PRINCIPAL COMMISSIOINER OF INCOME TAX 6 vs. ALIASGAR ANVARALII VARTEJI

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) C/TAXAP/827/2018 JUDGMENT [1.0] Feeling aggrieved and dissatisfied with the impugned order passed by the learned Income Tax Appellate Tribunal, Ahmedabad “A” Bench (hereinafter referred to as “the learned Tribunal”) dated 12/02/2018 in IT(SS) No.108/AHD/2012 for the Assessment Year 2009-10 by which the learned Tribunal has dismissed the said Appeal preferred by the revenue and has confirmed the order passed by the learned CIT(A) allowing the benefit of telescoping of the original disclosure made against the negative cash balance in the books of accounts, revenue has preferred the present Tax Appeal with the following question of law; “Whether the Appellate Tribunal has erred in law and on facts in allowing benefit of telescoping the original disclosure made against negative cash balance in books of accounts which was never a part of the disclosure made by the assessee in the return of income especially when F.D.R. are not part of books of accounts of the assessee?” [2.0] A search and seizure under Section 132 of the Income Tax Act was carried out in the case of Mahek Group of Bhavnagar on 05/02/2009. A warrant of authorization under Section 132 of the Income Tax Act was also issued in the case of the assessee. The assessee filed the return of income for the year under consideration declaring the total income of Rs.3,68,18,066/-. During the course of assessment, the learned Assessing Officer noticed the negative cash balance in the cash book for the period between 01/04/2008 to 22/09/2008 and the learned Assessing Officer noticed that the C/TAXAP/827/2018 JUDGMENT maximum negative balance during the said period was (-)Rs.2,27,86,693/-. The assessee was asked to explain the reasons of the said negative balance. The assessee replied to the same, which was accepted by the learned Assessing Officer, and therefore, the learned Assessing Officer ultimately made the addition of peak of negative cash of Rs.2,27,86,693/- as undisclosed investment. At this stage, it is required to be noted that as such during the search the assessee made the disclosure of unaccounted income /assets of Rs.86 lakhs, which was reflected in the return of income filed by the Group. Feeling aggrieved and dissatisfied with the order passed by the learned Assessing Officer making the addition of Rs.2,27,86,693/- as undisclosed investment, the assessee preferred Appeal before the learned CIT(A). Learned CIT(A) allowed the said Appeal and deleted the aforesaid addition of Rs.2,27,86,693/- on account of peak of negative cash. The order passed by the learned CIT(A) was the subject matter of Appeal before the learned Tribunal at the instance of the revenue. By the impugned order, learned Tribunal has dismissed the said Appeal preferred by the revenue and has confirmed the order passed by the learned CIT(A) deleting the addition of Rs.2,27,86,693/- on account of peak of negative cash. Feeling aggrieved and dissatisfied with the impugned order, revenue has preferred the present Tax Appeal with the aforesaid proposed question of law. [3.0]

We have heard Mrs. Mauna Bhatt, learned advocate appearing on behalf of the revenue. At the outset, it is required to be noted that the learned Assessing Officer made the addition of Rs.2,27,86,693/- on account of peak of negative cash in the books of accounts. However, the assessee C/TAXAP/827/2018 JUDGMENT explained the same and submitted that such negative balance was on account of payment made out of the unaccounted income, and therefore, it was submitted that when the entire unaccounted income found during the search was offered as a part of the overall disclosure, the same cannot be added in the total income as undisclosed investment. It is required to be noted that the learned Tribunal has rightly observed that such negative balance was made on unaccounted income and when necessary entries were made in the books of accounts, it is bound to result in negative cash balance. We are in complete agreement with the view taken by the learned Tribunal. Considering the aforesaid facts and circumstances of the case and more particularly when the entire unaccounted income, which was found during the search, was offered as part of overall disclosure, learned Tribunal has rightly held that the assessee shall be entitled to the benefit of telescoping of negative cash balance against the disclosure made. Under the circumstances, the learned Tribunal has rightly allowed the assessee the benefit of telescoping the original disclosure made against the negative balance in the books of accounts. No substantial question of law arises.

Under the circumstances, present Tax Appeal deserves to be dismissed and is accordingly dismissed. (M.R. SHAH, J.) (A.Y. KOGJE, J.) siji