DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE AJMER vs. OMANSHU SHARMA , AJMER

CO No. 28/JP/2022 (Arising out of fu/kZkj.k o"kZ@Assessment Years : 2020-21 cuke Shri Omanshu Sharma Deputy Commissioner of Vs. B-47, A-32, Kuva Ki Gali, Ajmer, Income-tax, Alwar Gate, Ajmer Central Circle, Ajmer LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: CVLPS 6966 B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri C. M Agarwal (C.A.) jktLo dh vksjls@Revenue by: Shri Shailendra Sharma (CIT) lquokbZ dh rkjh[k@Date of Hearing : 15/11/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 08/12/2022 vkns'k@ORDER PER BENCH:

This appeal is filed by the revenue aggrieved from the order of the Commissioner of Income Tax (Appeals)- 2, Udaipur [ Here in after referred which in turn arises from the order passed by the ACIT, Central Circle, Ajmer passed under Section 143(3) of the Income tax Act, 1961 (in short 'the Act') dated 27.09.2021. The assessee has also preferred a cross objection against the revenue’s appeal and his cross objection is numbered as CO No. 28/JP/2022.

“1 Ground 1 “ The Ld. CIT(A) has erred in law and on facts in granting relief to the assessee.

2. Ground 2 “ Whether on facts, and in the circumstances of the case and in law, the ld. CIT(A) is justified in deleting the addition of Rs.76,29,000/- made u/s 69 r.w.s 115BBE of the IT. Act, 1961 merely relying upon the contention of assessee and ignoring the finding arrived at by the AO that no evidence was furnished by the assessee.

3. Ground No. 3 “Whether on the facts, circumstances of the case and law, the Ld. CIT(A) is justified in deleting the addition of Rs. 16,43,150/- made u/s 69A r.w.s 115BBE of the I.T. Act, 1961 ignoring the fact no evidence has been furnished by the assessee about the source of money found during the search proceedings.

5. Ground 5 “The Appellant craves leave or reserve right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”

3 & CO No. 28/JP/2022 DCIT vs. Omanshu Sharma “1. That the Ld CIT(A) has grossly erred on facts and in law in not adjudicating this ground because approval given by the Addl. CIT u/s 153D of the Act to the order passed u/s 143(3)/153A is without application of mind, purely in a mechanical manner, without appreciating the facts and not following the provisions/mandate of the section, which makes the order passed u/s 143(3)/153 nonest, void abinitio, bad in law, the same deserves to be quashed. Ld. CIT(A) has erred in not accepting this issue.

2. That the Ld. CIT(A) has grossly erred on facts in not accepting this ground because the ld. AO has erred on facts and in law in charging interest u/s 234A, 234B and 234C of the Act.

3. That the Ld. CIT(A) has grossly erred on facts in not accepting this ground because On the facts and in the circumstances of the case the ld. AO has erred in initiating proceedings u/s 271AAC of the Act. The appellant craves leave to add, amend or withdraw any of the grounds of the appeal during the course appellate proceedings. All the grounds of appeal are independent and without prejudice to each other.”

4 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 her 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 was assigned to ACIT, Central Circle, Ajmer. The assessee has filed his original return of income for the year under consideration on 28.06.2021 declaring income of Rs. 59,73,640/-. During the year the assessee having income from Salary, Income from Business or Profession and Income from other sources. Notices were issued from time and time and in responses to these notices the assessee filed the details. The seized records / books of account have been examined and desired details were filed by the assessee and was discussed.

5.1 During the course of assessment proceedings, vide notice u/s 142(1) dated 12.08.2021, the assessee was asked to explain the sources of the above investment. In reply to the same, the assessee furnished reply on 10.09.2021 but could not explain the sources with documentary evidence.

Therefore, in absence of any documentary evidence as well as failure to get verified the same from his regular books of accounts an amount of Rs.76,29,000/- is being considered as unexplained investment of the assessee and added u/s 69 r.w.s 115BBE of the I.T. Act, 1961.

5.2. During the course of search proceedings, cash of Rs. 16,43,150/- was found from the bedroom of the assessee. The sources of the same were asked by the assessee during the course of search proceedings as well as assessment proceedings. The assessee replied that the cash found of Rs. 16,43,150/- was received in envelops during his marriage. However, the sources explained by the assessee are not found to be supported with any documentary evidence and therefore, the same is being considered as unexplained money u/s 69A r.w.s 115BBE of the I.T. Act, 1961. carried the matter in appeal before the ld CIT(A). The ld. CIT(A) has given the relief to the assessee in part. Both the party aggrieved from the order of the ld. CIT(A), revenue has filed this appeal and the assessee has also filed cross objections.

“4.2 (ii) Before me, the appellant has contended that the amount of Rs. 76,29,000/- has been advanced by his father Sh. Yashwant Sharma which is appearing in the memoranda cash book submitted before the AO. Further it was also contended that in the cash book an amount of Rs. 63,22,000/- has been debited out of which Rs. 23,22,000/- pertains to AY 2018-19 and balance amount of Rs. 40,00,000/- pertains to year under consideration and has been recorded in the cash book and therefore sufficient cash balance was available with the father of the appellant to cover this amount. Further, it has been contended that apart from Rs. 40,00,000/-, the balance is rough noting. (iii) I have considered the facts of the case and it is observed that the AO has made the addition on account of digital data obtained from the Mobile phone of the appellant. On perusal of the same, it is observed that there is an entry of Rs. 60,00,000/- on account of 'Anonymous' and Rs. 7,50,000/- on account of 'Unsettled account' which appears to be a rough noting. The Ld. AR of the appellant has also brought to my notice that the possession of the aforesaid flat has not been handed over to the appellant as yet. Furthermore, on perusal of the memoranda cash book of Sh. Yashwant Sharma, father of the appellant, it is observed that an amount of Rs. 40,00,000/- has been recorded in it. It is also observed that as a consequence of search proceedings, Sh. Yashwant Sharma has offered the peak credit in his hands on the basis of the memoranda cash book and it is observed that there is sufficient cash balance to cover up the entire investment made by the appellant and therefore no separate addition is required to be made in the hands of the appellant. Accordingly the addition of Rs. 76,29,000/- made by the AO is deleted and the Ground of Appeal No. 1 is treated as allowed.” and supported the contention raised by the ld. AO. The ld. DR submitted that as the revenue did not accept the findings of the ld. CIT(A) because the AO was not confronted on the issue to controvert the submission made by the assessee and the ld. CIT(A) has not called for any remand report from the assessing officer.

10. On the ground raised by the revenue two written submissions were made dated 13.10.2022 and 31.10.2022 the same is reproduced here in below:

“As per Assessment orders in brief:- � Search & Seizure action u/s 132 of the I. T. Act, 1961 was carried out at the Residential and Business Premises of the assessee and his family members of the Group on 13.02.2020. � In the assessment order following additions were made by AO i) During the course of assessment proceedings u/s 153A of the I. T. Act, 1961, certain data in digital format was found and seized/ impounded. As per the data seized/impounded, investment of Rs. 1,17,51,000/- was made by the assessee on account of purchase of flats from M/s Sarth Developers Pvt. Ltd. Out of this, an amount of Rs. 76,29,000/- pertains to the year under consideration. During the course of assessment proceeding, assessee was asked to explain source of such investment but reply was furnished by the assessee without any supporting documentary evidence as well as failed to get verified the same from his regular books of accounts. Accordingly, an amount of Rs. 76,29,000/- was added to the total income of the assessee on account of unexplained investment u/s 69 r.w.s. 115BBE of The Act during the year under consideration. ii) Further, during the course of search proceedings, cash of Rs. 16,43,150/- was also found from the bedroom of the assessee. As per reply of the assessee

9 & CO No. 28/JP/2022 DCIT vs. Omanshu Sharma during the course of search proceedings as well as assessment proceedings, the cash of Rs. 16,43,150/- was received in envelops during his marriage but no supporting evidence was given. In absence of supporting documents, an addition of Rs. 16,43,150/- was also made on account of unexplained money u/s 69A r.w.s. 115BBE of the Act. � Ld CIT (A) deleted the additions as under: i) Ld CIT(A) has stated that the AO has made the addition on account of digital data obtained from the Mobile Phone of the assessee. On perusal of the same, it is observed that there is an entry of Rs. 60,00,000/- on account of Anonymous' and Rs. 7,50,000/- on account of 'Unsettled account' which appears to be a rough noting. It has also came to notice of Ld CIT(A) that possession of flat has not been handed over to assesee yet. On perusal of the memoranda cash book of Shri Yashwant Sharma, father of the assessee, it is observed that an amount of Rs. 40,00,000/- has been recorded in it during AY 2020-21 & Rs 23,22,000/- in AY 2018-19. It is also observed that as a consequence of search proceedings, Shri Yashwant Sharma has offered the peak credit in his hands on the basis of the memoranda cash book and it is observed that there is sufficient cash balance to cover up the entire investment made by the assessee and therefore no separate addition is required to be made in hands of the assessee. Accordingly addition of Rs. 76,29,000/- made on account of unexplained investment u/s 69 r.w.s. 115BBE of the Act was deleted. ii) Ld. CIT(A) has stated that as per inventory of cash seized, It is observed that about Rs 70650/- are of small denomination out of total Rs 16,43,150/- and rest were of Rs 752000/- in denomination of Rs 2000/- & Rs 820000/- in the demomination of Rs 500/-. It has been contended that amount of cash found was received by assesee in his marriage. It was further contended that the balance amount was small saving of family members and there was sufficient cash available in the memoranda cash book of his father Shri Yaswant Sharma who has surrendered peak credit for taxation. Ld CIT(A) deleted the addition on the basis of cash available with the father of assesee Shri Yaswant Sharama who has surrendered peak credit for taxation. � Decision of Ld CIT(A) cannot be accepted on merit. i) Out of addition of Rs 76,29,000/- during the year under consideration, Ld CIT(A) accepted that Rs 40,00,000/- was received by assesee from his father and rest was rough noting. Finding to treat amount of Rs 60,00,000/- on account of Anonymous' and Rs. 7,50,000/- on account of Unsettled account' as rough noting by Ld CIT(A) is without any basis whereas other entries in the same seized paper has not been treated as rough noting. It is not logical/correct to treat

10 & CO No. 28/JP/2022 DCIT vs. Omanshu Sharma some entries as rough entries & other as genuine entries which were found in the same paper without giving any reasoning in the appeal order. Further, Ld CIT(A) has accepted amount of Rs 40,00,000/- as explained on the basis of cash available with Shri Yaswant Sharam, the father of assesece on the basis of peak credit of cash offered by Shri Yaswant Sharama. Similar explanation is also seen accepted in AY 2018-19 also by Ld CIT(A). CSR for which is being filed along with this CSR. In this regard, it is worthwhile to mention that peak offered by Shri Yaswant Sharma has not been accepted by the AO/department. AO/Department was/is of the view that documents seized during the search (on the basis of which peak was offered by Shri Yaswant Sharama) mainly pertains to a company namely M/s Shree Bhagwati Machine Pvt. Ltd., Ajmer not to Shri Yaswant Sharma as seized documents were of business nature & Shri Yaswant Sharma was not doing any business in his individual capacity. Accordingly, on this issue even appeal has been filed by the department recently before ITAT. Few of the relevant grounds of appeal taken by department before ITAT in the appeal recently filed in the cases of M/s Shree Bhagwati Machine Pvt. Ltd is as under: "Whether on the facts and circumstances of the case for the assessment year under consideration, the ld. CIT(A) is justified in law and on facts in the deleting the addition made u/s 68 r.w.s. 115BBE of the LT. Act, 1961, in spite of the fact that Shri Yashwant Sharma was not involved in any business activity in his individual capacity and has relied upon incorrect facts without verification and accepted and accepted the peak offered by Shri Yashwant Sharma in individual capacity." "The learned CIT Appeal has erred by failing to appreciate the findings of the assessing officer that in the case of the assessee company, not only the peak, but the entire unaccounted receipts should have been added, and that peak cannot be relied upon without verification." "The learned CIT appeal has erred in facts in arriving at finding by failing to appreciate that even on the basis of peak theory, income has not been offered by Shri Yashwant Sharma, director, in assessment years 2017- 18, 2018-19 and 2019-20 and has wrongly deleted the additions made by the assessing officer even in assessment years 2017-18, 2018-19 and 2019-20," Further, without prejudice of above, for other unaccounted transactions of other person in family of Shri Yaswant Sharma (such as said unaccounted transaction of assesee

11 & CO No. 28/JP/2022 DCIT vs. Omanshu Sharma Shri Omanshu Sharma), explanation cannot be accepted from the same peak offered by Shri Yaswant Sharma. Further, Ld. CIT(A) simply mentioned that It has also came to notice that possession of flat has not been handed over to assesse yet but no further details/evidence in this regard is given/discussed in the order.. seen ii) Ld CIT(A) deleted another addition of Rs 16,43,150/- also again on the basis of cash available in the memoranda cash book of his father Shri Yaswant Sharma who has surrendered peak credit for taxation. As discussed in para (ii) above, peak credit theory of Shri Yaswant Sharma has not been accepted by the department and appeal before ITAT had already been filed in the case of M/s Shree Bhagwati Machine Pvt. Ltd treating the transactions related to M/s Shree Bhagwati Machine Pvt. Ltd not to Shri Yaswant Sharma. Further, without prejudice of above, for other unaccounted transactions of other person in family of Shri Yaswant Sharma (such as said unaccounted transaction. of assesee Shri Omanshu Sharma), explanation cannot be accepted from the same peak offered by Shri Yaswant Sharma. Further, argument given by assesee during the course of search proceedings as well as assessment proceedings on this issue was totally different where assesee mentioned that cash of Rs. 16,43,150/- was received in envelops during his marriage but no supporting evidence was given by assesee. Same argument is given by assesee before Ld CIT(A) also. But before Ld CIT(A) assesee has contented different arguments, one is that amount was received in marriage, one is small saving of family and one is out of peak offered by father. Ld CIT(A) accepted the theory of peak without appreciating the fact that this argument was not given by assesee earlier. However, even peak theory has not been accepted by the department. � Hence, order of Ld CIT(A) was not acceptable in view of above discussion, findings made by AO in assessment order and material on record. Accordingly, further appeal before Hon'ble ITAT was recommended. Accordingly, further appeal before Hon'ble ITAT was filed in both the cases as per order of worthy Pr. Commissioner of Income-tax (Central), Rajasthan, Jaipur on the grounds mentioned in the order of worthy PCIT. Said appeals were filed online as well as offline subsequently. Along with the appeals Original Authorizations letters of PCIT (Central), Rajasthan, Jaipur, Form No.36, Orders of CIT(A), Form No.35, Assessment Orders, Grounds filed by the assessee before the CIT(A) were also submitted. Copy of the same were also provided to PCIT (Central), Rajasthan, Jaipur, Sr. DR, ITAT, Jaipur and JCIT, Central-Range, Udaipur.

10.1 On the ground raised by the revenue 2nd written submission were made dated 31.10.2022 the same is reproduced for the sake of convenience:

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).

“Copy of Memorandum cash book is enclosed which was submitted even in the case Shree Bhagwati Machines Pvt. Ltd., Ajmer and as per which cash balance is 1,02,39,811/- Total addition on account of Flat was made by Ld AO as under: - A.Y. 2018-19 41,22,000/- A.Y.2020-21 76,29,000/- Total 1,07,51,000/-

In assessment year 2018-19 appeal was allowed and a sum of Rs.18,00,000/- was through cheques and 23,22,000/- was debited in cash book. Total amount was debited in cash book is 63,22,000/- Thus, though without prejudice to above this paper is dump paper and having rough noting’s Even total amount debited is 63,22,000/- plus 18,00,000/- totaling to 81,22,000/- and balance 26,29,000/- may be considered from cash available with the assessee. Similarly, cash found may also be considered from this cash”

From the submission so made, the ld. AR of the assessee submitted that on the similar issue the ld. CIT(A) has considered the cash payment of Rs. 23,22,000/- from the same cash book for the assessment year 2018-19, the department has accepted this decision and has not challenged the finding for that year. Therefore, the rule of consistency should apply as there is not the fact that there is cash balance available to meet with the investment and the assessee has already submitted a memoranda cash book which has been accepted in the earlier year. Not only that the ld. AO & DR did not bring contrary fact that this cash is not the same and assessee has taken the benefit of the said cash in other investment. Thus, in the light of this fact apparent from the record that the assessee is having the cash balance and once the source is taxed the investment again cannot be taxed and there cannot be double taxation.

11.1 As regard the addition of Rs. 16,43,150/- deleted by the ld.CIT(A) the ld. AR of the assessee submitted that the cash of Rs. 16,43,150/- was received at the time of the marriage and were found in the envelops and were opened by the officers while search. It was also contended that even otherwise the cash appearing in the memoranda cash book of Shri Yashwant Sharma father of the assessee was sufficient to cover up this amount also. The ld. AR of the assessee has drawn our attention to the denomination of the cash seized. The same is reiterated here in below for the sake of brevity:-

Denomination No. of Notes Amount 2000 376 752000 From the above denomination the ld. AR of the assessee contended that it is very much clear that the said cash is on account of gift received at the time of Marriage and the same is not taxable. There is no controvert finding that the same were not found in the separate covers. The ld. AO overlooked this aspect and made the addition merely saying that there is no support of the contentions raised by the assessee. But in fact, the fact itself speak that the same cash is generated at the time of marriage. The ld. AR of the assessee alternatively submitted that since, in his father’s case the sufficient availability of cash is not disputed the benefit of the setoff be given considering the conceivable reason placed by the assessee. The ld. CIT(A) considered the alternative plea of the assessee and this relief is granted considering the fact of the case and there is no merit in the ground of the revenue. The contention of the revenue that the relief granted by the ld. CIT(A) on peak theory is without bringing any contrary fact on record and therefore, the same is not maintainable. the lower authorities, material available on record, arguments advanced by both the parties. As the ld. DR raised the specific objection regarding not giving the opportunity before the proceeding before the ld. CIT(A) the bench noted that presence of the ld. AO was very well marked before the ld. CIT(A) in the first para of the order of the ld. CIT(A). This basic fact is not disputed by the revenue the contention of the ld. DR is not against the fact on record.

12.1 In respect of Ground No. 2 raised by the Revenue. While making the addition of Rs. 76,29,000/- ld. AO contended that the assessee unable to explain the source of investment made and failed to get it verified from the regular books of accounts. Thus, the investment made in the property to that extent which falls in the year under consideration added as unexplained investment u/s. 69 of the Act. The ld. AR of the assessee submitted that the father of the assessee has disclosed sufficient amount of cash in his books of account and the memoranda cash book submitted by the assessee has already considered in his case. From the contention raised the Bench noted that the contention of the assessee that similar addition was made in the A.Y 2018-19 and the finding of the ld. CIT(A) is stands in these year. The Bench has also noted that the memoranda cash book submitted by the assessee has been accepted not only that the disclosure amount made by the father of the assessee has been accepted the amount calculated based on the peak theory. Once that income is already taxed and in the other year i.e. A.Y 2018-19, the Revenue has already accepted the contention of the assessee that in making the investment in flat sourced and partly recorded in the memoranda cash book filed and the ld. CIT(A) has given his detail finding on the issue. Based on these not controverted fact once in the earlier the set off cash available with the father is granted the same is also required to be granted in the year under consideration and thus, addition of Rs. 76.29 lakhs made as unexplained investment stands duly covered by the income disclosed by the father of the assessee no separate addition can be made. The view take on these plea of the assessee by the ld. CIT(A) is correct and based on the non-controverted fact. The ld. CIT(A) further observed that out of total Rs. 63.22 lakhs debited in the memoranda cash book a sum of Rs. 23.22 lakhs pertains A.Y 2018-19 and balance amount of Rs. 40 lakhs pertains year under consideration and the said amount is already recorded in the memoranda cash book. Not only that the sufficient further cash claimed by the assessee for any other investment. Thus, the investments made by the assessee covered by the disclosure made in accordance with memoranda cash book prepared by the assessee. These memoranda cash book has already accepted by the Revenue and the income arising and recorded in the memoranda cash book has already been considered and thus when the assessee claimed set of these income disclosed in the form of assets again the same cannot be taxed in the absence of the contrary finding recorded by the Revenue. The assessee has also contended that the possession of the flat has also not received by the assessee and the investments thus recorded is met with the income disclosed by the father of the assessee and father of the assessee has also not taken any set of disclosed by the assessee since the Revenue did not controvert this fact which is evidently clear and the contention of the assessee is supported by memoranda cash book wherein the relevant entries in support of the arguments of ld. AR of the assessee, In the light of these facts and circumstances, we do not find any infirmity in the detailed finding of ld. CIT(A) and therefore, the Ground No. 2 raised by the Revenue is dismissed. that a cash of Rs. 16,43,150/- found from the bedroom of the assessee is to the considered as unexplained money in the hands of the assessee. In these regards, we have noted the first contention of the assessee that the money has been found in the bedroom of the assessee. It is also not disputed that the money has been found in the wrapped cover wherein the assessee has contended that the money has been received at the time of various rituals ceremony conducted at the time of his marriage. The denomination of cash found also support the contention of the assessee.

The ld. AR argued from the memoranda cash book. The ld. CIT(A) though has not considered the first argument of the assessee but has very well taken into consideration alternative plea before him that his father is having sufficient cash to cover up the cash found from his bedroom. The ld. CIT(A) has given his factual finding and the deleted the addition and we do not find any infirmity in granting credit of the cash available in the memoranda cash book submitted during the course of search assessment by the father of the assessee and the income which also been taxed the cash available in the form of these memoranda of cash book again cannot be taxed. In light of these observations, we do not see any merit in the ground raised by the Revenue and therefore, the Ground No. 3 of the Revenue is dismissed.

Omanshu Sharma in CO/28/JPR/2022 wherein effectively three grounds of cross objections raised by the assessee.

Order pronounced in the open court on 08/12/2022.

Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 08/12/2022 *Ganesh Kumar आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- DCIT, Central Circle, Ajmer 1. 2. izR;FkhZ@ The Respondent- Shri Omanshu Sharma, Ajmer vk;djvk;qDr@ The ld CIT 3. vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZQkbZy@ Guard File (ITA No. 339 /JP/2022 and CO No. 28/JP/2022) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेजज. त्महपेजतंत