9911796707
TMI Blog1996 (9) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... first time before them for set off of the unexplained cash credits against the estimated addition to the assessee's business income ? and 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in telescoping the unexplained credits with the estimated addition to the business income towards deficiency in gross profit, especially in view of the Delhi High Court's decision in CIT v. Kulwant Kaur [1980] 121 ITR 914 and that of the Andhra Pradesh High Court in CIT v. Maduri Rajaiahgari Kistaiah [1979] 120 ITR 294 ?" The assessee is a registered firm carrying on business as "forest contractor". In respect of the assessment year 1976-77, it disclosed a turn-over of Rs. 25,74,087 and a gross pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,50,000 but confirmed the cash credit addition of Rs. 1,21,000. The assessee then advanced an alternative argument based upon the ruling of the Supreme Court in Anantharam Veerasinghaiah and Co. v. CIT [1980] 123 ITR 457 that the cash credit addition should be telescoped into the gross profit addition. The Tribunal agreed with that and allowed a set off of Rs. 1,21,000 against the addition of Rs. 1,50,000. At the instance of the Revenue, this court has directed the Tribunal to refer the questions for consideration under section 256(2) of the Income-tax Act. Learned counsel for the Revenue contends that the Tribunal should not have entertained the plea of set off for the first time before them and that there was nothing wrong in maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hheld from the books and the cash credit entries, it cannot be said that the conclusion is based upon speculation. The first question sought to be raised is, therefore, purely one of fact and could not be referred under section 66."
As the addition on the ground of increase in the rate of profit was made by the Commissioner of Income-tax at the appellate stage, the assessee could not have raised the plea of set off anywhere else except before the Tribunal in the appeal. The contention that the plea should not have been allowed to be raised at that stage is, therefore, untenable.
In the circumstances, both the questions are answered in the affirmative, in favour of the assessee and against the Revenue. No costs. X X X X Extracts X X X X X X X X Extracts X X X X
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