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TMI Blog2022 (12) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and creditworthiness of persons involved." 2. Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 21,56,510/-. During the year the assessee having income from Business or Profession and Income from other sources. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 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 provide the details of the said creditors on account of which the said entries were said to be mentioned in the Balance Sheet. Therefore, the amount of Rs. 52,46,69,253/- is held as the unexplained investment u/s. 69 r.w.s. 115B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 capital made by his predecessor AO includes the profit earned during the year and the actual addition made by the AO is of closing balance and that the correct capital should be at Rs 23,05,32,408/- instead of Rs. 26,23,34,627/-. On perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse 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 213 (Jpr.) In no case, AO can be allowed to consider a part of a particular document as a true being favorable to revenue and other part to the very document as false since that is favorable to assessee. Duality of the approach of AO is not fair. 5. RAMANLAL P. CHORDIA VE. ASSIS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 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 Tax Act, 1961 lays down a binding deeming fiction that the books of account, other documents, money, bullion, jewellery and valuable article or thing found in the possession/control of the person would be deemed to belong to the person in whose possession/control it is found and seized and the contents of the books of account or other documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 opinion of the A.O. satisfactory. As regards the fulfillment or satisfaction of these conditions in the case of the appellant, it is observed that the AO has made the addition against the opening capital of the appellant which itself proves that the AO has not found any investment made by the appellant during the year under consideration. Accordingly, the first eligibility criterio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 the AO in this regard. Further, there is no case for making addition on account of opening capital balance in the case of the appellant either under s. 69 or even under s. 68 of the Act. I find that the basic eligible criterions as laid down u/s 69 are not fulfilled in this case and therefore it is observed that the AO was not justified in adding the alleged opening capital by treating it as unexplained. However, I also find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore 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. 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 op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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