2015 (12) TMI 1466 - HC - Income Tax

Block assessment - Benefit of telescoping relating to cash actually found during the course of search - promissory note found during search - undisclosed income of the assessee - ITAT deleted addition - Held that - All that has been done by the Commissioner (Appeals) is that the benefit of telescoping has been given to the assessee in relation to the cash that was actually found during the course of search, which view has been confirmed by the Tribunal. This court in the case of Commissioner of Income Tax, Gandhinagar v. Jagatkumar Satishbhai Patel (2012 (12) TMI 1017 - GUJARAT HIGH COURT) has held that applying the principles of telescoping does not give rise to a question of law. Under the circumstances, the impugned order passed by the Tribunal confirming the order of the Commissioner (Appeals) granting the benefit of telescoping to the assessee does not give rise to any question of law, much less, any substantial question warranting interference. - Decided against revenue.

Summary

Issues:
Challenge to order under section 260A of the Income Tax Act, 1961 regarding deletion of addition of Rs. 29.45 lacs and allowing telescoping of the impugned amount without established basic facts.

Analysis:
1. The appellant challenged the order of the Income Tax Appellate Tribunal regarding the addition of Rs. 29.45 lacs and the telescoping of the impugned amount. The search conducted on the respondent-assessee's premises revealed a promissory note indicating a cash loan of Rs. 50,00,000 received by Shri N.P. Desai on behalf of Shri Amratbhai Karsanbhai. The Tribunal remanded the matter to the Assessing Officer to examine the claim after the name of the borrower was disclosed. The Assessing Officer considered the promissory note as evidence of an undisclosed income and added Rs. 50,00,000 to the block period's income. The Commissioner (Appeals) accepted the explanation that Rs. 29,45,000 was returned due to a failed transaction, thus restricting the addition to Rs. 20,55,000. The Tribunal upheld this decision, granting the benefit of telescoping.

2. The appellant contended that the Tribunal erred by not considering the promissory note found during the search and the failure of the assessee to provide details of the borrower. Despite the matter being remanded for verification, the borrower's details were not furnished. The Assessing Officer justified adding the entire amount as undisclosed income. The appellant urged the court to admit the appeal based on the proposed questions. However, the respondent relied on a precedent to argue that the principle of telescoping applied in this case, which did not raise a question of law.

3. The court noted that the promissory note indicated a cash loan received by Shri N.P. Desai on behalf of Shri Amrat Karsanbhai Desai. The assessee initially did not disclose the borrower's details but later revealed them during the Tribunal proceedings. The Commissioner (Appeals) and the Tribunal accepted the explanation that Rs. 29,45,000 was returned due to a failed transaction, thereby restricting the addition to Rs. 20,55,000. The court cited a previous case to establish that granting the benefit of telescoping did not warrant interference as it did not raise a substantial question of law.

4. In conclusion, the court dismissed the appeal, stating that the Commissioner (Appeals) granting the benefit of telescoping to the assessee did not give rise to any substantial question of law. The court upheld the Tribunal's decision, confirming the grant of telescoping benefit and the restriction of the addition to Rs. 20,55,000.