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Showing contexts for: telescoping in Jayant B Patel Huf, Mumbai vs Assessee on 10 August, 2016Matching Fragments
9. All other additions made by the AO in respect of sale of shares are being confirmed.
10. In view of the detailed finding given by lower authorities with regard to addition made on account of seizer of cash and jewellery, we confirm the respective additions so made by AO in the hands of the assessee in his individual capacity.
11. In the year 200708, the revenue has challenged the addition deleted by the CIT(A) on the ground of telescoping amounting to Rs.63,73,000/.
12. It was contended by ld. DR that assessee could not establish link between the income declared and cash found during the course of search, therefore, benefit of telescoping cannot be given. Reliance was placed on the decision of Ahmedabad Bench in the case of Shri Ketan I Shah, ITA No.610&611/Ahd/2012, dated 29112013. Reliance was also placed on the decision of Hyderabad bench in the case of Sri Jayachandra Reddy, ITA No.1765/Hyd/2013, dated 2022015, wherein it was held that telescoping can be accepted only if the assessee established nexus between the same. The Tribunal observed that assessee was claiming telescoping of income/expenditure made in the group, since group consists different taxable entities, it was held that each ITA No.5547-5561 & 7524&7525/12 assessee and assessment are independent and no telescoping should be allowed.
14. We had carefully gone through orders of authorities below and also considered the rival contentions. We had also deliberated on the judicial pronouncements cited by ld. DR and AR during the course of hearing before us, in the context of factual matrix of the case. From the record we found that during the course of search cash of Rs.80,46,000/ was found from the residential premises at Clifton Society Juhu. After giving credit to the cash expenditure amounting to Rs.11,08,885/ the AO made an addition of Rs.69,37,915/ on account of unaccounted income from business of M/s Universal Taste Makers. However, the same was not reflected in the return of income filed u/s.153A. It was explained during the course of assessment proceedings that the cash was out of the income offered for gross profit on cash sale amounting to Rs.63,73,000/ in various years as well as from the agricultural operation of A.Y.200708 ITA No.5547-5561 & 7524&7525/12 amounting to Rs.5,25,500/. In fact in this regard, an additional ground has also been filed before the CIT(A) and it has been pleaded that this addition should be deleted by telescoping disclosure made on account of GP on cash sales and agricultural income.
15. By the impugned order the CIT(A) after considering various judicial pronouncements allowed assessee's claim of telescoping after having following observations : 14.10.9 I find that in the present case no finding has been given nor anything brought on record that cash secreted out of gross profit on cash sales was not available as cash in hand, even if undisclosed. It was held in Commissioner of Income-tax Vs. K.S.M. Guruswamy Nadar & Sons [1984] 19 Taxman 533 (Mad.) : "In the instant case, in addition to the bogus cash credits, there was an addition towards the suppression of profit also. In such a case when there were two additions, 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 and that there should be only one addition.
It was thus clear in the instant case that the view taken by the Tribunal that the additions towards the suppressed book profit should have been telescoped with the additions towards the cash credits, was legally tenable."
14.10.10 I have perused the facts obtaining in this case and find that against the offered income which is undisclosed there has to be either undisclosed investment or unaccounted cash. Ld.A.O. has not brought anything on record to suggest as to where the undisclosed income on account of G.P. on cash sale was invested. In view of the same, by adding the undisclosed cash which is more or less the same as the undisclosed gross profit, it would amount to double addition. Hence, I find merit in the submission made by the Ld. A.R. that undisclosed income on account of G.P. against cash sales needs to be telescoped with the cash found. Accordingly, the appellant gets a relief of Rs. 63 ,73,000/ - on this account.