TMI Blog2022 (1) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 15.10 cr. was offered on the basis of cloud data of N. Trading Company which was finally accepted by the Settlement Commission in its order dated 16.05.2019 and accordingly, where the amounts have been subjected to tax in the hands of MBDL and related entities, 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. In the instant case as well, we find that pursuant to search action in case of M/s Manglam Group, the action was taken in the hands of the assessee u/s 153C of the Act based on transactions in N Trading Company found on cloud data found and seized 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 - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 ₹ 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 to unaccounted capital and advances were found in the N Trading cloud data, and thus addition of unexplained unaccounted capital, advances and interest earned were on the basis of incriminating seized data. 6. Whether on the facts and in the circumstances of the case and in law ld. CIT(A)-4, Jaipur is justified in giving relief to the assessee on the ground that the Manglam Group had owned up the entire entries in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalysis of above ledger shows that you have given ₹ 5,75,00,000/- cash loan to MBDL. The above ledger is written with suppression of two zeroes. (3,00,000+75,000+60,000+40,000+90,000+10,000=5,75,000 *100=5,75,00,000/-), The suppression of two zero in the entries of N Trading Co, has been admitted by the directors and key persons of the group. You are requested to furnish the source of this cash loans. Further, during the year under consideration you have earned interest of ₹ 25,62,800/- 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 abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 5. It is also submitted that on the basis of statements and accounts ledger of N. Trading Company, which was collected, seized and recorded in the absence of the assessee and without giving the cross examination opportunity of the witness to the assessee, is not binding on the assessee. Moreover any of his statement nowhere any claim has been recorded that these transaction are related to assessee, Shri Mohan Sukhani. So any inference drawn on the basis of such statement 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the document is not true. However, for that he has to adduce evidence, in absence of any evidence presumption holds true and has not been rebutted successfully. 9.4. 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. 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 parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts as discussed in the previous paras the total unaccounted, 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 ₹ 5,75,00,000/-In absence of proper explanation by the assessee, addition of these out of books cash loans needs to be made as these loans have been forwarded from the undisclosed sources by the assessee. Hence, the total cash loans of ₹ 5,75,00,000/- provided 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 ₹ 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the appellant. Thereafter, on merits of the case as well, the ld. CIT(A) has deleted the additions and his findings read as under:- 8. It may further point out that Mangalam Builder Developer Ltd. (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 peak deposit of unaccounted capital introduced, loans and advances and interest paid and received was considered for computing the income. Accordingly income of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken any loan in cash from any person or repaid it to any person as mentioned in cloud data and these relates to their own affairs and reference was drawn to the reply submitted by him in response to question No. 117 and 118 and affidavit so filed by him. Further, the Assessing Officer did not brought on record any corroborative material to controvert the same and the fact that the assessee having denied the said transactions. It was submitted that the ld. CIT(A) has rightly appreciated the 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 139(1) of the Act on 31-01-2015 at ₹ 6,25,35,780/-. A search and seizure operation was carried out on 4-11-2016 at the various premises 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 ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 `peak deposit' of unaccounted Capital introduced, loans and advances and interest paid and received was considered for computing the income. Accordingly income of ₹ 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. The relevant extract of the final order wherein this issue is discussed is reproduced as under:- Para I of Page. 137-138 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: ₹ 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 busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilised in the business activities of the group and out of such business receipts or further loan raised, repayment is made of the earlier loan. Para 7.7 (Findings of the Commission) Page No. 151 of the Hon'ble Settlement Commission order The Commission has considered the submissions made by both parties. After going through the facts of the case the commission finds merit in the contention of the applicants that in computation of Peak the debit entries must also be considered. The contention of the Pr. CIT that the applicants are not entitled for any benefit of debit entries in calculation of peak values does not hold ground. The position of the Applicants 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 ₹ 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&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of page. 33 of the Hon ble Settlement commissioner order o In the Tally Data, on the date on which the on money was all settled, the earlier cash receipts against booking advances were all deleted and on the said date of final settlement, a fresh consolidated cash entry was passed wherein cash was debited and the Surplus - Project Name Account was credited. o After transfer of the settled receipts to the Surplus A/c, the said on money was transferred to the partners/directors of the Group by debiting the said Surplus Account and crediting the Partners Accounts with the description being surplus after deletion credited to partners . Thus the Partners were given control of the 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lam Builder Developer Ltd had owned up all the N Trading Company 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 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 ₹ 15.10 cr. was offered on the basis of cloud data of N. Trading Company which was finally accepted by the Settlement Commission in its order dated 16.05.2019 and accordingly, where the amounts have been subjected to tax in the hands of MBDL and related entities, 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, the action was taken in the hands of the assessee u/s 153C of the Act based on transactions in N Trading Company found on cloud data found and seized during the course of search and the assessment was completed u/s 143(3) r/w 153C wherein addition on account of unaccounted capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Benches in aforesaid case as nothing has been brought on record in terms of the specific grounds basis which the findings in aforesaid orders have been challenged by way of writ petition and secondly, whether the order of the Settlement Commission and that of the Coordinate Benches have been stayed by the Hon ble Rajasthan High Court or not. Where the decision of the Coordinate Bench is not acceptable to the Revenue, the Revenue is well within its right to pursue the matter before the Hon ble Rajasthan Court and however, till such time, the order of the Coordinate Bench is not stayed or overruled by the Hon ble Rajasthan High Court, the assessee is well within his rights to draw support from the said decision. Where the matter is adjudicated by the Hon ble Rajasthan High Court in favour of the Revenue, the Revenue is not without recourse and is free to take action as per law. Therefore, following the principle of consistency, where the Coordinate Jaipur Benches have already taken a view in the matter under identical set of facts and circumstances of the case and no restriction has been placed by the Hon ble Rajasthan High Court in terms of effect and operation of the said order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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