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2021 (5) TMI 814 - AT - Income TaxUnaccounted cash loans - Addition on money received by the assessee - transactions found on Cloud Data - entries pertaining to unaccounted capital and advances were found in the N Trading on Cloud Data - addition of unexplained unaccounted capital, advances, interest and surplus profit earned were on the basis of incriminating seized data - CIT-A deleted the addition - HELD THAT - We found that the transaction recorded in the cloud data of N Trading was owned up by the main person of the company MBDL with regard to the transactions like transactions under the heading of unsecured loans (receipt and payment) and consequent interest payment thereof. As gone through the order of the Hon'ble Settlement Commission dated 16-05-2019 passed in the case of MBDL and have also gone through the statement of Shri N.K. Gupta, main person of MBDL group wherein we found that M/s. Mangalam Builder Developer Ltd.(MBDL) had already 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 was offered on the basis of cloud data of N. Trading Company.The same is accepted by the Settlement Commission. CIT(A) observed that it is evident that the surplus being referred to by the Ld. AO is not profit from the projects but the receipts of 'on money' credited to the capital accounts of the partners which has been considered in the additional income offered by MBDL and accepted by the Hon'ble Settlement Commission. Thus on merits also since the amounts had already been added by the AO and the same had already been subjected to tax in the hands of MBDL and related entities, therefore, the ld. CIT(A) after considering all those facts had correctly deleted the addition made in various assessment years. The Bench also noted that no new facts have been brought by the Revenue in controverting the order of the ld. CIT(A) to the issue in question. In this view, of the matter, we find no reason to interfere with the order of the ld. CIT(A). Thus the appeal of the Revenue for the assessment is dismissed.
Issues Involved:
1. Legality of the order passed under section 143(3) r.w.s. 153C of the Income Tax Act, 1961. 2. Justification for ignoring transactions found on Cloud Data. 3. Deletion of additions made on account of unaccounted capital, surplus profit, and interest based on Cloud Data. 4. Justification for giving relief based on Manglam Group's ownership of transactions in Cloud Data. 5. Consideration of the Settlement Commission's acceptance of Manglam Group's ownership of transactions. Detailed Analysis: 1. Legality of the order passed under section 143(3) r.w.s. 153C of the Income Tax Act, 1961: The assessee challenged the legality of the order under section 143(3) r.w.s. 153C, arguing that no incriminating documents were found related to the assessee and no satisfaction was recorded before issuing the notice under section 153C. The assessee cited several case laws, including Manish Maheshwari vs. CIT and CIT vs. Shetty Pharmaceuticals & Biological Ltd., to support the argument that proper satisfaction must be recorded before invoking section 153C. The Tribunal noted that the search was conducted at Manglam Group's premises, and the transactions found in the Cloud Data were owned up by Manglam Group. The Tribunal found no new facts brought by the Revenue to controvert the CIT(A)'s order, thus upholding the deletion of additions made by the AO. 2. Justification for ignoring transactions found on Cloud Data: The Revenue argued that the CIT(A) erred in ignoring the transactions found on Cloud Data and deleting the additions made by the AO. The Tribunal noted that the transactions recorded in the Cloud Data of N Trading were owned up by the main person of Manglam Group, and the same was accepted by the Settlement Commission. The Tribunal found that the CIT(A) correctly deleted the additions as the amounts had already been subjected to tax in the hands of Manglam Group. 3. Deletion of additions made on account of unaccounted capital, surplus profit, and interest based on Cloud Data: The AO made additions based on Cloud Data, including unaccounted capital, surplus profit, and interest. The assessee argued that these transactions were owned up by Manglam Group and were not related to the assessee. The Tribunal noted that the Settlement Commission accepted the peak deposit of unaccounted capital, loans, and interest as the undisclosed income of Manglam Group. The Tribunal upheld the CIT(A)'s decision to delete the additions as these amounts were already taxed in the hands of Manglam Group. 4. Justification for giving relief based on Manglam Group's ownership of transactions in Cloud Data: The Revenue contended that the CIT(A) was not justified in giving relief to the assessee based on Manglam Group's ownership of transactions in Cloud Data. The Tribunal found that Manglam Group had owned up all the transactions recorded in the Cloud Data, and the same was accepted by the Settlement Commission. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere with the order. 5. Consideration of the Settlement Commission's acceptance of Manglam Group's ownership of transactions: The Tribunal extensively referred to the Settlement Commission's order, which accepted Manglam Group's ownership of the transactions recorded in the Cloud Data. The Settlement Commission had accepted the peak deposit of unaccounted capital, loans, and interest as the undisclosed income of Manglam Group. The Tribunal found that the CIT(A) correctly deleted the additions made by the AO, as these amounts were already subjected to tax in the hands of Manglam Group. Conclusion: The Tribunal dismissed the appeals of the Revenue for the assessment years 2014-15 to 2017-18, upholding the CIT(A)'s order to delete the additions made by the AO based on transactions found in the Cloud Data. The Tribunal found that the transactions were owned up by Manglam Group and were already subjected to tax as accepted by the Settlement Commission. The Tribunal found no reason to interfere with the CIT(A)'s order, thus dismissing the Revenue's appeals.
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