TaxTMI 
TaxTMI 
2026 (7) TMI 1105
X X X X Extracts X X X X
X X X X Extracts X X X X
....aw and in the facts and circumstances of the case, the ITAT was right in confirming the addition of Rs. 26,21,100 on account of unexplained cash receipts? 3. Whether, in law and in the facts and circumstances of the case the ITAT was right in holding that the appellant was not to be allowed the benefit of telescoping when the said issue was not there before the ITAT for consideration either by the appellant or the respondent especially when the department relies on the order of the CIT(A) who has given the benefit of telescoping ? 4. Whether in law and in the facts and circumstances of the case, the ITAT was right in upholding the addition of Rs. 82,567 as unexplained investment in FDR?" Tax Appeal No. 1692 of 2008 : "1. Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the total undisclosed investment is Rs. 55.868 lac as against 30 lac declared by the appellant? 2. Whether, in law and in the facts and circumstances of the case, the ITAT was right in holding that the appellant was not to be allowed the benefit of telescoping when the said issue was not there before the ITAT for consider....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcumstances of the case as well as the reply of the assessee including the affidavit and page No. 64 of the loose papers found and seized during the search, which was an application from the assessee's wife for procuring Fire Insurance of the house and furniture and fixture including decoration therein, given to New India Insurance Company Limited. Considering such application for insurance, wherein, the house was valued at Rs. 1 Crore out of which value of Rs. 50 Lacs was claimed to be on account of the construction of the building and another Rs. 50 Lacs for furniture, fixture and decoration, the Assessing Officer considered the investment in house at Rs. 1 Crore and consequently, after allowing the assessee benefit of Rs. 55,80,692/-, i.e. Rs. 46,80,692/-, investment in the house, plus Rs. 9,00,000, for purchase of the old building, computed the undisclosed income in building and furniture and fixture and decoration at Rs. 44.20 Lacs. 3.5. The Assessing Officer made an addition of Rs. 26.21 Lacs on account of unaccounted cash receipts as it was revealed during the course of search that the Authorities have seized a diary from the possession of the assessee's one of the truste....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the search, whereas the Revenue preferred an Appeal before the Tribunal for reduction of the undisclosed income of Rs. 44.20 Lacs to Rs. 22.10 Lacs and granting benefit of telescoping. 3.10. The Tribunal, by the impugned order dated 8th December 2006 after considering the submissions of the parties and facts and circumstances of the case, partly allowed the Appeal of the Revenue sustaining addition of Rs. 26.21 Lacs and rejected the plea of the assessee of telescoping and further sustained unexplained investment in house to Rs. 55.86 Lacs as under: "18. We have considered the rival submissions, facts and circumstances oi the case as well as the evidentiary value of application filed by the assessee's wife to the New India Assurance Co. Ltd. for securing Insurance of the house including furniture, fixture and decoration therein and also the fact that investment of Rs. 9 lacs claimed by the assessee as having been made in purchase of old bungalow had also not been recorded in the assessee's books of account (because assessee has not furnished any evidence), are of the opinion that the value of building i.e. ground/first/second floors at Rs. 50 lacs and of a fur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed to written the same on the morning of next day. In the alternatively, it was submitted that this cash should be considered as having been invested in the house and may be telescoped against undisclosed income on account of undisclosed investment; in house furniture / fixture / decoration, etc. 23. The Id. DR, on the other hand, has supported the order of the CIT (Appeals). 24. After careful consideration of the rival submissions and the facts and circumstances of the case and the fact that details in question shows the cash having been given to various persons other than the assessee and also to jewelers and the assessee having not established that cash paid to other than the assessee had come to the assessee, it is not possible to consider the same as having been invested in house as claimed by the assessee and, there, the same cannot be telescoped. 25. So far as assessee's claim that these were not receipts by the assessee, we are, again, of the opinion that the assessee has not furnished any evidence, in this regard and the contents of the Diary having been admitted by the assessee, it is not possible to accept the assessee's plea. Coming t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the affidavit dated 28th September, 2003, adding Rs. 9 Lacs for purchase of the land and the old bungalow, and total investment would be Rs. 55,80,692/-, as against that, the Assessing Officer considered the value of the bungalow at Rs. 1 Crore on the basis of the application for insurance, as per page No. 64 of the seized loose papers. It was therefore submitted that the Assessing Officer has made addition to the tune of Rs. 44.20 Lacs (Rs. 1 Core-Rs. 55,86,000/-) as undisclosed income without any reason on wrong premises. 4.4. It was further submitted that the assessee has already shown Rs.46.80 Lacs plus Rs. 9 Lacs in the books of accounts and therefore, considering the estimated cost of the new residential bungalow at Rs. 70 Lacs, as per the paragraph No.4 of the affidavit of the assessee filed during the course of assessment, undisclosed income would be Rs. 14.5 Lacs, which was already disclosed by the assessee in the return of income and therefore, no addition could have been made. It was therefore submitted that both the Assessing Officer and CIT (Appeals) have erred in holding that an amount of Rs. 9 Lacs, being undisclosed investment by the assessee, should be added to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and Rs. 86,000/- and the third FDR was in the name of the son of the assessee for an amount of Rs. 1,50,000/-. It was pointed out that the Assessing Officer, however, made an addition of Rs. 3,87,000/-on the basis of the three FDRs whereas, CIT (Appeals) deleted the addition regarding the FDR of Rs. 1,50,000/-, which was in the name of the son of the assessee and held that the amount of Fixed Deposit Receipts, which was in the name of the son cannot be added in the income of the assessee. 4.9. Learned advocate Mr. B.S. Soparkar submitted that so far as FDR of Rs. 82,567/-is concerned, it is the maturity value of the FDR and not the initial value and not the amount invested by the assessee as the amount invested was only Rs. 40,000/- and therefore, the CIT (Appeals) and the Tribunal could not have confirmed the addition of Rs. 82,567/-, considering the maturity value of the FDR as unexplained investment in the deemed income of the assessee but only the initial investment value of the FDR ought to have been considered by the Assessing Officer. 5.1. On the other hand, learned Senior Standing Counsel Mr. Karan Sanghani for the respondent placed reliance on the statement of the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anted to the assessee. Moreover, in the statement of the assessee recorded on 20th September 2001 under Section 132(4) of the Act, in reply to question No. 10, the assessee has stated that he had purchased the plot for residential house before four years to the date of statement whereas, the undisclosed cash was found during the search and therefore, it cannot be said that the same was made during the year when search was conducted. 7. Therefore, the Tribunal was justified in not granting the telescoping to the assessee with regard to the addition made of undisclosed cash and unexplained investment in residential house property. 8. It is also pertinent to note that the Tribunal has adopted basis for the value of the house property of Rs. 85 Lacs as against Rs. 70 Lacs, admitted by the assessee in the statement dated 12th November 2001 and in the affidavit filed during the course of assessment proceedings by considering addition of Rs. 22.10 lacs made by CIT(A) and investment recorded in the books of accounts, however, the Tribunal justification for adopting such value for the residential house property appears to be arbitrary and contrary to evidence on record. On one hand, t....