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3.0 On the facts and in the circumstances of your appellant's case and in law, the Ld. CIT (A) has erred in confirming the addition of Rs.37,12,000/- (actually 39,12,000 due to apparent mistake) as unexplained expenditure u/s 69C of the Act. (Para 37.4 on page 126 of the Ld. CIT(A)'s order).

4.0 Without prejudice to the specific grounds of appeal taken above and those taken in appeals for AY 2013-14 and AY 2014-15, on the facts and circumstances of the case and in law, the LdCIT(A) has erred in not allowing telescoping / offsetting of the alleged unexplained expenses / investment against the items treated as incomes as well as against disclosures made by the individuals in the Promoter Group. (Para 20.6 on page 103 of the Ld. CIT(A)'s order)."

41. Without prejudice to the above i.e. general and compartment wise contention, the assessee submitted that seized document contain various noting which has been described as unaccounted expenses and unaccounted receipt by the AO. Therefore expenses and income cannot be added to income of the assessee separately. As such only profit element as per telescoping should be taxed. The assesse accordingly submitted the working of the telescoping and prayed only an amount of Rs. 8,40,140/- can be added as per sheet bearing page no. 33 of A-3.

41.1 The ld. CIT-A after considering the submission of the assessee rejected the alternate plea for telescoping without assigning specific reason and adjudicate the compartment wise addition individually which are summarized in following paragraph.

42. The learned CIT(A) with respect to the addition made by the AO under the 1st compartment found that the assessee has incurred an expense of Rs.15 Lacs which represents the deposit made with AICTE for diploma courses dated 3 June 2014 which was duly recorded in the books of accounts. Likewise, the learned CIT(A) found that the assessee has taken loans of Rs.17.5 Lacs and 11.5 Lacs from Shri Ghanshyam Patel/ Shri Jivabhai Patel collectively and Shri Hemant Patel which were recorded in the books of accounts. Thus the learned CIT(A) deleted the addition of Rs.45 lacs (amount should be Rs. 44 Lacs but inadvertently mentioned Rs. 45 lacs inCIT-A order) in aggregate and confirmed the balance amount of Rs.37.12 Lacs (right amount is of Rs. 39.12).

56. In view of the above, we find that the net results of the receipts and expenses should only be considered for the purpose of the additions. As such the individual receipts and the expenses cannot be subject matter of the addition independently. There is also no ambiguity to the fact that whatever amount of the unaccounted expenses have been incurred have been sourced out of unaccounted receipts recorded in the same seized document.

57. At this juncture, it is equally important to deal with the situation that what would be the position if the receipts have been utilized by the assessee for the capital expenditures or the revenue expenses have been incurred out of the capital receipts. In either of the case, the transactions were not recorded in the books of accounts. As regards the receipts, the additions cannot be made under the provisions of section 68 of the Act. It is for the reason that the provisions of section 68 of the Act are applicable with respect to the transactions recorded in the books of accounts. As regards the expenses in the given facts and circumstances, the provisions of section 69C of the Act cannot be applicable as the source of the expenses is emanating from the same seized document. In other words, one of the precondition for attracting the provisions of section 69C of the Act is that the assessee failed to justify the source of the expenses. However in the given case, the source of the expenses is not in dispute. Accordingly, we are of the view that only option available work out the income from the unrecorded transactions in the given facts and circumstances is to apply the concept of telescoping. It is for the reason Page : 30 Shri Pravinchandra R. Patel and Anrs Vs. DCIT, Cent.Cir.2, Vadodara that all the transactions were the business transactions whether it was on capital account or revenue account. If the assessee has incurred an expense on account of capital expenditure which was not recorded in the books of accounts, the same would have been eligible for deduction in the form of depreciation. As such, none of the expenses was incurred by the assessee which was not eligible for deduction. Accordingly, we are of the view that the income should be determined keeping the principles of telescoping. The assessee has worked out the income of Rs.8,40,140.00 based on the principles of telescoping which has been reproduced in the order of the learned CIT-A. No defect of whatsoever was pointed out by the authorities below in the working furnished by the assessee. Accordingly, we hold that the addition of Rs.8,40,140.00 is sustained out of the total addition made by the authorities below of Rs. 39.12 Lacs and Rs. 3,84,61,253 respectively in the assessment year 2012-13 and 2014-15.