TMI Blog2020 (4) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanjay Kothari in the statement recorded under section 132(4) and therefore we can reasonably held that assessee is entitled to benefit of telescoping of ₹ 2,19,96,000/-. The case of the assessee finds support from the several decisions referred to by the assessee during the course of hearing. In the case of CIT vs. K.SREEDHARAN [ 1992 (6) TMI 24 - KERALA HIGH COURT] has held that if a intangible addition made in the earlier year is as good as other disclosed income of the assessee and it would be treated as available for investment from the year in which such addition was made. Thus the assessee has available source with it to incur the cash expenses which was not in any way controverted by the AO by bringing on record any cogent and substantive materials or evidences and accordingly we set aside the order of Ld. CIT(A) and direct the AO to allow the telescoping and delete the addition. Disallowing the setting off the loss against the assessed deemed income under section 69C - HELD THAT:- We observe that the income assessed under section 68/69C is eligible to be adjusted against any brought forward loss or depreciation. The position is clarified by the board s circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 A.Y. 2012-13 2. The various grounds raised by the assessee are as under: 1. The addition made by A.O. at ₹ 2,19,96,000/- u/s 69C of IT. Act 1961 is unjustified, unwarranted and bad in law. 2. The learned CIT(A) erred in upholding addition of ₹ 2,19,96,000/- u/s 69C of IT. Act 1961. 3. The learned A.O. as well as CIT(A) ought to have telescoped the addition made with the income assessed/availability of funds in case of assessee in past assessment year as well as for the assessment year under consideration. 4. The addition made at ₹ 2,19,96,000/- without giving benefit of telescoping is unjustified, unwarranted and excessive. 5. The learned A.O. erred in not setting off the addition made in the assessment framed at ₹ 2,25,42,200/- with the net loss assessed in assessment framed at ₹ 69,42,148/-. 6. The learned CIT(A) erred in upholding the action of A.O. in not setting off of income with loss determined in assessment framed. 7. The assessee denies liability to pay interest under section 234A, 234B and234C of IT. Act 1961. Without prejudice, levy of interest under section 234A, 234B and 234C of IT. Act 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -11 2011-12 2012-13 2013-11 2014-15 2015-16 Total Land Purchased 1013859020 0 0 564320808 250706440 0 71780920 1900667188 Contract 0 0 0 0 24198920 80018554 61064336 165270810 Total 1013859020 0 0 564320808 274894360 80018554 132845256 2065937998 Percentage 49.07 0 0 27.31 13.30 3.87 6.45 100 Over- Invoicing on land purchase and contract 98140000 0 0 54620000 26600000 7740000 12900000 2000000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogress on account of inflated value of land in contracts results in available cash with the assessee and such cash has been used by assessee to make the expenses for the various years which have been discussed in para-8 to 8.5 of the assessment orders for both the assessment years. Also it would be relevant to mention that inflation and over voicing of the expenses related to work in progress has been discussed/in para-6 of the assessment orders, which has direct nexus with this ground. Therefore, while disposing of this ground of appeal, the entire details discussed by assessing officer regarding over voicing of work in progress have been duly considered. After considering the overall facts of the case including all the statements recorded and the various seized documents, on the basis of which the issue has been unearthed by the Revenue Department as well as the submissions of assessee filed before the AO as well as in the appeal proceedings, the ground of appeal of assessee is dismissed in view of following;- 5.1.1 Onus of Linking the Availability of Cash due to Over Invoicing of Work in Progress Expenditure not Discharged by Assessee:- The onus is exclusively on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng is not the real value of cash available with assessee in that financial year as a whole. It is only a fair and logical estimation made by AO on proportionate basis. Such exercise was the only option available with the AO as assessee failed to provide year-wise break-up. Therefore, in view of these facts also, the argument of assessee to allow him the benefit of telescoping is not admissible at all. 5.1.11 In view of the above facts and various judicial pronouncements, the ground No. 1 of the assessee is dismissed for both the years. 5. The Ld. A.R. vehemently submitted before us that it is not in dispute that assessee has generated cash of ₹ 20 crores up to a period of 31.03.2015 by over invoicing the sub contracts and land purchases and it was also stated that the excel sheet titled, cash expenses up to 31.10.2014 of ₹ 6.03 crores was found at the time of search from the assessee which after comparing with the noting in the books of accounts adjusted by ₹ 75.37 lakhs and it was concluded by the AO that ₹ 528.02 lakhs were unrecorded expenses and out of that ₹ 2,19,96,000/- pertained to A.Y. 2012-13. The Ld. A.R. submitted that at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Purohit ITA No. 7208/Mum/2013 vide order dated 20/09/2017(Mum Tri.). The Ld. A.R., therefore, prayed that the order passed by the Ld. CIT(A) is blatantly wrong and against the facts on record as the CEO Shri Sanjay Kothari in his statement recorded under section 132(4) of the Act has candidly and explicitly stated that the source of such expenses were out of cash generated through over invoicing and prayed before the Bench that in view of the ratio laid down in various decisions referred to during the course of hearing the telescoping of ₹ 2,19,96,000/- may be allowed out of the cash generated during the year and the addition made under section 69C of the Act may be deleted. The Ld. A.R. also distinguished the facts of those cases relied upon by Ld. CIT(A) by submitting that in the assessee s case a reasonable nexus was shown between the cash generated and expenses incurred and therefore justified telescoping of these expenses out of cash generated through over invoicing. 6. The Ld. D.R., on the other hand, heavily relied on the order of authorities below by submitting that though the assessee had admitted the generation of cash through over invoicing in sub contracts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over invoicing was ₹ 5,46,20,000/- and it has been admitted by Shri Sanjay Kothari during the course of recording of statement under section 132(4) of the Act that the source of these expenses were out of the cash generated through over invoicing. We further note that the AO has failed to bring on record any evidence to the effect that these expenses of ₹ 2,19,96,000/- were incurred out of some other source or the cash generated of ₹ 5,46,20,000/- was invested or incurred on some other activity. Therefore, under these circumstances, the only possible presumption is that the expenditure was incurred out of the funds available with the assessee generated through over invoicing. This has been admitted by the CEO of the project Shri Sanjay Kothari in the statement recorded under section 132(4) and therefore we can reasonably held that assessee is entitled to benefit of telescoping of ₹ 2,19,96,000/-. The case of the assessee finds support from the several decisions referred to by the assessee during the course of hearing. In the case of CIT vs. K. Sridhar (supra) the Hon ble Kerala High Court has held that if a intangible addition made in the earlier year is as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me under section 69C of the Act by observing and holding as under:- This ground is regarding not allowing set off of current year's loss against the addition u/s. 69C. The AO has discussed this issue in para 9 of the assessment orders and relied on the Hon'ble Gujarat High Court judgment in the case of Fakir Mohammed Haji Hasan (247 ITR 209). 5.2.1 This ground of appeal of assessee is dismissed in view of following position of law and facts of the case :- a) The correct position of law as per various expositions by various high courts including Gujarat H.C.[in case of Fakir Mohammed Haji Hasan V/s CIT (2001) 247 ITR 290(Guj)] and Punjab Haryana High Court[in case of Dulari Digital Photo Services P.Ltd V/s CIT (2013) 219 Taxman 216 (Punjab Haryana)] is that additions made u/s 68 69C are 'deemed income' and do not fall under any specific head of income. b) As per newly introduced section 115BBE introduced by Finance Act 2012, w.e.f. 01.04.2013, no deduction or allowance or loss can be allowed to be set off against the ; deemed income computed u/s 68 or 69A to 69D. c) The section 115BBE is actually a clarificatory section and law was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No.1972/Ahd/2012 in the case of M/s. K.R. Automobiles vide order dated 03/02/2014. iv) ITAT order in ITA No.1841/Del/2016 in the case of M/s. Godwin Resort Hotel Pvt. Ltd. vide order dated 14/10/2019. 12. The Ld. A.R. also distinguished the decision of Hon ble Punjab Haryana High Court in the case of Dulari Digital Photo Services Ltd. vs. CIT 219 taxman 216 P H by submitting that the same is not relating to set off of loss against the income assessed under section 68 of the Act. Finally, the Ld. A.R. prayed before the Bench that the unabsorbed losses/depreciation including the current year loss/depreciation may kindly be allowed to be set off against the income under section 68/69C of the Act. 13. After hearing both the parties and perusing the material on record, we observe that the income assessed under section 68/69C is eligible to be adjusted against any brought forward loss or depreciation. The position is clarified by the board s circular No.11/2019 dated 19.06.2019 which provides for setting off of loss/depreciation against the income assessed under section 69C of the Act provided it relates to any assessment years prior to A.Y. 2017-18 and the same rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d booked till date along with the date of booking. It was observed by this survey party that there were discrepancies in the details furnished by Shri Mahendra Takkre qua the per square feet sale price of flats sold as stated hereinabove that statement of Shri Sanjay Kothari, CEO of the assessee was also recorded under section 132(4) of the Act who admitted to have generated cash by accepting on money on sale of flats and other activities and also stated that the same was utilized for the purpose of the project only. Shri Sanjay Kothari also submitted that cash as well cheques were accepted from the buyers. However, all these payments received whether in cash or by cheque were recorded in the books of accounts of the assessee. However, the AO brushed aside the contentions as made by the assessee and came to the conclusion that during the period of financial year 2013-14 and 2014-15, the assessee has generated on money to the tune of ₹ 1,03,65,000/- out of which ₹ 40 lakhs pertained to F.Y. 2013-14 relevant to A.Y. 2014-15 and ₹ 63.65 lakhs relates to F.Y. 2014-15 relevant to A.Y. 2015-16. The project at Ensara Metropark was at the development stage and there was w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whom the flats were sold. Out of the said money received in cash ₹ 40 lakhs pertained to A.Y. 2014- 15 and ₹ 63.65 lakhs relates to A.Y. 2015-16. After perusing the material on record, we observe that the assessee has duly accounted for all the receipts issued to the customers from whom the said cash was received and duly recorded in the books of accounts of the assessee. Since the project Ensara Metropark was at the development stage and whatever explained was incurred was shown as work in progress at the year end and also no revenue was offered to tax. We find that assessee has duly accounted for all these entries in the books of accounts and thus the mere fact that the money has been received in cash by the assessee would not justify the order of Ld. CIT(A) confirming the order of AO wherein it has been held that money received by issuing various receipts represent the on money. The stand of the authorities below appears to be contrary to the facts on record as the money which has been alleged to be on money is duly recorded in the books of accounts. In such a scenario we are not in agreement with the conclusion drawn by the Ld. CIT(A) and accordingly we direct the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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