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TMI Blog2013 (8) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the Assessee. Whether Intangible addition in the past would take care of the unexplained credit in the present – Held that:- When the alternate plea that tangible additions in the past could take care of cash credits of current year is not taken at the earlier stage and no materials are placed on record to substantiate the same, rejection of such plea would be justified – Reliance is placed upon the judgment of R. Dalmia (Decd.) Versus Commissioner of Income Tax.[2001 (8) TMI 26 - DELHI High Court] – Decided against the Assessee. - ITA No. 461/Hyd/2013 - - - Dated:- 10-7-2013 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Appellant : Sri K. C. Devdas For the Respondent : Sri Phani Raju ORDER Per Chandra Poojari, AM:- This appeal preferred by the assessee is directed against the order of the CIT(A)-III, Hyderabad dated 8/02/2013 for assessment year 2009-10 wherein the assessee has raised the following grounds of appeal: "1. The order of CIT(A) is against law, weight of evidence and facts of the case. 2. The CIT(A) erred in upholding the addition of Rs. 15,00,000/-being the loan incurred from Smt. Radhika Gupta without appreciating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Assessing Officer. Regarding other issues, the learned DR submitted that the same are to be remitted back to the file of the Assessing Officer for fresh consideration as the assessee has filed certain additional evidences before the Tribunal. 6. We have heard both the parties and perused the material on record. In this case, original assessment has been completed u/s 144 of the Act. The assessee has not produced necessary evidences before the lower authorities in support of her case. Before us, the assessee has filed certain evidences to say that the assessee is in the first year of business and also filed confirmation of income tax details in the form of PAN and copy of returns of income in case of Smt. Radhika Gupta. Being so, we deem it fit and proper to remit the issues back to the file of the Assessing Officer for fresh consideration. Further, we also make it clear that even if the income is estimated, the Assessing Officer may invoke the provisions of section 68/69 of the Act as held by the Tribunal in case of Sri P.V. Sitaramaswamy Naidu in ITA No. 264/Hyd/12 vide order dated 09/01/2013. 12. We have carefully gone through this judgement. This judgement is with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspect as would be seen from the following cases. In CIT v. Aggarwal Engg. Co. (Jai.) (2006) 206 CTR (P H) 648, the Punjab Haryana High Court held, relying on decision in CIT vs. Banwarilal Banshidhar (1998) 148 CTR (All) 533; (1998) 229 ITR 229 (All), that no separate addition on account of cash credit and on account of unexplained payments for purchases made outside the books can be made once the net profit rate is applied on contract receipts of an assessee for estimating his income from contract work. Even when the books of account relating to the assessee's business are rejected and income from such business is determined on estimate basis, a separate addition (which may not exceed the difference between the income as estimated by the Department and the income/loss as per books) may be made under section 68 towards cash credits which are not explained or which are not properly explained. This is because the source of the former is business whereas for the latter the Department does not have to locate any particular source [Kale Khan Mohammed Hanif vs. CIT (1963) 50 ITR 1 (SC) impliedly overruling Ramcharitar Ram Harihar Prasad vs. CIT (1953) 23 ITR 301 (Pat) and impliedly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istaiah (1979) 120 ITR 294 (AP) where the assessee pleads that the impugned cash credits came out of suppressed profits which are already included in the income estimated from business on rejection of the books, it is for him to prove that it is so [CIT vs. Devi Prasad Vishwanath Prasad (1969) 72 ITR 194 (SC) reversing Devi Prasad Vishwanath Prasad vs. CIT (1963) 50 ITR 641 (All) and impliedly approving on this point Maddi Sudarsanam Oil Mills Co. vs. CIT (1959) 37 ITR 369 (AP) and CIT vs. Krishna Mining Co. (1972) 83 ITR 860 (AP). The Supreme Court in this case of CIT vs. Devi Prasad Vishwanath Prasad observed thus : "There is nothing in law which prevents the ITO in an appropriate case in taxing both the cash credit, the source and nature of which is not satisfactorily explained and the business income estimated by him under section 13 of the IT Act, after rejecting the books of account of the assessee as unreliable ..... Whether in a given case the ITO may tax the cash credit entered in the books of account of business, and at the same time estimate the profit must, however, depend upon the facts of each case ..... Where there is an unexplained cash credit, it is open to the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash credit must be ascertained from an overall consideration of the particular facts and circumstances of the case. Evidence may exist to show that reliance cannot be placed completely on the availability of a previously earned undisclosed income. A number of circumstances of vital significance may point to the conclusion that the cash deficit or cash credit cannot reasonably be related to the amount covered by the intangible addition but must be regarded as pointing to the receipt of undisclosed income earned during the assessment year under consideration. It is open to the Revenue to rely on all the circumstances pointing to that conclusion." 17. Thus, as explained by the Supreme Court, income from intangible additions is available to the assessee for, inter alia, introducing amounts in his account books. If any unexplained cash credits can be reasonably related to the amount covered by the intangible additions made in the past or in that very year, necessary set off may be given by the authorities on that account. In each case, the true nature of the cash credit must be ascertained from an overall consideration of the particular facts and circumstances of the case. However, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support his claim by proper explanation, affidavit and material. Thus, there is no general or absolute rule to the effect that whenever additions to profits are made, they must be regarded as funds represented in the books of account as cash credits. The question depends on the findings of fact. If there is no connection found between the cash credits and the additions made to profits, the assessee would not be entitled to set off cash credits against the past intangible addition. 19. Since it is for the assessee to provide the explanation for cash credits, when the assessee has not pleaded that the cash credits came out of the past intangible additions, it would not be open to the Tribunal to hold that the cash credits would be covered by such additions [CIT vs. G. M. Chennabasappa (1959) 35 ITR 261 (AP). The omission to claim set off of past intangible additions against cash credits would give rise to a presumption that the former amounts were not available for set off. When the alternate plea that tangible additions in the past could take care of cash credits of current year is not taken at the earlier stage and no materials are placed on record to substantiate the same, rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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