant has not been discharged. Therefore, the deeming provisions of s. 69 cannot be invoked in this case. (ix) In this case, the AO has taxed the unexplained opening capital as per provisions of sec. 69 of the Act. In this context, it will be pertinent to discuss the provisions of this section. As per this section, the value of unexplained investment made by the assessee in the FY immediately preceding AY can be charged to tax u/s 69 of the Act only if the following conditions are fulfilled:- (a) Assessee might have made investments in the FY inmediately preceding A.Y b) The investments made are not recorded in the books, if any, maintained by the assessee for any source of income (c) Assessee places no explanation about the nature of source of investments or explanation offered by him is not, in the opin....
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....come Tax Appellate Tribunal - Kolkata in the case of D.C.I.T.,Circle- 1(2), Kolkata, vs M/S Paramie Goods Private in I.T.A. Nos. 1931/Kol/2016 (2018) has held as under: "9. As held by the Hon'ble Delhi High Court in the case of Usha Stud Agricultural Farms Ltd. (supra) as well as by the Hon'ble Rajasthan High Court in the case of Parmeshwar Bohra (supra), the amount received by the assessee in the earlier year and not in the year under consideration and duly credited in the books of account of the assessee for such earlier year cannot be added under section 68 an unexplained cash, credit for the year under consideration. In our opinion, the ratio of the said two judicial pronouncements is squarely applicable to the facts of the present case." (xii) In view of the above discussion and judicial precedents, I am of the view that if the AO accepts that the entries relating to opening stock, Gross Profit, and Net Profit reflecting in the tally data seized are genuine, then he should also accept that the figures of capital balance reflected in the same tally data are also genuine and true, if not found otherwise based on some material or inquiries carried out by....
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.... 111351741 3 Shakti Eng 2018-19 0 -21989350 46868725 9275400 4 Shakti Rewari 2018-19 15755500 -326355 -434155 6578023 5 SM 2018-19 15569791 56476190 29992943 321756089 101727513 524669253 Reply furnished by assessee was not found satisfactory by AO. On perusal of the data, it was appeared that the capital of Rs. 52,46,69,253/- was introduced first time in the year under consideration and net profit mentioned in the above table had already declared by the assessee in his return of income. The assessee was asked to explain the above transactions but no satisfactory reply was furnished by the assessee, hence the whole amount of capital introduced i.c. Rs. 52,46,69,253/- was treated as unexplained investment u/s 69 r.w.s. 115BBE of the Act. Since all the transactions mentioned in the said concern are admitted by the joint venture of the assessee Shri Alok Malpani and Shri Mukesh Somani, hence 50% of 52,46,69,253/- i.c. Rs. 26,23,34,627/- each was equally added to the total income of the Shri Alok Malpani and Shri Mukesh Somani on account of unexplained inves....
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....orthy PCIT. Said appeals were filed online as well as offline subsequently. Alongwith the appeals Original Authorizations letters of PCIT (Central), Rajasthan, Jaipur, Form No.36, Orders of CIT(A), Form No.35, Assessment Orders, Grounds filed by the assessee before the CIT(A) were also submitted. Copy of the same were also provided to PCIT (Central), Rajasthan, Jaipur, Sr. DR, ITAT, Jaipur and JCIT, Central-Range, Udaipur. Copies of 8 Pen Drives inventorized as Exhibit-1 to 8 of Annexure-PD found from the residential premises of the Shri Alok Malpani situated at Kishangarh pride are enclosed." 10.2 The ld. AO also submitted 2nd written submission dated 31.10.2022 the same is reproduced here in below : "3. The desired paper book was submitted as per reference no 2 mentioned above to your goodself through proper channel. The same included a brief note (Page 01 to 29) and a pen drive containing copies of relevant exhibits of seized material part of which has been discussed in respective assessment orders (Copies of 8 Pen Drives inventorized as Exhibit-1 to 8 of Annexure-PD found from the residential premises of the Shri Alok Malpani situated at Kishangarh pride, C....
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....n the year under consideration. Thus, it is beyond doubt that the ld. AO was given fair chance to represent his version in this case before ld. CIT(A). 12. We have considered the rival contention and perused the orders of the lower authorities, material available on record, arguments advanced by both the parties and also gone through the judicial decision relied upon by both the parties to drive home to their respective contentions. As the ld. DR raised the specific objection regarding not giving the opportunity before the proceeding before the ld. CIT(A) the bench noted that presence of the ld. AO was very well marked before the ld. CIT(A). We have also noted from the order of the ld. CIT(A) that the ld. AO has accepted the fact that while making the addition instead of taking the opening capital he has taken the closing capital and thus, there cannot be a doubt that while recording the finding of the fact that the whether the amount added is on account of the opening capital or income of the assessee. His version on this issue is duly recorded vide para 4.2 (iii). The same is reiterated here in below "4.2 (iii) During the course of appellate proceedings, Shri G. D. Sh....
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.... all the options available to tax the said opening capital in the earlier year but not in the year under consideration. Even if the contention of the assessee that the opening balance is not correct or bogus even then evidence cannot be considered partly in favour of the assessee and partly against. The ld. CIT(A) relying on the judgment of the jurisdictional high court in the case of Commissioner of Income Tax Vs. S. M. S. Investment Corporation Private Limited reported at 207 ITR 364 (Raj.) considered the view that if any document is found in the course of search, then by legal fiction, a presumption has to be drawn that such document belongs to the person from whom possession or control it was found and the contents of such documents are true. In accordance with the provision of section 132(4A), a presumption has to be drawn that the seized documents belongs to the assessee and is a true document. Thus, on conjoined reading of provision of section 292C and 132(4A) of the Act the contents of such books of account and other documents seized during the course of search are true and the contents of the seized documents are itself confirmation and proof of what is evidently clear fro....
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....vailable on record. The bench has noticed that the issues raised by the assessee in the appeal in ITA No. 336/JPR/2022 are equally similar on set of facts and grounds with that of ITA No. 334/JPR/2022. Therefore, it is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in ITA No. 334/JPR/2022 for the Assessment Year 2019-20 shall apply mutatis mutandis in the case of Mukesh Kumar Somani in ITA No. 336/JPR/2022for the Assessment Year 2019-20. 15. In the result the appeal of the revenue in ITA No. 336/JPR/2022 is dismissed. 16. Now, we take up the cross objection filed by the assessee Shri Alok Malpani in CO/23/JPR/2022 wherein effectively three grounds of cross objections raised by the assessee. 17. The cross-objection Ground no. 1 is related to challenging the proceeding on account of mechanical approval u/s. 153D of the Act, since we have concurred the findings of the ld. CIT(A) on merits therefore, these ground No. 1 becomes technical and infructuous does not require any adjudication. As regards ground no. 2 related to charging of interest u/s. 234B which is consequential in nature for w....