2020 (2) TMI 413 - AT - Income Tax

Undisclosed cash receipts - not giving telescoping benefit to the above income against the income offered during the course of survey - HELD THAT - As relying on ANANTHARAM VEERASINGAIAH AND CO. VERSUS COMMISSIONER OF INCOME-TAX, AP 1980 (4) TMI 2 - SUPREME COURT since the assessee during survey operation on 16.01.2013 had already offered undisclosed income of ₹ 95 lacs which includes ₹ 45 lacs for this assessment year and since all other entries found in the diary SKS-5 has already been tallied with the cash book, we are of the opinion that the assessee has been able to give a plausible explanation to this amount of ₹ 14,50,000/- dated 18.06.2012 since this amount is entered in the cash book prior to survey and this amount get subsumed in the ₹ 45 lakhs surrendered by the assessee for this assessment year. Therefore, no other addition was warranted and we delete the addition of ₹ 14,50,000/-. Therefore, this ground of appeal of assessee is allowed. Undisclosed rental income - survey operation u/s. 133A - HELD THAT - We note that the assessee had received rental income of ₹ 3,36,000/- in this assessment year which has been rightly taxed by the AO. However the only limited prayer of the Ld. AR is that the standard deduction on the rental income should be granted. Needless to say, since this amount is on account of rental income, then standard deduction needs to be granted to the assessee and the AO is directed to do so in accordance to law. So, this ground of appeal of assessee is partly allowed.

Summary

Issues:
1. Addition of undisclosed cash receipts and telescoping benefit.
2. Addition of undisclosed rental income and standard deduction.

Issue 1: Addition of Undisclosed Cash Receipts and Telescoping Benefit

The appeal was against the Ld. CIT(A)'s decision to confirm the addition of ?14,15,000 on account of alleged undisclosed cash receipts and not granting telescoping benefit against the income of ?45,00,000 offered during a survey. The AO found an entry of ?14,15,000 in a diary during a survey operation and added it to the total income as undisclosed. The Ld. CIT(A) upheld this decision due to lack of proof from the assessee. The assessee argued that the undisclosed amount was already covered in the declared income. The tribunal agreed, citing relevant case laws, and allowed the appeal, deleting the addition of ?14,50,000.

Issue 2: Addition of Undisclosed Rental Income and Standard Deduction

The second issue involved the addition of ?3,36,000 as undisclosed rental income, confirmed by the Ld. CIT(A). The AO found monthly rent receipts of ?28,000 during a survey but the assessee claimed it was part of truck brokerage income. The AO added the amount to total income as the assessee did not maintain proper accounts. The Ld. CIT(A) upheld this decision. The tribunal agreed that the rental income should be taxed but directed the AO to grant standard deduction as it was rental income. Thus, this ground of appeal was partly allowed.

In conclusion, the tribunal partially allowed the appeal, deleting the addition of undisclosed cash receipts and directing the AO to grant standard deduction on the undisclosed rental income.