TMI Blog2022 (12) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... detailed observation while dealing with the appeal of the assessee and we do not find any infirmity in the reasoned finding recorded by the CIT(A) and the revenue has not controverted any of the findings of the CIT(A) even though the bench has also granted proper opportunity to the revenue to place their contentions. Since, there is no refuting submission that the opening capital is in fact is income of the assessee when from the said tally data income for the current year is duly accepted. Thus, we do not find any infirmity in the finding of the CIT(A) that the opening capital reflected in the same tally data cannot be considered as income for the year under consideration. In terms of these observations, we do not find any merit in the ground no. 2 3 raised by the revenue and thus, the same is dismissed. - ITA No. 334/JP/2022 CO No. 23/JP/2022 (Arising out of ITA No. 334/JP/2022), ITA No. 336/JP/2022 CO No. 25/JP/2022 (Arising out of ITA No. 336/JP/2022) - - - Dated:- 8-12-2022 - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri C. M Agarwal (C.A.) For the Revenue : Shri Shailendra Sharma (CIT) ORDER PER BENCH: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case and law, the ld. CIT(A) is justified in deleting the addition of Rs. 26,23,34,627/- made u/s 69 r.w.s.115BBE of the IT. Act, 1961 by relying the contention of assessee that the unexplained investment was opening capital of assessee and by ignoring the finding of AO that it was the fresh capital (found first time in tally data) introduced during the year . (ii) In grating relief, the Ld. CIT(A) has accepted the opening balance which has been conveniently specified by the taxpayer at a convenient figure, without any satisfactory or judicial basis. 4. In CO No. 23/JP/2022 for A.Y 2019-20, the assessee has taken following grounds of appeal, which is reproduced here in below: 1. On the facts and in the circumstances of the case the approval given by the Addl. CIT u/s 153D of the Act is in a routine and mechanical manner, without any application of mind, without appreciating the facts and without following the mandate of the section 153D, which makes the order passed u/s 153A nonest, void ab initio, bad in law. Therefore, the assessment order passed by the ld. AO on the basis of such approval deserves to be quashed. LD CIT(A) has erred in giving finding on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 8 of Annexure- PD found from the residential premises of Shri Alok Malpani at Kishangarh Pride as per which the P L account, capital account and Balance Sheet of various concerns related to the assessee were found. These P L Accounts, depicting opening stock, Gross profit and Net Profit of these concerns. The Balance Sheet depicts opening asset of these concerns the details off are tabulated below: S.No. Name of the concerns FY Opening stock Gross Profit Net Profit Capital A/c 1 SMP 2018-19 55554476 16000000 16000000 75708000 2 SG 2018-19 0 13347596 9300000 111351741 3 Shakti Eng 2018-19 0 -21989350 46868725 9275400 4 Shakti Rewari 2018-19 15755500 -326 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 52,46,69,253/- is held as the unexplained investment u/s. 69 r.w.s. 115BBE of the I. T. Act, 1961. Since, all the transactions mentioned in the said concerns mentioned in the table are admitted to be the joint venture of the assessee and Shri Mukesh Somani and the Net Profit reflecting from these concerns were jointly own by these two, therefore, the half amount of Rs. 52,46,69,253/- i.e. 26,23,34,627/- is being added in the total income of the assessee. 7. Aggrieved from the additions made by the ld. AO, assessee has carried the matter in appeal before the ld CIT(A). The ld. CIT(A) has given the relief to the assessee in part. Both the party aggrieved from the order of the ld. CIT(A), revenue has filed this appeal and the assessee has also filed cross objections. 8. We have taken the appeal of the revenue first in ITA NO. 335/JPR/2022. The ground no. 1, 4 5 being general in nature or there is no specific submission and/or arguments advanced we considered it as general in nature and it does not require any adjudication and thus is treated as dismissed. 9. Apropos ground no. 2 3 raised by the revenue, it is observed that during the course of search proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect capital should be at Rs 23,05,32,408/- instead of Rs. 26,23,34,627/-. On perusal of the capital account and admission made by the AO in the course of appellate proceedings, I find that the capital account represents the closing balance of the partner's capital at the yearend amounting to Rs. 52,46,69,253/- as it includes profit of Rs. 10,18,70,320/- earned during the year as well. However, the fact also remains that the amount of Rs.23,05,32,408/- is not the fresh capital introduced during the year but is an opening capital brought forward from the previous years as depicted in the tally data. Moreover the fact also remains that the AO has not made any inquiries during the course of assessment proceedings to ascertain whether it was fresh capital introduced during the year under consideration or the opening capital balance. Even during the course of appellate proceedings, the AO could not rebut the contention of the appellant that it is the opening capital brought forward from the previous years. Further it is also observed that the AO has not formed his opinion on the basis of any material or information that the appellant had in fact made investments in some form or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rable to assessee. Duality of the approach of AO is not fair. 5. RAMANLAL P. CHORDIA VE. ASSISTANT COMMISSIONER OF INCOME TAX, reported in (2001) 20 CCH 0047 Pune Trib; (2004) 87 TTJ 0713 Held: It is noted that both these diaries are considered by the Department as true, genuine and correct documents under s. 132(4A) and if that be so, the diary No. 27 gives, on one hand, the ledger accounts of the borrowers and in the same accounts, the amounts taken from the lenders are mentioned. When the Department considers the diary as genuine, there is no reason for the Department to doubt these entries in the diaries regarding the lenders. The principle of law is that under s. 132(4A) the document found in search is genuine vis-a-vis the entire contents thereof and the Revenue is not justified in holding a view that only a part of the content, 1.e., the name of the borrower, is correct and not the name of the lender. Hence, in this case, on the facts, the entire diary has to be considered as genuine, true and correct document and if that is so, the fact that the initials of the lenders are mentioned in the accounts of the borrowers, they are to be considered as genuine-Chander Moha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se possession/control it is found and seized and the contents of the books of account or other documents are true. As held in the judicial rulings, the sole exception to this rule is that if it is alleged that the contents are not true or does not belong to that person, then the person alleging so is obliged to establish it. In the instant case, the ld. AO himself is accepting that the opening stock, gross profit and net profit as depicted in the tally data found as per pen drive seized during the course of search to be true and therefore accepting part entries to be true while considering the other entries as per the same tally data to be not correct, is not justifiable. Under such circumstances, the opening balance as per the aforesaid capital account contained in the said tally data cannot be brushed aside against all the accepted principals of law. (viii) It is observed that the addition was made by ld. AO under section 69 of Income Tax Act, 1961. From perusal of the provisions of this section it reveals that the addition in this section can only be made if the assessee is found to have made investments which are not recorded in the books of accounts, which is not found corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment made by the appellant during the year under consideration. Accordingly, the first eligibility criterion of section 69 as mentioned above is not fulfilled. Secondly, I find that the net profit figures in the same table were offered by the appellant for taxation in his return of income filed for the year under consideration which have been accepted by the AO. The opening balance of the capital account is also part of the said books of accounts which have been accepted by the AO alongwith the figures of opening stock, gross profit and net profit. The impugned figure of 23,05,32,408/- which represents opening capital balance is duly recorded in the books of accounts as well as balance sheet of the appellant as found in the tally data. Therefore, it can be easily inferred that the opening capital balance is duly recorded in the books of accounts and accordingly, the second eligibility criterion of section 69, addition against opening capital balance cannot be made u/s 69 of the Act. Thirdly, the AO has not formed his opinion on the basis of any material or information that the appellant had in fact made investments in some form or the other such as immovable and movable as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO was not justified in adding the alleged opening capital by treating it as unexplained. However, I also find that the AO should have made enquiries and ascertained the period of introduction of fresh capital and should have brought the same to tax in the event, it was found unexplained. In this regard, the AO may take necessary action, as per law. In view of the above discussion, the addition of Rs.26,23,34,627/- made by the AO on account of unexplained investment is deleted and the Grounds of appeal no. 1 to 3 are treated as allowed. 10. The ld. DR heard who relied on the findings of the assessing officer and supported the contention raised by the ld. AO. The ld. DR submitted that as the revenue did not accept the findings of the ld. CIT(A) because the AO was not confronted on the issue and the ld. CIT(A) has not called for any remand report from the assessing officer. 10.1 On the ground raised by the revenue two written submissions were made dated 13.10.2022 and 31.10.2022 the same is reproduced here in below: As per Assessment orders in brief:- Search Seizure action u/s 132 of the I. T. Act, 1961 was carried out at the Residential and Business Premises of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 investment u/s 69 of the Act. Ld CIT(A) deleted the addition made by AO. Ld CIT (A) in her finding mentioned that the capital introduced by the assessee was an opening balance of assessee which cannot be added in the current year as it pertains to preceding year/(s) and AO had not made any enquiry to rebut the same. Ld CIT(A) further relied that even closing capital balance includes net profit of the assseee declared in ITR Ld CIT(A) further mentioned that Shri G, D. Shrama, DCIT Central Circle) Ajmer was called for during assessment proceeding who accepted that actual addition should have been of Rs 23,05,32,408/- according instead of 26,23,34,627/-. Ld CIT(A) further relied that since other factors such as opening stock etc had been accepted by AO, then opening capital also should have been accepted by AG as AO cannot partly accept the books of accounts. Ld CITA) further mentioned that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized 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, Copies of an Ikrarnama relating to transfer of shares in Paradizo resort relevant whatsapp chats extracted from the mobile phone of Shri Ashok Jain and Copies of relevant digital data obtained from the Mobile Phone of Shri Omanshu Sharma and relevant Annexure-CF in the case of Shri Omanshu Sharma). 11. Per contra, the ld. AR of the assessee reiterated the submission from the paper book made before the ld. CIT(A) and heavily relied upon the reasoned finding granting relief by the ld. CIT(A). The ld. AR of the assessee submitted that since the data is already with the ld. AO in the form of seized pen drive where itself suggest the impugned amount is recorded as opening capital and therefore, now the revenue cannot take a plea that the same is not opening balance and income of the assessee. Based on these information extracted by the revenue the assessee has already disclosed the income that is related to the assessee for the year under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. Sharma, DCIT, Central Circle, Ajmer, the present AO, appeared before me and submitted that the addition of opening capital includes the profit earned during the year and that the actual addition has been made of closing balance and not of opening capital. According to him, the correct capital was at Rs. 23,05,32,408/- instead of Rs. 26,23,34,627/- added by the then AO while passing the assessment order. We have also noted that there are no contrary contentions raised before us that the ld. AO has not attended the proceeding before the ld. CIT(A). We have also not found any contrary contention that the amount disputed is not the opening capital. Both these not disputed fact makes it clear that the ld. AO has verified the figure of the capital confessed that the addition to the extent of the profit is taxed twice and his version on the issue is very well taken into consideration by the ld. CIT(A) while deciding the appeal of the assessee. Even though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from the such seized documents. Hence, when in the seized tally data the income and opening capital both reflected. The ld. AO cannot shift the burden to the assessee for opening capital amount when the income has already considered by him as correct from the same record. Thus, the action of the ld. AO to further add the opening capital keeping a side the established and accepted provision of law. Even the provision of section 292C are very much clear that the information as available in the seized records are correct unless otherwise proved to be wrong. Here in this case the revenue did not controvert the contention of the assessee from the same very evidence that the opening capital is in fact the income of the current year. We have also observed that the ld. AO has made the addition u/s. 69 of the Act. On careful perusal of the provision of the act the ld. AO can make the addition if the assessee is found to have made investments which are not recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs 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 which AO is directed to give the necessary effect as per law. Ground no. 3 is related to levy of the penalty and the levy of penalty is not subject matter of challenge before us. Therefore, the same is premature which does not require adjudication. 18. In terms of these observations the cross objection filed by the assessee is allowed for statistical purpose in CO No. 23/JPR/2022 for assessment year 2019-2020. 19. The fact of the cross objection in CO No. 25/JPR/2022 are similar to the facts of the cross objection in CO No. 23/JPR/2022 and we have heard both the parties and persuaded the materials available on record. The bench has noticed that the issues raised by the assessee in this cross objection [CO] No. 25/JPR/2022 are equally similar on set of facts and grounds. Therefore, it is not imperative to repeat the facts and various grounds raised. Hence, the bench feels that the decision taken by us in CO No. 23/JPR/2022 for the Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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