Telescoping requires source-and-period nexus; property investment and fixed deposits must be assessed on actual unaccounted investment.

Telescoping of unexplained cash receipts against undisclosed investment requires a demonstrated nexus in both source and period; where the residential plot acquisition predates the seized diary entries, the set-off is unavailable. Undisclosed investment in residential property should be computed from substantiated actual investment, rather than an unsupported insurance estimate, after accounting for recorded expenditure. Unexplained cash receipts reflected in diary entries may be added where factual findings support their treatment as unaccounted receipts. Fixed-deposit additions must reflect the actual unaccounted amount invested, not the later maturity value of the deposits.

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Issues: (i) Whether the undisclosed investment in the residential house was correctly determined; (ii) whether the addition for unexplained cash receipts was sustainable; (iii) whether unexplained cash receipts could be telescoped against undisclosed investment in the residential house; (iv) whether addition for fixed deposit receipts could be based on their maturity value rather than the amount invested.

Issue (i): Whether the undisclosed investment in the residential house was correctly determined.

Analysis: The adoption of an investment value of Rs. 85 lakh was arbitrary and unsupported by the evidence. The insurance proposal was only an estimate, while the assessee's disclosed estimated value of Rs. 70 lakh was accepted. Since Rs. 46,80,692 was recorded in the books and the claimed Rs. 9 lakh expenditure on the old land and building was not substantiated, the unexplained investment was to be computed at Rs. 23,19,308.

Conclusion: The house-property addition was reduced to Rs. 23,19,308, in favour of the assessee.

Issue (ii): Whether the addition for unexplained cash receipts was sustainable.

Analysis: The addition rested on concurrent factual findings, and no basis was established for interference with the finding that the diary entries represented unexplained cash receipts.

Conclusion: The addition of Rs. 26,21,000 for unexplained cash receipts was sustained, against the assessee.

Issue (iii): Whether unexplained cash receipts could be telescoped against undisclosed investment in the residential house.

Analysis: No material established that the house investment and the cash reflected in the seized diary related to the same period. The acquisition of the residential plot pre-dated the search by several years, defeating the claimed nexus necessary for telescoping.

Conclusion: Telescoping was rightly denied, against the assessee.

Issue (iv): Whether addition for fixed deposit receipts could be based on their maturity value rather than the amount invested.

Analysis: The seized material showed unaccounted deposits aggregating Rs. 40,665. The figure of Rs. 82,567 represented the maturity value and not the actual unexplained investment.

Conclusion: The FDR addition was restricted to Rs. 40,665, in favour of the assessee.

Final Conclusion: The undisclosed house investment and FDR additions were reduced, while the unexplained cash-receipts addition and denial of telescoping were maintained.

Ratio Decidendi: Telescoping of unexplained income requires a demonstrated nexus in source and period between the income and the investment; an unexplained investment must be assessed on the actual amount invested, not on subsequent maturity value.

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