AI Drafter 
TaxTMI 
TaxTMI 
2024 (6) TMI 1063
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....fied 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 and cogent evidence to establish the claim regarding source of cash?" 3. Learned Senior Counsel for the respondent has argued that the case does not involve any substantial question of law and the substantial question of law framed on 12.09.2021 is in fact not as such and is merely factual in nature. The Senior counsel has straight away drawn the attention of this Court to paras 55 to 58 of the ITAT's order to buttress the fact that no substantial question of law is involved in the case. 4. The Counsel for the appellant has on the other hand relied on the findings recorded by the CIT(A) to submit that the Tribunal has not taken into consideration the finding of CIT(A) before d....
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....ding. 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 from source which has already been offered to tax during the course of action u/s 133A and in subsequent Income tax return filed. Consequently, receiving the money in cash and deposit of the same in bank account is nothing but an application of an already offered income and counting the same again will amount to double counting and taxation of the same income. Relying on various judgments the respondent pointed out to the Assessing officer that he is entitled to telescopic set off of unexplained income surrendered as income against its subsequent application. 11. Thereafter the Assessing officer rejected the respondent's contention and vide assessment ord....
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....der 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 used in earning interest income by way of giving short term advance on hundis. Such hundis are normally issued through brokers. Only the name of person receiving the money, his signature, amount given as advance, rate of interest, date of entering into the hundi agreement and the maturity date of receiving the money are provided. When the assessee shows the original hundi he receives the principal and interest. The assessee had surrendered his income from other source as unexplained money which was not recorded in the books of accounts and the assessee failed to offer any explanation about the nature and source of acquisition of these u....
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....000 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 maturity of hundis with the cash deposited in the bank account. Whether the assessee is entitled to the telescoping benefit of the surrendered income with the cash deposited in the bank account needs to be analysed in light of following judicial pronouncemen....
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....nd 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 High Court of Punjab & Haryana in the case of Jaswant Rai (1977) 107 ITR 477 has held that "it was not open to department to adopt different yard sticks in the case of different assesses....
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....o 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 unaccounted income discovered during the search was included in the overall disclosure, and the negative balance in the books of account was due to payments made fr....
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.... 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 Chunilal V. Mehta and Sons Ltd. v. Century Spinning and Mfg. Co. Ltd., reported in AIR 1962 SC 1314, Constitution Bench of the Supreme Court ....
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....nts 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 Sant....
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.... counsel for the Revenue. There is a clear finding of fact by the Tribunal 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 ....