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2015 (10) TMI 2023 - AT - Income TaxValidity of proceedings initiated u/s 153C - rejection of books of accounts - unaccounted income in respect of automobile business - Held that:- In the absence of any defect noticed in the automobile business, we are of the view that the assessing officer was not justified in rejecting the book results of automobile business and estimating the income of the assessee. We notice that the Ld. CIT(A) also has upheld the rejection of books of accounts without bringing on record any defects in the books of accounts. Accordingly, we set aside the order of Ld. CIT(A) as well as A.O. with regard to the rejection of books of accounts Since we have held that the rejection of books of accounts was not proper, the consequent estimation of profit from automobile business is also liable to be cancelled. Accordingly the orders of the lower authorities on this issue also set aside, meaning thereby the income disclosed by the assessee in respect of automobile business in the revised return of income shall remain. Claim of set off - Held that:- We have noticed that the Ld. CIT(A) has given telescoping benefit in respect of ₹ 92 lakhs offered by the assessee against the income estimated from automobile business. Since we have cancelled the estimation of income from automobile business, the additional income of ₹ 92 lakhs assessed by the assessing officer is required to be sustained, subject to the claim of set off claimed before the tax authorities. The nature of additional income of ₹ 92 lakhs offered in 2008-09 is the unaccounted payment made for purchase of the property (Cash outflow). So one is income component and another one is investment component. In these kind of situations only, i.e., when cash inflow and cash flow are assessed as income, normally the claim of set off of one against the another shall be claimed. There is justification in making such a claim, since both income and investment should not be assessed separately, otherwise it may result in double assessment of same income. Hence, we find merit in the contention of the assessee that the unaccounted income of ₹ 20 lakhs offered in the assessment year 2007-08 should be adjusted against the undisclosed investment made in assessment year 2008-09. Accordingly, we direct the assessing officer to allow set off of this amount also.
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