NMD CONSTRUCTIONS LLP,BHILWARA vs. ITO, WARD-1, BHILWARA

PER GAGAN GOYAL, A.M:

This appeal by the assessee is directed against the order of CIT(A), Jaipur -
05 dated 25.02.2025 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’).The assessee has raised the following grounds of appeal: -
1. As per the grounds taken by the assessee as attached in annexure with Form No. 36. NMD Constructions LLP

(2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of section 132A, had been found in the possession or control of that person in the course of a search under section 132. 6. Section 292C of the Act is further analysed in the light of judicial pronouncements of various Hon’ble High Courts as under, in similar circumstances:
[2019] 108 taxmann.com 437 (Bom.)PCIT, Central-2vs.Umesh Ishrani
“2. The Respondent-Assessee is an individual. He was the partner of the firm. The Income Tax
Department had carried out search and seizure operation during which certain loose papers were NMD Constructions LLP collected. On the basis of loose papers additions were made in the hands of the individual partners and on protective basis on the hand of the firm. While deleting such addition in case of the present assessee the Tribunal noted that the documents nowhere show that any payments were made by same persons, no enquiry or verification was made with the seller of the shops or the developer. Tribunal therefore concluded that entries of the loose papers were not corroborated with any other evidence on record.
3. It can thus be seen that the entire issue is based on appreciation of evidence on record. The Tribunal noted that the loose papers entries were not clear and not corroborated by any independent evidence.
No question of law therefore arises. Income Tax Appeal is dismissed.”

[2017] 84 taxmann.com 109 (Calcutta) PCIT, Central-1, Kol. Vs. Ajanta Footcare
(India) (P.) Ltd.
As it would be evident from the question suggested by the revenue, it wants the Court to interfere with concurrent finding of fact in relation to content of a document by two appellate authorities. This one can do only if it is demonstrated that findings in the order of the appellate authorities were perverse. The revenue has submitted that the assessee disowned this document and, therefore, did not give any explanation. In such a situation the presumption would be that the content of the document would be true and the computation made by the Assessing Officer would be valid in terms of section 69C. It brought to the notice of the Court the provisions of section 292C. [Para 5]
On the basis of provisions of section 292C, the revenue argued that content of the document ought to be held to be true and as the document was recovered from the assessee's custody or possession, the same should be treated to have been belonged to the assessee only. Considering the presumption available to the revenue under section 292C, there was no necessity of independent examination of the assessee or further enquiry for corroborating the contents of the document. It relied on a judgment of the Delhi High
Court rendered in the case of Mahavir Woollen Mills v. CIT [2000] 245 ITR 297/111 Taxman 566 in support of the submission on this point. [Para 6]
The assessee, on the other hand, argued that the manner in which presumption contemplated under the provision of section 292C shall be drawn is in the discretion of the authority concerned and in support of the submission relied on a decision of the Supreme Court rendered in the case of P.R.
Metrani v. CIT [2006] 287 ITR 209/157 Taxman 325. [Para 7]
The ratio of the judgment in the case of Mahavir Woollen Mills (supra) does not apply in the instant case.
In the judgment, the Delhi High Court has explained the context in which a question of fact can get transformed into a question of law. [Para 8]
The interpretation given by the Supreme Court in the case of P.R. Metrani (supra) so far as the construction of the expression 'may be presumed' is concerned does not support the aforesaid submission of the revenue. The revenue seeks to counter this submission referring to provisions of section 292C. Its stand is that the appellate authorities ought to have concluded that unexplained expenditure reflected in the aforesaid document constituted undisclosed income of the assessee and such conclusion was inevitable. The Court, however, finds applying the ratio of the judgment of the Supreme Court in the case of P.R. Metrani (supra) that the Legislature in employing the expression may be presumed left it to the discretion of the statutory bodies to decide as to whether the fact sought to be established by the revenue is to be presumed or not in the manner the revenue wants to.
NMD Constructions LLP

It is not legislative mandate to impute duty on the authority to presume certain fact which may be the case where the law requires that an authority shall presume certain facts. So far as the subject document is concerned, both the appellate authorities found insufficient evidence to link the document with the assessee in the first place. Thus, primary fact was not established from which presumption could be drawn. [Para 9]
In the instant case, the appellate authorities have exercised their discretion against the revenue and in favour of the assessee. The reason for exercising such discretion is that no stock discrepancy could be demonstrated and there was no corroboration of the figures forming the basis of addition to the income of the assessee as was directed by the Assessing Officer. No question about the said document was put to the Director of the assessee in course of search. This factor was also taken into consideration by the appellate bodies. The appellate authorities doubted the inherent probative value or quality of the above document upon applying their mind on it. In substance, the said authorities found no reason to draw presumption against the assessee on the basis of scribbled figures appearing on the document. This is how two fact finding bodies chose to deal with that document. Even without proper explanation from the assessee, when the mandate of law is that authorities may presume certain facts under section 292C to come to a conclusion in favour of revenue, the nature of information contained in or revealed by such document would have to be examined to link such document to undisclosed income of the assessee. Both the Commissioner (Appeals) and the Tribunal found no linking factor. Both these authorities rejected the reasoning of the Assessing Officer on this basis of which the latter came to his finding that the figures appearing on the said document could be computed to arrive at undisclosed income of the assessee. The findings of the appellate authorities cannot be held to be perverse or based on no evidence. The appellate authorities had examined the said document and found that the same could not be connected with assessee's transactions for the relevant assessment year. [Para 10]
[2016] 67 taxmann.com 357 (Del.) PCIT vs. Delco India (P.) Ltd.
Section 292C, inter alia, provides that where any books of account or other documents are found in possession or control of any person in the course of search under section 132 or survey under section 133A, it may be presumed that such books or documents belong to such person. Undisputedly, such presumption is rebuttable. It is not disputed that the assessee had clearly denied having any dealing with SSL and had also filed an affidavit to that effect. The Tribunal found, as a matter of fact, that the assessee on its part had made the necessary enquiries and also provided final accounts of SSL; confirmation from the director of SSL; details of the bank accounts; final accounts; director's reports'
PA Number, etc. which sufficiently discharged the burden cast on the assessee. The Tribunal also found that the assessee had provided the necessary information for the Assessing Officer to make the requisite enquiries from SSL. No interference with the order of the Tribunal is called for under section 260A since the findings of the Tribunal are essentially factual. Further, no infirmity was found with the findings returned by the Tribunal and in any event the same cannot be held to be perverse by any stretch. [Para 17]
7. In the matter before us also, the Revenue relied on a torn piece of document found in a dustbin at the business premises of the assessee, containing
NMD Constructions LLP certain figures relating to the project undertaken by the assessee. In this piece of paper, it was written that total project cost was Rs. 8.96 Cr. (Rs. 5.92 Cr. in cheque and Rs. 3.04 in cash). In rebuttal to the same the assessee tried to explain its factual position before the authorities below that it was basically a calculation sheet prepared for the purposes of internal calculation, i.e. how much money received up till then and how much was yet to be received (Rs. 3.04 Cr.), which is wrongly mentioned as cash.
8. To substantiate, its contention the assessee further furnished the affidavits of the parties/clients for whom he was working as construction contractor. All the parties confirmed the version of the assessee and there was no variation in the statement of the assessee vis-à-vis the parties furnished the affidavits. We have thoroughly examined the orders of the authorities below, but have not found any adverse comments on the affidavits filed by the assessee in support of its contentions.
9. Insofar as the provisions of Section 292C of the Act are concerned, Section provides that where a document is found in possession of a person during search or survey, a presumption can be drawn that it belongs to such person, however, the said presumption is rebuttable and the Assessee can rebut the same. It is noted that in the given facts, the Assessee had asserted that it did not have any dealing in cash with parties concerned and had filed affidavits of the parties to that effect. Further, in order to rebut the presumption, the Assessee had provided all necessary details for the AO to make the necessary enquiries. The Assessee had also produced the complete set of books of accounts, bank statements, vouchers and data retrieved from the laptop and these submissions of the assessee were thoroughly examined by the AO, yet no adverse findings on NMD Constructions LLP the same was there. Thus, given the stand of the Assessee, it had done all that it was in its power to do.
10. The assessee further furnished payments received alongwith the parties’
ledgers reflecting the transactions with the parties duly confirming the facts read with the affidavits placed before the AO. There is no evidence or finding on actual cash receipt by the assessee. It is observed that despite the information being provided by the Assessee, the AO had not made the efforts to make the necessary enquiries. It is observed that in the given facts and circumstances, the AO was required to make further enquiries but it appeared that the AO was reluctant to do so. Although the AO had been provided the details of the parties concerned alongwith their affidavits, he made no efforts to obtain the necessary information from the AO of respective parties.
11. In view of the above, it is observed and held that the assessee succeeded in rebutting the presumption as provided in section 292C of the Act and rather, the Revenue was in vain to counter the same on facts and law. We do not find any force in the order of the AO, being further confirmed by the Ld. CIT (A). Grounds raised by the assessee are allowed and additions made in the assessment order are directed to be deleted as the same are non-sustainable.
12. In the result, based on above the appeal of the assessee is allowed.
The Order is pronounced in the open court on the 17th day of September 2025. (NARINDER KUMAR)
ACCOUNTANT MEMBER
NMD Constructions LLP

Jaipur, िदनांक/Dated: 17/09/2025

Copy of the Order forwarded to:
1. अपीलाथ /The Appellant ,
2. ितवादी/ The Respondent.
3. आयकर आयु CIT
4. िवभागीय ितिनिध, आय.अपी.अिध., Sr.DR., ITAT,
5. गाड फाइल/Guard file.

BY ORDER,
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(Asstt.