Asst.CIT., Circle-1, Warangal V. M/s Biswajit Roy, Warangal

ITA 325/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74473 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JEEVAN LAL LAVADIYA
• Keywords: Unexplained cash credit; Unexplained expenditure; Business income; Depreciation; Income from undisclosed sources; Onus to prove
• Section: 44AD; 32; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 325/HYD/2013 ASSESSMENT YEAR 2009(10 THE ASST. CIT CIRCLE(1 WARANGAL VS. M/S. BISWAJIT ROY WARANGAL PAN: ALCPR6723L [APPELLANT] [RESPONDENT] APPELLANT BY: SRI JEEVAN LAL LAVADIYA RESPONDENT BY: NONE DATE OF HEARING: 21.01.2014 DATE OF PRONOUNCEMENT: 21.01.2014 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF THE CIT(A)(VI, HYDERABAD DATED 18.11.2012 FOR ASSESSMENT YEAR 2009(10. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) HAS ERRED BOTH IN FACTS AND IN LAW IN GIVING RELIEF INSTEAD OF APPRECIATING THAT FACT THAT THE INCOME ESTIMATED AT 8% BY THE AO WAS CORRECT. 2. WHETHER THE CIT(A) WAS CORRECT IN NOT CONSIDERING THE DECISION OF ITAT IN THE CASE OF M/S. TEJA CONSTRUCTION, WHEREIN INCOME FROM SUB(CONTRACT WORK WAS ESTIMATED AT 8% OF THE NET RECEIPTS AFTER CONSIDERING THE DEDUCTIONS. ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 2 3. THE CIT(A) IS ERRED IN DELETING THE ADDITION OF RS. 26,50,535 ON THE GROUND THAT ONCE THE INCOME ESTIMATED, THERE IS NO SCOPE FOR FURTHER ADDITION. SUNDRY CREDITORS ARE TO BE ASSESSED AS INCOME FROM OTHER SOURCES BUT NOT AS BUSINESS INCOME IF THEY ARE NOT PROVED GENUINE. 3. BRIEF FACTS OF THE ISSUE RELATING TO GROUND NOS. 1 AND 2 ARE THAT THE ASSESSEE IS ENGAGED IN EXECUTION OF CIVIL CONTRACT WORKS. IN THE COURSE OF ASSESSMENT IN SPITE OF GIV ING OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT, TH E ASSESSEE NOT PRODUCED THE SAME. BEING SO, THE AO ESTIMATED T HE INCOME OF THE ASSESSEE AT 8% OF GROSS RECEIPTS OF R S. 2,41,31,686. THE INCOME FROM CONTRACT WORKS WAS WORKED OUT AT RS . 19,30,535. THE ASSESSEE CARRIED ON APPEAL ON THIS ISSUE TO THE CIT(A). THE CIT(A) DIRECTED THE AO TO ESTIMATE THE INCOME FROM CONTRACT RECEIPTS AT 7% ON THE TURNOVER OF RS. 1,58 ,21,848 AND DIRECTED THE AO TO EXCLUDE THE SEIGNIORAGE CHARGES FROM CONTRACT RECEIPTS AT RS. 83,09,838. AGAINST THIS , THE REVENUE IS IN APPEAL BEFORE US. 4. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD THE LEARNED DR. AFTER HEARING THE LEARNED DR, WE FIND THIS ISSUE CAME BEFORE THIS TRIBUNAL IN THE CASE OF M/S. C. ES WARA REDDY & CO. VS. ACIT IN ITA NOS. 668 & 669/HYD/2009 FOR A.Y S. 2003(04 AND 2004(05, RESPECTIVELY. THE TRIBUNAL VIDE ORDER DATED 31 ST JANUARY, 2011 HELD AS FOLLOWS: '6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ADM ITTEDLY THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNT AND VOUCHERS . ON ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 3 EXAMINATION OF THE BOOKS OF ACCOUNT WITH REFERENCE TO THE VOUCHER PRODUCED, THE ASSESSING OFFICER FOUND THAT THE VOUCHER DOES NOT TALLY WITH THE CASHBOOK. WHEN THE VOUCHER DOES NOT TALLY WITH CASHBOOK, IN OUR OPINION, THE ASSESSEE H AS NOT MAINTAINED THE BOOKS OF ACCOUNT PROPERLY. THEREFOR E, THE BOOK RESULT WILL NOT REFLECT THE CORRECT PROFIT OF THE A SSESSEE. IN THESE CIRCUMSTANCES, IN OUR OPINION, THE ASSESSING OFFICE R HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNT. THEREFORE, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY IN RE JECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE PROFIT. 7. NOW COMING TO THE ESTIMATION OF PROFIT. THE AS SESSING OFFICER ESTIMATED THE PROFIT AT 12.5%. HOWEVER, TH E CIT(A) RESTRICTED THE SAME TO 8% IN RESPECT OF MAIN CONTRA CT AND 5% ON SUB-CONTRACT. WHEN THE BOOKS OF ACCOUNT WERE RE JECTED THE ONLY METHOD AVAILABLE TO THE ASSESSING OFFICER IS T O ESTIMATE THE PROFIT. THE PROFIT RATIO CANNOT BE A CONSTANT FACT OR FOR EACH AND EVERY YEAR. IN OTHER WORDS, PROFIT RATIO WOULD FLUCTUATE DEPENDING UPON VARIOUS FACTORS SUCH AS THE PLACE OF EXECUTION OF CONTRACT, AVAILABILITY OF RAW MATERIAL, LABOUR A ND ASSESSEE'S OWN FUNDS, ETC. THEREFORE, FOR THE PURPOSE OF ESTI MATING THE PROFIT, THE LOWER AUTHORITIES MAY TAKE INTO CONSIDE RATION THE PROFIT RATIO OF THE SIMILARLY PLACED TRADERS IN THE SAME LOCALITY AND OTHER FACTORS SUCH AS AVAILABILITY OF LABOUR, D EMAND IN THE MARKET, ETC., AS DISCUSSED ABOVE. THEREFORE, THE P ROFIT RATIO OF THE OTHER ASSESSEES IN THAT LOCALITY MAY BE ONE OF THE FACTORS TO BE TAKEN INTO CONSIDERATION. HOWEVER, THAT CANNOT BE THE SOLE CRITERIA FOR FIXING THE PROFIT RATIO FROM THE CONTR ACT BUSINESS. BY KEEPING THIS FACTUAL SITUATION IN MIND, LET US N OW EXAMINE WHETHER THE ESTIMATION OF PROFIT BY THE CIT(A) AT 8 % ON MAIN CONTRACT AND 5% ON SUB CONTRACT IS JUSTIFIED OR NOT . 8. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THI S TRIBUNAL IN THE CASE OF KRISHNAMOHAN CONSTRUCTIONS (SUPRA), K.C. REDDY ASSOCIATES (SUPRA), SRI SRINIVASA CONSTR UCTIONS (SUPRA) AND M. BHASKAR REDDY (SUPRA). NO DOUBT THI S TRIBUNAL ESTIMATED THE PROFIT FROM 12.5% TO 8% DEPENDING UPO N THE FACTUAL SITUATION. THE LEARNED DR MADE AN ATTEMPT TO DISTINGUISH THE ORDER OF THIS TRIBUNAL IN M. BHASKA R REDDY (SUPRA) ON THE GROUND THAT THE TURNOVER IS ONLY RS. 54,40,420. IT IS A WELL KNOWN FACT THAT WHENEVER THE TURNOVER INCREASES THE PROFIT RATIO WOULD GO DOWN. MERELY BECAUSE THE TUR NOVER INCREASES THE PROFIT MAY NOT GO UP. THEREFORE, WE DO NOT FIND ANY JUSTIFICATION IN THE DISTINCTION MADE BY THE LE ARNED DR TO SHOW THAT THIS TRIBUNAL ESTIMATED THE PROFIT AT 8% IN THE CASE OF M. BHASKAR REDDY (SUPRA) ONLY BECAUSE THE TURNOVER WAS RS. 51,40,420. A BARE READING OF THE ORDER OF THIS TRI BUNAL IN M. BHASKAR REDDY (SUPRA) CLEARLY SHOWS THAT THIS TRIBU NAL AFTER CONSIDERING THE JUDGEMENT OF THE APEX COURT IN C. V ELUKUTTY, ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 4 60 ITR 239 AND THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN ARIHANT BUILDERS PVT. LTD. VS. ACIT, 29 1 ITR 41 (SB) AND BY TAKING A CLUE FROM SECTION 44AD OF I.T. ACT THE PROFIT WAS ESTIMATED AT 8%. ADMITTEDLY SECTION 44A D WOULD BE APPLICABLE IN RESPECT OF A CASE WHERE THE GROSS CON TRACT RECEIPT DOES NOT EXCEED RS. 40 LAKHS. WHEREVER THE GROSS C ONTRACT RECEIPTS EXCEED RS. 40 LAKHS THE PROVISIONS OF SECT ION 44AD ARE NOT APPLICABLE. THEREFORE, THE PROFIT CAN BE ESTIM ATED EITHER AT LOWER THAN 8% OR ABOVE 8% DEPENDING UPON THE FACTUA L SITUATION. AS DISCUSSED EARLIER, FOR THE PURPOSE O F ESTIMATING THE PROFIT VARIOUS FACTORS SUCH AS THE PROFIT RATIO OF THE ASSESSEE IN THE EARLIER YEAR, PROFIT RATIO OF THE SIMILARLY PLACED TRADERS IN THE SAME LOCALITY, DEMAND FOR THE PRODUCT, AVAILABI LITY OF LABOURERS, RAW MATERIALS, ETC., AND THE TIME GAP AV AILABLE FOR EXECUTING THE CONTRACT WORK, ETC., HAVE TO BE TAKEN INTO CONSIDERATION. THEREFORE, IN OUR OPINION, REFERENC E TO EARLIER ORDER OF THIS TRIBUNAL ALONE FOR THE PURPOSE OF EST IMATING THE PROFIT AT 12.5% MAY NOT BE JUSTIFIED AT ALL. 9. IN FACT, IN THE CASE OF KRISHNAMOHAN CONSTRUCTI ONS IN ITA NOS. 116 AND 117/HYD/2007 FOR A.YS. 1993-94 AND 1994- 95 THE TRIBUNAL ESTIMATED THE PROFIT ONLY AT 8% EVE N THOUGH THE PROFIT WAS ESTIMATED AT 12.5% FOR A.Y. 1992-92. TH IS ITSELF SHOWS THAT FOR EACH YEAR THE PROFIT HAS TO BE ESTIM ATED DEPENDING UPON THE FACTORS WHICH PREVAIL IN THE LOC ALITY. 10 WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE CIT(A) AFTER REFERRING TO T HE DECISION OF THIS TRIBUNAL IN THE CASE OF KRISHNAMOHAN CONSTRUCT IONS (SUPRA) AND THE SPECIAL BENCH DECISION IN ARIHANT B UILDERS (SUPRA) ESTIMATED THE PROFIT AT 8% FOR MAIN CONTRAC T AND FOR SUB CONTRACT AT 5%. IT MAY NOT BE OUT OF PLACE TO MENTION THAT THIS TRIBUNAL UNIFORMLY ESTIMATING THE PROFIT FROM MAIN CONTRACT AT 8% TO 12.5% DEPENDING UPON THE FACTUAL SITUATION AND 5% TO 7% ON THE SUB CONTRACT DEPENDING UPON THE FACTUAL SITUATION. THEREFORE, IN OUR OPINION, ESTIMATION O F PROFIT AT 8% BY THE CIT(A) ON MAIN CONTRACT AND AT 5% ON SUB CON TRACT IS JUSTIFIED. WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 11. NOW COMING TO THE CLAIM OF THE ASSESSEE TOWARD S SEIGNIORAGE CHARGES. NO DOUBT THE SEIGNIORAGE CHAR GES ARE IN RELATION TO THE MATERIAL SUPPLIED BY THE GOVERNMENT FOR EXECUTING THE WORK. THE APEX COURT IN THE CASE OF BRIJ BHUSHANLAL (SUPRA) CONSIDERED THIS ISSUE AND FOUND THAT THE MATERIAL SUPPLIED BY THE GOVERNMENT/CONTRACTOR WILL NOT HAVE ANY ELEMENT OF PROFIT. THEREFORE, THE SAME SHALL B E REDUCED FROM THE CONTRACT RECEIPTS. IN VIEW OF THE JUDGEME NT OF THE APEX COURT THE SEIGNIORAGE CHARGES SHALL BE REDUCED FROM THE ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 5 TOTAL CONTRACT RECEIPTS FOR THE PURPOSE OF ESTIMATI NG THE PROFIT. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER WHILE C OMPUTING THE TOTAL CONTRACT RECEIPTS THE SEIGNIORAGE CHARGES SHALL BE REDUCED FROM THE TOTAL CONTRACT RECEIPTS FOR THE PU RPOSE OF ESTIMATING THE PROFIT. 12. NOW COMING TO THE DEPRECIATION. WE HAVE CAREF ULLY GONE THROUGH THE JUDGEMENT OF THE JURISDICTIONAL HI GH COURT IN THE CASE OF INDWELL CONSTRUCTION (SUPRA). IN THE C ASE BEFORE THE JURISDICTIONAL HIGH COURT AN ADDITION WAS MADE TOWA RDS INTEREST AND REMUNERATION PAID TO THE PARTNER WHEN THE PROFIT WAS ESTIMATED. THE JURISDICTIONAL HIGH COURT AFTER CONSIDERING THE PROVISIONS OF SECTION 29 AND 40 FOUND THAT NO S EPARATE ADDITION SHALL BE MADE. THE CONTENTION OF THE LEAR NED COUNSEL FOR THE ASSESSEE IS THAT DEPRECIATION SHALL BE ON T HE WDV FROM THE PROFIT COMPUTED/ESTIMATED. THEREFORE, DEPRECIA TION SHALL BE ALLOWED ON THE PROFIT COMPUTED. 13. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 44AD OF THE ACT. NOW DOUBT THIS PROVISION I S APPLICABLE FOR THOSE CASES WHERE THE TURNOVER/TOTAL CONTRACT R ECEIPT DOES NOT EXCEED RS. 40 LAKHS. HOWEVER, BY FINANCE (NO. 2) ACT OF 2009 WITH EFFECT FROM 1.4.2011 THE LEGISLATURE REMO VED THE RESTRICTION OF THE TOTAL CONTRACT RECEIPTS OF RS. 4 0 LAKHS. BY TAKING A CLUE FROM THE PROVISION OF SECTION 44AD AS IS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION AND THE PROVISIONS WHICH ARE APPLICABLE WITH EFFECT FROM 1. 4.2011, WE FIND THAT THE DEDUCTION AVAILABLE U/SS. 30 TO 38 SH ALL BE DEEMED TO HAVE BEEN ALREADY GIVEN FULL EFFECT AND NO FURTH ER DEDUCTION UNDER THOSE SECTIONS SHALL BE ALLOWED. DEPRECIATIO N IS ALLOWABLE U/S. 32 OF THE INCOME-TAX ACT. THEREFORE , AS PROVIDED IN SECTION 44AD NO FURTHER/SEPARATE DEDUCTION SHALL BE ALLOWED. IN VIEW OF THE ABOVE, IN OUR OPINION, THE CLAIM OF DEPRECIATION ON THE ESTIMATED INCOME IS NOT JUSTIFI ED. THEREFORE, THE LOWER AUTHORITIES HAVE RIGHTLY REJEC TED THE SAME. 14. NOW COMING TO THE PAYMENT OF INTEREST AND SALA RY TO THE PARTNER. PROVISO TO SECTION 44AD(2) CLEARLY SAYS T HAT SALARY AND INTEREST PAID TO THE PARTNER SHALL BE DEDUCTED FROM THE INCOME COMPUTED UNDER SUB-SECTION (1) OF SECTION 44 AD SUBJECT TO LIMITATION U/S. 40(B) OF THE ACT. AS WE HAVE AL READY OBSERVED, THOUGH THERE WERE RESTRICTIONS WITH REGAR D TO APPLICATION OF SECTION 44AD WHEREVER THE TOTAL CONT RACT RECEIPTS EXCEED RS. 40 LAKHS, WITH EFFECT FROM 1.4. 2011 SUCH RESTRICTION WAS REMOVED BY THE LEGISLATURE. MOREOV ER, THE CO- ORDINATE BENCH THIS TRIBUNAL IN M. BHASKAR REDDY (S UPRA) AFTER TAKING A CLUE FROM SECTION 44AD ESTIMATED THE PROFI T AT 8% OF THE CONTRACT RECEIPT. THEREFORE, BY TAKING A CLUE FROM THE PROVISION OF SECTION 44AD AS IS APPLICABLE FOR THE ASSESSMENT ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 6 YEAR UNDER CONSIDERATION AND THE PROVISIONS WHICH W OULD COME INTO OPERATION WITH EFFECT FROM 1.4.2011, IN OUR OP INION, THE PAYMENT OF INTEREST AND SALARY TO THE PARTNER SHALL BE ALLOWED SUBJECT TO LIMITATION SPECIFIED IN SECTION 40(B) OF THE ACT FROM THE ESTIMATED INCOME. 15. WE HAVE CAREFULLY GONE THROUGH THE JUDGEMENT O F THE JURISDICTIONAL HIGH COURT IN THE CASE OF INDWELL CO NSTRUCTION (SUPRA). THE ASSESSMENT YEAR UNDER CONSIDERATION B EFORE THE JURISDICTIONAL HIGH COURT WAS ASSESSMENT YEAR 1981- 82. SECTION 44AD WAS INTRODUCED IN THE STATUTE BOOK WIT H EFFECT FROM 1.4.1994. THEREFORE, THE JURISDICTIONAL HIGH COURT HAD NO OCCASION TO CONSIDER THE PROVISIONS OF SECTION 44AD AS IT IS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION AND AS IT WOULD BE APPLICABLE WITH EFFECT FROM 1.4.2011. IN VIEW OF THE PROVISION OF SECTION 44AD AS IT IS APPLICABLE FOR T HE ASSESSMENT YEAR UNDER CONSIDERATION AND THE AMENDMENT MADE WIT H EFFECT FROM 1.4.2011 IT IS OBVIOUS THAT THE LEGISLATURE IN TENDED TO ALLOW THE INTEREST AND SALARY SEPARATELY FROM THE E STIMATED INCOME. THEREFORE, THE JUDGEMENT OF THE JURISDICTI ONAL HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS (SUPRA) MAY NOT BE OF ANY ASSISTANCE TO THE REVENUE IN THIS CASE. ACC ORDINGLY WE DIRECT THE ASSESSING OFFICER TO ALLOW THE SALARY AN D INTEREST PAID TO THE PARTNER SUBJECT TO THE LIMITATION PROVI DED IN SECTION 40(B) OF THE ACT. 5. BEING SO, IN OUR OPINION, THE ISSUE IS SQUARELY COV ERED BY THE ABOVE ORDER OF THE TRIBUNAL. AS SUCH, THE INCO ME OF THE ASSESSEE IS TO BE ESTIMATED AT 8% OF GROSS CONTRACT RECEIPTS UNLESS THE ASSESSEE FURNISHED THE DETAILS OF SEIGNI ORAGE CHARGES. BEFORE THE AO THE ASSESSEE HAS NOT FURNISHED DETAIL S OF CONTRACT RECEIPTS. ACCORDINGLY, WE DIRECT THE ASSESSEE TO F URNISH DETAILS OF CONTRACT RECEIPTS AS WELL AS SEIGNIORAGE CHARGES . ON RECEIPT OF THESE DETAILS, THE AO SHALL APPLY THE NET PROFIT AT 8% ON THE CONTRACT RECEIPTS. ACCORDINGLY, THIS ISSUE IS REMI TTED BACK TO THE AO FOR FRESH CONSIDERATION. 6. GROUND NO. 3 IS WITH REGARD TO DELETION OF ADDITION OF RS. 26,50,535 ON THE GROUND THAT ONCE INCOME IS ESTIMAT ED, THERE IS ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 7 NO SCOPE FOR FURTHER ADDITION. FACTS RELATING TO T HIS ISSUE ARE THAT THE AO MADE FURTHER ADDITION OF RS. 26,50,350 TOWAR DS OUTSTANDING SUNDRY CREDITORS IN RESPECT OF WHICH TH E ASSESSEE NOT FURNISHED DETAILS LIKE NAME, POSTAL ADDRESS, ET C. THE CIT(A) DELETED THE ADDITION HOLDING THAT ONCE INCOME IS ES TIMATED, THERE CANNOT BE ANY FURTHER ADDITION. AGAINST THIS , REVENUE IS IN APPEAL BEFORE US. 7. IN OUR OPINION, THE VIEW TAKEN BY THE CIT(A) IS CON TRARY TO THE PROVISIONS OF LAW AND VARIOUS JUDICIAL PRECEDEN TS. THE CO( ORDINATE BENCH IN THE CASE OF SRI P.V. SITARAMASWAM Y NAIDU VS. ADDL. CIT IN ITA NO. 264/HYD/2012 ORDER DATED 9.1.2 013 HELD AS FOLLOWS: '10. THE NEXT GROUND IS WITH REGARD TO SUSTAINING T HE ADDITION MADE U/S. 68 OF THE INCOME-TAX ACT, 1961 A ND NOT GIVING THE BENEFIT OF TELESCOPING TO THE SAME O UT OF THE ESTIMATED BUSINESS INCOME OF THE ASSESSEE. . 11. THE LEARNED AR SUBMITTED THAT ONCE THE INCOME I S ESTIMATED THERE CANNOT BE ANY ADDITION OF WHATSOEVE R. FOR THIS PURPOSE HE RELIED ON THE JUDGEMENT OF INDW ELL CONSTRUCTIONS (232 ITR 776) WHEREIN IT WAS HELD THA T WHERE THE BOOKS OF ACCOUNT ARE REJECTED BY THE REVE NUE CANNOT RELY ON THE SAME BOOKS FOR ADDITION OF EXACT ITEM IN THE PROFIT AND LOSS A/C. 12. WE HAVE CAREFULLY GONE THROUGH THIS JUDGEMENT. THIS JUDGEMENT IS WITH REGARD TO ALLOWABILITY OF DEDUCTION WHILE COMPUTING BUSINESS INCOME OF THE ASSESSEE. NOW, WE ARE CONCERNED WITH THE ADDITION MADE U/S. 68 OF THE ACT. IN THE PRESENT CASE, THE ASSESSING OFFICER MADE ADDITION WITH REGARD TO CRED IT SHOWN IN THE NAME OF MS. DEVI INDUKURI AT RS. 30,07 ,392 AND IN THE NAME OF MR. NANDYALA BHASKAR REDDY AT RS . 80,00,000 TOTALLING TO RS. 1,10,07,392. WHEN THE C REDIT ENTRY IS SHOWN IN THE BOOKS OF ACCOUNT IT IS INCUMB ENT UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF CREDIT, CREDITWORTHINESS OF THE PARTY AND GENUINENE SS OF ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 8 THE TRANSACTION. THE FACT THAT THE ENTRIES ARE SHO WN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WHOSE INCOME H AD ALREADY BEEN COMPUTED ON THE BASIS OF THE ESTIMATE BUT NOT ON THE RETURN FILED BY THE ASSESSEE, THAT DOES NOT PREVENT THE ITO FROM TREATING, BUT ENTITLES HIM TO TREAT, THE UNEXPLAINED CASH CREDIT AS INCOME FROM UNDISCLO SED SOURCES WHICH FALLS UNDER THE HEAD OF INCOME 'INCOM E FROM OTHER SOURCES'. UNLESS THE ASSESSEE, BY INDEPENDENT AND SATISFACTORY EVIDENCE, ESTABLISHES THAT THOSE AMOUNTS RELATE OR REFERABLE TO THE UNDISCLOSE D INCOME FROM KNOWN OR DISCLOSED SOURCES VIZ., THE BUSINESS, WHOSE INCOME HAD ALREADY BEEN ESTIMATED. IN THE PRESENT CASE, THE ASSESSEE DID NOT ABLE TO ESTA BLISH THE CASH CREDITS MENTIONED ABOVE AS GENUINE CREDITS . THE ASSESSEE'S STAND FROM THE BEGINNING AND ALSO BE FORE US IS THAT THE CASH CREDITS ARE GENUINE. THE ASSES SEE NEVER TOOK SPECIFIC STAND THAT THESE UNEXPLAINED CA SH CREDITS ARE REFERABLE TO THE INCOME FROM DISCLOSED SOURCES VIZ., BUSINESS, WHOSE INCOME HAS BEEN ESTIM ATED BY THE REVENUE AUTHORITIES. IN ORDER TO DELETE THI S ADDITION, THE ASSESSEE IS BOUND TO EXPLAIN THE SOUR CE OF CREDIT, GENUINENESS OF THE TRANSACTION AND THE CAPA CITY OF THE LENDER TO ADVANCE THE SAME. AS THE ASSESSEE FAILED TO EXPLAINED THESE CRITERIA, WE HAVE NO HESI TATION IN CONFIRMING THE ACTION OF THE CIT(A). FOR THIS PURPOSE, WE PLACE RELIANCE ON THE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. MAD URI RAJAIAHGARI KISTAIAH (120 ITR 294). FURTHER, WE PL ACE RELIANCE ON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. DEVI PRASAD VISWANATH PRASAD (72 ITR 194) WHEREIN HELD THAT ON REJECTION OF BOOKS OF ACCOUNT, BUSINESS INCOME ESTIMATED, ADDITION TOWARD S UNEXPLAINED CASH CREDIT SEPARATELY VALUED. 13. FURTHER, THE APPROACH OF THE VARIOUS HIGH COURT S' IS NOT UNIFORM ON THE ABOVE ASPECT AS WOULD BE SEEN FROM T HE FOLLOWING CASES. IN CIT V. AGGARWAL ENGG. CO. (JAI. ) (2006) 206 CTR (P&H) 648, THE PUNJAB & HARYANA HIGH COURT HELD, RELYING ON DECISION IN CIT VS. BANWARILAL BANSHIDHA R (1998) 148 CTR (ALL) 533; (1998) 229 ITR 229 (ALL), THAT N O SEPARATE ADDITION ON ACCOUNT OF CASH CREDIT AND ON ACCOUNT O F UNEXPLAINED PAYMENTS FOR PURCHASES MADE OUTSIDE THE BOOKS CAN BE MADE ONCE THE NET PROFIT RATE IS APPLIED ON CONTRACT RECEIPTS OF AN ASSESSEE FOR ESTIMATING HIS INCOME F ROM CONTRACT WORK. EVEN WHEN THE BOOKS OF ACCOUNT RELATING TO TH E ASSESSEE'S BUSINESS ARE REJECTED AND INCOME FROM SUCH BUSINESS IS DETERMINED ON ESTIMATE BASIS, A SEPARATE ADDITION ( WHICH MAY NOT EXCEED THE DIFFERENCE BETWEEN THE INCOME AS EST IMATED BY THE DEPARTMENT AND THE INCOME/LOSS AS PER BOOKS) MA Y BE MADE ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 9 UNDER SECTION 68 TOWARDS CASH CREDITS WHICH ARE NOT EXPLAINED OR WHICH ARE NOT PROPERLY EXPLAINED. THIS IS BECAUS E THE SOURCE OF THE FORMER IS BUSINESS WHEREAS FOR THE LATTER TH E DEPARTMENT DOES NOT HAVE TO LOCATE ANY PARTICULAR SOURCE [KALE KHAN MOHAMMED HANIF VS. CIT (1963) 50 ITR 1 (SC) IMPLIED LY OVERRULING RAMCHARITAR RAM HARIHAR PRASAD VS. CIT ( 1953) 23 ITR 301 (PAT) AND IMPLIEDLY APPROVING SRINIVAS R AMKUMAR VS. CIT (1948) 16 ITR 254 (PAT) AND G.M. CHENNA BAS APPA VS. CIT (1958) 34 ITR 576 (AP) ON THIS POINT]. IN THIS CASE, THE SUPREME COURT HELD THAT THE ITO HAVING ASSESSED THE INCOME OF THE ASSESSEE ON A PERCENTAGE BASIS, WAS ALSO JUSTIF IED IN TREATING THE UNEXPLAINED CASH CREDIT AS PROFITS FRO M AN UNDISCLOSED SOURCE. REPELLING THE CONTENTION THAT T HE ENTRIES FOUND IN THE BOOKS OF ACCOUNT OF THE BUSINESS MUST BE REFERABLE TO THE INCOME OF THE BUSINESS WHICH HAD BEEN COMPUT ED ON THE BASIS OF AN ESTIMATE WITHOUT ACCEPTING THE RETURN F ILED BY THE ASSESSEE, WHICH AMOUNTS TO DOUBLE TAXATION OF THE S AME INCOME, THE COURT RULED THUS: 'THE QUESTION WOULD SEEM TO SUGGEST THAT BECAUSE TH E INCOME FROM A DISCLOSED SOURCE HAS BEEN COMPUTED ON THE BASIS OF AN ESTIMATE AND NOT ON THE BASIS OF THE RE TURN FILED IN RESPECT OF IT, AN INCOME REPRESENTED BY A CREDIT EN TRY IN THE BOOKS OF ACCOUNT OF THAT SOURCE CANNOT BE HELD TO B E INCOME FROM ANOTHER AND UNDISCLOSED SOURCE. WE DO NOT SEE WHY IT CANNOT BE SO HELD ..... IF THE INCOME IS TREATED AS ONE FROM AN UNDISCLOSED SOURCE WHICH THE QUESTION POSTULATES, I T IS NOT TREATED AS INCOME OF THE DISCLOSED SOURCE WHICH HAD PREVIOUSLY BEEN ASSESSED TO TAX AND, THEREFORE, THE RE IS IN SUCH A CASE NO DOUBLE TAXATION. IT IS NOT A CASE WH ERE THE INCOME SOUGHT TO BE TAXED WAS HELD TO BE UNDISCLOSE D INCOME OF A DISCLOSED SOURCE, THE INCOME OF WHICH S OURCE HAD PREVIOUSLY BEEN TAXED ON THE BASIS OF AN ESTIMA TE ..... THE QUESTION WHETHER INCOME REPRESENTED BY AN ENTRY IN THE BOOKS OF A BUSINESS IS INCOME OF THAT BUSINESS OR O F ANOTHER BUSINESS WOULD HAVE TO BE DECIDED ON THE FACTS WHIC H SHOWED THE BUSINESS TO WHICH IT BELONGED. BUT QUITE CLEARLY, THE ANSWER TO THAT QUESTION WOULD NOT DEPEND ON WHE THER THE INCOME FROM THE FIRST MENTIONED BUSINESS HAD BEEN COMPUTED ON THE BASIS OF A RETURN FILED OR OF AN ES TIMATE OF THE INCOME MADE BY THE TAXING AUTHORITIES THEREFORE , IT CANNOT BE SAID THAT THE TAXING AUTHORITIES WERE PRE CLUDED FROM TREATING THE AMOUNTS OF THE CREDIT ENTRIES AS INCOME FROM UNDISCLOSED SOURCES SIMPLY BECAUSE THE ENTRIES APPEAR IN THE BOOKS OF A BUSINESS WHOSE INCOME THEY HAD PREVIOUSLY COMPUTED ON A PERCENTAGE BASIS.' 14. THERE IS NO PRESUMPTION THAT ANY CASH CREDIT EN TRY FOUND IN THE BUSINESS ACCOUNTS OF THE ASSESSEE IS RELATED TO HIS CONCEALED ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 10 INCOME FROM THE SAME BUSINESS [CIT VS. MADURI RAJAI AHGARI KISTAIAH (1979) 120 ITR 294 (AP) WHERE THE ASSESSEE PLEADS THAT THE IMPUGNED CASH CREDITS CAME OUT OF SUPPRESS ED PROFITS WHICH ARE ALREADY INCLUDED IN THE INCOME ESTIMATED FROM BUSINESS ON REJECTION OF THE BOOKS, IT IS FOR HIM T O PROVE THAT IT IS SO [CIT VS. DEVI PRASAD VISHWANATH PRASAD (1969) 72 ITR 194 (SC) REVERSING DEVI PRASAD VISHWANATH PRASAD VS . CIT (1963) 50 ITR 641 (ALL) AND IMPLIEDLY APPROVING ON THIS POINT MADDI SUDARSANAM OIL MILLS CO. VS. CIT (1959) 37 IT R 369 (AP) AND CIT VS. KRISHNA MINING CO. (1972) 83 ITR 8 60 (AP). THE SUPREME COURT IN THIS CASE OF CIT VS. DEVI PRAS AD VISHWANATH PRASAD OBSERVED THUS : 'THERE IS NOTHING IN LAW WHICH PREVENTS THE ITO IN AN APPROPRIATE CASE IN TAXING BOTH THE CASH CREDIT, TH E SOURCE AND NATURE OF WHICH IS NOT SATISFACTORILY EXPLAINED AND THE BUSINESS INCOME ESTIMATED BY HIM UNDER SECTION 13 O F THE IT ACT, AFTER REJECTING THE BOOKS OF ACCOUNT OF THE AS SESSEE AS UNRELIABLE ..... WHETHER IN A GIVEN CASE THE ITO MA Y TAX THE CASH CREDIT ENTERED IN THE BOOKS OF ACCOUNT OF BUSI NESS, AND AT THE SAME TIME ESTIMATE THE PROFIT MUST, HOWEVER, DEPEND UPON THE FACTS OF EACH CASE ..... WHERE THERE IS AN UNEXPLAINED CASH CREDIT, IT IS OPEN TO THE ITO TO H OLD THAT IT IS INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIE S ON THE ITO TO SHOW THAT THAT INCOME IS FROM ANY PARTICULAR SOURCE. IT IS FOR THE ASSESSEE TO PROVE THAT EVEN IF THE CA SH CREDIT REPRESENTS INCOME IT IS INCOME FROM A SOURCE WHICH HAS ALREADY BEEN TAXED.' 15. THE ANDHRA PRADESH HIGH COURT IN CIT VS. JANAB MOHD. SULEMAN [REFERRED CASE NO. 13 OF 1968 DT. 11TH NOV. , 1970] HAS EXPRESSED THE SAME VIEW ON SIMILAR FACTS AND CIRCUMSTANCES. IN KARNAL MOTORS VS. CIT (2003) 180 CTR (RAJ) 166 IT WAS HELD THAT ADDITIONS UNDER S. 68 COULD NO T BE TELESCOPED WITH THE TRADING ADDITION WHERE THE ASSE SSEE HAD NOT ADMITTED THAT UNEXPLAINED CASH CREDITS CAME OUT OF BLACK MONEY EARNED IN THE CURRENT YEAR OR IN AN EARLIER Y EAR. IN OUR OPINION, A SEPARATE ADDITION UNDER S. 68 TOWARDS UN EXPLAINED CREDIT IS SUSTAINABLE IN SPITE OF ADDITION MADE TO THE DECLARED TRADING RESULTS IS A QUESTION OF FACT WHICH IS TO B E DECIDED BASED ON CIRCUMSTANCES IN EACH CASE. 16. THE BENEFIT OF TELESCOPING WAS ALSO CONSIDERED BY THE SUPREME COURT IN ANANTHARAM VEERASINGAIAH & CO. VS. CIT (1980) 16 CTR (SC) 187 : (1980) 123 ITR 457 (SC) AP PROVING LAGADAPATI SUNNA RAMAIAH VS. CIT (1956) 30 ITR 593 (AP) OBSERVED THAT: 'THERE CAN BE NO ESCAPE FROM THE PROPOSITION THAT T HE SECRET ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 11 PROFITS OR UNDISCLOSED INCOME OF AN ASSESSEE EARNED IN AN EARLIER ASSESSMENT YEAR MAY CONSTITUTE A FUND, EVEN THOUGH CONCEALED, FROM WHICH THE ASSESSEE MAY DRAW SUBSEQU ENTLY FOR MEETING EXPENDITURE OR INTRODUCING AMOUNTS IN H IS ACCOUNT BOOKS. BUT IT IS QUITE ANOTHER THING TO SAY THAT ANY PART OF THAT FUND MUST NECESSARILY BE REGARDED AS T HE SOURCE OF UNEXPLAINED EXPENDITURE INCURRED OR OF CASH CRED ITS RECORDED DURING A SUBSEQUENT ASSESSMENT YEAR. THE M ERE AVAILABILITY OF SUCH A FUND CANNOT, IN ALL CASES, I MPLY THAT THE ASSESSEE HAS NOT EARNED FURTHER SECRET PROFITS DURI NG THE RELEVANT ASSESSMENT YEAR. NEITHER LAW NOR HUMAN EXP ERIENCE GUARANTEES THAT AN ASSESSEE WHO HAS BEEN DISHONEST IN ONE ASSESSMENT YEAR IS BOUND TO BE HONEST IN A SUBSEQUE NT ASSESSMENT YEAR. IT IS A MATTER FOR CONSIDERATION B Y THE TAXING AUTHORITY IN EACH CASE WHETHER THE UNEXPLAIN ED CASH DEFICITS AND THE CASH CREDITS CAN BE REASONABLY ATT RIBUTED TO A PRE-EXISTING FUND OF CONCEALED PROFITS OR THEY ARE REASONABLY EXPLAINED BY REFERENCE TO CONCEALED INCOME EARNED I N THAT VERY YEAR. IN EACH CASE, THE TRUE NATURE OF THE CAS H DEFICIT AND THE CASH CREDIT MUST BE ASCERTAINED FROM AN OVE RALL CONSIDERATION OF THE PARTICULAR FACTS AND CIRCUMSTA NCES OF THE CASE. EVIDENCE MAY EXIST TO SHOW THAT RELIANCE CANN OT BE PLACED COMPLETELY ON THE AVAILABILITY OF A PREVIOUS LY EARNED UNDISCLOSED INCOME. A NUMBER OF CIRCUMSTANCES OF VI TAL SIGNIFICANCE MAY POINT TO THE CONCLUSION THAT THE C ASH DEFICIT OR CASH CREDIT CANNOT REASONABLY BE RELATED TO THE AMOUNT COVERED BY THE INTANGIBLE ADDITION BUT MUST BE REGA RDED AS POINTING TO THE RECEIPT OF UNDISCLOSED INCOME EARNE D DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. IT IS OPEN TO THE REVENUE TO RELY ON ALL THE CIRCUMSTANCES POINTING T O THAT CONCLUSION.' 17. THUS, AS EXPLAINED BY THE SUPREME COURT, INCOME FROM INTANGIBLE ADDITIONS IS AVAILABLE TO THE ASSESSEE F OR, INTER ALIA, INTRODUCING AMOUNTS IN HIS ACCOUNT BOOKS. IF ANY UN EXPLAINED CASH CREDITS CAN BE REASONABLY RELATED TO THE AMOUN T COVERED BY THE INTANGIBLE ADDITIONS MADE IN THE PAST OR IN THAT VERY YEAR, NECESSARY SET OFF MAY BE GIVEN BY THE AUTHORI TIES ON THAT ACCOUNT. IN EACH CASE, THE TRUE NATURE OF THE CASH CREDIT MUST BE ASCERTAINED FROM AN OVERALL CONSIDERATION OF THE PA RTICULAR FACTS AND CIRCUMSTANCES OF THE CASE. HOWEVER, WHERE IN THE EARLIER YEARS, THERE WAS DISALLOWANCE OF EXPENDITUR E ON THE GROUND THAT THERE WAS NO EVIDENCE THOUGH THE REQUIS ITE AMOUNT WAS IN FACT PAID, IT CANNOT BE SAID THAT THE CORRES PONDING AMOUNT IS AVAILABLE TO THE ASSESSEE FOR USE LATER. 18. UNDER SECTION 68, THE BURDEN IS ON THE ASSESSEE TO PRIMA FACIE PROVE THE NATURE AND SOURCE OF THE CASH CREDI T FOUND IN HIS BOOKS AND THE EXPLANATION IN REGARD THERETO MUST NE CESSARILY ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 12 BE FACTUAL BUT NOT ARGUMENTATIVE. A VIEW THAT THE C ASH CREDITS TO THE EXTENT OF THE PAST INTANGIBLE ADDITIONS STAND A UTOMATICALLY EXPLAINED WOULD PRACTICALLY DISPENSE WITH THE NECES SITY OF THE ASSESSEE GIVING ANY EXPLANATION OF FACT UNDER SECTI ON 68 WHERE INTANGIBLE ADDITIONS WERE MADE IN THE EARLIER YEARS AND HENCE SUCH A VIEW IS UNTENABLE. IN THE CASE OF CIT VS. MA NIK SONS (1969) 74 ITR 1 (SC) IT WAS HELD THAT ONLY IF THE U NEXPLAINED CASH CREDIT CAN REASONABLY BE RELATED TO THE AMOUNT COVERED BY THE INTANGIBLE ADDITION MADE IN THE PAST, OR IN THE VERY YEAR, NECESSARY SET OFF CAN BE ALLOWED. THE PRINCIPLE THA T IT IS THE ASSESSEE WHO SHOULD GIVE A SATISFACTORY EXPLANATION REGARDING CASH CREDITS IS IN NO WAY RENDERED INAPPLICABLE MER ELY BECAUSE THE ASSESSEE WAS FOUND TO HAVE EARNED SOME UNDISCLO SED INCOME IN SOME EARLIER YEARS FOR WHICH ADDITIONS HA D BEEN MADE IN THE RELEVANT ASSESSMENTS. IF IT IS THE ASSE SSEE'S CASE THAT THE CASH CREDITS FOUND IN HIS BOOKS CAME OUT O F THE ADDITION MADE TO HIS INCOME FOR AN EARLIER YEAR, IT IS UNDOU BTEDLY OPEN TO HIM TO PUT FORWARD SUCH A PLEA WHILE FURNISHING EXPLANATION REGARDING SUCH CASH CREDITS. WHILE THE FACT OF MAKI NG OF INTANGIBLE ADDITIONS IN THE EARLIER YEARS IS UNDOUB TEDLY A MATTER TO BE CONSIDERED BY THE ASSESSING OFFICER IN JUDGING WHETHER THE CASH CREDITS ARE SATISFACTORILY EXPLAIN ED BY THE ASSESSEE, THE BURDEN OF PROOF RESTS SQUARELY ON THE SHOULDERS OF THE ASSESSEE TO ESTABLISH THE TRUTH AND TENABILITY OF THE EXPLANATION FURNISHED BY HIM. IN OTHER WORDS, THE ASSESSEE'S EXPLANATION MUST SATISFY THE INCOME-TAX AUTHORITIES THAT THE CASH CREDITS REPRESENT INTANGIBLE ADDITIONS MADE IN THE EARLIER YEARS. FOR WEIGHING THE ASSESSEE'S EXPLANATION, TH E ASSESSEE'S CONDUCT, HIS EXPLANATION AT THE INITIAL STAGE AND T HE SHIFT, IF ANY, IN LATER STAGES AND ALSO THE MATERIAL, IF ANY, LINK ING UP THE CASH CREDIT ENTRIES WOULD BE RELEVANT FACTORS. THE ASSE SSEE, INSTEAD OF MERELY RAISING AN ARGUMENT, MUST SUPPORT HIS CLA IM BY PROPER EXPLANATION, AFFIDAVIT AND MATERIAL. THUS, THERE IS NO GENERAL OR ABSOLUTE RULE TO THE EFFECT THAT WHENEVE R ADDITIONS TO PROFITS ARE MADE, THEY MUST BE REGARDED AS FUNDS RE PRESENTED IN THE BOOKS OF ACCOUNT AS CASH CREDITS. THE QUESTION DEPENDS ON THE FINDINGS OF FACT. IF THERE IS NO CONNECTION FO UND BETWEEN THE CASH CREDITS AND THE ADDITIONS MADE TO PROFITS, THE ASSESSEE WOULD NOT BE ENTITLED TO SET OFF CASH CREDITS AGAIN ST THE PAST INTANGIBLE ADDITION. 19. SINCE IT IS FOR THE ASSESSEE TO PROVIDE THE EXP LANATION FOR CASH CREDITS, WHEN THE ASSESSEE HAS NOT PLEADED THA T THE CASH CREDITS CAME OUT OF THE PAST INTANGIBLE ADDITIONS, IT WOULD NOT BE OPEN TO THE TRIBUNAL TO HOLD THAT THE CASH CREDI TS WOULD BE COVERED BY SUCH ADDITIONS [CIT VS. G. M. CHENNABASA PPA (1959) 35 ITR 261 (AP). THE OMISSION TO CLAIM SET O FF OF PAST INTANGIBLE ADDITIONS AGAINST CASH CREDITS WOULD GIV E RISE TO A PRESUMPTION THAT THE FORMER AMOUNTS WERE NOT AVAILA BLE FOR SET ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 13 OFF. WHEN THE ALTERNATE PLEA THAT TANGIBLE ADDITIO NS IN THE PAST COULD TAKE CARE OF CASH CREDITS OF CURRENT YEAR IS NOT TAKEN AT THE EARLIER STAGE AND NO MATERIALS ARE PLACED ON RE CORD TO SUBSTANTIATE THE SAME, REJECTION OF SUCH PLEA WOULD BE JUSTIFIED. [R. DALMIA (DECD.) VS. CIT; (2002) 172 CTR 180 (DEL ) : (2002) 255 ITR 401 (DEL)]. 20. THE AVAILABILITY OF FUNDS REPRESENTING THE INTA NGIBLE ADDITIONS SHOULD BE QUANTIFIED NOT WITH REFERENCE T O WHAT THE ASSESSEE OFFERED FOR TAXATION BUT WHAT WAS ACTUALLY ADOPTED IN ASSESSMENTS FOR TAXATION. IN THE PRESENT CASE, THE ASSESSEE FAILED TO SHOW HOW THE ADDITION U/S. 68 IS RELATED TO ESTIMATED INCOME. 21. IN VIEW OF THE ABOVE DISCUSSION, THE ASSESSEE'S CONTENTION ON TELESCOPING ON ADDITION TOWARDS UNEXPLAINED CREDIT OF RS. 1,10,07,392 ON THE ADDITI ON MADE TOWARDS BUSINESS INCOME IS REJECTED AND THE ADDITION MADE U/S. 68 IS SUSTAINED IN ITS ENTIRETY. ' 8. IN VIEW OF THE ABOVE DECISION OF CO(ORDINATE BENCH, WE ARE INCLINED TO HOLD THAT THE ADDITION TOWARDS SUND RY CREDITORS MADE U/S. 68 OF THE ACT FALLS UNDER THE HEAD 'INCOM E FROM OTHER SOURCES'. ACCORDINGLY, WE REVERSE ORDER OF T HE CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE AO. 9. IN THE RESULT, REVENUE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2014. SD/( (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/( (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 21 ST JANUARY, 2014 TPRAO ITA NO. 325/HYD/2013 M/S BISWAJIT ROY ================== 14 COPY FORWARDED TO: 1. THE ASST. CIT, CIRCLE(1, AAYAKAR BHAVAN, STATION ROAD, WARANGAL. 2. M/S. BISWAJIT ROY, 8(4(81, KRISHNA COLONY, WARAN GAL. 3. THE CIT(A)(VI, HYDERABAD. 4. THE CIT(VI, HYDERABAD. 5. THE DR BENCH 'B', ITAT, HYDERABAD