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2019 (10) TMI 255 - AT - Income TaxAddition on the basis of loan receipts/cheques found during the course of search, in seriatim - HELD THAT:- It is found as an admitted position that cheques amounting to ₹ 1.08 crore issued by M/s Karda Constructions were found at the assessee’s premises. The assessee failed to corelate such cheques with the recorded loan transactions. Considering the fact that the assessee himself admitted during the course of search that he was engaged in the business of making cash loans on receipt of security by cheques, it has to be held that such cheques found at the premises of the assessee were representing security for the loans advanced, which were not recorded in the books of account of the assessee. The assessee has raised an additional ground similar to the one taken in his appeal for the A.Y. 2010-11 seeking the benefit of telescoping. DR did not raise any serious objection to the admission of this additional ground, which is hereby admitted for disposal on merits. We have disposed of the appeal of the assessee for the A.Y. 2010-11 by firstly sustaining the addition of ₹ 2.00 crore and then allowing the benefit of telescoping to the extent of available undisclosed income already taxed. We hold that the addition on this count is warranted and also benefit of telescoping should be given. While giving the benefit of telescoping for the preceding year, we did not allow the benefit of ₹ 22,06,750/- because the same was unrecovered at the time of advancing loan of ₹ 2.00 crore which was subject matter of addition for the preceding year. In view of the fact that ₹ 22,06,750/- was suo moto offered by the assessee as his undisclosed income along with certain other income, the benefit of such a portion, which has not been allowed for the preceding year, is now available to be adjusted against the income for the current year. Thus, the extent of the benefit of telescoping for the year would be ₹ 22,06,750/- as against the addition of ₹ 1.08 crore. We, therefore, sustain the addition of ₹ 85,93,250/- (₹ 1.08 crore minus ₹ 22,06,750). Addition is of ₹ 10.00 lakh on account of cheques found as having been issued by Mr. Manohar B.Sadhwani and another addition is of ₹ 5.00 lakh on the basis of cheques issued by Mr. Baldeva and found from the assessee’s premises. The AO made addition totaling ₹ 15.00 lakh on the basis of such cheques found, which was countenanced in the first appeal. AR fairly conceded before the Tribunal that he had no explanation in respect of these two amounts. We, therefore, sustain the additions of ₹ 10.00 lakh and ₹ 5.00 lakh. Addition on account of unrecorded loans given/cheques found to have been issued by Mr. Pradip D. Kalani - HELD THAT:- Argument of the AR on this score that the addition to the extent of ₹ 5.00 lakh should be deleted as the equivalent amount of income was offered by Mr. Pradip D. Kalani as his income. What is material for our purpose is the taxability of the amount of income earned by the assessee and not disclosed the same for tax purposes. As it is the assessee who gave loan of ₹ 5.00 lakh to Mr. Pradip D Kalani out of his undisclosed income, the same has to be taxed in his hands. It is trite that income should be taxed in the hands of the right person as has been held in ITO vs. Ch. Atchaiah [1995 (12) TMI 1 - SUPREME COURT] We, therefore, hold that such an amount of ₹ 5.00 lakh should be subjected to tax in the hands of the assessee. However, it is made clear that Sh. Pradip K Kalani is entitled to take recourse to the legal remedies available to him for ensuring that he is not wrongfully charged to tax. To sum up, we uphold the action of the authorities below in making the addition of ₹ 41.00 lakh in the hands of assessee as there was sufficient evidence to the effect that the assessee advanced cash loan to Sh. Pradip D Kalani out of his undisclosed income.
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