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2022 (1) TMI 478 - AT - Income TaxValidity of proceedings u/s 153C - incriminating material found during the search or not? - unaccounted capital deployed by the assessee - transactions found on cloud data - addition of unexplained unaccounted capital, advances and interest earned were on the basis of incriminating seized data - HELD 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 various projects of the Manglam Group and addition on account of interest earned on such capital employed were made by the AO. The fact that the order of the Settlement Commission has been challenged by the Revenue by way of writ before the Hon ble Rajasthan High Court and similarly, the fact that another set of writ petitions have been filed before the Hon ble Rajasthan High Court against the decision of the Coordinate Benches in case of Shri Jugal Kishore Garg 2021 (5) TMI 814 - ITAT JAIPUR cannot be the basis for not following the decision so passed by the Coordinate 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 Courts and however, till such time, the order of the Coordinate Bench is not stayed or overruled by the Courts, 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 taken a view in the matter under identical set of facts and circumstances of the case and no restriction has been placed by the Courts in terms of effect and operation of the said order of the Coordinate Benches including following the same in other cases as facts and circumstances so justify as in the instant case, we see no justifiable reason to deviate and take a different view in the matter and addition so made in the hands of the assessee is hereby held to be rightly deleted by the ld CIT(A) and we hereby affirm his findings in this regard. The grounds of appeal so taken by the Revenue are thus dismissed.
Issues Involved:
1. Justification of ignoring transactions found on cloud data and deleting the addition of unaccounted capital. 2. Justification of ignoring transactions found on cloud data and deleting the addition of unaccounted interest earned. 3. Justification of ignoring entries pertaining to unaccounted capital and advances found in the N Trading cloud data. 4. Justification of giving relief based on the Manglam Group's ownership of the cloud data entries before the ITSC. Issue-wise Detailed Analysis: 1. Justification of Ignoring Transactions Found on Cloud Data and Deleting the Addition of Unaccounted Capital: The Revenue challenged the deletion of ?8,83,39,100/- added by the AO as unaccounted capital based on cloud data. The assessee denied any connection with the N Trading Co. cloud data, supported by affidavits from Mr. Nand Kishor Gupta and the assessee himself. The AO dismissed these affidavits, relying on the presumption under Section 132(4A) and the fact that MBDL had owned up the cloud data before the ITSC. However, the CIT(A) found that the mere mention of "RGS" in the ledger was insufficient to prove it referred to the assessee, especially since the Manglam Group had claimed the data as their own and settled the tax liability on it before the ITSC. The Tribunal upheld the CIT(A)'s decision, noting that the cloud data transactions were already taxed in the hands of MBDL, and thus, the addition in the assessee's hands was unwarranted. 2. Justification of Ignoring Transactions Found on Cloud Data and Deleting the Addition of Unaccounted Interest Earned: The AO added ?1,06,35,650/- as unaccounted interest earned on cash loans/capital based on the same cloud data. The assessee contested this, supported by affidavits denying any such transactions. The AO rejected these affidavits, relying on the presumption under Section 132(4A). The CIT(A) found that the cloud data entries were not corroborated by any other evidence linking them to the assessee. Since MBDL had already included these transactions in their settlement before the ITSC, the CIT(A) deleted the addition. The Tribunal confirmed this, noting that the interest income was already taxed in the hands of MBDL. 3. Justification of Ignoring Entries Pertaining to Unaccounted Capital and Advances Found in the N Trading Cloud Data: The AO argued that the entries in the N Trading cloud data indicated unaccounted capital and advances by the assessee. The assessee denied any connection with these entries, supported by affidavits. The CIT(A) found that the cloud data entries were not sufficiently linked to the assessee and noted that MBDL had owned up these entries before the ITSC. The Tribunal upheld the CIT(A)'s decision, emphasizing that the transactions were already taxed in the hands of MBDL, and thus, the addition in the assessee's hands was not justified. 4. Justification of Giving Relief Based on the Manglam Group's Ownership of the Cloud Data Entries Before the ITSC: The CIT(A) provided relief to the assessee based on the fact that MBDL had owned up the cloud data entries before the ITSC and settled the tax liability on them. The Revenue contended that the CIT(A) erred in relying on the ITSC's findings, which were under challenge before the High Court. However, the Tribunal noted that the ITSC's order had not been stayed, and the principle of consistency required following the Coordinate Benches' decision in similar cases. Thus, the Tribunal upheld the CIT(A)'s decision to delete the additions in the assessee's hands, as the transactions were already taxed in the hands of MBDL. Conclusion: The Tribunal dismissed the Revenue's appeals, confirming the CIT(A)'s decision to delete the additions of unaccounted capital and interest in the assessee's hands. The Tribunal emphasized that the cloud data transactions were already taxed in the hands of MBDL, and the Revenue's challenge to the ITSC's order did not provide a basis for making the additions in the assessee's hands. The principle of consistency and the lack of corroborative evidence linking the cloud data entries to the assessee were key factors in the Tribunal's decision.
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