LT JAWAHARLAL CHANDULAL SHAH,,SATARA vs. DEPUTY COMMISSIONER OF INCOME TAX,,

The assessee has raised the following grounds of appeal:- 1) On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the addition made by the A.O. of

The issue raised in the present appeal is against addition of ₹ 3,15,008/- declared in survey action. The assessee has raised the issue that once addition of ₹ 4,86,212/- is made in the hands of assessee, then source of addition of ₹ 3,15,008/- stands explained. This was the plea in respect of addition of ₹ 2,21,101/-, ₹ 20,806/- and ₹ 73,101/-, assessee claims that telescopic effect has to be allowed.

Briefly, in the facts of the case, the assessee was proprietor of M/s. Jawahar Chandulal & Company and engaged in selling diesel, oil and petroleum under the name and style of M/s. Jawaharlal Chandulal & Co. at Vaduj, Tal. Khatav, Dist. Satara. Survey action under section 133A of the Act was conducted at the business premises of assessee on 21.02.2008. During the course of survey proceedings, survey team came across various

During the course of survey, assessee offered sum of ₹ 8,01,220/- as additional income for the year under consideration. The assessee furnished return of income declaring total income of ₹ 11,11,130/- after the survey. On going through return of income, the Assessing Officer noted that the assessee had not included the amount of excess cash found, excess stock and unexplained expenditure as his additional income and had only offered the amount of unrecorded income of ₹ 4,86,212/- to his Profit and Loss Account. The assessee explained that excess cash of ₹ 2,21,101/-, excess stock of ₹ 20,806/- and unexplained expenditure of ₹ 73,101/-, totaling ₹ 3,15,008/- was taken care of by the income offered of ₹ 4,86,212/-. The Assessing Officer was of the view that where the assessee had offered additional income during the course of survey voluntarily, then he could not go back on the same. The explanation of assessee was held to be an afterthought with a view to evade the payment of due taxes. The Assessing Officer thus, held that source of unexplained items were not explained at the time of survey and even at the time of assessment proceedings and the same had to be added as deemed income of the assessee. The Assessing Officer thus, made an addition of ₹ 3,15,008/-.

The CIT(A) upheld the said addition in view of the assessee having admitted to the voluntary disclosure made during the course of survey.

The assessee is in appeal against the order of CIT(A).

The learned Authorized Representative for the assessee pointed out that the assessee is deceased and the legal heir has filed the present appeal. He further referred to the disclosure made during the course of survey and pointed out that yes, sum of ₹ 4,86,212/- was offered to tax and other three items totaling ₹ 3,15,008/-, offer was retracted on the ground of telescoping.

The learned Departmental Representative for the Revenue strongly objected to the submissions of learned Authorized Representative for the assessee and pointed out that what has to be seen is how the items were capitalized in the books of account after survey.

We have heard the rival contentions and perused the record. In the facts of the present case, survey under section 133A of the Act was carried out at the business premises of assessee. During the course of survey, various discrepancies were found and the assessee in all offered sum of ₹ 8,01,220/- as his additional income. However, in the return of income, the assessee offered sum of ₹ 4,86,212/- as income which was originally offered as income from Pokland Earthmover. In respect of excess cash found of ₹ 2,21,101/-, unexplained expenditure of ₹ 73,101/- and excess stock of ₹ 20,806/-, the assessee did not offer as additional income and claimed that telescoping effect of income offered in the hands of assessee should be given against said items totaling ₹ 3,15,008/-. We find merit in the plea of assessee that once the assessee has already offered sum of ₹ 4,86,212/- as its income, then the said funds are available with the assessee for making investments in various other

In the result, appeal of assessee is allowed.