TMI Blog2022 (5) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel of the assessee that AO has not applied mind, while recording reasons. In the instant case, assessment has been reopened in view of the information of bogus purchases by the assessee exceeding Rs. 80 lakh, and therefore it was not of the case that income escaped was below taxable limit. In view of the clear statement of income more than the taxable limit, the decision relied upon is distinguishable as GENERAL ELECTORAL TRUST VERSUS INCOME TAX OFFICER 20 (1) (2) , MUMBAI OTHERS [ 2016 (8) TMI 959 - BOMBAY HIGH COURT] No reference of source of information for reopening the assessment except that information was available on record - According to the Ld. DR, said information was duly provided to the assessee by the Assessing Officer during the course of the assessment proceeding after filing return of income in response to notice under section 148 of the Act. However, the Ld. counsel has not produced any evidence to support that source of the information was asked from the Assessing Officer. It was the onus of the assessee to file necessary evidence in support of its claim that such information was asked from the Assessing Officer and he had not supplied. In absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee in very casual manner without verifying its records. The action of the assessee is highly deplorable. Therefore, the additional ground raised by the assessee is accordingly dismissed. Deduction under section 10AA - Whether income of the assessee is assessed into profit, the exemption under section 10AA of the Act should be allowed as assessee fulfilled the eligibility criteria for said exemption? - HELD THAT:- In our opinion, if the assessee is otherwise eligible for deduction under section 10AA of the Act and fulfilling all the criteria as laid down in the relevant section, then there is no reason as why the assessee should be denied the deduction under section 10AA of the Act. If the income of the relevant unit is finally positive, then assessee may be considered for deduction under section 10AA if the assessee so satisfies the terms and conditions specified therein. The ground of the appeal of the assessee is accordingly allowed for statistical purposes. NP estimation - applying of net profit rate of 3% on the turnover by the Ld. CIT(A) as against the net profit rate of 5% applied by the Assessing Officer - plea of the assessee is that as per the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 40(a)(ia) Act is called for when invoking section 145(3) of the Act net, profit rate has been applied for estimation of profit. The ground No. four of the appeal of assessee is accordingly allowed. Addition of loan outstanding held as unexplained - HELD THAT:- We are of the opinion that as far as estimation of the income is concerned, the computation of the profit by the assessee has been rejected, which does not mean that entries of unsecured loan recorded in those books of accounts are of no relevance. The addition for unsecured loan is made in terms of section 68 of the Act where the assessee failed to explain source and nature of the credit in its books of accounts. The credit in books of accounts shown as received by way of unsecured loan are independent from estimation of profit from business operation. It is for the assessee to explain source of the said credit and in failure to do so, said credit is liable to be added under section 68 of the Act. We find that Tribunal Hyderabad Bench in the case of Smt. Shoba Gupta [ 2013 (8) TMI 756 - ITAT HYDERABAD] has discussed this issue in detail and held that addition u/s 68 of the Act can be made along with estimation of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance. 7. In the light of the decision rendered by the ITAT Amritsar Bench in (2015) 60 Taxmann.com 447. (Amritsar-Trib.), the Assessment order is void abinitio as it has been framed under Section 143(3) r.w.s.147 instead of Section 144. 8. For these and other grounds that may be raised at the time of hearing the income tax demand may kindly be deleted. 2.1 Thereafter, the assessee filed additional ground challenging the validity of the notice issued under section 148 of the Act. The assessee, further raised additional ground, challenging the assumption of jurisdiction by the Assessing Officer. The assessee further raised additional ground that no notice under section 143(2) of the Income-Tax Act, 1961 (in short the Act ) was issued. The said additional grounds along with revised form No. 36 filed by the assessee on 21/06/2021 are reproduced as under: 9. The issue of notice u/s. 148 invalid for various reasons. 10. The appellant reserves the right to add amend or alter any or all grounds of appeal Section 264A. 11. The Assessing Officer has erred in adding Rs.26,35,198/- as interest income. 12. The Assessment Order is void abinitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest under section 43B of the Act amounting to Rs.5,68,87,489/- paid towards secured loans obtained from the banks on the ground that same has not been paid on or before the due date of the filing of the return of income. The service tax amounting to Rs.8,62,289/-has also been disallowed by the Assessing Officer in terms of section 43B of the Act. For non-deduction of tax at source (TDS) also the Assessing Officer disallowed expenditure amounting to Rs.3,97,90,291/-in terms of section 40(a)(ia) of the Act. Additions for unexplained cash credit in terms of section 68 of the Act amounting to Rs.1,46,24,270/- and difference in valuation of fixed asset of Rs.2,50,19,760/- being written off were also made. The Assessing Officer made addition of Rs.80,45,300/- against accommodation entry received i.e. basis on the which assessment was reopened. In this manner, the Assessing Officer made total addition of Rs.28,31,12,447/-. On further appeal, the Ld. CIT(A), partly allowed the appeal. Aggrieved, both the assessee and the Revenue are before the Tribunal by way of raising grounds as reproduced above. 5. The Revenue filed a paper book containing pages 1 to 37. The assessee filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be beneficiary of unsecured loan of Rs.80,45,300/- through the concern namely M/s R S Enterprises, which was managed by Sh Praveen Jain, whereas in third paragraph, the Assessing Officer mentioned that analysis of the information shows that above entity has provided accommodation entry for bogus sales. The Ld. counsel further submitted that in fourth para of reasons recorded, the Assessing Officer says that it is a case of bogus purchase. Thus, according to him the reasons recorded are vague without any clarity as to the transactions. 9.1 But, we find that same transaction, which is sale for the accommodation entry provider, is purchase as far as the assessee is concerned. The Ld. Assessing Officer has recorded that entity has provided bogus sales to the assessee, whereas with reference to the assessee, the Ld. Assessing Officer has recorded as bogus purchase. Though in the first para the Assessing Officer has noted the transaction as accommodation entry in the form of the loan but in subsequent paras, he has specifically pointed out the transaction as accommodation entry of bogus sales provided by the entry operator. In our opinion, Assessing Officer has made it clear to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson exceeds the maximum amount not chargeable to tax. So also the obligation to obtain PAN only arises on the income being in excess of the maximum amount not chargeable to tax. Therefore, non filing of return of income and/or not obtaining of PAN does not ipso facto give jurisdiction to reopen an assessment under Section 147/148 of the Act. Prima facie the jurisdiction even in case of non filing of return of income to issue notice of reopening notice is a reasonable belief of the Assessing Officer that income chargeable to tax has escaped assessment. The condition precedent for issuance of notice under Section 147/148 of the Act is no different in cases where no return of income has been filed. If clause (a) of explanation 2 to Section 147 of the Act is to be applied then it must be established that the income of the person to whom the notice is issued is in excess of the maximum amount not chargeable to tax. This could have been done by collecting information under Section 133B of the Act. 8. In this case the reasons in support do not indicate any reasonable belief that income chargeable to tax has escaped assessment nor does it hold that income of the petitioner is in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. counsel submitted that Assessing Officer should have examined the possibility of truthfulness of such transactions. 14. In our opinion, these arguments of the Ld. counsel are devoid of any merit. As far as recording of reasons is concerned in terms of finding of Hon ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Broker P. Ltd. [2007] (7 SCR 765) that at the initiation stage, what is required is reason to believe but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials could conclusively prove the escapement is not the concern at the stage. Further, the Hon ble Supreme Court in the caes of Raymond Wollen Mills Ltd. V. ITO Other reported in 326 ITR 34 (SC) held that sufficiency or correctness of material is not a thing to be considered at the stage of recording reasons. In the case, information of providing accommodation entry was available with the Assessing Officer and he formed requisite belief on the basis of the said information. There was no requirement in the law for the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JCIT, who has approved the reasons. In absence of any such documentary evidence, the contention of the Ld. counsel are rejected. 19. Seventhly, the Ld. counsel submitted that no such information was available with the Assessing Officer as he could not provide details of the information to the assessee despite specific request. 20. Before us, the assessee has filed an undated letter addressed to the Assessing Officer to support that such information was asked specifically. The relevant part of the said letter is reproduced as under: To, The Assistant Commissioner of Income Tax 8 (3) (2), Room No.615, 6th Floor, Aaykar Bhawan, M.K. Road, Mumbai 400 020. Dear Madam, Ref: ITO-8(3)3)/Reopened/148/Reasons/VGPL/2015-16 Dtd.26.10.2015 With reference to the above letter giving us the reasons for the issue of notice u/s 147, we wish to submit that we had no transactions of any nature with the party referred to in the letter. In the circumstances, we request your honour to drop the proceedings or give us some more proof to enable us to rebut the presumptions of the Department . 21. On perusal of the above letter, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the income/loss exceeding Rs.30.00 lakhs, he has validly transferred the case to the DCIT 8(3)(2). He further submitted that in terms of section 124(3)(b) of the Act the assessee could not call in question jurisdiction of the Assessing Officer after expiry of one month from the date of the service of the reassessment notice and therefore notice issued by ITO remains valid. In support of his contention, he relied on the (i) decision of the Hon ble Delhi High Court in the case of Abhisek Jain Vs ITO reported in (2018) 94 taxmann.com 355. (ii) Decision of Hon ble Punjab and Haryana High Court in the case of Subhash Chander Vs CIT, Rohtak reported in (2008) 166 Taxman 307 ( Punjab and Haryana). (iii) decision of Hon ble Allahabad High Courtin the case of CIT vs All India Children Care and Educational Development Society reported in (2014) 41 taxmann.com 20 (Allahabad). 26. From the held portion of the decision in the case of Dilip Chatarjee Vs ACIT (supra) submitted by the assessee before us, it is evident that in said case notice was u/s section 143(2) of the Act was issued by one Assessing Officer whereas assessment was completed by another officer, without val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO ward 8(3)(3) under territorial jurisdiction/class of persons in terms of section 120 of the Act and jurisdiction was not assigned to him under section 127 of the Act. Merely proposed escapment being more than Rs. 30.00 lakh, it cannot be presumed that taxable income of the assessee will be more than Rs. 30.00 lakhs. There might be losses and resultant total income might be less than Rs.30.00 lakhs. Where no return of income has been filed in regular course, the quantum of income can be ensure only after filing return of income by the assessee in response to the notice u/s 148 of the Act. On being noticed the income/loss falling under the jurisdiction of the ACIT Circle 8(3)(2) , the ITO transferred the case to him. The jurisdiction was transferred to ACIT and assessment has been completed by the ACIT Circle 8(3)(2), Mumbai , but ,there is nothing on record which shows that the assessee has challenged the jurisdiction of the Assessing Officer i.e. ACIT Circle 8(3)(2), Mumbai, within the limitation prescribed under section 124(3) of the Act. 30. The Ld Counsel relied on the decision dated 11th July 2017 of Hon ble Bombay High Court (Nagpur Bench) in the case of CIT v. Lalit K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on a person who inherently lacks jurisdiction. Therefore, the principle of waiver cannot be invoked so as to confer jurisdiction on an Officer who is acting under the Act when he does not have jurisdiction. The Act itself prohibits an Officer of Income Tax from exercising jurisdiction u/s.158 BC of the Act, unless he is an Assessing Officer. This limit in power of the Income Tax Officer in exercise of jurisdiction is independent of conduct of any party. Waiver can only be of irregular exercise of jurisdiction and not of lack of jurisdiction. The decision of the Delhi High Court in Venad Properties v. CIT, 340 ITR 463 relied upon by the Appellant/Revenue is a case of non-service of notice before passing of an order by an Officer having inherent jurisdiction. Therefore, it is a case of irregular exercise of jurisdiction and not absence of jurisdiction to issue notice. Therefore, it will have no application. 19. It is a settled position in law that mere participation in 19 itl127.06.odt proceedings or acquiescence will not confer jurisdiction. The Apex Court in Kanwar Singh Saini (supra) made observations, which are apposite to the issue at hand and which read as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act. This provision makes it clear that though transfer would come into effect from the date the order of Commissioner passed under Section 127(1) of the Act, the proceedings already commenced would not abate and continue with new Assessing Officer, who assumes charge consequent to transfer subject ofcourse to the pending notices 21 itl127.06.odt being within jurisdiction of the Officer issuing the notices. It is not a provision which validates without jurisdiction notice issued by an Income Tax Officer. If the submission of the Revenue on the above account is to be accepted, then an order which is without jurisdiction could be bestowed with jurisdiction by passing an order of transfer with retrospective effect. Section 127 of the Act does not validate notices/orders issued without jurisdiction, even if they are transferred to a new Officer by an Order under Section 127 of the Act. 31. The Hon ble Delhi High Court in the case of Abhisekn Jain (supra) held that in terms of section 124(3)(b) of the Act, the assessee could not call in question jurisdiction of an Assessing Officer after expiry of one month from date of the service of reassessment notice upon him. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the same Director General, Chief Commissioner or Commissioners of the Assessing Officer from whom the case is to be transferred. This is not a case of a transfer under Section 127 of the Act. This is a case in which the assessee had raised an objection stating that the Income-Tax Officer, Ward-1 (1), Noida should not continue with the assessment as the petitioner-assessee was regularly filing returns with the Income-Tax Officer, Ward-58 (2), Delhi. Objection as raised were treated as made in terms of sub-section (3) to Section 124, notwithstanding the fact that there was delay and non-compliance. The Income-Tax Officer, Ward-1 (1), Noida accepted the request/prayer of the petitioner and had transferred pending proceeding to the Assessing Officer, Ward-58 (2), Delhi. Therefore, there was no need to invoke and follow the procedure mentioned in sub-section (2) to Section 127 of the Act. Section 127 of the Act would come into play when the case is to be transferred from the Assessing Officer having jurisdiction to a third officer not having jurisdiction over an assessee (a case) in terms of the directions of the Board under section 120 of the Act. Section 127 of the Act could al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in those jurisdictions that the Assessing Officer is to refer the matter for determination to the Director General or the Chief Commissioner or the Commissioner as per the provisions of section 124(2) of the Act. It is, thus, evident that before the expiry of the period of one month from the date of ,service of notice under sub-section (1) of section 142 of the Act, no right to question the jurisdiction of an Assessing Officer would survive. 7. In the present case, notice under section 142(1) of the Act was issued to the appellant-assessee on 25-2-1993 and the return was to be filed on or before 15-3-1993, which, in fact, has been filed on 1-3-1993. No objection to the jurisdiction till 6-9-1994 was raised when the appellant-assessce requested for transfer of the case to Delhi. Therefore, it is not possible to conclude that the Assessing Officer was under obligation to refer the question of jurisdiction to the Director General or Chief Commissioner as per the provisions of section 124(2) read with section 124(4) of the Act, as is contended by learned counsel for the appellant-assessee. 8. We are further of the view that it would not make any difference even if at one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; case (3) at p. 79 Spens, C. J., after referring to s. 64(3) and the proviso thereto said: These provisions clearly indicate that the matter is more one of administrative convenience than of (1) (1927) I.L.R. 49 All. 616. (2) Seth Kanhaiyal Lal v. CIT [1937] 5 ITR 736 (All.) (3) Wallance Bros. Co. Ltd. v. CIT [1945] 13 ITR 39 (FC). Jurisdiction and in any event it is not one for adjudication by the Court .. This confirms us in the view that the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made. As we have already pointed out, the objection was not raised in the present case even before the Appellate Income-tax Officer but only before the Appellate Tribunal . There is nothing in the Bidi Supply case (1) which in any way detracts from the efficacy of the decision of the Federal Court in Wallace Brothers' case (2). We have already said that Bidi Supply case (1) deals with the vires of s. 5(7A). In view of the above, question as to place of assessment could not have been gone into by the Tribunal and it definitely committed error of law on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same is subsumed in the net profit estimation. This ground of appeal is treated as allowed. 38.1 In view of the above, in our opinion the contention of the Ld. counsel of the assessee that no addition has been made in respect of the basis on the which assessment was reopened, is not correct and therefore his request for considering the decision on the issue that no other addition could be made if the Assessing Officer has not made addition on the issue for which the assessment was reopened, is also rejected. The reliance placed on the decision of Hon ble Bombay High court in the case of CIT v. Jetaieways (I) Ltd. (2011) 331 ITR 236 (Bom) Ltd is of no help to the assessee. The ground No. 14 (additional ground) of the appeal is accordingly dismissed. 39. In the ground No. 15 (Additional Ground), the assessee challenged legality of the assessment on the ground that no notice under section 143(2) of the Act was issued. 40. The Ld. Counsel before us submitted that in the assessment order there is no mention of issuance of any notice under section 143(2) of the Act and therefore it is presumed that no such notice was issued by the Assessing Officer before completion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come was filed by the assessee. In response to notice under section 148 of the Act, the assessee filed return of income along with unaudited accounts in support of income declared in the return of income. In the said unaudited account total turnover of the assessee was shown at Rs.92,35,35,456/- on which loss of Rs.2,13,96,780/- was shown. The Assessing Officer asked audited accounts of the assessee for the year under consideration from the banker of the assessee, i.e. the state Bank of India, invoking section 133(6) of the Act however, the Banker provided audited accounts for AY 2010-11 (FY 2009-10), which were furnished by the assessee while sanctioning loan to the assessee company. The said audited accounts for AY 2010-11, also contained comparative figure of accounts for assessment year under consideration i.e. AY 2009-10 ( FY 2008-09). The Assessing Officer found following differences in the unaudited accounts submitted along with the return of income and audited accounts filed with the State Bank of India: From the accounts submitted by the Bank in the case of the assessee, it is seen that the assessee has shown unsecured loan as on 31-03-2009 of Rs.1,46,24,270/-. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crepancies in unaudited accounts enclosed with the return of income vis-a-vis, audited accounts provided by the state Bank of India, however, the Ld. CIT(A) accepted the argument of the assessee that whole of the textile industry was not doing well. The assessee submitted a report of ICRA management consulting services Ltd and the impact of economic slowdown on Indian textile and clothing industry. In view of the said report, the Ld. CIT(A) directed the Assessing Officer to accept the book results of the assessee. The Ld. CIT(A) observed that non-operative income consist of fixed deposit interest and export incentives. He directed the Assessing Officer not to consider the export incentive for addition because the said receipt were part of the business of the assessee. The Ld. CIT(A) directed the Assessing Officer to verify the amount of interest earned by the assessee on the fixed deposit and make addition for the same to the loss declared by the assessee from operation of textile products. The relevant finding of the Ld. CIT(A) is reproduced as under: 4.2 So far as estimation of profit by the AO at the rate of 5% of the turnover is concerned, it is seen from the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt incentives are concerned, no separate addition in respect of the same is required to the net loss shown by the appellant because the receipts are part of the business of the appellant. However, I'm of the opinion that the interest income is required to be added separately. The AO shall obtain the details of interest received by the appellant and add the same to the net loss of Rs.2,13,96,780 shown by the appellant in its Profit and Loss account for the purpose of estimating net profit of the appellant for the assessment year under consideration. Second ground of appeal is decided accordingly . 49. Before us, both the assessee and the Revenue are aggrieved with the above finding of the Ld. CIT(A) on the issue of estimation of profit of the business by way of respective grounds. 50. We find that the assessee as well as Revenue in their grounds has assumed the net profit rate applied by the CIT(A) the rate of the 3%, whereas from the above finding of the Ld. CIT(A), we notice that Ld. CIT(A) has accepted the loss declared by the assessee in unaudited accounts, which were enclosed along with the return of income. 51. As far as finding of the Ld. CIT(A) of accepti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is aggrieved with the direction of the Ld. CIT(A) with regard to the interest payment received. In ground No. 11 (additional ground), the assessee has challenged addition of Rs.26, 35, 198/-as interest income. 53. We find that the Ld. CIT(A) directed the Assessing Officer for considering the interest income from fixed deposits being nonoperative income, for addition separately from the estimation of profit from business operations. We are of the opinion that when the Assessing Officer has applied the book results for AY 2007-08 and 2010-11 for estimating the book results for the year under consideration, then treatment for the interest income has also to be given in the year under consideration, what has been given by the assessee in assessment year 2007-08 and 2010-11. Before us, the assessee has not substantiated that said interest income for assessment year 2010-11, was not part of business operations. In absence of any supporting evidence by the assessee, the action of the Ld. CIT(A) in directing to add the interest income from fixed deposit to the estimated profit from business operation is justified and accordingly upheld. The ground No. three and additional grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have been received from the army including interest element of Rs. 1043/-. An amount of Rs. 57,98,885/- was debited by the assessee as hiring charges. Upon verification, the Assessing Officer found that the details of the vehicles provided by the assessee through which the contract was supposed to be executed and hiring charges paid were cars, scooters, tractors etc. Confronted with the situation, the assessee withdrew the details of the vehicles furnished earlier, which were stated to have been hired by it, and furnished another list of vehicles with some details of trips undertaken by each vehicle. Return of income was filed by the appellant for the Assessment Year 2008-09. The Assessing Officer vide its order dated 27.12.2010 by invoking the provisions of Section 40(a) (ia) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'), disallowed the amount of Rs.55,59,585/- and added it back to the income of the assessee. The Assessing Officer computed the income of the assessee as per the provisions of Section 144 of the Act which worked out to RS.9,93,069/-. Against the order of the Assessing Officer, an appeal was preferred by the assessee. The Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce sheet for the year ending 31- 03-2009 submitted by the assessee with SBI, there is an unsecured loan of Rs. 1,46,24,270/-. However for the year ending 31-03-2009 the assessee has submitted unaudited accounts wherein it has no unsecured loan creditor. Therefore in the course of assessment proceedings the assssee has been asked to file the name, address, PAN and the source of payment in respect of repayment of loan credit outstanding as on 31-03-2009 Rs.1,46,24,270/-In response, the assessee has not stated anything. In absence of any explanation and also considering the facts of the case and time barring mattering involved in this case, the payment made by the assessee to clear the unsecured loan amounting to Rs. 1,46,24,270/- is considered as unexplained. Accordingly, the payment inade by the assessee to the loan creditor of Rs. 1,46,24,270/- is considered as deemed income of the assessee. Thus, an addition of Rs. 1,46,24,270/- is made to the total income of the assessee. 12.2 Similarly, for the year ended 31-03-2009 the assessee has shown net block of asset of Rs. 17.63,26,729/-. However, in the accounts submitted before me the opening WDV of the same was shown at Rs. 15, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. So far as providing copy of balance sheet obtained from the bank to the appellant is concerned, the same has been filed with the bank by the appellant only, therefore, it is not understood as to why the AO should have provided the same to the appellant once again. Moreover, no evidence has been furnished by the appellant in respect of the submission made before the undersigned, therefore, in view of the ratio of the decision quoted above, the additions made by the AO towards unexplained repayment of loan is hereby confirmed. So far as addition towards difference in block of assets is concerned, the same is not justified because the appellant has not taken any benefit for the same in the accounts submitted before the AO. The appellant has not written off the difference in the unaudited accounts submitted before the A and depreciation has also been claimed only on the opening WDV of the block of assets as appearing in the accounts filed before the AO, therefore, there is no case for making any further addition. Accordingly, the AO is directed to delete the addition of Rs.2,50,19,760 made in this regard . 59. We have heard rival submission of the parties on the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown in the name of Ms. Devi Indukuri at Rs. 30,07,392 and in the name of Mr. Nandyala Bhaskar Reddy at Rs. 80,00,000 totalling to Rs. 1,10,07,392. When the credit entry is shown in the books of account it is incumbent upon the assessee to explain the nature and source of credit, creditworthiness of the party and genuineness of the transaction. The fact that the entries are shown in the books of account of the assessee whose income had already been computed on the basis of the estimate but not on the return filed by the assessee, that does not prevent the ITO from treating, but entitles him to treat, the unexplained cash credit as income from undisclosed sources which falls under the head of income income from other sources . Unless the assessee, by independent and satisfactory evidence, establishes that those amounts relate or referable to the undisclosed income from known or disclosed sources viz., the business, whose income had already been estimated. In the present case, the assessee did not able to establish the cash credits mentioned above as genuine credits. The assessee's stand from the beginning and also before us is that the cash credits are genuine. The assessee nev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the ITO having assessed the income of the assessee on a percentage basis, was also justified in treating the unexplained cash credit as profits from an undisclosed source. Repelling the contention that the entries found in the books of account of the business must be referable to the income of the business which had been computed on the basis of an estimate without accepting the return filed by the assessee, which amounts to double taxation of the same income, the Court ruled thus: The question would seem to suggest that because the income from a disclosed source has been computed on the basis of an estimate and not on the basis of the return filed in respect of it, an income represented by a credit entry in the books of account of that source Smt. Shobha Gupta ==================== cannot be held to be income from another and undisclosed source. We do not see why it cannot be so held ..... if the income is treated as one from an undisclosed source which the question postulates, it is not treated as income of the disclosed source which had previously been assessed to tax and, therefore, there is in such a case no double taxation. It is not a case where the income sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITO to show that that income is from any particular source. It is for the assessee to prove that even if the cash credit represents income it is income from a source which has already been taxed. 15. The Andhra Pradesh High Court in CIT vs. Janab Mohd. Suleman [Referred Case No. 13 of 1968 dt. 11th Nov., 1970] has expressed the same view on similar facts and circumstances. In Karnal Motors vs. CIT (2003) 180 CTR (Raj) 166 it was held that additions under s. 68 could not be telescoped with the trading addition where the assessee had not admitted that unexplained cash credits came out of black money earned in the current year or in an earlier year. In our opinion, a separate addition under s. 68 towards unexplained credit is sustainable in spite of addition made to the declared trading results is a question of fact which is to be decided based on circumstances in each case. 16. The benefit of telescoping was also considered by the Supreme Court in Anantharam Veerasingaiah Co. vs. CIT (1980) 16 CTR (SC) 187 : (1980) 123 ITR 457 (SC) approving Lagadapati Sunna Ramaiah vs. CIT (1956) 30 ITR 593 (AP) observed that: There can be no escape from the proposition th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years, there was disallowance of expenditure on the ground that there was no evidence though the requisite amount was in fact paid, it cannot be said that the corresponding amount is available to the assessee for use later. Smt. Shobha Gupta ==================== 18. Under section 68, the burden is on the assessee to prima facie prove the nature and source of the cash credit found in his books and the explanation in regard thereto must necessarily be factual but not argumentative. A view that the cash credits to the extent of the past intangible additions stand automatically explained would practically dispense with the necessity of the assessee giving any explanation of fact under section 68 where intangible additions were made in the earlier years and hence such a view is untenable. In the case of CIT vs. Manik Sons (1969) 74 ITR 1 (SC) it was held that only if the unexplained cash credit can reasonably be related to the amount covered by the intangible addition made in the past, or in the very year, necessary set off can be allowed. The principle that it is the assessee who should give a satisfactory explanation regarding cash credits is in no way rendered inapplic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not taken at the earlier stage and no materials are placed on record to substantiate the same, rejection of such plea would be justified. [R. Dalmia (Decd.) vs. CIT; (2002) 172 CTR 180 (Del) : (2002) 255 ITR 401 (Del)]. 7. Further, regarding estimation of income, as we have directed the assessee to produce the books of account maintained by her, if the Assessing Officer finds any discrepancy in the books of account, he is at liberty to make his best judgment in accordance with law. Accordingly, respectfully following finding of the Tribunal (supra), we uphold the finding of the Ld. CIT(A) on the issue in dispute. The ground No. 5 (five) of the appeal of the assessee is accordingly dismissed. 60. As for as ground 6 (six) of the appeal is concerned, the Ld. CIT(A) has already allowed relief to the assessee on the addition of the fixed assets discrepancy and revenue has not challenged said finding of the Ld. CIT(A), therefore the ground No. six raised by the assessee is infructuous and accordingly, dismissed. 61. In ground No. 7 (seven), the assessee has challenged the legality of the order being passed under section 143(3) of the Act read with 147 instead of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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