2016 (8) TMI 914 - AT - Income Tax

Allowance of telescoping of debit entries (payments) against addition made on account of unexplained receipts (credits) - Held that - CIT(A) has given a categorical finding that the debit side entry dated 09.03.2008 for ₹ 15 lacs is of similar narration being cash amount transferred, Pradeep, Sanjay Goyal, cons by Ashishji. Even name is mentioned i.e. Sanjay Goyal, Ashishji Goyal are also common. The said findings remain uncontroverted. In light of that, ld CIT(A) has rightly held that where the credit side cash entries have already been taxed then in that case the debit side cash entries have to be telescoped and he has accordingly given relief of ₹ 15 lacs. We accordingly donot see any infirmity in the order of ld CIT(A) in the said finding and the same is hereby confirmed. Hence, ground of Revenue is dismissed. Addition in the trading account - Held that - CIT(A) has given a categorical finding of fact that both the transactions are of the same period and the determination of undisclosed income ₹ 81,73,000/- is based on P&L account and balance sheet of same period. It is not only the case that the profit of ₹ 81,73,000/- is reflected or detected by way of any independent source of any other undisclosed income. Therefore the income already detected and taxed in the same A.Y. should be given credit in as much as otherwise it will tantamount to double taxation. The said finding remains uncontroverted before us. Further, the Coordinate Bench in assessee s appeal (supra) has questioned the very basis of the subject addition where it stated that without rejection of books of accounts, no such additions in the trading account only on the basis of retracted admission is justified. In light of above, we donot see a necessity to interfere with the findings of the ld CIT(A). Hence, ground of the Revenue is dismissed.

Summary

Issues:
Telescoping of debit entries against unexplained receipts, Appeal against order of Ld. CIT(A), Central, Jaipur, Grounds of appeal by Revenue, Relief granted to the assessee, Double taxation concern, Addition based on seized documents, Credit for undisclosed income, Deletion of sustained addition.

Telescoping of Debit Entries Against Unexplained Receipts:
The Revenue filed an appeal against the order of Ld. CIT(A), Central, Jaipur regarding the telescoping of debit entries against unexplained receipts in the account of M/s Wig Brothers. The Ld. AR argued that the relief of ?15 lacs had already been granted to the assessee in a previous case. However, the Tribunal noted that the subject appeal had been filed by the Revenue and decided to hear the appeal on its merits. The Tribunal dismissed the appeal, stating that the statement made by ld CIT(DR) regarding non-appeal against the relief of ?15 lacs was made out of ignorance and cannot be a basis for denial of filing an appeal.

Relief Granted to the Assessee:
The ld CIT(A) had allowed relief of ?15 lacs to the assessee based on the similarity in narration and names in the debit side entry dated 09.03.2008. The Tribunal confirmed this finding, stating that where credit side cash entries had already been taxed, the debit side cash entries had to be telescoped. The Tribunal found no infirmity in the order of ld CIT(A in this regard and dismissed the Revenue's ground of appeal.

Double Taxation Concern - Credit for Undisclosed Income:
Regarding the undisclosed income of ?81,73,000, the ld CIT(A) held that the income already taxed in the same assessment year should be given credit to avoid double taxation. The Tribunal agreed with this finding and confirmed the relief of ?33,86,000 granted to the assessee. The Coordinate Bench also supported this view, stating that without rejection of books of accounts, additions based on retracted admissions were not justified. The Tribunal dismissed the Revenue's ground of appeal in this regard.

Deletion of Sustained Addition:
The Coordinate Bench, in the appellant's appeal, found that the net undisclosed profit was lower than the sustained addition by the ld CIT(A). The Coordinate Bench noted that the AO had not rejected the books of account, and without such rejection, additions based on retracted admissions were not justified. The Coordinate Bench ordered the deletion of the entire addition made and even deleted the sustained addition of ?47,87,000. The Tribunal upheld this decision and dismissed the Revenue's ground of appeal.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue, confirming the relief granted to the assessee and addressing concerns of double taxation by giving credit for undisclosed income and deleting the sustained addition based on the findings of the Coordinate Bench.