JUDGMENT JUDGMENT UDAY SINHA J.-These are two references under section 256(1) of Income-tax Act, 1961, by consolidated case statement. They arise out of six appeals and cross-appeals by assessee and Department. references relate to assessment years 1967-68 and 1968-69. assessee is firm of five partners. It was assessed as unregistered firm. It deals in sale and purchase of bidi leaves and tobacco. While assessing, Income-tax Officer found sum of Rs. 1,25,000 plus interest of Rs. 4,106 thereon (total Rs. 1,29,106) credited in books of firm for assessment year 1967-68 and sum of Rs. 1,05,201 during assessment year 1968-69. Income-tax Officer not having accepted genuineness of cash credits treated them as unexplained income and taxed them accordingly. Appellate Assistant Commissioner confirmed findings of Income-tax Officer in regard to cash credits. stand of assessee in regard to cash credits in respect of all but two items did not find favour with Appellate Tribunal as well. Tribunal, however, accepted stand of assessee in regard to loans of Rs. 20,598 and Rs. 8,247 (principal and interest) by Navjug Bidi Company and Ram Bidi Company, respectively. Tribunal thus held that out of credits in assessment year 1968-69, assessee had successfully explained loans of Rs. 28,845 from Navjug Bidi Company and Ram Bidi Company both of Nepal. transactions in regard to loans from individuals during year 1967-68 were rejected without any modification. finding of Tribunal in regard to cash credits, therefore, was that assessee had failed to explain cash credits to tune of Rs. 1,29,106 during year 1967-68 and sum of Rs. 85,356 during year 1968-69. 1 have some difficulty in following arithmetic of Tribunal in regard to unexplained sums, but that is not important. Suffice it to say that case of cash credits was rejected by all Revenue authorities. Thus far, there is no difficulty. Tribunal, however, allowed " telescoping benefit " to assessee on account of intangible additions sustained by them in bidi leaves and tobacco account to tune of Rs. 25,000 and Rs. 17,250 for two assessment years, respectively. Revenue objects to conferment of telescoping benefit to assessee for two years. claim of assessee to telescoping benefit was accepted by Tribunal on ground that that point had been decided in favour of assessee in appeal for assessment year 1966-67. For sake of consistency, it followed its earlier decision and confirmed telescopic benefit to assessee. question, therefore, referred to this court is: " Whether, on facts and in circumstances of case, Income- tax Appellate Tribunal were correct in law in allowing telescoping benefit on account of intangible additions in trading account sustained by them during same assessment year? " order of Tribunal in appeal in relation to assessment year 1966-67 has been filed as miscellaneous paper by Revenue. From order of Tribunal in relation to appeal for assessment year 1966-67, position was that sums of Rs. 4,000 and Rs. 3,500 were found credited in books of assessee as loans from Pravin Kumar and Chhotelal Dubey, respectively. Income-tax Officer did not accept them as genuine loans. They were, therefore, taxed as income from " other sources ". While asserting that cash credits were genuine transactions, assessee contended in alternative that even if they were not held to be genuine, they should be set off against additions in trading account. Tribunal accepted transaction in regard to loan from Chhotelal Dubey, but rejected it in regard to loan from Pravin Kumar to tune of Rs. 4,000. Having done that, Tribunal accepted alternative plea of assessee and set off additions against cash credits. profit of firm had been enhanced by sum of Rs. 10,000. Tribunal held that sum of Rs. 4,000 was covered by added profit of Rs. 10,000. addition of Rs. 7,500 was thus deleted. Tribunal gave same benefit for assessment years 1967-68 and 1968-69 with which we are concerned in two references before us. question, therefore, is whether additions in trading account can be set off against income from undisclosed sources or other sources. In order to appreciate contentions of parties, it would be useful to set out some more facts. During assessment year 1967-68, assessee showed purchase in bidi leaves of value of Rs. 13,67,856. Income-tax Officer held that purchase figures were inflated. He, therefore, cut down purchase figure by Rs. 1,50,000. He took this figure as income of assessee. Income-tax Officer also found that figure for shortage of 12,546 bags on conversion to 7,281 bags of bidi leaves was high. shortage thus was about 72.6% as against 62% during preceding year. This, in view of Income-tax Officer, was unusually high. He, therefore, added back Rs. 25,000 for excess shortage. Income-tax Officer thus added Rs. 1,75,000 in bidi leaves purchase account for assessment year 1967-68 and Rs. 1,05,000 for assessment year 1968-69 and Rs. 30,000 on account of conversion loss. Income-tax Officer thus treated Rs. 1,35,000 as income of assessee for year 1968-69. assessee during assessment year 1967-68 had shown gross profit of Rs. 1,84, 519 which worked out to 11.72%. This was considered to be low by Income-tax Officer in view of past records. For reasons assigned, Income-tax Officer rejected figures and estimated profit at Rs. 2,16,000 which worked out to 13.5% gross profit.. He thus added Rs. 32,156 for year 1967-68 and for assessment year 1968-69, sum of Rs. 5,000 to total income. On appeal, Appellate Assistant Commissioner added only Rs. 50,000 on account of excess purchase of bidi leaves as against estimate of Income-tax Officer at Rs. 1,75,000 for year 1967-68 and Rs. 70,000 for year 1968-69 as against sum of Rs.1,05,000 added by Income-tax Officer. sum of Rs. 30,000 on account of shortage of bidi leaves by conversion was totally deleted for both years by appellate authority. On account of purchase of tobacco, Appellate Assistant Commissioner sustained addition only of Rs. 5,000 for year 1967-68. addition on account of sale of tobacco of Rs. 5,000 during year 1968-69 as found by Income-tax Officer was completely deleted. On further appeal by assessee, figures on account of excess purchase, of bidi leaves was reduced to Rs. 20,000 and Rs. 15,000 during assessment years 1967-68 and 1968-69, respectively. Tribunal confirmed addition of Rs. 5,000 during assessment year 1967-68 on account of sales of tobacco in agreement with findings of Appellate Assistant Commissioner, but retained addition of Rs. 2,500 on account of sales of tobacco during year 1968-69. This was as sequel to appeal by Revenue. Thus, during year 1967-68, total sum of Rs, 25,000 was added to taxable income on account of discrepancy in purchase of bidi leaves and sum of Rs. 7,500 on account of profit on sales of tobacco. Having recorded these findings of fact, Tribunal considered claim of assessee that sums added as profits to total income should be set off or adjusted against cash credits whose existence had not found favour with Revenue and directed that intangible additions upheld in bidi leaf account and tobacco account be set off against cash credits which had not been satisfactorily explained by assessee. Revenue has taken exception to this set-off doled out to assessee. In back ground of these facts, question referred to us has to be answered. Learned standing counsel for Revenue has contended that there was no occasion for adjusting or setting off of additions in trading account against cash credits. It was submitted that all cash credits were recorded in May, 1967, which would be mid-season of bidi account and, therefore, they could not be concealed profits earned during assessment years. Tribunal observed in respect of previous assessment year (1966-67) that cash credits may be deemed to have been covered by additions made in trading account. orders of Tribunal for years under reference were passed on same footing. basis of order of Tribunal thus is that since there were unexplained cash credits, additions to trading account must be related to those cash credits. I have some difficulty in accepting this bald proposition. There can be no presumption that whenever additions to profit or trading account are effected, they must be set off against cash credits unexplained by assessee. It was never case of assessee that cash credits were intangible additions of previous assessment years. It was not assessee's assertion that intangible additions were available with assessee and that these were introduced in books of account as cash credits. It was open to assessee to advance pleas in alternative in regard to cash credits, but no such plea was taken. It is, therefore, difficult to hold that cash credits were intangible additions of previous years. In Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457, Supreme Court observed that (p. 462): " secret profits or undisclosed income of assessee earned in earlier assessment year may constitute fund, even though concealed, from which assessee may draw subsequently for meeting expenditure or introducing amounts in his account books. But it is quite another thing to say that any part of that fund must necessarily be regarded as source of unexplained expenditure incurred or of cash credits recorded during subsequent assessment year. mere availability of such fund cannot, in all cases, imply that assessee has not earned further secret profits during relevant assessment year......... It is matter for consideration by taxing authority in each case whether unexplained cash deficits and cash credits can be reasonably attributed to pre-existing fund of concealed profits or they are reasonably explained by reference to concealed income earned in that very year. In each case, true nature of cash deficit and cash credit must be ascertained from overall consideration of particular facts and circumstances of case. Evidence may exist to show that reliance cannot be placed completely on availability of previously earned undisclosed income. number of circumstances of vital significance may point to conclusion that cash deficit or cash credit cannot reasonably be related to amount covered by intangible addition but must be regarded as pointing to receipt of undisclosed income earned but must be regarded as pointing to receipt of undisclosed income earned during assessment year under consideration. It is open to Revenue to rely on all circumstances pointing to that conclusion. What these several circumstances can be is difficult to enumerate and indeed, from nature of enquiry, it is almost impossible to do so." Thus there can be no general or absolute rule to effect that whenever additions to profits are made, they must be regarded as funds represented in books of account as cash credit. assessee may try to cheat Revenue not only by showing fake cash credits but also by suppressed profits. Tribunal, therefore, had to consider whether cash credits were profits or income earned during respective assessment years. assessee did not point to any circumstance or material indicating that cash credits were profits earned by assessee during very same assessment year. Learned standing counsel for Revenue brought to our notice decision in CIT v. Manick Sons [1969] 74 ITR 1 (SC) in aid of his submission. We have considerable reservation about efficacy of this decision in favour of Revenue. weight of decision must depend upon its ratio. decision is authority only for what it actually decides and not logical extension therefrom. [ Quinn v. Leathem [1901] AC 495 and Regional Manager v.PawanKumar Dubey, AIR [1976] SC 1766. In that case, question was whether Tribunal hearing appeal may give direction for reopening of assessment of year to which appeal does not relate. In that context, Supreme Court observed that Tribunal cannot give any direction to reassess any case for period not covered by that year and that it cannot assume powers which are inconsistent with express provisions of Act or its scheme. This decision, therefore, must be left out of account. It does not support either assessee or Revenue in instant case. In M. I. Chakkoru v. CIT [1980] 121 ITR 440, 442 (Ker) and in Annamma Paul v. CIT [1980] 121 ITR 433, (Ker), Kerala High Court laid down that it is not law that whenever estimate of income has been made for any particular year, amount added by that estimate as income from business disclosed and additions to income from undisclosed sources because of unexplained credits must be taken to be available with assessee for being credited in subsequent year of account. Similarly, Madras High Court in CIT v. Banarsilal Dhawan [1977] 109 ITR 360 laid down as follows (headnote): There is no general proposition of law that whenever assessee failed to explain credits found in his books of account, it was open to him to claim set-off of those credits as against additions made to his income in previous years' assessments. It will be question of fact in each case as to whether there was evidence to find that such additions were sources of subsequent credits. Learned counsel for assessee placed reliance upon decision of Allahabad High Court in CIT v. Babban Pandey [1970] 77 ITR 601, where T. P. Mukherjee J., on difference of opinion between Jagdish Sahai and M. H. Beg JJ. (as they were then), accepted conferment of telescoping benefit to assessee. In that case, Tribunal had held that there was connection between profits withheld from books and cash credit entries. His Lordship held that finding was pure question of fact. That finding could not be challenged in reference. This case, in my view, proceeds upon finding of fact recorded by Tribunal. No exception can be taken to it. situation in present case is rather different as I shall explain later. decision of Allahabad High Court is based upon decision of Supreme Court in CIT v. S. Nelliappan [1967] 66 ITR 722. ratio of decision is to be found in following observations of Shah J. (headnote): " inference of Tribunal that there is connection between profits withheld by assessee from his account books and cash credit entries found therein and conclusion that since additions were made to book profits in excess of amount of cash credits, addition of cash credits becomes redundant, are findings of fact and no question of law can arise therefrom. " question, however, before us is really within very narrow compass. question is whether Tribunal has found any connection between additions and cash credits. If Tribunal had held that there was such connection, that would have been finding of fact and would have closed all controversy. situation in instant case, however, is entirely different. discussion in regard to this aspect of matter is to be found in paragraph 21 of order of Appellate Tribunal. Tribunal held that additions to profits must be held to be implicit in claim of cash credits and as such set- off had been conceded in assessments in assessment year 1966-67, assessee was entitled to some rebate. order of Tribunal in regard to assessment year 1966-67 shows that set-off of Rs. 4,000 claimed to be cash credits was allowed, as it was implicit in additional profits of Rs. 10,000. That was case where story of cash credits had been rejected and they were not treated as income of assessee, as addition of Rs. 10,000 had been added to profits. In year in question, position is reverse. Tribunal has ordered that addition to profit must be adjusted against claim of cash credits. If this process of reasoning were to be accepted, it would have to be conceded that if assessee has tried to hoodwink Revenue at one point, he cannot be held to have hoodwinked at another point as well. Such inference is not permissible. There is no presumption that whenever assessee has claimed fast and loose on one aspect, he must be given clean chit on all other aspects of matter and exonerated of all delinquencies. There are various modes of concealing profits. One may be by creation of cash credits. Another mode may be by inflating expenditure. other may be by decreasing profits. It cannot, therefore, be taken as axiom that once claim of assessee in regard to cash credit has been rejected, his claim or assertion in regard to profits must be accepted. assessee may be caught lying at more than one point and he will be liable to pay tax on account of all delinquencies at all points. Tribunal appears to have taken view as question of law, that if claim of cash credit is accepted, taxing authority must not challenge figure of profits returned by assessee. case in regard to intangible additions does not appear to have relevance on facts and situation in instant case. I have, therefore, not considered it necessary to go into greater detail into question of intangible additions being available for use or expenditure in subsequent years. case before us is not of intangible additions in past but of cash credit and addition to profits in same year. decision of Supreme Court in CIT v. S. Nelliappan [1967] 66 ITR 722 is relevant to case before us, but that case was decided on findings of fact. It does not, therefore, give us much help. Tribunal not having held that there was connection between cash credits and profit additions, it would be difficult to accord set off of two figures as ordered by Tribunal. Tribunal, therefore, had no justification for confirming telescoping benefits upon assessee. Learned counsel for assessee brought to our notice decision of this court in CIT v. Thakur Ram Ganga Prasad (P.) Ltd. [1986] 158 ITR 409 (Taxation Case No. 85 of 1975, disposed of on July 6, 1984). That case has no application to this case, as that proceeded upon intangible addition in past. It did not relate to cash credits and additions to profits during assessment year itself. other distinctive feature is that in that case their Lordships found that matter was concluded by findings of fact. Tribunal had held that intangible additions of past were available with assessee howsoever inaccurate. That finding was binding upon High Court. That is not situation here. That case, therefore, has no relevance in instant case. For reasons stated above, I am of view that Tribunal was not correct in allowing telescoping benefit on account of intangible additions in trading account claimed by assessee during same assessment year. reference is thus answered in favour of Revenue and against assessee. In circumstances of case, there shall be no order as to costs. NAZIR AHMAD J.-I agree. *** COMMISSIONER OF INCOME TAX v. JHAVERBHAI BIHARILAL & CO.