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TMI Blog2015 (10) TMI 2023X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that the Ld. CIT(A) has given telescoping benefit in respect of ₹ 92 lakhs offered by the assessee against the income estimated from automobile business. Since we have cancelled the estimation of income from automobile business, the additional income of ₹ 92 lakhs assessed by the assessing officer is required to be sustained, subject to the claim of set off claimed before the tax authorities. The nature of additional income of ₹ 92 lakhs offered in 2008-09 is the unaccounted payment made for purchase of the property (Cash outflow). So one is income component and another one is investment component. In these kind of situations only, i.e., when cash inflow and cash flow are assessed as income, normally the claim of set off of one against the another shall be claimed. There is justification in making such a claim, since both income and investment should not be assessed separately, otherwise it may result in double assessment of same income. Hence, we find merit in the contention of the assessee that the unaccounted income of ₹ 20 lakhs offered in the assessment year 2007-08 should be adjusted against the undisclosed investment made in assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer also assessed the same of ₹ 20 lakhs declared by the assessee and also the amount of ₹ 3.5 lakhs received by the staff of the assessee. Accordingly, he determined the total income at ₹ 60.63 lakhs. 3. In the appellate proceedings, Ld. CIT(A) confirmed the rejection of books of accounts and estimation of income. However, the Ld. CIT(A) held that the assessing officer was not correct in assessing commission income of ₹ 23.45 lakhs separately, since the books of accounts have been rejected and income was estimated. Accordingly, he directed the A.O. to delete the addition of ₹ 23.45 lakhs. The assessee is aggrieved by the decision of Ld. CIT(A) in confirming the rejection of automobile business and estimation of income from that business. The revenue is aggrieved by the decision of Ld. CIT(A) in giving telescoping benefit to the commission income against the income estimated from automobile business. 4. Before us, the assessee has raised two legal issues. The first legal issue relates to the scope of assessment made u/s 153A of the Act. According to the assessee, the additions made by the assessing officer were outside the scope of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same was a simple formality only. 7. In the rejoinder, the Ld. A.R. submitted that the recording of satisfaction is compulsory even if the assessing officer is one and the same. In support of this contention, he placed reliance on the decision rendered by the M.P. High Court in the case of CIT Vs. Mechmen 11C (2015) 193 CCH 0132 (MP). The Ld. A.R. invited our attention to para 18 of the decision which reads as under: The concomitant of this conclusion, is that, the legal position as applicable to Section 158BD regarding satisfaction in the first instance of the first Assessing Officer forwarding the items to the Assessing Office4r having jurisdiction; and in the second instance of the Assessing Officer having jurisdiction whilst sending notice to such other person (other than the person referred to in Section 153A), must apply proprio vigore. The fact that incidentally the Assessing Officer is common at both the stages would not extricate him from recording satisfaction at the respective stages. In that, the Assessing Officer is satisfied that the items referred to in Section 153C belongs or belong to a person (other than the person referred to in Section 153A), being si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer was not right in law in completing the assessment proceedings u/s 153C of the Act. This view is also supported by the decision rendered by the jurisdictional High Court in the case of Sri Rao Subba Rao (supra). Accordingly, we set aside the order of Ld. CIT(A) and quash the assessment order. 10. With regard to the first issue relating to the Scope of assessment u/s 153A of the Act, we wish to state here that the said issue was considered in a detailed manner in the case of Shri A.T. Rayudu, after duly considering the arguments of Ld Standing Counsel of the revenue Shri Narasimha Sharma and the counsel of the assessee Shri G.V.N. Hari. However, since we have quashed the assessment order on the basis of second legal issue relating to recording of satisfaction, we do not find it necessary to adjudicate the same. 11. Accordingly, the appeal filed by the assessee for AY 2007-08 is treated as allowed and appeal of the revenue is dismissed. 12. We shall now take up the appeals filed by both the parties for the assessment year 2008-09. The assessing officer has completed the assessment of this year u/s 143(3) of the Act. During the course of search proceedings conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate addition of ₹ 92 lakhs is required to be made, when books of account of the assessee is rejected and profit from automobile business is estimated. Accordingly, he gave telescoping benefit to ₹ 92 lakhs against the income estimated from automobile business. 14. The assessee is aggrieved by the decision of Ld. CIT(A) in confirming the rejection of books of accounts and estimating income from automobile business and also in confirming the addition of ₹ 3 lakhs relating to unexplained payment. The revenue is aggrieved by the decision of Ld. CIT(A) in giving telescoping benefit to the addition of ₹ 92 lakhs made by the assessing officer. 15. The Ld. A.R. submitted that the search officials as well as the assessing officer did not find any discrepancy or mistakes in the books of accounts maintained for automobile business and hence there is no proper reason recorded for rejecting books of accounts relating to automobile business. He further submitted that the commission earned in real estate transaction in assessment year 2007-08 and also the undisclosed payment made in respect of property purchases cannot be linked to automobile business in the abse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the view that the assessing officer was not justified in rejecting the book results of automobile business and estimating the income of the assessee. We notice that the Ld. CIT(A) also has upheld the rejection of books of accounts without bringing on record any defects in the books of accounts. Accordingly, we set aside the order of Ld. CIT(A) as well as A.O. with regard to the rejection of books of accounts. 18. Since we have held that the rejection of books of accounts was not proper, the consequent estimation of profit from automobile business is also liable to be cancelled. Accordingly the orders of the lower authorities on this issue also set aside, meaning thereby the income disclosed by the assessee in respect of automobile business in the revised return of income shall remain. 19. We have noticed that the Ld. CIT(A) has given telescoping benefit in respect of ₹ 92 lakhs offered by the assessee against the income estimated from automobile business. Since we have cancelled the estimation of income from automobile business, the additional income of ₹ 92 lakhs assessed by the assessing officer is required to be sustained, subject to the claim of set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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