The ACIT, Central Circle-2(1), Ahmedabad V. Shri DineshChandra R. Agrawal, Ahmedabad

ITSSA 443/AHD/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3578 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 26-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Wrong claim; Corroborative evidences; Valuation report; Accommodation entries; Retraction; Penny stocks; Bogus
• Section: 132; 2; 69C; 15; 143(3); 142(1); 153A; 143(2); 69A; 13; 20

Judgement Text

आयकर अपील य अ धकरण, अहमदाबाद यायपीठ ‘B’अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI PRAMOD M JAGTAP, VICE PRESIDENT & MS. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील(एसएस)सं./I. T. (S S) A. N os .4 42 & 44 3/ Ah d/ 20 19 ( नधा रण वष / A sse ss me nt Ye ar s: 2 01 4- 1 5 & 2 01 6- 17 ) Assistant Commissioner of Income-tax, Central Circle- 2(1), Ahmedabad बनाम/ Vs. Dineshchandra R. Agrawal , 22-23, Her mitage Villa, Ambli Bopal Road, Ah medabad थायी लेखा सं. /जीआइआर सं. / P A N / G IR N o .: A B K P A 0 5 2 5 D (अपीलाथ /Appellant) . . ( यथ / Respondent) आयकर अपील(एसएस)सं./I. T. (S S) A. N o. 44 4/ Ah d/2 01 9 ( नधा रण वष / A sse ss me nt Ye ar : 20 14 -1 5 ) Assistant Commissioner of Income-tax, Central Circle- 2(1), Ahmedabad बनाम/ Vs. Ushadevi D. Agra wal 22-23, Her mitage Villa, Ambli Bopal Road, Ah medabad थायी लेखा सं. /जीआइआर सं. / P A N / G IR N o .: A B K P A 0 5 2 5 D (अपीलाथ /Appellant) . . ( यथ / Respondent) आयकर अपील(एसएस)सं./I. T. (S S) A. N o. 44 5/ Ah d/2 01 9 ( नधा रण वष / A sse ss me nt Ye ar : 20 17 -1 8 ) Assistant Commissioner of Income-tax, Central Circle- 2(1), Ahmedabad बनाम/ Vs. Jagdishchandra R. Agrawal , 4-5, Her mitage Villa, Ambli Bopal Road, Ah medabad थायी लेखा सं. /जीआइआर सं. / P A N / G IR N o .: A B K P A 0 5 1 7 H (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से/Appellant by : Shri James Kurian, CIT D.R. यथ क ओर से/Respondent by: Shri S. L. Poddar, Advocate I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 2 - स ु नवाई क तार ख/ D at e o f He ar in g 13/06/2022 घोषणा क तार ख /Dat e o f Pr on ou nc e me nt 13/07/2022 आदेश/O R D E R PER MS. MADHUMITA ROY, JUDICIAL MEMBER:- The bunch of appeals filed by the Revenue are directed against the orders passed by the Ld. CIT(A)-12, Ahmedabad all dated 17.07.2019 arising out of the assessment orders passed by the ACIT, Cent. Cir.2(1), Ahmedabad all dated 31.12.2018 passed under Section 143(3) r.w.s. 153A of the Income Tax Act, 1961 for A.Y. 2014-15 & 2016-17 and 143(3) of the Income Tax Act, 1961 (in short “the Act”) for A.Y. 2017-18. 2. A perusal of the grounds of appeals would indicate that there are certain common grounds in the Revenue’s appeals which are as follows– 1. The Ld. CIT(A) has erred in deleting the addition made on account of unexplained expenditure in house construction u/s 69C of I.T. Act. 2. The Ld. CIT(A) has erred in deleting the addition made on account of bogus Long Term Capital Gain (LTCG) by allowing set off / telescoping of undisclosed income in the hands of DRAIPL. 3. The Ld. CIT(A) has erred in deleting the addition made on account of unexplained brokerage expenditure. 4. Deletion of addition made on account of unexplained investment u/s 69 of the Act and addition made on account of unexplained money u/s. 69A of the Act are also under challenge. I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 3 - 5. Deletion of addition made on account of unexplained money u/s. 69A of the Act on account of cash found has also been challenged by the Revenue. 3. Since all the appeals relating to the assessment of the same assessee, these are heard analogously and are being disposed of by a common order for the sake of convenience. 4. We shall take up the Revenue’s appeal in IT(SS)A No. 442/Ahd/2019 concerning AY 2014-15 as a lead case for adjudication. 5. The assessee is an individual and also the Director and the key person of the M/s. Dineshchangra Rameshwarlal Agarwal Infracon Pvt. Ltd. (in short “DRAIPL”), the flagship concern of the DRA Group. A search action under Section 132 was carried out in DRA Group of cases on 21.10.2016. A search warrant of authorization under Section 132 of the Act was issued in the name of the assessee Shri Dineshchandra R Agarwal, Smt. Ushadevi D Agrawal at the following premises: Sr. No. Address of the Premises 1 Bungalow No.22-23, Hermitage Villa, Near Amritbaugh Party Plot, Ambli Bopal Road, Bopal, Ahmedabad 2 Bungalow Behind Old Telephone Exchange, Near to Rameshwaram Bungalow, Nava Deesa, Deesa 3 401-403, Setu Apartment, Near Girish Cold Drink’s, B/h Dev Corporate Hotel, Navrangpura, Ahmedabad During this course of search action at the office premises of DRAIPL lying and situated at 401-403, Grand Mall, S M Road, Panchwati Ambawadi, Ahmedabad on 21.10.2016 some diaries were seized containing certain details of expenditure amongst others regarding the construction of residential properties i.e. 22-23, Hermitage Villa, near Amrit Baugh Party Plot, Ambali Bopal Road, Ahmedabad. Subsequently, notice under Section 153A of the Act was issued 07.03.2017 in response whereof the return of income was filed I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 4 - by the assessee on 22.03.2017 declaring total income at Rs. 1,27,22,270/-. Further notice under Section 143(2) dated 13.07.2017 followed by the notice under Section 142(1) dated 31.10.2018 was served alongwith detailed questionnaire upon the assessee. The Ld. AO completed the assessment with the following additions: (i) Addition of Rs. 6,32,638/- on account of alleged unexplained investment in construction of house properties. (ii) Addition of Rs. 1,40,23,721/- on account of alleged bogus long term capital gain. (iii) Addition of Rs. 10,00,000/- on account of alleged unexplained expenditure as commission payment. The said addition, were, however, deleted by the Ld. CIT(A). Hence, the instant appeal before us. 6. Ground No.1:- On 21.10.2016 a statement under Section 132(4) was recorded from the assessee being the Managing Director of DRAIPL admitting that the cash expenses had been incurred for the construction of residential bungalows situated at 22, 23 & 4, 5, Hermitage Villa, Near Amrit Baugh Party Plot, Ambali-Bopal Road, Ahmedabad which are unaccounted. During the course of search and also in the statement of the Directors recorded under Section 132(4) of the Act it was submitted that the DRAIPL has surrendered a total amount of Rs. 18 crore in A.Y. 2012-13, 2013-14 and 2017-18. The assessee declared an amount of Rs. 4.92 crores as his income over and above his normal income for the current year and had offered the same for taxation. 7. The investment for construction of house property was made out of the money withdrawn by inflating expenditure of DRAIPL and the same has been surrendered by the company and taxes accordingly was paid as stated by the assessee under Section 132(4) of the Act. The expenditure incurred by the I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 5 - assessee for construction of house is not income but the application of income of the company as sought to be claimed. However, such plea of the assessee was not found acceptable by the Ld. AO and finally an amount of Rs. 6,32,638/- was held to be undisclosed amount of cost of construction of residential bungalows incurred in cash was added to the total income of the assessee under Section 69C of the Act which was, in turn, deleted by the Ld. AO. Hence, the instant appeal before us. 8. At the time of hearing of the instant appeal the Ld. D.R. vehemently argued the matter in favour of the Revenue. The Ld. CIT(A) has not appreciated that DRAIPL is an individual judicial entity and merely because it has some unexplained income of his own the same cannot be held to have been used by its directors without such transfer of funds as was the main contention of the Ld. D.R. 9. On the other hand, the Ld. Counsel appearing for the assessee submitted before us that the AO without considering the full facts of the case made the addition against the assessee. The fact that the income surrendered in the hands of M/s. Dineshchandra Rameshwarlal Agrawal Infracon Pvt. Ltd. on account of inflated expenditures was utilized in construction of house property has not been considered by the Ld. AO in its proper perspective. It was further argued by the Ld. A.R. that the Ld. AO has failed to bring any evidence on record that the income which has been surrendered by the company and disclosed in the returned filed under Section 153A by inflating the expenditure was utilized otherwise by the assessee company other than house construction or obtaining long-term capital gain income. In that view of the matter the Ld. CIT(A) has rightly allowed telescoping and the claim of set off by the assessee. He, therefore, relies upon the order passed by the Ld. CIT(A). I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 6 - 10. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 11. The following break-up of the total surrendered amount of Rs. 18,00,00,000/- by DRAIPL in A.Y. 2012-13, 2013-14 and 2017-18 has been submitted by the assessee before the authorities below: Assessment Year Amount surrendered Amount disclosed in the return of income 2012-13 686426 686426 2013-14 118702925 118702925 2017-18 60610649 60610649 Total:- 180000000 180000000 12. In addition following financial year wise break-up of the disclosed amount of Rs. 4.92 crores by the assessee was furnished before the Investigation Wing as appearing from the order passed by the Ld. A.O: F.Y. Expenditure Incurred (in Rs.) 2015-16 2,56,92,563 2014-15 1,26,18,851 2013-14 54,83,074 2012-13 47,75,086 2011-12 06,86,426 Total:- 4,92,56,000 13. However, the Ld. AO has observed that the said disclosure Rs. 4,92,56,000/- was not shown in the return of income of any person, neither the assessee before us nor Smt. Usha Agrawal or Shri Jagdish Chandra Agrawal. In that view of the matter a show-cause notice dated 31.10.2018 under Section 142(1) was issued to the assessee directing him to explain as to why the amount of Rs. 4.92 crores should not be treated as his undisclosed income used for construction of house and as to why the same should not be added to the hands of the assessee in his individual capacity for the relevant assessment years. The case of the assessee before the Assessing Officer is this that the total amount of Rs. 4,92,56,000/- has already been surrendered by DRAIPL in its return of income and further addition is unsustainable. However, no I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 7 - documentary evidence establishing direct nexus between generation of unaccounted income from DRAIPL and its application in the form of bringing back that amount in the books of accounts of the appellant has been furnished by the assessee as the observation of the Ld. AO as appearing from the records. He, therefore, referred the matter to the District Valuation Officer (in short “DVO”) for a Valuation Report and a second show-cause was issued as to why the difference of Rs. 2,80,348/- worked out between the amount of cost of construction as per Valuation Report and the amount of cost of construction as per the assessee would not be added. In reply to that, the assessee submitted the detail chart of surrender of income made and application of such income before the Investigation Wing which is appearing at Page 9 & 10 of the Assessment Order. Further that, since the difference is very minor and is due to the adoption of CPWD ratio, the addition, if any is not called for as also contended by the assessee. 14. The AO in the absence of any documentary evidences showing the relation between generation of unaccounted income from DRAIPL and its application in the form of bringing back the amount books of accounts did not accept the contention of the assessee and accordingly, on the basis of year wise cost of investments as per DVO’s Report dated 12.12.2018 an amount of Rs. 6,32,638/- was held to be undisclosed amount of cost of construction of residential bungalows incurred in cash and was added to the total income of the assessee under Section 69C of the Act. 15. During the appellate proceeding the assessee submitted that (i) The addition has been made not on the basis of any incriminating documents found during the course of search but the addition has been made with reference to valuation report of the DVO which was not called for in case of proceedings u/s 153A. I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 8 - (ii) The addition has been made by the Assessing Officer without considering the full facts of the case in proper perspective and disregarding the submissions of the assessee that the income surrendered in the hands of the DRAIPL on account of bogus claims of expenditures was in fact utilized in construction of house properties - in the hands of Shri Jagdish Agarwal, Shri Dinesh Agarwal and Smt. Usha Agarwal specifically in the construction of 4-5, Hermitage Villa and 22-23, Hermitage Villa. 16. Apart from the above submission before the Ld. CIT(A) it was also the case of the appellant that as per regular books of accounts a sum of Rs. 3,47,89,652/- stood invested in the construction of house properties – 4-5, Hermitage and 22-23, Hermitage Villa in the hands of all the directors. The AO referred the matter to the DVO who estimated the investment at Rs. 8,43,26,000/- against such disclosed investment of Rs. 3,47,89,652/-. In order to met out the unexplained expenditure in the construction of house properties the assessee Group had submitted that a sum of Rs. 4,92,56,000/- was met out of the surrender of Rs. 18,00,00,000/- made in the case of DRAIPL. Therefore, after adjustment of Rs. 4,92,56,000/- from the surrendered income in the hands of the company the total investment in both the house worked out to Rs. 8,40,45,652/- (3,47,89,652 + 4,92,56,000) as against the value adopted by the Ld. AO at Rs. 8,43,26,000/- in terms of the DVO’s report leaving a paltry difference of Rs. 2,80,348/- which is only 0.5% of the total investment in construction which was requested to be ignored. Several decisions of different judicial forums on this aspect has been relied upon by the assessee wherein it has been held that such difference varying from 5 to 10% deserves to be ignored. 17. The Ld. CIT(A) deleted the addition allowing telescoping / setting off the unaccounted / undisclosed expenditure / investment of the assessee with I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 9 - the undisclosed income in the hands of the DRAIPL Group for the year under consideration. 18. The benefit of surrendered income in the hands of the company against investment in the hands of the Directors that is the assessee before us in construction of two house properties has not been considered by the Ld. AO as it is evident from the order passed by him. It is a fact that there was bogus expenditure which was claimed in the hands of the company and has been surrendered and further offered to tax. Such amount has become available to the group to explain unexplained investments and expenditure in subsequent periods. In such a situation the telescoping / set off have been allowed by various judicial forums. Neither there is any bar in law and in practice that disclosure of unaccounted income by one entity cannot be the source of the unexplained investment / expenditure of other person. The above case repeatedly sought to be made out by the assessee cannot be rejected in the absence of any record disproving such contention of the assessee. In this regard, the CIT(A) observed as follows: “A reasonable explanation of the assessee can be rejected only when cogent materials are brought on record which disprove the assessee's contention. Thus, it has to been only seen by the Department/AO that proper entries are made in the respective books/accounts i.e. once the telescoping is claimed/allowed the only remaining unutilized amount should be amount available/carried forward (in the balance sheet or otherwise), if any, for any future utilization. Thus the appellant is found justified in contending that since income was available in the hands of the company and the same was only utilized in the hands of the directors, there was no case of any (separate) surrender of income/addition on account of unexplained investment in the construction of house, more so, because in spite of the search/survey conducted, the AO has not been able to controvert any of the facts submitted by the appellant during the assessment proceedings. In my opinion, no specific documentary evidences are required to be filed by the assessee as mentioned/insisted by the AO. As per the well-settled principle of law (of taxation), a reasonable and plausible explanation of the assessee is admissible/acceptable if not refuted by the Revenue/AO in the manner that can stand the test of law. Thus under the facts and circumstances, the additions in the hands of the directors on account of unexplained investment in the two house properties deserve to be set off against the additional income available on account of disclosures made in DRAIPL. It is also to be put on record that in view of the incriminating material related to unaccounted investment in the construction of residential properties, there was no bar on the AO in carrying out any enquiry/investigation related thereto. Thus the AO, in my view, was competent to refer the valuation to the DVO and in making the additions based on incriminating material found during the search as well as the Valuation Report and such additions are allowed/legal for unabated assessment years. The I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 0 - appellant has neither contended nor established that the Valuation Report of the DVO was incorrect/high-pitched. Thus the determination of undisclosed/unaccounted expenditure/investment in the house properties is legal. However, the AO is directed to obtain a fresh, working of offer of undisclosed income in the hands of the Group specially DRAIPL and its appropriation towards all the unaccounted/undisclosed expenditure/investments and to satisfy himself of the adequacy of the telescoping/set off. The unaccounted/undisclosed expenses/investment to the extent of the undisclosed income offered to tax will be deleted. The AO is directed to treat the addition of Rs.7,71,001/- accordingly.” 19. Once the fact of bogus expenditure claimed in the hands of the company being surrendered and offered to tax and the same was utilized in the hands of the Director there would not be any case of separate surrender of income / addition on account of unexplained investment in the construction of house by the assessee and the claim of utilization of the surrendered income by the company in the hands of the assessee has rightly been considered by the Ld. CIT(A) in its proper perspective in the absence of any contrary document in the hands of the Revenue. It is a settled principle of law and the principle of accounts as well that addition cannot be made twice, once for income earned and again on the application of such income. It can only be made either on the basis of income or on the basis of asset or expenditure. In this regard, we have considered the judgment relied upon by the Ld. A.R. in the case of a. CIT Vs. Kulwant Kaur, reported in 121 ITR 914 (Del) b. CIT Vs. Manick Sons, reported in 74 ITR 1 (SC) c. CIT Vs. Five Star Holidays, reported in 294 ITR 54 (Del) wherein this principle has been further upheld. In that view of the matter telescoping of such surrendered income by the company against investment in the hands of the Directors as done by the Ld. CIT(A) is, therefore, found to be justified, without any ambiguity so as to warrant interference. The consequential direction passed by the Ld. CIT(A) as indicated in the order impugned is, therefore, found to be just and proper and thus, upheld. This ground of appeal preferred by Revenue is, thus, dismissed. I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 1 - 20. Ground No.2:- The Revenue has challenged the deletion of addition of Rs. 1,40,23,721/- made on account of bogus Long Term Capital Gain by allowing set off / telescoping of undisclosed income in the hands of DRAIPL. 21. During the course of search it was noticed that Shri Dinesh Chandra R. Agrawal had claimed Long Term Capital Gain of Rs. 1,40,23,721/-. The income surrendered in the hands of the DRAIPL on account of inflated expenditures was utilized in purchasing shares as the case made out by the assessee which was ultimately not accepted by the Ld. AO and the amount was treated as bogus Long Term Capital Gain and was added to the total income of the assessee. The Ld. CIT(A) in appeal deleted the same. Hence, the instant appeal before us. 22. The brief facts leading to the case is this that the Revenue was in possession of the information that the key person of the company (DRAIPL) Shri Dinesh Chandra R. Agrawal and Ushadevi R. Agrawal had obtained accommodation entries of bogus Long Term Capital Gain from Kolkata based entry operators in the scrip of Kappac Pharma Ltd. amounting to Rs. 4,12,14,020/- and from Gold Line International Finvest Ltd. amounting to Rs. 1,74,71,640/- out of which Rs. 1,40,24,721/- was the consideration of the share gained by the assessee. The said company was one of penny stock companies used for routing unaccounted income by various beneficiaries by way of bogus Long Term Capital Gain on sale of such penny stocks at exorbitantly high prices without any underlying supporting financials of such companies. However, the assessee disclosed Rs. 5,71,24,672/- in the Income Tax Return filed prior to the date of search. It was further submitted by the assessee before the Revenue that those shares were purchased through SEBI registered broker with STT (Securities Transaction Tax) duly paid and the shares were dematted thereafter in the account of the assessee and the amounts were transacted through proper banking channels. However, to buy peace of I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 2 - mind the same was surrendered and included in the return of income of DRAIPL from where the income was generated by inflating the expenditure and investment was made in the name of the individuals. In that view of the matter it was case of the assessee that no addition can be made in the hands of the individual/appellant on account of alleged accommodation entries by way of bogus Long Term Capital Gain from penny stocks. 23. The Ld. AO did not accept such submission rendered by the assessee in the absence of any documentary and/or other evidences establishing direct nexus between generation of unaccounted income of DRAIPL and its application in the form of bringing back this amount to the books of the assessee in the form of bogus Long Term Capital Gain and addition was made which was, in turn, deleted by the Ld. CIT(A) in appeal. 24. At the time of hearing of the matter the Ld. D.R. relied upon the order passed by the Ld. A.O. Since no evidence in support of the case made out by the assessee establishing direct nexus between the surrendered by the company and the investment in Long Term Capital Gain made in the hands of the Director the order of addition made by the Ld. AO has been supported by the Ld. D.R. 25. On the other hand, the Ld. Counsel appearing for the assessee vehemently argued in favour of the case made out by the assessee that the income surrendered in the hands of the DRAIPL on account of inflation of expenditure was in fact utilized by the directors in obtaining Long Term Capital Gain and finally supported the order passed by the Ld. CIT(A) in telescoping of income surrendered in the hands of the company against application of assets, investments and expenditure in the hands of the directors. I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 3 - It was further submitted by him that once tax has been paid on the surrendered income by the company i.e. the income earned by the company cannot be added again on application of such income in the hands of the directors of the said company. Additions can be made either on the basis of income or on the basis of asset or expenditure. In this regard, he has relied upon the judgment passed by the Delhi High Court in the case of CIT vs. Kulwant Kaur, reported in 121 ITR 914 (Del), the judgment passed by the Hon’ble Apex Court in the case of CIT vs. Manick Sons, reported in 74 ITR 1 (SC) and the judgment passed by the Hon’ble Delhi High Court in the matter of CIT vs. Five Star Holidays, reported in 294 ITR 54 (Del). 26. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 27. It is an admitted fact that the assessee group surrendered Rs. 18,00,00,000/- in the case of DRAIPL in A.Y. 2012-13, 2013-14 and 2017-18 alongwith the details. In support of the same, copies of return alongwith the computation of income for the relevant A.Y. 2012-13, 2013-14 and 2017-18 had already been filed before the First Appellate Authority and before us as well. It appears from the records that the aforesaid income was surrendered in the hands of the company in regard to the inflated expenditure booked in the regular books of accounts. It is also a fact that such inflated expenditure has generated income in the hands of the company which was applied and/or utilized by the assessee group in the hands of the directors in consideration of house and obtaining Long Term Capital Gain of shares etc. The details of surrendered income in the hands of the company and the application of such income in the hands of directors in construction of house and Long Term Capital Gain and the excess cash found is also appearing at Page 34 of the order impugned before us. Thus, the fact for consideration before us is as to whether the appellant’s submission that the said income related to bogus Long I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 4 - Term Capital Gain stand offered to tax as claimed by the assessee and whether the issue is rightly explained by way of application of undisclosed income in the hands of the DRAIPL. 28. It appears that while deciding the appeal the Ld. CIT(A) observed as follows:- “ 9.8 From the analysis of the assessment order and the appellant's submission, it is seen that in relevant paragraphs of the assessment order there is no mention of any incriminating material found during the course of search having any iota of evidence that the appellant had obtained bogus long term capital gain by way of transactions in alleged penny stock. This could have been issue of illegality for the unabated assessment year (including A.Y.2014-15). However, as the admission was made by the appellant in the statement u/s. 132(4) and there was no subsequent retraction there from, I find no applicability of the case laws relied upon by the appellant for the purpose of Ground No.1 and Ground No.2 of the appeal. It may also be that page Nos.19 and 20 of Annexure-BS6 seized from the residence of Shri Rajesh Mewada and discussed in relation to addition of Rs. 10,00,000/- on account of unexplained brokerage expenditure may be relevant incriminating materials for the purpose of the alleged bogus long term capital gain on sale of alleged penny stocks - shares of Kapacc Pharma Ltd. and Goldline International Finvest Ltd. In such a case, the appellant would not be liable for protection of the case laws relied upon for the purpose of Ground No.1 and Ground No.2 of the appeal. Whatever the case may be, the only issue that remains for adjudication is that whether the appellant's submission that the said amount related to bogus long term capital gains stand offered to tax as claimed and whether the issue is plausibly explained by way of application of undisclosed income in the hands of DRAIPL. 9.9 In principle and in view of the case laws relied upon by the appellant, the Ld. AR was requested to furnish a comprehensive chart for the Group showing the disclosure of additional income offered to tax pursuant to the search and the year-on- year cumulative income versus telescoping of expenses. The said chart submitted by the appellant is attached as Annexure-A to this appellate order. From the chart, it is seen that in all the years all the unaccounted/undisclosed investments/expenditure likely to be the application of undisclosed admitted income are adequately covered and thus the submissions of the appellant are plausible and in order. Therefore, there is no reason for draw adverse inference and make separate addition to the total income. Separate addition can be made only if the Department is able to controvert the explanation by and working of the appellant with adverse cogent materials on record and from the assessment, I find no such instance. Accordingly, under the facts and circumstances, the AO is directed to satisfy himself that the appellant has adequate funds available on account of undisclosed income offered in the Group which could be held utilized for obtaining accommodation entry on account of the LTCG on sale of penny stock(s). The AO is directed to deal the addition in the manner as laid down in the appellate order in the context of undisclosed expenditure/investment in construction of residential properties.” 29. It transpires from the records that there was bogus expenditure claimed in the hands of the company which has been surrendered. This bogus I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 5 - expenditure surrendered has generated income which was utilized by the Directors for the construction of house property and obtaining Long Term Capital Gain. The following detailed chart for the group showing the disclosure of additional income offered to tax pursuant to the search and the application/utilization of such income by the Directors was furnished by the assessee: A.Y. Surrendered on income in the hands of company DRAIPL Name Application of income Balance of surrendered income House const LTCG Cash Jewellery Total 2011- 12 0 0 0 0 0 0 0 2012- 13 686426 Dinesh Agarwal 686426 0 0 0 686426 0 2013- 14 118702925 Dinesh Agarwal 4775086 0 0 4775086 113927839 2014- 15 Dinesh Agarwal 5483074 29726506 0 0 35209580 78718259 2015- 16 Dinesh Agarwal 12618851 9926529 0 0 22545380 56172879 2016- 17 Dinesh Agarwal 25692563 17471640 0 0 10302686 63316639 2017- 18 60610649 Dinesh Agarwal 1129340 9173346 10302686 63316639 2017- 18 Jagdish Agarwal 8240000 16740605 24980605 38336034 2017- 18 Bharat Agarwal 470500 5153762 5624262 32711772 2017- 18 Manu Agarwal 1706295 1706295 31005477 180000000 49256000 57124675 9839840 32774008 148994523 31005477 It is evident from the above chart that in all the years all the unaccounted / undisclosed investments / expenditures likely to be the application of undisclosed admitted income were mostly covered. Therefore, the submission of the assessee that the income surrendered in the hands of M/s. Dineshcahndra Rameshwarlal Agarwal Infracon Pvt. Ltd. on account of inflation of expenditures was in fact utilized by the directors in obtaining Long Term Capital Gain has been duly accepted by the Ld. CIT(A). It was I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 6 - further noted by the Ld. CIT(A) as appears from the order impugned that the department has not been able to controvert the explanation by and working of the appellant with adverse cogent materials on record; neither such instances are appearing in the assessment proceeding. In the absence of the same the adverse inference drawn by the Ld. AO and making separate addition to the total income has been rightly found by the Ld. CIT(A) as unjustified. The Ld. CIT(A), therefore, finally direct the Ld. AO to be satisfied as to whether the appellant has adequate funds available on record of undisclosed income offered in the group which could be held unutilized for obtaining accommodation entries on account of LTCG on sale of penny stock. Taking into the entire aspect of the matter we, therefore, find the order passed by the Ld. CIT(A) reasonable and justified in giving benefit of telescoping of income surrendered in the hands of the company against application of assets, investments and expenditure in the hands of the directors. 30. Ground No.3:- Deletion of addition of Rs. 10,00,000/- made on account of unexplained brokerage expenditure is the subject matter before us. 31. The Ld. AO made addition of Rs. 10,00,000/- on account of brokerage paid for obtaining Long Term Capital Gain. During the course of re- assessment proceeding on 20.12.2018 a show-cause was issued to the assessee to explain the loose paper No. 19 & 20 of Annexure BS-6, seized from the resident of one of the accountant of the DRA Group namely Shri Rajesh Mewada and as to why brokerage given for the acquisition of share should not be considered at 5% unaccounted. In reply to the said show-cause it was submitted by the assessee that those papers were relating to the Kapac Pharma & Gold Line International which was purchased by him and his wife through proper banking channel and made through SEBI registered share brokers. It was further pointed by the assessee that during the course of search the assessee disclosed and admitted LTCG of Rs. 5,74,24,672/- the cost of I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 7 - purchase of those shares in the name of the assessee was Rs. 20,89,860/- and in the event 5% of the brokerage if to be added, the same would not exceed Rs. 1,04,493/-. However, it was also pointed out by the assessee that since the entire capital gain has been offered and disclosed has been made, the addition of brokerage is not sustainable. Such contention of the assessee was not found acceptable. However, the Ld. AO was of the opinion that the transactions seems to be for providing accommodation entry of huge amount of Rs. 5,71,24,672/-. The too small amount of Rs. 1,04,493/- cannot be a brokerage of such amount of accommodation entry and therefore, brokerage expenditure to the tune of Rs. 10,00,000/- at 1.5% of the entire amount of accommodation entry has been added to the total income of the assessee. In appeal the same was deleted by the Ld. CIT(A). Hence, the instant appeal before us. 32. At the time of hearing of the matter the Ld. D.R. relied upon the order passed by the Ld. A.O. 33. On the other hand, it was submitted by the Ld. Counsel appearing for the assessee that the action of the Ld. A.O. in making addition is unlawful, illegal and unjust. Further that, in view of telescoping of the income surrendered in the hands of the company against the application of assets/investments and expenditure in the hands of the Directors, the appellant is not required to furnish any documentary evidence as demanded by the Ld. AO. The only consideration would have been before the AO was as to whether funds were available for such appreciation. He ultimately relies upon the order passed by the Ld. CIT(A) in deleting the addition. 34. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 35. During the appellate proceeding the assessee submitted the following before the First Appellate Authority: I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 8 - “10.2 During the appeal proceedings, it has been submitted by the appellant that – a) The AO has made the addition purely on presumptions and conjectures and has assumed that brokerage/commission was paid @ 1.75% of the total long term capital 'gains of Rs. 5,71,24,672/- though there was no paper in the possession with the Assessing Officer seized during the course of search which Indicated payment of commission. b) The total cost of purchase of shares both in his name and in the name of his wife was of Rs. 20,89,860/- and that too was spread over in Assessment Year 2014-15, 2015-16 and 2016-17 and thus the assessee objected to commission rate of 1.75% on the sale proceeds of shares whereas it should have been only on cost of shares of Rs. 20,89,860/-. c) In respect of shares purchased in the name of wife, addition was not required to be made in the hands of the assessee. d) The shares were sold in Assessment Years 2014-15, 2015-16 & 2016-17 and the Assessing Officer was not justified in making addition on account of commission in assessment year 2014-15 only. e) The chart of surrender of income in the hands of the company and application of income in the hands of the directors revealed that there remained surplus of Rs. 31005477/- which remained unapplied and therefore, the commission payment if any was fully covered by the aforesaid surplus amount of Rs. 31005477/-.” 36. The Ld. CIT(A) upon considering the entire aspect of the matter deleted the addition with the following observation: “10.3 On analytical examination of the facts, 1 am of the considered opinion that on one level, there are incriminating materials related to the issue found during the search and the LTCG was, for whatever reason, admitted by the appellant for offer to tax, there is substance in the AO's position that commission must have been paid for the alleged accommodation entry in the garb of LTCG but at the same time on the other hand the demand of telescoping of unaccounted expenses as application of unutilized undisclosed income offered during the course of search and in the return of income is reasonable for which, the appellant is not required to furnish any documentary evidences as demanded by the AO and it has to be only seen that proper entries/accounting has been made and taken on record and that funds are available for such appropriateion. The AO is directed to obtain such working and to satisfy himself. The addition of Rs.10,00,000/- is directed to be deleted if the appellant (in other words DRAIPL) has the source out of the disclosure made in the hands of DRAIPL. Any excess of expenditure/investment over the disclosure by DRAIPL will be retained as income while giving effect to the appellate order.” 37. Thus, it appears once the telescoping of unaccounted expenses as application of unutilized undisclosed income offered during the course of search by the company has already been found justified by the Ld. CIT(A), which is also found to be rational by us the addition made by the Ld. AO has I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 1 9 - not been found reasonable, rather the prime consideration would be the availability of such fund for such appreciation which according to us, is just and proper. The direction passed by the Ld. CIT(A) in directing the AO to obtain such working and to delete the addition in the event the source of disclosure is found in the hands of the assessee company out of which the said expenditure/investment has been made by the Directors of the company, the assessee before us is, therefore, found to be justified. 38. We do not find any ambiguity in such order passed by the Ld. CIT(A). Hence, this ground of appeal filed by the Revenue is found to be devoid of any merit and thus, dismissed. IT(SS)A No. 443/Ahd/19 (A.Y. 2016-17):- 39. The identical issues involved in the case have already been dealt with by us in Ground Nos. 1 & 2 of IT(SS)A No. 442/Ahd/2019 for A.Y. 2014-15 and in the absence of any changed circumstances, the same shall apply mutatis mutandis. IT(SS)A No. 444/Ahd/19 (A.Y. 2014-15):- 40. The identical issues involved in the case have already been dealt with by us in Ground Nos. 1 & 2 of IT(SS)A No. 442/Ahd/2019 for A.Y. 2014-15 and in the absence of any changed circumstances, the same shall apply mutatis mutandis. IT(SS)A No. 445/Ahd/2019(A.Y. 2017-18):- 41. Ground No.1:- The identical issue involved in the case has already been dealt with by us in Ground No. 1 of IT(SS)A No. 442/Ahd/2019 for A.Y. 2014-15 and in the absence of any changed circumstances, the same shall apply mutatis mutandis. I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 2 0 - 42. Ground Nos. 2&3:- The next ground relating to the addition of Rs. 1,67,40,155/- made on account of unexplained investment in respect of jewellery found during the course of search and surrendered under Section 132(4) held to the unexplained for the source of such investment. Further that addition of Rs. 82,40,000/- on account of cash found during the course of search held to the unexplained by the Ld. AO. According to him the amount surrendered on account of cash and jewellery has not been offered to tax in the return by the assessee for the relevant assessment year. However, the Ld. CIT(A) deleted the same by allowing the claim of telescoping of income surrendered in the hands of the company against the aforesaid asset/investment. Hence, the instant appeal before us. 43. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 44. During the course of assessment proceeding in response to the show- cause issued to the assessee it was submitted that the expenditure/expenses made on those items was not an income but application of income. The Directors of DRAIPL in fact has no independent source of income and the investments in these assets was made out of the money withdrawn by inflating expenditure by DRAIPL which has been surrendered in the hand of the company. We have already placed the fact of disclosure of 18,00,00,000/- in the hands of DRAIPL in the various assessment years on lump sum basis by covering all the disclosures including of Rs. 4,26,13,398/- in respect of the assessee before us. However, the Ld. AO did not accept the contention of the group holding that it had failed to prove the direct nexus between generation of unaccounted income in DRAIPL and its subsequent application in the form of investment in jewellery and bullion in the name of the individuals of the family. In was further held that the amount of Rs. 4,26,13,398/- as additional undisclosed income of the individual is separate from the lump sum disclosure I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 2 1 - of the company of Rs. 18,00,00,000/-. In that view of the matter the amount of Rs. 1,67,40,155/- on account of jewellery and Rs. 82,40,000/- on account of unexplained cash credit under Section 69 and 69A respectively has been added to the total income of the assessee for A.Y. 2017-18. However, the Ld. CIT(A) deleted the addition. 45. While doing so the Ld. CIT(A) observed as follows: “13.8 It is submitted by the appellant that it is a case of surrender of income in the hands of company and application of the same income in the hands of the directors. Virtually it is claim of telescoping of income of the company versus the investments and expenditures in the hands of the Directors. It is submitted that during the course of search, the company (DRAIPL) had surrendered a total amount of Rs.18,00,00,000/- in A.Yrs. 2012-13, 2013-14 and 2017-18 as under: Assessment Year Amount surrendered (Rs.) Amount disclosed in the return of income (Rs.) 2012-13 686426 686426 2013-14 118702925 118702925 2017-18 60610649 60610649 Total 180000000 180000000 13.9 It is submitted by the appellant that the aforesaid income was surrendered in the hands of the company with reference to inflated expenditure booked in the regular books of accounts, that such surrender of inflated expenditure had generated income in the hands of the company which was applied/utilized by the assessee group in the hands of the directors - Shri Dinesh Agarwal, Shri Jagdish Agarwal, Shri Bharat Agarwal and Shri Manu Agrawal in construction of house, the investment of jewellery, marriage expenditure etc. etc. A sum of Rs.4,92,56,000/- stood applied in the construction of house properties in the name of the directors. The detail of surrendered income in the hands of the company as well as application of income in the hands of directors in construction of house, long term capital gain, expenditure incurred in marriage and excess cash found was reflected as per the table below:- A.Y. Surrender of income in the hands of company DRAIPL Name Application of income in the hands of directors Balance of surrendered income House const LTCG Cash Jewellery Total 2011-12 0 0 0 0 0 0 0 2012-13 686426 Dinesh Agarwal 686426 0 0 0 686426 0 2013-14 118702925 Dinesh Agarwal 4775086 0 0 4775085 113927839 2014-15 Dinesh Agarwal 54S3074 29726506 0 0 35209580 78716259 2015-16 Dinesh Agaiwal 12618851 9926529 0 0 22545380 56172879 2016-17 Dinesh Agarwal 25692563 17471640 0 0 43164203 13008676 2017-18 60610649 Dinesh Agarwal 1129340 9173346 10302686 63316639 I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 2 2 - 2017-18 Jagdish Agarwal 8240000 16740605 24980605 38336034 2017-18 Bharat Agarwal 470500 5153762 56242S2 3 97 11 779 2017-18 Manu Agarwal 1706295 1706295 31005477 180000000 49256000 57124675 9839340 32774008 148994523 31005477 13.10 It is the case of the appellant that the Assessing Officer has not given any reasoning for not considering the aforesaid submissions, that the Assessee Group is fully within the four corners of the law in taking benefit of telescoping of income surrendered in the hands of the company against application of assets, investments arid expenditure in the hands of the Directors, that it is settled principle of law as well as of accounts that addition cannot be made twice - once for income earned and again on application of such income. Additions can be made either on the basis of income or on the basis of asset or expenditure. The reliance is placed on case laws below: - a. CIT Vs. Kulwant Kaur 121 ITR 914 (Del) b. CIT Vs. Manick Sons 74 ITR 1 (SC) c. CIT Vs Five Star Holidays 294 ITR 54 (Del) 13.11 The issued related to jewellery and cash found/seized are similar to the investment in the construction of residential bunglows considered in earlier assessment years before. On analytical examination of the facts, I am of the considered opinion that the demand of telescoping of unaccounted expenses as application of unutilized undisclosed income offered during the course of search and in the returns of income is reasonable for which the appellant is not required to furnish any documentary evidences as to direct nexus between the two as demanded by the AO and it has to be only seen by the AO that proper entries/accounting has been made and taken on record and that there is such income available for such set off. The AO is directed to obtain such working and to satisfy himself. The additions of Rs.1,67,40,155/- on account of jewellery and Rs.82,40,000/- on account of cash are directed to be treated accordingly.” As we have already discussed that it is the case of surrender of income in the hands of the company and application of such income in the hands of the Directors, the issue in question relating to the jewellery and cash found and/or seized is similar to the investment in the construction of residential bunglows considered in the earlier years before and in this year too. Therefore, the demand of telescoping of unaccounted expenses as application of unutilized undisclosed income offered during the course of search and in the return of income is found to be reasonable. In that case the appellant is not required to furnish any documentary evidence so as to prove the direct nexus between the two as demanded by the Ld. AO as has been rightly I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 2 3 - observed by the Ld. CIT(A). In that view of the matter, the Ld. CIT(A) has properly considered the factor as to whether the proper entries/accounting has been made and taken on record and whether there is such income available for such set off. We, therefore, did not find any lacuna and/or infirmity in the order passed by the Ld. CIT(A) in directing the Ld. AO to obtain such working and to satisfy himself and to pass orders accordingly. The ground of appeal is found to be devoid of any merit and thus, dismissed. 46. Ground No.4:- The addition of Rs. 14,94,400/- on account of marriage expenses is in question before us. 47. At the time of hearing of the instant appeal the Ld. D.R. appearing for the Revenue relied upon the order passed by the Ld. AO. 48. On the other hand, the Ld. Counsel appearing for the assessee duly supported the order passed by the Ld. CIT(A). 49. The brief facts leading to the issue is this that during the course of search a blue colour diary containing 20 pages and inventorised as LF-2 was found which showed payment amount of Rs. 14,94,000/- to various persons at different places. In response to the show-cause as to why the said amount should not be treated as unexplained expenditure and added to the total income of the assessee for the year under consideration, it was explained by the assessee that the said expenses were already debited to the capital account; Rs. 12,00,000/- debited on 31.03.2011 and Rs. 33,26,710/- debited as daughter’s marriage expenses; Rs. 7,40,720/- was further not paid. As the diary containing various such expenditure pertaining to Financial Year 2016- 17 incurred by family members since not having been accounted by the assessee the said amount of cash incurred was treated as unexplained and added to the total income of the assessee under Section 69C of the Act. I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 2 4 - However, the same were deleted by the Ld. CIT(A). Hence, the instant appeal before us. 50. The case of the assessee before the Ld. CIT(A) is this that the statement of various expenditure to be incurred on estimation. Assessee and his wife has made sufficient withdrawals during the block period for making the expenditure of Rs. 14,94,400/-; the withdrawals are more than the said amount. In support of the contention made by the assessee the ledger of cash withdrawal showing sufficient withdrawal more than 30 lakhs from the account of the assessee in the month of February 2015 has been furnished by the assessee. The details whereof as noted by the Ld. CIT(A) in the order impugned is as follows: “On 09.02.2015 – Rs. 500000/- On 13.02.2015 – Rs. 500000/- On 14.02.2015 – Rs. 500000/- On 16.02.2015 – Rs. 500000/- On 17.02.2015 – Rs. 500000/- On 18.02.2015 – Rs. 500000/- On 19.02.2015 – Rs. 500000/-” It was also contended by the assessee that the pages in the diary are undated neither written by the assessee or his wife and therefore, cannot be related to any Assessment year. Neither the AO has been able to bring any material on record proving such expenditure was incurred for A.Y. 2017-18 by the assessee. The common contention raised by the assessee that the company DRAIPL has surrendered the income of Rs. 18,00,00,000/- and the application of such income is in the hands of such directors to the extent of Rs. 14,89,94,523/-. The balance of Rs. 3,10,05,477/- utilized which is enough balance to cover the expenditure of Rs. 14,94,400/- in question. 51. The Ld. CIT(A) while deleting the addition made the following observation: “13.16 In this regard, I find that during the search proceedings the appellant had admitted the amount to be unexplained and to offer the same for taxation. However, the said amount was not specifically shown in the return of income for the purpose of tax. I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 2 5 - As the entries in the said annexure are not established to be accounted for, the AO is justified in treating the amount as unexplained and liable for addition in the year corresponding to the date of search. But at the same time it has to be conceded that the amount is capable of being expenditure and application of the income earned by the appellant, family members and the Group concerns. The explanation of the appellant, during the assessment proceedings was plausible and reasonable and therefore, if the AO had to rebut the same, he was required to gather cogent material to disprove the assertion of the appellant. The same has not been done. Accordingly, following the decision in the context of expenditure related to construction of house and jewellery and cash found, 1 am of the considered opinion that the appellant has to be allowed benefit of telescoping and set off of unexplained expenses/investments with the unexplained/undisclosed income which has been offered to tax in the hands of the Group concern DRAIPL. Only if such disclosed income in the hands of DRAIPL is exhausted the addition on account of unexplained expenses/ investment in the hands of the appellant and other individuals of the family will survive. The AO is advised to obtain the chart of admitted undisclosed income in the hands of DRAIPL and set off of all such unexplained expenses/investments in the hands of all the individuals of the family including the appellant and having satisfied himself of the availability of such admitted undisclosed income for the purpose of explaining the undisclosed expenses/investments, the AO is directed to treat the addition of Rs. 14,94,400/- accordingly.” It appears that following the decision and/or finding in the context of expenditure related to construction of house and jewellery and cash found during the search the Ld. CIT(A) extended the benefit of telescoping and set off of unexplained expenses/investment of the assessee with the unexplained undisclosed income of the company which was offered to tax in the hand of the company DRAIPL. It was further observed that in the event if the disclosed amount of income in the hands of DRAIPL is exhausted, the addition on account of unexplained expenses/investment in the hands of the appellant and other individuals of the family would survive. In that view of the matter, in our considered opinion the Ld. CIT(A) has rightly allowed the benefit of telescoping in the aforesaid facts and circumstances of the case and in directing the AO to obtain the chart of estimated undisclosed income in the hands of DRAIPL and set off of all such unexplained expenses/investments in the hands of the individual of the family including the assessee and to pass orders in treating the addition of Rs. 14,94,400/- accordingly. We do not find any ambiguity in the order impugned before us for the reason as already narrated by the Ld. CIT(A) so as to warrant interference. Hence, this ground of appeal preferred by the Revenue fails and thus, dismissed. I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 2 6 - 52. Ground No.5:- The deletion of addition of Rs. 74,40,610/- on account of cash found during the search is under challenged before us. 53. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 54. The plea of the assessee is same as already taken in other grounds already decided by us hereinabove to this effect that the cash found belong to DRAIPL. It is not the income of the assessee rather the application of undisclosed income / inflated expenses of the company. The Revenue’s case is this that the said amount is not shown as disclosure in the return of the assessee for the year under consideration. 55. On the other hand, the assessee submitted the details of surrender of Rs. 2,49,80,155/- in his own hands which has been tabulated at Page 11 of the assessment order which has been claimed to be the cash found during the course of search formed part of the total surrender of Rs. 18,00,00,000/- on account of unexplained income generated by inflating expenditure on account of payment to various suppliers and vendors in the case of DRAIPL. However, during the course of search the cash was not found to be accounted in the books of DRAIPL and in the absence of any supporting evidence as to the said amount included to the disclosure, the same was added to the total income of the assessee under Section 69A of the Act. 56. We further find that the appellant before the Ld. CIT(A) reiterated its earlier stand by submitting that DRAIPL has surrendered Rs. 18,00,00,000/- in the hands of the company and it is the application of such income in the hands of such Directors to the extent of Rs. 14,89,94,523/- only. The balance of Rs. 3,10,05,477/- utilized is enough to cover the aforesaid cash and therefore, the addition is not called for. The issue is ultimately is the common i.e. the application of income out of admission and/or offer of undisclosed I T ( S S ) A N o s . 4 4 2 / A h d / 1 9 & 0 3 o t h e r s [ A C I T v s . M / s . Di n e s h c h a n d r a R A g r a w a l & o t h e r s ] A . Y s . 2 0 1 4 - 1 5 , 2 0 1 6 - 1 7 & 2 0 1 7 - 18 - 2 7 - income in the hands of DRAIPL in the context of unexplained expenses/investments in the hands of the individual of the family. In that view of the matter, allowing the claim of telescoping, the Ld. CIT(A) directed the AO to grant relief in the same line as indicated in the case of other additions which we have already considered and found justifiable without any ambiguity so as to warrant interference. The order passed by the Ld. CIT(A) is, therefore, upheld. The ground of appeal preferred by Revenue is, thus, found to be devoid of any merit and hence dismissed. 57. In the combined result, the appeal preferred by the Revenue in (i) IT(SS)A No. 442/A/2019 is dismissed. (ii) IT(SS)A No. 443/A/2019 is dismissed. (iii) IT(SS)A No. 444/A/2019 is dismissed. (iv) IT(SS)A No. 445/A/2019 is dismissed. This Order pronounced in Open Court on 13/07/2022 Sd/- Sd/- PRAMOD M JAGTAP (VICE PRESIDENT) MADHUMITA ROY (JUDICIAL MEMBER) TANMAY TRUE COPY Ahmedabad: Dated 13/07/2022 आदेश क $त%ल&प अ'े&षत / Copy of Order Forwarded to:- 1. राज व / Revenue 2. आवेदक / Assessee 3. संबं)धत आयकर आय ु +त / Concerned CIT 4.आयकर आय ु +त- अपील / CIT (A) 5. &वभागीय $त$न)ध,आयकर अपील य अ)धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड1 फाइल / Guard file. By order/आदेश से, उप/सहायक पंजीकारआयकर अपील य अ)धकरण,अहमदाबाद । 1.Date of dictation on 22.06.2022, 24.06.2022, 01&04.07.2022 2.Date on which the typed draft is placed before the Dictating Member 24.06.2022 & 05.07.2022 3.Date on which the approved draft comes to the Sr.P.S./P.S. 11.07.2022 4.Date on which the fair order is placed before the Dictating Member for pronouncement 5.Date on which the fair order comes back to the Sr.P.S./P.S 6.Date on which the file goes to the Bench Clerk 13 .07.2022 7.Date on which the file goes to the Head Clerk............. 8.The date on which the file goes to the Asstt. Registrar for signature on the order........................ 9.Date of Despatch of the Order.........