TaxTMI 
TaxTMI 
2020 (4) TMI 900
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.... in case of assessee in past assessment year as well as for the assessment year under consideration. 4. The addition made at Rs. 2,19,96,000/- without giving benefit of telescoping is unjustified, unwarranted and excessive. 5. The learned A.O. erred in not setting off the addition made in the assessment framed at Rs. 2,25,42,200/- with the net loss assessed in assessment framed at Rs. 69,42,148/-. 6. The learned CIT(A) erred in upholding the action of A.O. in not setting off of income with loss determined in assessment framed. 7. The assessee denies liability to pay interest under section 234A, 234B and234C of IT. Act 1961. Without prejudice, levy of interest under section 234A, 234B and 234C of IT. Act 1961 is unjustified, unwarranted and excessive. 8. Any other ground shall be prayed at the time of hearing." 3. The issue raised in ground No.1 to 4 is against the confirmation of addition of Rs. 2,19,96,000/- by Ld. CIT(A) as made by the AO under section 69C of the Act by not allowing the telescoping of the said addition out of the available of funds with assessee. The facts in brief are that the assessee is developing a township know....
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.... 54620000 26600000 7740000 12900000 200000000 For assessment year 2012-13 the quantum was estimated at Rs. 5,46,20,000/-. Since the work was in progress in respect of the project undertaken by the assessee, the cash received of Rs. 20 crore by way of over invoicing was reduced from work in progress without treating the same as assessable income in the hands of the assessee as the cost inflated was embedded in and was part of the work in progress. During the course of search an Excel sheet titled, cash expenses up to 31.10.2014 was found from Shri Sanjay Kothari. However, no corroborative evidences were found whether the assessee had incurred theses expenses actually or not. As per the said excel sheets the cash expenses up to 31.10.2014 were Rs. 6.03 crores and after considering certain notings recorded in the books of accounts of the assessee aggregating to 75.37 lakhs, the AO came to the conclusion that Rs. 528.02 lakhs were not recorded in the books of accounts and are liable to be assessed under section 69C of the Act as unexplained in various sheets. However, out of the unrecorded expenses of Rs. 528.02 crores, Rs. 2,19,96,000/- p....
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....bstantiate the availability of cash on a particular day to explain the various expenses. There cannot be general and blanket linking of cash generated through over voicing with certain specific expenses on particular days. Assessee has not done any exercise to explain the availability of the cash to explain the sources of the expenses. In view of this there is no anomaly in the orders of assessing officer, wherein, a separate addition of Rs. 2,19,96,000/- and Rs. 89,83,000/- is made on account of unexplained expenditure under section 69C. 5.1.2. Law Relating to Telescoping : - Neither in assessment proceedings nor in appeal proceedings, assessee has submitted any cash flow chart to explain and show availability of cash (generated through over-invoicing) for various expenses, details of which were maintained by Shri Sanjay Kothari. Out of total such expenses Rs. 6.03 crores, assessee could verify an amount of Rs. 75.37 lakhs only with books of accounts. For remaining Rs. 5.28 crores, no sources could be explained. For claiming the benefit of telescoping, it is the bounden duty of the appellant to furnish relevant details and documentary evidences. Hence, the claim ....
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.... The Ld. A.R. submitted that at the time of search no corroborative evidences were found whether these expenses were actually incurred on the project. The Ld. A.R. also submitted that if at all it is presumed that these expenses were incurred for the purpose of business, the said expenses were incurred out of the cash generated through over invoicing, the details whereof are given year wise before the AO and the cash generation through over invoicing was Rs. 5,46,20,000/- during the current year. The Ld. A.R., therefore, submitted that the benefit of telescoping should be allowed to the assessee as it has been maintained by Shri Sanjay Kothari all throughout that the cash was generated through over invoicing. It was also admitted by Shri Sanjay Kothari in his statement recorded under section 132(4) of the Act that the source of cash for incurring expenses was out of over invoicing of sub contracts and land purchases. The Ld. A.R. also referred to para 8.1 of the assessment order and submitted that there is a direct linkage and nexus between cash generation and expenses incurred. The Ld. A.R. also submitted before the Bench that neither the search party nor the AO during the assessm....
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.... assessee had admitted the generation of cash through over invoicing in sub contracts and also in land purchases but the fact remains that nowhere it has ever been proved by the assessee that the expenses incurred of Rs. 2,19,96,000/- were incurred out of the said cash generated during the year. The Ld. D.R., therefore, relied heavily on the order of Ld. CIT(A)and prayed before the Bench that the ground Nos.1 to 4 raised by the assessee deserved dismissal. 7. We have heard the rival submissions of both the parties and perused the material on record including the various case laws cited during the course of hearing. The undisputed facts are that the assessee is engaged in the business of developing township in Nagpur which was in progress and whatever expenditure was incurred on the said project was shown as work in progress till 31.03.2015. Consequently, during the year assessee has not shown any income from the said project. The assessee has also received some advances from customers by way of cash/cheques which was shown as advances from the customers in the balance sheet. A search was conducted on 19.03.2015 on the assessee and its related entities including promoters and dir....
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....ngible addition made in the earlier year is as good as other disclosed income of the assessee and it would be treated as available for investment from the year in which such addition was made. The Hon'ble Bombay High Court in the case of M/s. CIT vs. Gulani Brothers (supra) has observed as under: "21. When it was disturbed and interfered with, the Tribunal found that there was indeed a justification for such interference. If the unaccounted expenditure is determined, then, necessarily the question which would arise for consideration before the Tribunal is whether the Assessing Officer was justified in making addition under Section 69C for the years under consideration. The Tribunal, in para 39 of the order under challenge, found that the explanation as derived from the records and placed by both can be traced to the 'on money1 received at the time of booking/sale of shops. The statement of the senior partner is referred. The senior partner admitted that the sums have been received as 'on money1 and at the stage aforesaid. Therefore, both the amounts, namely the 'on money1 as well as the unexplained 'expenditure cannot be brought to tax, according to the Tri....
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....ection 115BBE is actually a clarificatory section and law was already 1 accordingly propounded by High Courts. d) Thus A.O. has correctly applied the provisions of law and thus rightly rejected the request of assessee. 5.2.2 In view of the above facts, it is held that the AO is right and there is no anomaly in the orders of AO. Hence ground No. 2 of the assessee is dismissed for both the years." 9. The facts in brief are that AO assessed the loss at Rs. 69.42 lakhs for assessment year under consideration. The assessee had carried forward unabsorbed business losses and unabsorbed depreciation of Rs. 98.34 lakhs and Rs. 8.80 lakhs respectively. The total business loss and depreciation loss available with the assessee for setting off was Rs. 176.56 lakhs against the assessed income, if any. The AO did not allow the setting off the business loss against the addition made under section 69C of the Act on the ground that the addition under section 69C of the Act are head less addition and does not follow under any specific head by following the decision of Hon'ble Gujarat High Court in the case of Fakir Chand Haji HasariVs CIT (2001) 247 ITR 290 Guj. HC. 10. The Ld....
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....to any assessment years prior to A.Y. 2017-18 and the same ratio has been laid down in the various decisions relied upon by the assessee. Accordingly, we hold that whatever income is assessed after giving effect to ITAT order is subject to set off against the loss/depreciation of the current year and also brought forward loss/brought forward depreciation of the earlier year. The grounds no. 5 to 7 are allowed. 14. The issue raised in ground No.1 to 4 in ITA No.1294/Mum/2019, ground No.3 to 6 in ITA No.1295/Mum/2019 and ground No.3 to 6 in ITA No.1296/Mum/2019 is as regards not allowing the benefit of telescoping out of the cash generated through over invoicing by the assessee which has been decided by us in ground No.1 to 4 in ITA No.1293/Mum/2019 A.Y. 2012-13, wherein we have held that assessee is entitled to the benefit of telescoping and the appeal of the assessee was allowed on this issue. Following the decision in ITA No.1293/Mum/2019, we set aside the order of Ld. CIT(A) on this issue and direct the AO to allow the benefit of telescoping to the assessee. Resultantly, the addition made under section 69C of the Act is ordered to be deleted. The grounds raised by the assessee....
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....park was at the development stage and there was work in progress at the close of the accounting year and consequently no income was offered as no part of the project is sold/transferred and whatever advances were received from the customers were shown as liability in the balance sheet as advance from customers and this position has been accepted by the AO. It was also shown to the AO during the course of assessment proceedings that the cash advances received from customers were duly recorded in the books of accounts and necessary evidences were also produced in the form of confirmations/ledger accounts. It was also stated that since these cash transactions were duly recorded in the books of accounts of the assessee there was no question of on money being received on the sale of land in para 8.9. The AO has not disputed that the receipts issued by the assessee for on money has not been accounted for in the books of accounts. Therefore, assessee contended that no addition can be made in respect of on money when the transactions were duly recorded in the books of accounts. The assessee also filed before the AO, confirmations from the customers and also submitted that since the assesse....