The amount was surrendered by the assessee during the course of search proceedings. The Assessing Officer found that he is an accused of the Vyapam case and the cash so deposited should have been from the income earned from alleged bribe received for admission in medical colleges.
Before the Tribunal, the assessee contended that the source of cash deposits of Rs.7,34,79,097/- is the maturity proceeds of hundis during the year which were made out of the unaccounted surrendered income offered to tax in the return of income for Assessment Year 2012-13.
The Tribunal noted that the proceeding initiated against the assessee under the Vyapam case fall in the financial year 2012-13 i.e. subsequent year whereas cash was deposited during Financial Year 2011-12. However, there was no evidence on the record to substantiate this fact that assessee received any unaccounted income in the form of a bribe for admission in medical college during the financial year 2011-12.
While allowing the contentions of the assessee, the Tribunal held that “It seems that Ld. A.O merely on the basis of surmises and conjectures have taken this view. He ignored the fact that the assessee has surrendered Rs.7 crores as unaccounted income during the year. This unaccounted income in cash was used in earning interest income by way of giving short term advance on hundis. Such hundis are normally issued through brokers. Only the name of the person receiving the money, his signature, the amount is given as advance, rate of interest, date of entering into the hundi agreement and the maturity date of receiving the money are provided. When the assessee shows the original hundi he receives the principal and interest. The assessee had surrendered his income from another source as unexplained money which was not recorded in the books of accounts and the assessee failed to offer any explanation about the nature and source of acquisition of these unexplained money/income. The hundis were impounded during the course of the survey which itself is sufficient evidence that unaccounted income has been invested. The unaccounted income has been offered to tax which is not in dispute.”
While granting relief to the assessee, the Tribunal also observed that “if there are two funds one which is already taxed and other has not and there were remittances during the accounting year for a certain sum, the source of which is not indicated then the presumption is that the remittances should have been from the fund which has already suffered tax.
While concluding the matter, the Tribunal also said that the assessee is entitled to the telescoping benefit of the income surrendered during the year to the cash deposited in the bank account.To Read the full text of the Order CLICK HERE