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TMI Blog2024 (6) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted as the source of deposits in the bank. Thus, it is apparent that the ITAT's finding of telescoping benefit of surrendered income vis- -vis subsequent bank deposits was reached only after due analysis of all the facts, circumstances, relevant documents and evidence, statements recorded during the survey. ITAT has accepted the contention of the respondent that the cash deposited in the bank accounts originated from the cash balance on hand as per the books of account. This cash balance was, in turn, derived from the loans recovered in cash from the individuals to whom the loans were advanced, against which hundis were seized from the assessee during the survey proceedings. ITAT, being the final authority for fact-finding, has adjudicated the issue comprehensively, taking into account the relevant facts, circumstances, documents/evidence, and judicial rulings. The finding of the ITAT as extracted, stand as matter of fact, with no discernible error of law. Moreover, the department has not highlighted or pointed out any factual inaccuracies or incorrect findings recorded by the ITAT. Consequently, the entitlement of the assessee to the telescopic benefit does not constitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate With Shri Gagan Tiwari - Advocate For The Respondent [Caveat) ORDER PER With the consent of the parties the matter is heard finally. This is an appeal filed by the appellant under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act of 1961) being aggrieved by the order dated 20.03.2021 passed by the Income Tax Appellate Tribunal, (ITAT) Bench Indore Vinod Bhandari vs. PCIT (IT Appeal No. 66 (IND) of 2017) for the assessment year 2012-13. 2. This appeal was admitted by this Court vide order dated 12.09.2021 whereby the following substantial question of law was framed: Whether on the facts and circumstances of the case and in law the ITAT was justified in deleting the addition of Rs. 7,34,79,097/- made by the AO under section 68 of the Income Tax, Act 1961 on account of unexplained cash credit, holding that the assessee is entitled for the telescopic benefit of the income surrendered during the year to the cash deposit of Rs. 7,34,79,097/- in Bank account treating the same as maturity proceeds of hundies during the year, particularly when no specific source of cash deposit were submitted by the assessee and assessee failed to produce the reliable an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereof were seized by the department during Survey action. Further the income returned also included an interest income of Rs. 34,79,097/- recovered from the Hundi loans. 8. It is submitted by the respondent that the respondent had recorded all the realization, which was in cash, from loans given on Hundi, in his books of account, as and when realized and major portion of the amount was deposited in his bank accounts from time to time. During assessment a date-wise statement of extract from books of account of recovery of loans given on Hundi out of surrendered income along with books of account was provided to the Assessing officer during the assessment proceeding. 9. Thereafter the Assessing officer gave a show cause to the Respondent asking the assesse to produce the persons to whom, the loans on Hundi were advanced in absence of which, the AO gave a notice to add the amount of loan recovered by the Appellant in cash, from recovery of loans lent on hundi, as unexplained cash credit u/s 68 of the IT Act. 10. The respondent filed a reply contending that the amount recovered in cash has been recorded in the books of account as and when recovered and is nothing but flow of funds fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2012. Ld. A.O refused to accept the contention of the assessee that source of cash deposited is the maturity proceeds of the hundis i.e. short term advances for which investment was made from unaccounted income surrendered during the course of survey and offered to tax in the return of income. Ld. A.O made the addition for unexplained cash deposit merely in order to prove that since the assessee is accused in Vyapam case cash so deposited should have been from the income earned from alleged bribe received for admission in medical colleges. In the preceding paras we have observed that the proceeding initiated against the assessee under the Vyapam case fall in financial year 2012-13 i.e. subsequent year whereas cash was deposited during Financial Year 2011-12. There is no evidence on the record to substantiate this fact that assessee received any unaccounted income in the form of bribe for admission in medical college during financial year 2011-12. It seems that Ld. A.O merely on the basis of surmises and conjectures have taken this view. He ignored the fact that the assessee has surrendered Rs. 7 crores as unaccounted income during the year. This unaccounted income in cash was use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 NARENDRA KUMAVAT 3500000 183822 3683822 28-Sep-11 7 RAJMOHAN SHAH 4500000 236345 4736345 29-Sep-11 8 RAM SINGH 2500000 114045 2614045 27-Oct-11 9 RAMESH AGRAWAL 2500000 112195 2612195 08-Oct-11 10 RAMESH CHAND JAIN 5000000 262605 5262605 13-Sep-11 11 SURAJ KULKARNI 5000000 229315 5229315 28-Nov-11 12 SURENDRA KOTHARI 3000000 136110 3136110 20-Sep-11 13 SURESH AND SONS 5000000 337810 5337810 19-Jul-11 14 VALLABH CHAND MUNDRA 5000000 229315 5229315 28-Oct-11 15 VIJAY DHAKAD 2500000 113425 2613425 19-Sep-11 16 VIJAY DHAKAD 4000000 179510 4179510 05-Oct-11 17 VIJAY VARGIYA RATHORE 4500000 236345 4736345 27-Sep-11 TOTAL 70000000 3479092 73479092 57. When the amount was recovered on belated dates as against the maturity dates mentioned in the show cause notice issued by Ld. A.O which included principal and interest, they were entered in the books and the cash in hand kept on increasing. Total of principal amount is Rs. 7 crores and Rs. 34,79,097/- being the interest received on various dates and the assessee had this amount as cash in hand which was deposited in the bank on various dates in February 2012 and March, 2012. Apparently there is a direct nexus of the cash so received on mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot and there was remittances during the accounting year for certain sum, the source of which is not indicated then the presumption is that the remittances should have been from the fund which has already suffered tax. It is noteworthy that the Ld. A.O has not rejected the books of accounts and its extracts produced before him. In such situation as held in the case of Tolaram Daga V/s CIT 59 ITR 632 such unchallenged account books are prima facie proof of the correctness of the entries made therein. It is also brought to our notice that during the survey proceedings hundis of Rs. 23.65 crores were found out of which hundis of Rs. 7 crores were in the name of the assessee and hundis of Rs. 16.65 crores in the name of BHRC. Ld. Senior Counsel for the assessee stated that in the scrutiny proceedings u/s 143(3) of the Act carried out in the case of BHRC for Assessment Year 2012-13 the Ld. A.O has accepted the assessee s contention that the deposit in bank account of BHRC are out of the cash in hand as per the books of accounts of BHRC which in turn was built up on account of recovery of amount advanced as hundi loans against which income was surrendered during survey action. Hon ble Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s originated from the cash balance on hand as per the books of account. This cash balance was, in turn, derived from the loans recovered in cash from the individuals to whom the loans were advanced, against which hundis were seized from the assessee during the survey proceedings. 17. The ITAT, being the final authority for fact-finding, has adjudicated the issue comprehensively, taking into account the relevant facts, circumstances, documents/evidence, and judicial rulings. 18. The finding of the ITAT as extracted, stand as matter of fact, with no discernible error of law. Moreover, the department has not highlighted or pointed out any factual inaccuracies or incorrect findings recorded by the ITAT. Consequently, the entitlement of the assessee to the telescopic benefit does not constitute any question of law, as the benefits of telescoping must be judged and allowed based on the facts and circumstances of the case, which has already been thoroughly examined by the ITAT. 19. The benefit of telescoping has been approved in Principal Commissioner of Income-tax v. Aliasgar Anvarali Varteji reported in [2018] 96 taxmann.com 231 (Gujarat) wherein it was held that, when the entire unacco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were given and coupled with the fact that these hundis were seized by the department itself leading to surrender of income in the return shows that the department itself has accepted these hundis as such and the income surrendered there-for and thus now it cannot turnaround and argue that these persons are not genuine. Moreover the argument that source of deposits in bank account is because of Vypam scam has not been proved at any stage by the department as has been observed by the ITAT. It is imperative to note that the Tribunal serves as the final authority for fact-finding, and to challenge such findings, there must be substantial evidence indicating a perverse finding of fact by the Tribunal. In the absence of any such substantial question having been raised to point out perversity in the order of the ITAT, it cannot be asserted that any question of law arises for consideration, let alone a substantial question of law, as envisaged under Section 260A of the Income Tax Act. 22. As per Section 260A of the Income Tax Act, it is apparent that an appeal to this Court from an order of the ITAT is permissible only if a substantial question of law arises for consideration. In Shri Chu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which- (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). (7) [Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.] [Inserted by Act 27 of 1999, Section 87 (w.e.f. 1.6.1999).] 25. The Supreme Court in Santosh Hazari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l that the legal expenses incurred by the Assessee were for protecting its business and that the expenses were incurred after 18th November, 1994. There is no reason to reverse this finding of fact particularly since nothing has been shown to us to conclude that the finding of fact was perverse in any manner whatsoever. That apart, if the finding of fact arrived at by the Tribunal were to be set aside, a specific question regarding a perverse finding of fact ought to have been framed by the High Court. The Revenue did not seek the framing of any such question. In this regard, reference may be made to K. Ravindranathan Nair v. CIT [2001] 247 ITR 178/114 taxman 53 (SC) wherein it was observed: The High Court overlooked the cardinal principle that it is the Tribunal which is the final fact-finding authority. A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no such question before the High Court. Unless and until a fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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