AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 499
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....ilable with the appellant and out of which deposits were made during the year under appeal and balance of Rs. 17,86,646/- has already been surrendered by the appellant during the course of assessment proceeding to buy the peace of mind and to avoid prolonged litigation which is duly verifiable from the cash account of surrendered income. Thus the addition sustained deserves to be deleted in toto. 1.2 That the Ld. CIT(A) has failed to appreciate the fact that amount surrendered in assessment year 2007-08 was in circulation in the books of accounts of the assessee under the head advance from customers and assessee is entitled for benefit of set off of surrendered income towards deposits made during the year and the said amount was finally credited in the books in assessment year 2010-11 therefore benefit of set off of surrendered income be allowed to the appellant and the addition sustained deserves to be deleted. 2. The facts of the case are that the appellant is a partnership firm having authorized dealership of M/s Eicher Tractor and other vehicles and also running a service centre for all types of automobile vehicles besides having sale of spare parts. The return of income wa....
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....the surrendered income of Rs. 65,46,664/- in the year under consideration and addition made by the AO is confirmed. Accordingly, this ground of appeal is dismissed." 4. During the course of hearing, the ld. AR submitted all these grounds of appeal are in relation to non-allowance of benefit of telescoping of Rs. 47,10,000/- claimed by the assessee being the amount of additional income offered for taxation in AY 2007-08. 4.1. It was submitted that during the year under consideration, assessee had shown closing balance of advances received from customers at Rs. 34,62,272/- under the head "Current Liabilities" in Balance sheet as on 31.03.2009. During the course of assessment proceedings, assessee had submitted the complete details of the parties from whom the advances were received. In respect of cash receipts of more than Rs. 20,000/-, enquiries were made by Ld. AO u/s 133(6). In some of the cases, letters were returned by parties, whereas in some cases, confirmations were not reconciled. Accordingly, show cause notice was issued by ld. AO, to furnish confirmations in respect of parties from whom deposits were received. In response to show cause, since assessee was not able to fu....
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....e during the year by grossly ignoring the fact that all such advances of Rs. 47,10,000/- were claimed to have been refunded in A.Y. 2007-08 relevant to A.Y. 2009-10. 4.4 It was further submitted that in the instant case, assessment for A.Y. 2007-08 was completed on 21.11.2009, therefore, income on account of surrender made was shown in cash book on the said date, however, that does not imply that benefit of surrender income has been taken in A.Y. 2010-11. In the case of assessee, as is evident from page 2 para 2 of assessment order for A.Y. 2007-08 (APB 8), the accounts of parties from whom advances were shown to be received, were settled by cash payments in F.Y. 2007-08 itself. Accordingly, when surrender was made of the advance receipts, the subsequent repayment of of the same in cash at Rs. 47,10,000 stood available with the assessee which was utilized by the assessee in the manner he desires. Therefore, assessee's contention that the cash circulated in assessment year under appeal pertains to surrender made during A.Y. 2007-08 is well within law. In support of contention, assessee submitted extract of cash account incorporating cash available with assessee on surrender of inco....
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.... assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. That income, although commonly described as "intangible", is as much a part of his real income as that disclosed by his account books. It has the same concrete existence. It could be available to the assessee as the book profits could be." "The secret profits or undisclosed income of an assessee earned in an earlier assessment year may constitute a fund, even though concealed, from which the assessee may draw subsequently for meeting expenditure or introducing amounts in his account books. But it is quite another thing to say that any part of that fund must necessarily be regarded as the source of unexplained expenditure incurred or of cash credits recorded during a subsequent assessment year. It is a matter for consideration in each case whether the unexplained cash deficits and the cash credits can be reasonably attributed to a pre-existing fund of concealed profits or they are reasonably explained by reference to concealed income earned in that very year. In each case, the true nature of the cash deficit and the cash credit must be ascerta....
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....therefore, is on the assessee to explain satisfactorily with regard to the amounts which have been credited in the books of account by the assessee. The source and the nature of the receipt has to be proved by the assessee and if he fails to prove satisfactorily the source and nature of the amount received, the assessing authority is entitled to draw an inference that the receipt is assessable as income of the assessee." "While explaining the various credits and investments, it may be possible that the assessee may be successful in explaining some of them but that does not by itself mean that the entire investments has to be considered as explained. Even lapse of time or inability of the assessee would not make the unexplained investment an explained one. It is each and every individual entry on which the mind has to be applied by the taxing authority when an explanation is offered by the assessee. If no explanation has been offered in respect of a particular entry, the taxing authority will be justified in coming to the conclusion that the said investment is unexplained. It is not the totality of the credit entries which are to be allowed or to be disallowed. This work has to be....
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....posited the cash in different names in the financial year relevant to AY 2007-08. In our view, none of the objections raised by the AO are relevant. What is relevant to determine is whether assessee was in possession of sufficient cash out of surrendered income at the beginning of the current financial year or not. In this regard, the assessee has contended that the cash circulated in assessment year under appeal pertains to surrender made during A.Y. 2007-08 is well within law and in support of its contention, the assessee has submitted extract of cash account incorporating cash available with assessee on surrender of income in A.Y. 2007-08 and its effect in A.Y. 2008-09 and further circulation in A.Y. 2009-10. However, we donot find any finding given by the AO in response to the said contention raised by the ld AR and the same remain uncontroverted. 12. Now coming to the findings of the ld CIT(A), he has stated that "there is no correlation between the amount surrendered in A.Y. 2007-08 and bogus credits/deposits shown in A.Y. 2009-10. The amount surrendered in A.Y. 2007-08 of Rs. 47,10,000/- is represented by the various assets in the balance sheet for A.Y. 2007-08. It has not ....