TMI Blog1983 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... redits, the explanation of the assessee was that the loans as entered in the books of account were genuine and the ITO after rejecting that explanation made an addition of Rs. 85,000 on that account. Similarly for the year 1966-67 on the same lines a gross profit addition of Rs. 58,127 had been made and the cash credit addition made was a sum of Rs. 57,042. Aggrieved by the said additions, the assessee appealed to the AAC, who sustained the addition made both in gross profit as well as towards cash credit. But he accepted the assessee's statement that the gross profit addition should be telescoped with the addition made for cash credit. In that view he sustained the addition of Rs. 85,000 for the year 1965-66 and Rs. 60,000 for the year 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue contends that in this case the two additions came to be made under two separate heads; one addition was made for suppression of gross profit by, showing a lesser gross profit rate and the second addition came to be made towards cash credit in favour of third parties, which the assessee was not able to explain. These two additions have to be treated separately and one cannot be telescoped into the other as has been done by the AAC as well as by the Tribunal. According to the learned counsel for the Revenue, the Tribunal is in error in stating that to sustain a separate addition towards bogus cash credit, the Revenue has to establish that the assessee had any other separate source of income and that the assessee in this case has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Ganapathy Mudaliar [1964] 53 ITR 623 (SC), expressed the view that (headnote) : " Once it is found that a receipt by the assessee was income of the assessee, it is not necessary for the Revenue to locate its exact source, applies alike to cases in which an entry is found in the books of account of the assessee as to cases in which no such entry is found." We are, therefore, of the opinion that this decision also does not apply to the facts of this case. This decision will apply only if there has been an addition towards the bogus cash credit alone. But in this case in addition to the bogus cash credit there is an addition towards suppression of profit. In such a case as this, when there are two additions, it is always open to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Supreme Court, it is open to the assessee to prove that the cash credits came from the suppressed profits towards which an addition has already been made, and, therefore, there should be telescoping of one with the other. The decision of the Supreme Court in CIT v. S. Nelliappan [1967] 66 ITR 722, also, in a way, supports the case of the assessee. In that case also there were two additions, one towards bogus cash credit and the other towards profits suppressed. It was found by the Tribunal that there, is a connection between the profits withheld by the assessee in the account books and the cash credit entries found therein and, therefore, it can be concluded that only one addition could be made. When the matter came to this c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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