Income Tax Appellate Tribunal - Chandigarh
Dcit, C-1(1), Chandigarh vs M/S Kamesh Bhargava Hospital & Research ... on 31 July, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए ", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A', CHANDIGARH
ी संजय गग , याय क सद य एवं ीमती अ नपण
ू ा गु%ता, लेखा सद य
BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.30/Chd/2014
नधा रण वष / Assessment Year : 2005-06
The D.C.I.T., बनाम M/s Kamlesh Bhargava Hospital
Central Circle-1(1), & Research Centre (P) Ltd.,
Chandigarh. H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
&
C . O. N o s.4 0 & 4 3/C h d /2 0 16
In
आयकर अपील सं./ ITA No.30/Chd/2014
नधा रण वष / Assessment Year : 2005-06
M/s Kamlesh Bhargava बनाम The D.C.I.T.,
Hospital & Research Central Circle-1(1),
Centre (P) Ltd., Chandigarh.
H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
आयकर अपील सं./ ITA No.33/Chd/2014
नधा रण वष / Assessment Year : 2008-09
2
The D.C.I.T., बनाम M/s Kamlesh Bhargava Hospital
Central Circle-1(1), & Research Centre (P) Ltd.,
Chandigarh. H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
&
C .O .N o . 9/C h d /2 01 4
In
आयकर अपील सं./ ITA No.33/Chd/2014
नधा रण वष / Assessment Year : 2008-09
M/s Kamlesh Bhargava बनाम The D.C.I.T.,
Hospital & Research Central Circle-1(1),
Centre (P) Ltd., Chandigarh.
H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
आयकर अपील सं./ ITA No.34/Chd/2014
नधा रण वष / Assessment Year : 2009-10
The D.C.I.T., बनाम M/s Kamlesh Bhargava Hospital
Central Circle-1(1), & Research Centre (P) Ltd.,
Chandigarh. H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
&
C .O .N o . 10 /C hd / 20 14
In
आयकर अपील सं./ ITA No.34/Chd/2014
3
नधा रण वष / Assessment Year : 2009-10
M/s Kamlesh Bhargava बनाम The D.C.I.T.,
Hospital & Research Central Circle-1(1),
Centre (P) Ltd., Chandigarh.
H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
आयकर अपील सं./ ITA No.35/Chd/2014
नधा रण वष / Assessment Year : 2010-11
The D.C.I.T., बनाम M/s Kamlesh Bhargava Hospital
Central Circle-1(1), & Research Centre (P) Ltd.,
Chandigarh. H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
&
C .O .N o . 11 /C hd / 20 14
In
आयकर अपील सं./ ITA No.35/Chd/2014
नधा रण वष / Assessment Year : 2010-11
M/s Kamlesh Bhargava बनाम The D.C.I.T.,
Hospital & Research Central Circle-1(1),
Centre (P) Ltd., Chandigarh.
H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
आयकर अपील सं./ ITA No.36/Chd/2014
नधा रण वष / Assessment Year : 2011-12
4
The D.C.I.T., बनाम M/s Kamlesh Bhargava Hospital
Central Circle-1(1), & Research Centre (P) Ltd.,
Chandigarh. H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
&
C .O .N o . 12 /C hd / 20 14
In
आयकर अपील सं./ ITA No.36/Chd/2014
नधा रण वष / Assessment Year : 2011-12
M/s Kamlesh Bhargava बनाम The D.C.I.T.,
Hospital & Research Central Circle-1(1),
Centre (P) Ltd., Chandigarh.
H.No.761, Sector 8-B,
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Ashwani Kumar, CA
& Shri Aditya Kumar, CA
राज व क ओर से/ Revenue by : Dr.Ashish Gupta, CIT(DR)
सन
ु वाई क तार$ख/Date of Hearing : 23.05.2019
उदघोषणा क तार$ख/Date of Pronouncement : 31. 07.2019
&
आयकर अपील सं./ ITA Nos.1218 to 1222/Chd/2017
नधा रण वष / Assessment Years: 2007-08 to 2011-12
The D.C.I.T., बनाम M/s Kamlesh Bhargava Hospital
Central Circle-1(1), & Research Centre (P) Ltd.,
Chandigarh. H.No.761, Sector 8-B,
Chandigarh.
5
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
आयकर अपील सं./ ITA Nos.723 to 725/Chd/2017
नधा रण वष / Assessment Years: 2009-10 to 2011-12
M/s Kamlesh Bhargava Hospital बनाम The D.C.I.T.,
& Research Centre (P) Ltd., Central Circle-1(1),
H.No.761, Sector 8-B, Chandigarh.
Chandigarh.
थायी लेखा सं./PAN NO: AAACK7161 P
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Jaspal Sharma, Adv.
राज व क ओर से/ Revenue by : Shri Harjinder Singh, Sr.DR
सन
ु वाई क तार$ख/Date of Hearing : 23.05.2019
उदघोषणा क तार$ख/Date of Pronouncement : 07.2019
आदे श/ORDER
PER BENCH:
Al l the c a p ti one d a p p e a l s re l a te to t he s a me a ssess ee a nd a re a g a in st th e or de r of t he Com mi ss io ne r of I nc ome Ta x (A pp e a ls ), C h a ndi ga r h, [ (i n sh or t 'C I T( A )'] p a s se d u /s 2 5 0 (6 ) of the Income Tax Act, 1961 (in short 'the A c t ' ) , in q ua n tum p r o ce e d in gs a n d c ons e q u e nt pe n a l ty p r ocee d in gs a nd r e la te t o d i ff e re n t a sse ss men t ye a r s. Th e a s se sse e ha s fi le d C r oss O b je cti on s i n the a p pea ls fi l e d b y the Re ve n ue in q ua n tum p ro ce e di n gs.
2. Brief facts leading to the present appeals are that 6 a survey was conducted on the assessee on 21.09.2010 u/s 133A of the Act, which was converted into search u/s 132 of the Act, because cash amounting to Rs.45,80,420/- was found. Thereafter proceedings were initiated for assessing the income of the assessee for six years prior to the year of search and for the year in which search was conducted and assessment framed u/s 153A/143(3) of the Act, making additions on various counts. The orders so passed were challenged before the Ld.CIT(A), who allowed partial relief to the assessee. Aggrieved by the same, the Revenue has come up in appeal before us in the impugned years, while the assessee has filed Cross Objections.
3. At the outset, it was pointed out that there were common issues involved in the appeals. Therefore, since the appeals arose from orders passed consequent to search action undertaken on the assessee and involved common issues, all of them were taken up together for hearing.
4. The Ld.Counsel for the assessee pointed out that the common issues arose first in A.Y 2008-09 and 7 therefore stated that the appeal and cross objection relating to assessment year 2008-09,be first taken up for hearing. The appeal of the Revenue in I TA No.33/Chd/2014 was first taken up for hearing. ITA No.33/Chd/2014(A.Y.2008-09):
5. Ground Nos.1, 4 & 5 it was stated were general in nature . Th e same , there fore, nee d no a dj udica tion.
6. Ground No.2 raised by the Revenue reads as under:
"2. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.5,45,00,000/- made u/s 68 of the Act since the assessee has failed to prove that the whole amount related with cash receipts in Annexure A- 2 was deposited in banks and shown in the books of account."
7. The issue raised in the above ground relates to addition made on account of discrepancy noted in a document, A-2, seized during search at the assessee's premises.
8. Drawing our attention to the facts of the case it was pointed out that a diary was seized from the premises of the Director of the assessee company, Dr.Kamlesh Bhargava, which had entries relating to 8 cash received by him day-to-day and covered the period from 2.5.2007 to 20.9.2010, thus encompassing financial year 2007-08 to 2010-11,relevant to assessment years 2008-09 to 2011-12. The assessee was asked to file details of the notings made in the diary from which the AO noted that there was a difference in the total cash receipts and the amount deposited in the bank reflected in the said document, which he tabulated as under:
Net Cash Cash Deposit Difference
Collection as per as per A-2
A-2
AY 2008-09 6.68 Cr. 1.23 Cr. 5.45 Cr.
AY 2009- 10 7.73Cr. 4.01 Cr. 3.72 Cr.
AY 201 0-11 7.40 Cr. 4.90 Cr. 2.50 Cr.
AY 2011 -12 3.74 Cr. 3.39 Cr. 0.35 Cr.
Grand Total 25.55 Cr. 13.53 Cr. 12.02 Cr.
9. The assessee was asked to explain the difference and why the same may not be added back to the income of the assessee. The assessee filed detailed reply contending that the notings in the diary were incomplete and done in a haphazard manner and therefore required no cognizance to be taken of. It was further contended that the cash receipts accounted for in its books of the assessee were more than that 9 reflected in the diary, which proved that the entire cash reflected in the documents had been accounted for by the assessee. It was also contended that the income booked by the assessee for the impugned year was higher than the total cash receipts reflected in the diary thus proving that all the cash receipts in the dia ry ha d been a ccou nted for by the a ssessee. The AO was not satisfied with the reply of the assessee and held that since the assessee had failed to prove that the whole amount of cash receipts in annexure A-2 was deposited in bank and shown in the books, the cash receipts were to be treated as his income from undisclosed sources. Accordingly, the difference of the cash receipts and that deposited in the bank, as shown in document A-2, relating to the impugned year, amounting to Rs.5.45 crores, was treated as the income of the assessee u/s 68 of the Act.
10. Be fore the Ld .CI T( A), the assessee reitera ted his contentions by filing detailed submissions and also various details and workings to prove that the entire cash receipts reflected in the document A-2 had been accounted for in the books of the assessee. Th e 10 Ld.CI T(A) on perusing the same was convinced and accordingly deleted the addition made by the AO.
11. Before us, the Ld. DR contended that the fact that the document A-2, seized from the Director of the assessee company, contained notings of cash receipts and that deposited in the bank by the Director from the business of the assessee hospital, has not been disputed by the assessee. Also not disputed, it was contended, was the fact that the said document reflected a difference of Rs.5.45 crores between the cash receipts and cash deposited in bank by the Director during the impugned year. Th e Ld. DR contended that the assessee had failed to prove that it had deposited the whole amount of cash receipts reflected in the diary, in the bank and, therefore, the AO had rightly made the addition of the difference in the hands of the assessee as income unaccounted in the books of the assessee. The Ld. DR heavily relied upon the findings of the AO at para 4.2 of his order as under:
"4.2 The reply of assessee is duly consider but not accepted because assessee has failed to prove that the whole amount related with cash receipts in annexure - 2 (Dairy of 11 Akhil Bhargwa) is deposited in Banks and shown in the books. On perusal of annexure-2 it is clear that there are cash receipts which has been collected by Sh. Akhil Bhargwa, Director of Company and it is also clear that all the recipts have not booked into books, because it is a personal dairy of Sh. Akhil Bhargwa in which he has maintained day to day receipts of the business. The total of this annexure-2 is 25.55 Cr. which is cash receipts collected with Sh. Akhil Bhargwa, in the reply of assessee it is clear that according the deposit details in the banks shown in annexure-2 the total deposits are 13.53 Cr., so there is difference is 12.02 Cr. which has not been shown in the books of the company. This difference 12.02 Cr. is related with A.Y. 2008-09 to A.Y.2011-12. In the A.Y. 2008-09 the total cash receipts according the annexure -2 is 6.68 Cr. but the assessee has shown in his books only 1.23 Cr. (Deposited in Banks of Company), so there is difference of 5.45 Cr. which has not been explain by assessee. In his reply assessee said that his revenue receipts deposited banks during this time is more from the cash receipts in the annexure-2. This reply is also not accepted because assessee has failed to prove that all the receipts from the annexure-2 has been deposited in the banks. Further assessee said that this annexure-2 has been maintained by Sh. Akhil Bhargwa and the maintenance was not day to day basis because in many days he has not entered the amount of daily collection in his dairy and also not entered the deposit details of the receipts banks. This reply is also not accepted because Sh. Akhil Bhargwa is the administrative Director of the Company and he has day to day watch on the company activities and on perusal of annexure-2, it is also clear that Sh. Akhil Bhargwa has maintained this dairy on regular basis. The assessee has intensely has not shown these cash receipts in his income so according the section 68 of the IT. Act, 1961, the difference amount of 5.45 Cr. will be taxed as a income in the hand of assessed company."
12 The Ld.Counsel for the assessee, on the other hand, contended that it had demonstrated before both the AO a nd the C I T(A ) tha t the ca sh rece ipts r eflected in the documents had been duly accounted for in the books of the assessee and also deposited in the bank 12 account of the assessee and, therefore, the Ld.CI T(A) had rightly held that there was no reason to hold any amount of the cash receipts as unaccounted in the books of the assessee. The Ld.Counsel for the assessee at this juncture took us through various details and explanation filed to the lower authorities and placed in the form of Paper Book before us. Beginning with the document which formed the basis of the addition, being diary seized from the Director of the assessee company Dr.Akhil Bhargava and mentioned as Annexure A-2, placed at Paper Book page Nos.34 to 83, the Ld.Counsel for the assessee pointed out that on the basis of the details extracted from this document, it was found that there was a difference in the cash receipts reflected by Dr.Akhil Bhargava from assessee's business of running the hospital and amount deposited in bank, to the extent of Rs.5.45 crores for the impugned year. It was pointed out from the said document that admittedly it contained datewise notings of cash received by Dr.Akhil Bhargava and also notings of the cash deposited in the bank on various dates. Th e Ld.Counsel for the assessee contended that there is no 13 denying the fact that there was a difference of 5.45 crores in the cash shown as received by Dr.Akhil Bhargava and that deposited in the bank by him during the impugned year. But the Ld.Counsel for the assessee contended that it was explained to the lower authorities that the diary was not a complete and exact recording of all the cash received by Dr.Akhil Bhargava and that deposited by him in bank on various dates. The Ld.Counsel for the assessee drew our attention to the submissions made before the AO pointing out that there were many days on which entries or collections or deposits were not made, reproduced at page Nos.13 to 15 of the assessment order as under:
• The fact that his diary was maintained in a very haphazard manner can be corroborated from the fact that there were many days on which the entries for collection or deposits were not made, which are as under:
AY 2007-08 06-05-2007, 19-05-2007, 24-05-2007, 25-05-2007, 26-05-2007, 27-05-2007, 03-06-2007, 10-06-2007, 23-06-2007, 03-07-2007, 07-07-2007, 11-07-2007, 12-07-2007, 13-07-2007, 18-07-2007, 19-07-2007, 22-07-2007, 23-07-2007, 29-07-2007, 02-08-2007, 06-08-2007, 09-08-2007, 26-08-2007, 05-09-2007, 06-09-2007, 08-09-2007, 09-09-2007, 12-09-2007, 13-09-2007, 16-09-2007, 14 23-09-2007, 30-09-2007, 23-10-2007, 28-10-2007, 29-10-2007, 30-10-2007, 31-10-2007, 01.11.2007 04.11.2007 07.11.2007 08-11-2007, 09-11-2007, 11.11.2007 17.11.2007 18.11.2007 22-11-2007, 24-11-2007, 25.11.2007 26.1.2007 02.12.2007 05-12-2007, 23-12-2007, 25.12.2007 06.01.2008 20.01.2008 27-01-2008, 03-02-2008, 08.02.2008 10.02.2008 19.02.2008 23-02-2008, 24-02-2008, 04.03.2008 09.03.2008 14.03.2008 15-03-2008, 16-03-2008, 22.03.2008 23.03.2008 28.03.2008 29-03-2008, 30-03-2008, 31.03.2008 AY 2008-09 05-04-2008, 06-04-2008, 07-04-2008, 17-04-2008, 27-04-2008, 02-05-2008, 04-05-2008, 06-05-2008, 07-05-2008, 08-05-2008, 09-05-2008, 10-05-2008, 11-05-2008, 22-05-2008, 23-05-2008, 24-05-2008, 25-05-2008, 26-05-2008, 01-06-2008, 05-06-2008, 06-06-2008, 07-06-2008, 08-06-2008, 15-06-2008, 19-06-2008, 20-06-2008, 07-07-2008, 22-07-2008, 23-07-2008, 24-07-2008, 25-07-2008, 26-07-2008, 27-07-2008, 28-07-2008, 29-07-2008, 07-08-2008, 08-08-2008, 09-08-2008, 10-08-2008, 17-08-2008, 09-10-2008, 12-10-2008, 19-10-2008, 20-10-2008, 26-10-2008, 27-10-2008, 05-11-2008, 15-11-2008, 25-11-2008, 28-11-2008, 12-12-2008, 26-12-2008, 07-01-2009, 08-01-2009, 25-01-2009, 15-02-2009, AY 2009-10 07-04-2009, 06-05-2009, 07-05-2009 06-06-009 07.06.2009 08-06-2009, 09-06-2009, 10-06-009 11-06-2009 12.06.2009 13-06-2009, 14-06-2009, 15-06-2009 1-06-2009 17.06.2009 18-06-2009, 19-06-2009, 20-06-2009 21-06-2009 22.06.2009 23-06-2009, 12-07-2009, 13-08-2009 06-11-2009 07.11.2009 08-11-2009, 24-11-2009, 31-12-2009, 08-01-2010, 12-03-2010, 13-03-2010, 14-03-2010, 15-03-2010, 16-03-2010, 17-03-2010 18-03-2010, 19-03-2010, 20-03-2010, 21-03-2010, 15 AY 2010-11 02-04-2010, 09-04-2010, 10-04-2010, 11-04-2010, 17-06-2010, 18-06-2010, 19-06-2010, 20-06-2010, 24-06-2010, 07-08-2010, 08-08-2010, 09-08-2010, 10-08-2010, 11-08-2010, 12-08-2010, 13-08-2010, 14-08-2010, 15-08-2010, 16-08-2010, 17-08-2010, 18-08-2010, 19-08-2010, 20-08-2010, 21-08-2010, 22-08-2010, 3-08-2010, 24-08-2010, 26-08-2010, 12-09-2010, Thus, before going into the amounts included in the said diary, it is submitted that said diary maintained by Dr. Akhil Bhargava was an incomplete diary with incomplete records of receipts and deposits. The said diary was maintained primarily to gauge at the total collections of the hospital (of which he is the promoter director)."
13. The Ld.Counsel for the assessee further drew our attention to the fact that it was also pointed out to the AO that the Annexure did not contain the notings of the cheque/DD entries also which proved that the diary/Annexure A-2 was incomplete diary with incomp lete recor ds. Th e Ld.C ounsel for the a ssessee drew our attention to the submissions made in this regard before the AO reproduced at page Nos.16 & 17 as under:
"It would not be out of place mention that the amount of deposit entries (Rs.13.53 crores) arrived at above in the show cause notice do not consider the cheque/DD entries recorded in the said diary. The amount of cheques/DD recorded in the diary by Dr. Akhil are only to the tune of Rs. 1.02, which are as follows:
Page No. Date Amount
16 9/7/08 125,000
16
17 19/7/08 129,000
17 12/08/08 140,000
19 18/08/08 380,000
19 20/08/08 300,000
19 23/08/08 225,000
19 23/08/08 54,000
20 13/09/08 230,000
20 20/09/08 190,000
20 20/09/08 34,000
20 22/09/08 140,000
20 22/09/08 100,000
20 24/09/08 300,000
20 24/09/08 74,960
20 29/09/08 104,000
21 06/10/08 145,500
21 06/10/08 23,800
21 11/10/08 55,000
21 13/10/08 300,000
21 13/10/08 100,000
As against this meager total for the entire period, the total amount of cheques/DD's deposited in the bank are to the tune of Rs.. 44.19 crores during the said period. This further proves the point that the diary maintained by Dr. Akhil was an incomplete diary with incomplete records since all deposits of cash/cheques/drafts are not recorded by Dr. Akhil in a proper manner."
14. Thus the Ld.Counsel for the assessee contended that it was sufficiently proved to the authorities below that the diary was an incomplete record of entries and no cognizance could therefore be taken of the same. 17
15. Thereafter the Ld.Counsel for the assessee contended that another document,A-116, was also found during search which was a sort of petty cash book/record maintained by the cashier who after meeting out day-to-day expenditure would transfer the balance cash to Dr.Akhil Bhargava for safe keeping and which would be noted in his diary,A-2. The correlation between entries in document A-116 and A- 2,Ld.Counsel contended, was also demonstrated to the lower authorities, by matching the balance of cash at the end of select days reflected in the document A-116 by the cashier and that shown as received by Dr.Akhil Bhargava in his diary Annexure A-2 on the said date.
16. Ld.Counsel further contended that it was also demonstrated to the authorities below that the assessee had accounted cash receipts in its books far more than that reflected in the document A-2. Our attention was drawn to a statement filed to the authorities below, placed at Paper Book page Nos.102 to 108, comparing the day wise cash receipt as noted in the diary Annexure A-2 and that accounted for in the books of the assessee, and it was pointed out 18 therefrom that the amount of day wise cash accounted for in the books of the assessee was on the higher side as compared to that shown in the diary. Our attention was also drawn to the monthwise summary of cash noted in Annexure A-2 and that reflected in the books reflecting the above fact. It was pointed out from the same that the cash accounted for in the books of the assessee was Rs.9,22,61,986/- as aga inst Rs.6 ,68 ,11,879/- re flected in the di ar y. Th e Ld.Counsel for the assessee, therefore, contended that it was thus sufficiently demonstrated to the authorities below that the assessee had accounted for all the cash receipts and no amount of cash reflected in the diary in Annexure A-2 remained unaccounted for.
17. The Ld.Counsel for the assessee thereafter contended that the AO was dissatisfied with the explanation for the reason that the diary did not reflect the entire amount of cash receipts as deposited in the bank and, therefore, he presumed that to the extent the cash receipt was deposited in the bank is stood accounted for in the books of the assessee, 19 while the b alance re mai ned unaccounted for. To this, the Ld.Counsel for the assessee pointed out that the AO had missed out to consider a major fact which was demonstrated before him that the diary did not contain detail of all the cash actually deposited by the assessee in the bank and as per the Actual figures of the cash deposited in the bank a majority of the cash receipts was deposited by the assessee in the bank. It was pointed out that out of the total cash receipts of Rs.25.55 crores for all the years noted in the diary, the assessee had actually deposited a sum of Rs.24.80 crores in the bank. Our attention was drawn to the submissions made in this regard before the AO at page 16 of the assessment order as under:
"Further, as regards the amounts appearing as deposits, it could alsobe observed that the diary A-2 indicates cash deposited every now and then. The sum so deposited is reflected in the bank statement. The said annexure along with the bank statement highlighting the same amounts in the bank wasp/aced before Your Honors and the same verified. The bank accounts wherein the said cash is deposited are the banks of the assessee company which are reflected in the balance sheet. In light of the above, it is submitted that t he said annexure must be read as a whole wherein the deposits are considered to be accounted for and thus, since the total cash receipts of the assessee is more than the collection mentioned in the diary (as demonstrated in our earlier submissions dated 26.03.2013), the entire diary should be construed to be recorded accounted for in the books of account. Thus in the current circumstances, there is nothing to warrant 20 any addition on this account."
"Further, on making a total summation of the amounts in the diary it comes p a total of Rs.25.55 crores for the various years mentioned therein. As against this, a total of Rs.24.80 crores has been deposited in the banks as cash during the relevant period by the assessee. This goes to prove the fact that the amounts received by Dr. Akhil Bhargava has been recorded in the books of accounts since these banks form part of the balance sheet of the company. The statement reflecting the same was filed before Your Honors vide our earlier submissions dated 25/03/2013"
18. Our attention was also drawn to the detail filed before the AO reflecting the monthwise cash receipts noted in the diary and the monthwise cash actually deposited in the bank account of the assessee extracted from the bank statement of the assessee, placed at Paper Book page Nos.90 & 91. It was pointed out therefrom that against the total cash collections as reflected in the diary of Rs.26.42 crores, the assessee had deposited an amount of Rs.24.61 crores in the bank. Our attention was also drawn to year wise detail submitting the same fact to the assessee, placed at Paper Book page No.92. It was pointed out therefrom that against the cash collection of Rs.6.798 crores noted in the diary for the impugned year, the assessee had actually deposited Rs.6.587 crores in the bank. Our attention was also drawn to the month wise 21 detail of cash receipt shown in the diary,A-2 and the cash deposited in various bank accounts of the assessee, pointing out the same fact, placed at Paper Book page N os.93 and 9 4. Th us it wa s contende d that it was duly demonstrated to the authorities below that the contention of the Revenue that the assessee had not deposited its cash receipts in the bank, thus not accounting for the same, was incorrect.
19. The Ld.Counsel for the assessee further contended that it was also pointed out that the assessee had for the impugned year returned the income exceeding its total cash receipts reflected in the seized diary and thus had demonstrated the accounting for of the receipts in its books of account. Our attention was drawn to the statement made before the AO in this regard at page 17 of the assessment order as under:
"Further, another approach to verify the said amounts shown as collection, could be to compare the total income booked by the assessee with the total cash/cheque deposits made in the bank account. Thus, summation of all the amount of cheques and cash deposited in the bank account was produced before your Honors on 25/03/2013. On review of the compilation it was submitted that the total revenue booked by the assessee in the different years was more than the amounts deposited in the bank as cash and cheque."22
20. The Ld.Counsel for the assessee, therefore, contended that in view of the above, the Ld.CIT(A) had rightly held that there was no case for holding that the assessee had not accounted for the cash receipts to the extent of Rs.5.45 crores noted in the diary in Annexure A-2 and deleted the addition so made by the AO. Our attention was drawn to the findings of the Ld.CI T(A) at para 4.3 to 4.3.4 as under:
"4.3 I have considered the submission of Ld. Counsel. At the outset, it may be mentioned that section 68 has no application to the facts of this issue as this section applies only when an amount is found credited in the books of accounts of an assessee and the assessee cannot explain the source of that credit. This section cannot be applied where a revenue receipt is omitted from the accounts as appears to be the case of the Revenue. However, that is not of importance and the basic issue is whether the amount in question is taxable in the hands of the appellant or not.-
4.3.1 I have also gone through the relevant seized material i.e. Annexures A-2 and A-116 and discussed the matter with the Assessing officer. To comprehend the issue, it would be appropriate to understand the manner in which the entries were made in Annexures A-2 and A-116. A-116 contains entries only for four months of the F.Y. 2010-11. This annexure is named as cash book and contains entries of amounts received in cash and expenses incurred in cash. As per the notings in this annexure, major portion of cash in hand at the end of the day is handed over to Dr. Akhil Bhargava for keeping the amount in cash chest. The amount received at the end of the day is entered by Dr. Akhil Bhargava in the diary annexurised as A-2. The amount shown as having been given to Dr. Akhil Bhargava on a particular day as per A- 116 matches with the entry made by Dr. Akhil Bhargava in A-2.23
4.3.2 The submission of the appellant was given to the Assessing Officer and the Assessing Officer has not filed any reply to the submission of the appellant on the issue. It has transpired during the course of discussion that the cash receipts declared in the regular books of accounts are either equal to or more than the cash receipts mentioned in A-116, meaning thereby that the receipts were not understated by the appellan t. Similarly, the expenses debited by the appellant in its books of accounts tally with the entries made in A-116, meaning thereby that expenses claimed by the appellant are not inflated. In nutshell, the appellant has not understated its receipts and had not overstated its expenses. It may be mentioned that the A- 116 pertains to only four months (17.05.2010 to
21.09.2010), but this conclusion will mutatis-mutandis apply to the other period/years also.
4.3.3 The Assessing Officer has made the impugned addition by comparing the amounts pertaining to cash collection, mentioned in A-2 with the cash deposits made in the bank accounts as per this annexure. The explanation of the appellant is that A-2 was an incomplete diary with incomplete record of receipts and deposits. It has also been mentioned by the appellant in its reply that-the total sum of amount entered in diary for the entire period is of Rs.25.55 crores, against which a sum of Rs.24.80 crores has been deposited in the bank account during the same period and the Assessing Officer has not controverted the submission of the appellant in this regard,, which means that the figures mentioned by the appellant are correct. Be as it may, the entries in this Annexure A-2 regarding receipt of cash by Dr. Akhil Bhargava and deposit thereof in the bank account cannot form the basis of addition, since as discussed above, t he a p pel l an t h a s n o t un d er sta ted i ts rec e i p ts and moreov er, no other corroborative material was found and seized to indicate that the receipts are understated. It is also seen that the appellant has declared more cash receipts in its books of accounts than the cash receipts recorded in Annexure A-2 and so the cash receipts are in no way understated.
4.3.4 In view of the above, it is held that the Assessing Officer was not right in treating the difference of cash collection and deposit thereof in the bank accounts as per Annexure A-2 as undisclosed income of the appellant 24 and so the addition made on this account is deleted. Ground of appeal No. 3 is allowed."
21. We have heard the rival contentions carefully, gone through the orders of the authorities below and also the documents referred to before us. We do not find any infirmity in the order of the CIT(A). As rightly stated by the Ld.CI T( A), the AO has made the impugned addition of Rs.5.45 crores by comparing the amounts pertaining to cash collection mentioned in Annexure A-2 with the cash shown as deposited in the bank account as per this Annexure ,treating the difference as receipts unaccounted in the Books of the assessee. The Ld.CI T(A) has held that no addition of the difference was warranted based on certain facts found by him after examining details and evidences filed by the assessee, as under:
1. that the impugned diary/document A-2, was an incomplete record of receipts and deposit ,
2. that the assessee had accounted for cash receipts in its books, which was in excess of that shown in the diary ,
3. that the assessee had actually deposited almost the entire cash receipts in its bank account and 25
4. that the income returned for taxation exceeded the receipts reflected in the document.
22. The above facts have remained uncontroverted by the Reve nue before us. Th e Reve nue ha s a lso n ot been able to point out any perversity in the conclusion dra wn by the Ld.CI T( A) ba sed on the a bove facts, that there were no unaccounted cash receipts of the assessee. Further we have also carefully gone through all the details and documents referred to by the Ld.Counsel for the assessee before us to demonstrate the above facts and are in complete agreement with the Ld.CIT(A). We find that undeniably the Revenue's case rests on the premise that the entire cash shown received by the Director of the assessee company was not noted as deposited in the bank and, therefore, it was held that the difference remained unaccounted for in the books of the assessee.
23. Firstly we fail to understand how the fact noted from document A-2, that not all cash received was deposited in bank, can alone lead to the inference that the cash receipts remained unaccounted in the Books of the assessee. Cash receipts reflected in the 26 diary/document can be said to be unaccounted if they are found not accounted for in the books of the assessee. But the facts as demonstrated by the assessee and not controverted by the Revenue is that it had accounted for cash receipts much more than that reflected in the diary. In fact we find that the assessee had even filed a day wise detail correlating cash receipts shown in the document/diary with that accounted for in the books showing higher cash receipts accounted for in its books. Thus the assessee has directly correlated the two figures and established the fact that all cash receipts noted in the diary and in fact more was were duly accounted for in the books of the assessee. Not a single instance of cash noted as received any day in the diary has been pointed out to us as not reflected in the books of account by the assessee from the voluminous details filed to the revenue a uthorities. The detai l filed b y the assessee comparing the daily cash receipts noted in the diary and that reflected in the books of account for the entire year, the monthly summary of the cash receipts noted in the diary and that reflected in the books of account, all clearly show that the cash 27 accounted for in the books was more than that reflected in the diary with the diary reflecting total cash receipts of Rs.6.68 crores, while the books reflected cash receipts for the same period of Rs.9.22 crores. The Revenue has neither controverted these facts, nor p ointe d out any anomal y in the sa me . Thi s fact in itself establishes that all the cash receipts noted in the diary were duly accounted for in the books of the assessee. There is no basis, therefore, with the Revenue for holding that the cash receipts noted in the books to the extent of Rs.5.45 crores were not recorded in the books of the assessee. The addition therefore deserves to be deleted for this reason alone.
24. But going forward from here and even considering the plea of the Revenue that the assessee has not demonstrated the deposit of entire cash receipts as noted in the diary as being deposited in the bank also, we find no strength in the same also because the facts reveal otherwise. The assessee has demonstrated the fact that against the cash receipts of Rs.6.68 crores noted in the diary, it has deposited cash in 28 various bank accounts operated by it amounting to Rs.6.58 crores which is substantially almost the entire amou nt of ca sh rece ived by it. Thi s fa ct ha s also remained uncontroverted before us. Therefore, there remains no basis with the Revenue for justifying the addition.
25. Lending credence to the above is the fact that the assessee has duly demonstrated that the diary was incomplete with several days notings of receipts and deposits, not noted in the same and which has not been rebutted by the Revenue. The said document, we therefore hold, on its own strength cannot be the basis for making addition in the hands of the assessee.
26. Further adding strength to the contention of the assessee is the fact that its returned income for the impugned year exceeded the amount of cash receipts noted in the diary, Annexure A-2.
Thus by all coun ts, we agree w ith the Ld .CI T(A) that the assessee had duly demonstrated the fact of having accounted for all entries noted in the diary 29 Annexure A-2 of cash receipts and, therefore, the addition made of Rs.5.45 crores on account of holding the entries to this extent as unaccounted for in the books of the assessee, has been righty deleted by the CI T(A), we hold.
In view of the above, ground of appeal No.2 raised by the Revenue is dismissed.
27. Ground No.3 raised by the Revenue reads as under:
"3. The Ld CIT (A) has erred on the f acts and in law in allowing the relief of Rs.21,57,793/- in respect of excess depreciation claimed since the assessee has failed to prove the claim of higher depreciation on life saving equipments."
28. Brief facts relating to the issue are th a t t he a sse sse e had cla i me d d e p re ci ati on @ 40% on su r gic a l e q ui p me n ts. W he n the A sse ss ing Of fi ce r q ue stion e d t he a sse sse e re ga r d ing th e c la i m o f h i gh e r r a te of d ep r e c ia t ion , the a s se s se e s ub mi tte d tha t t he se e q u ip me nts we re i n t he na tu r e of l if e sa vi n gs e q ui p me n ts a n d so hi gh e r r a te of de pre ci a ti on w as a l lo wa b l e f or t he s a me . Th e Ass e s si ng Of fi ce r was n ot sa ti sf i e d w i th t he e xp la n a ti on of t he a sse sse e a n d res tr ic te d the de pr e ci a ti on t o 1 5 % on the se ite ms.
30
29. During appellate proceedings the Ld.Counsel for the assessee conceded its claim of depreciation @ 40% on the assets purchased up to financial year 2005-06 stating that it was cumbersome to segregate the assets upto that year. Regarding the assets purchased thereafter, the assessee was asked by the Ld.CI T(A) to file the list of assets which were eligible for claim of de precia tion @ 40%. The assessee accor dingl y file a revised claim of depreciation in all the years involved. The Ld.CIT(A) accordingly on the basis of the revised claim so filed by the assessee, disallowed depreciation relating to the impugned year restricting the depreciation to be disallowed for the impugned year to the extent of Rs.27,71,054/-. The relevant findings of the Ld.CI T(A) at paras 5.3 to 5.3.2 of the order are as under:
"5.3 1 have considered the submission of the Ld. Counsel. The appellant has decided to forego the claim of higher rate of depreciation upto F.Y. 2005-06 and so the depreciation on assets purchased upto F.Y. 2005-06 is restricted to 15%.
5.3.1 Regarding assets purchased in F.Y. 2006-07 and later, it was noticed by the undersigned that the appellant has claimed higher rate of depreciation on certain items which were not life savings equipments and depreciation @ 40% was not allowable. Therefore, the appellant was required to file list of assets, which were 31 eligible for claim of depreciation @ 40% during the course of appellate proceedings and the appellant has filed revised claim of depreciation for assets purchased after F.Y. 2005-
06. 5.3.2 The appellant was also required to work out the allowable depreciation for various years and the same has been filed. The depreciation to be disallowed as per the observations in para 6.3 and 6.3.1 above, as submitted by the appellant, is as under:
Assessment Year Amount (In Rs.)
2007-08 58,21,786/-
2008-09 27,71,054/-
2009-10 11,28,169/-
2010-11 2,22,608/-
2011-12 (3,10,449/-)
In view of the above, the depreciation to be disallowed for the year in question is of Rs. 27,71,054/- as against Rs. 49,28,847/-, disallowed by Assessing Officer. Hence, the disallowance made by the Assessing Officer is restricted to Rs.27,71,054/-. Ground of appeal No.4 is partly allowed."
30. During the course of hearing before us, the Ld. DR stated that admittedly the assessee had foregone its claim of depreciation @ 40% on the opening balance/WDV of the impugned assets. For the assets purchased during the year, the Ld. DR stated that the AO had specifically pointed out the assets purchased during the year which were not eligible for depreciation @ 40% and, therefore, contended that the excess depreciation claimed by the assessee on the same ought to be disallowed.
31. The Ld.Counsel for the assessee, on the other 32 hand, relied upon the order of the CI T( A) pointing therefrom that the CIT(A) had also noted that there were certain assets purchased during the year which were not eligible for depreciation @ 40% and had accordingly asked the assessee to file a revised claim, which was duly filed by the assessee and after going through it the Ld.CI T( A) had restricted the disallowance of depreciation to the extent as calculated by the assessee in its detail submitted amounting to Rs.27,71,054/-. The Ld.Counsel for the assessee stated that there was no requirement, therefore , to i nte rfere in the or de r of the Ld.CI T( A).
32. We have heard the rival contentions and perused the orders of the authorities below. The facts relating to the case are that the AO had disallowed the claim of depreciation @ 40% on surgical equipments on the opening balance of these assets/WDV of these assets and on certain assets purchased during the year which as per him, did not qualify for the higher rate of depreciation amounting to Rs.38,58,533/- and Rs.10,70,314/- respectively and which added upto Rs.49,28,847/-. Admittedly, the assessee had foregone 33 its claim of depreciation at higher rate on the WDV of assets. Th ere fore , there is no dispute vis-à-vis the same. It is only the depreciation at higher rate of assets purchased during the year which, in fact is in dispute. As rightly pointed out by the Ld.Counsel for the a sse ssee, the Ld .CI T(A) h ad noted from the details of assets purchased during the year that certain assets did not qualify for higher rate of depreciation and accordingly asked the assessee to file a revised calculation of depreciation. The same was duly filed, gone through by the Ld.CIT(A) and no discrepancy or anomaly found in the same and excess depreciation as worked out by the assessee amounting to Rs.27,71,054/- was upheld by the Ld.CI T(A). Before us, the Ld. DR has been unable to point out any anomaly or discrepancy in the findings of the CI T(A). The Ld. DR has been unable to point out from the revised calculation filed by the assessee to the CIT(A), any incorrectness in the claim of the assessee. IN the light of any discrepancy having not been pointed out by the Ld. DR on the facts relating to the revised computation filed by the assessee, we find no reason to interfere in the orde r of the Ld .CI T(A ) restricting 34 the disallowance made by the AO on the excess claim of depreciation to Rs.27,71,054/-. Moreover, we find that the excess depreciation as worked out by the AO on the additions made during the year amounted to Rs.10,70,314/-, while the Ld.CI T( A) has disallowed the excess depreciation on the additions made during the year to Rs.27,71,054/-. In view of the same, since the Ld.CI T( A) has d isal lowed the e xce ss depre cia ti on on the additions made during the year more than what was disallowed by the AO, there cannot be any grievance of the Revenue on this account. Ground No.3 raised by the Revenue merits no consideration and, therefore, is dismissed.
In effect the appeal of the Revenue is dismissed. We shall now take up the CO filed by the assessee for A.Y 2008-09..
CO No.9/Chd/2014(A.Y 2008-09)
33. The solitary ground raised by the assessee in its Cross Objection relates to the issue of disallowance of interest expenses u/s 36(1)(iii) of the Act and reads as under:
35
"The order passed u/s 250(6) of the Income Tax Act,1961 by the ld. Commissioner of Income T ax (Appeals),Chandigarh is against la w and f acts on the f ile in as much ashe was not justified to arbitrarily uphold the disallowance of Rs.5,15,119/-out of interest account by resort to provisions of section 36(1)(iii) ignoring the f act that the advance was made for business purpose."
34. Brief facts relating to the issue are that t he Ass e ss i ng O f fi ce r n oti ce d t ha t the a s se sse e h a d d e bi te d a la r ge a mou nt to the p r of it a nd los s a cco un t on a c cou nt of in te re st p a i d on b or ro we d fu nd s . A t th e s a me t ime , t he a sse sse e ha d ma de i n te re s t free ad v a nc e s a s un de r:
a) M/s Silver Oak Foundation Rs. 21,42,000/-
b) Advance for land Rs. 21.50.000/-
Total Rs. 42,92,000/-
35 . Th e Ass e s si ng O f fi ce r q ue st ion e d the a ss e ssee
re ga r d in g b usi ness e xpe d ie n cy for ma k i ng th e se a dv a nc e s a nd a l so a b out p r op or ti on a te d isa l lo wa n ce of i n te re s t u/s 36 ( l) ( ii i ) of t he Ac t. Th e a s se s se e f i le d a re p ly , t he con te n ts of w h i ch we r e su m ma ri z e d b y t he Ld .C I T(A ) a t p a r a 3 .1 . 1 of hi s or de r a s u nde r :
( i) M / s S il ve r O a k F ou n d a tio n i s ru n n ing a c ol le ge u n de r th e n a me an d sty le of 'Sil ve r O a k Col l ege of Nu rsin g', i mp ar ti ng med ic al / n u rsin g edu c a ti on to the stu d en ts . T h e nu rse s tr ain ed i n th e co ll eg e are prov id ed to th e h os p ita l an d so c o mmerc ial ex ped ie nc y s ta n d s e x pl ain ed .36
( i i) Re g ard in g a dv anc e f o r pu rch a se of l an d a t Abh i pu r, th e sa me wa s sh o wn a s ad v an ce , s in c e the tr an sa c tio n wa s n o t c o mpl e te . L a ter, wh en th e reg is tr y wa s do n e , th e a sse t wa s tr an sf er red to th e f ixe d asse t sch ed u l e. T h e lan d wa s pu rch a se d wi th in ten tio n to e x p an d th e h o sp i ta l f ac il ity an d to a ttr ac t th e ru r a l c l ie n tel e, bu t la ter on it wa s ob served th a t th e sc o pe wa s n o t v ery h ig h in th a t are a and so th e l and wa s sol d .
( i ii) T h e in ter e st de bi ted to th e prof i t an d lo ss ac cou n t per ta i n s to l o an s r a i se d f or spec if ic pu r po se s an d n o p ar t of th e se l o a n s we re u sed f or ma k in g th e se ad van ce s and so i t c an no t be sa id th a t th e in tere st be ar ing f u n d s were u sed f or ma k in g th e se in te re st f ree adv an c e s.
( iv) T h e ra tio of th e ju d ge me n t of H on 'bl e Pu n ja b an d H ar y an a H ig h Cou r t in th e ca se of Abh i sh e k In d u str ie s L td . ( 2 8 6 IT R 1 ) h as bee n am pl if ie d, d iscu ssed an d c l ar if ied b y Ho n' bl e S u pre me Co u r t in th e c a se s of M/ s C ore He al th C are L td . ( 29 8 IT R 1 9 4) and M / s S. A. B uil d er s L td . ( 2 8 8 IT R 1 ) an d a s the ad v an ce s we re g iv en on th e grou n d o f c ommerc i al ex p e dien c y, no di sal l o wa n c e is req uire d to be ma d e.
36 . Th e Ass e s si ng Of f ic e r d id not a gr ee w it h t he e xp la na ti on of the a sse ssee a n d d is a ll ow e d p ropo rt ion a te in te re st of Rs . 5 , 15 , 11 9 /-, c o mp ute d @ 1 2 % p e r a nn um on the a f ore sa i d int e re s t f ree a dva n ce s w it h the f oll ow i ng obs e r va t ion s:
( i) T h er e is n o evid en c e th at th e im pu gne d l and f or wh ich ad v a n ce i s given , wa s to be purc h a sed f or th e h osp i tal .
( ii) T h ere is n o e vide n ce th at th e a mou n t p a id a s ad v an c e f o r l and wa s n o t ou t of th e bor ro we d f un ds.37
( i ii) T h e f u n ds d iv er te d b y th e a p pel l an t are no t ou t of o wn f u n d s.
( iv ) T h e ju dge men t of H on 'bl e Pu n j ab and Har y an a H igh Cou r t in th e c a se of M /s Abh ishe k In du s tr ie s L td. is ap pl ic a bl e on th e f acts of the c a se.
3 7 . D u ri n g the c our s e of a p pel la t e p r oce e d in gs , th e Ld. C ou ns e l f or the a ss e ssee fi le d w r i tte n s ub mi ssi on , ma in l y r e i te ra t in g the s ub mi ssi on s ma d e be f ore th e A sse ssi n g O ff i ce r .
38 . Th e Ld. C I T( A) r e j e c te d a l l the c ont e nt ion s ma d e by t he a sse sse e a nd uph e l d the di sa l l owa nc e ma d e .
39 . B e f ore us the sol e i s sue r a i se d by th e Ld. C ou ns el f or the a s se s se e wa s t ha t i t ha d s uf fi c ie nt ow n i nt e re s t f ree fu nd s f or th e p ur p os e of ma k in g th e i nve s tme n t. Ou r a tte n ti on w a s d ra w n to t he p ro fits e a r ne d b y t he a ss e ssee du r in g t he ye a r i ts e l f a s re f le cted i n t he a ud i te d f i na n ci a l sta te me n ts, cop y of w h i ch w a s f ile d be f ore us, a mou nt in g to Rs. 2. 1 2 cr or e s an d i t w a s p oi nted ou t t ha t the i nve s tme n t in re la t ion to w h i ch di sa l l ow a nc e was ma d e a m oun te d to Rs. 42 . 9 2 l a cs . I t w a s , th e re f ore , c on te n de d t ha t i n vi e w of va r io us d e c is ion s of v a r iou s ju d ic ia l a uth or i ti e s, t he pr e sump ti on wa s th a t the in ve stme nt h a s b e e n ma d e ou t of ow n in te re st free f un ds of t he a sse s see c a ll ing fo r no 38 di sa l l ow a nc e of inte re st u /s 3 6 ( 1) ( ii i ) of th e Ac t.
40 . Th e Ld . D R, on th e othe r h a nd , re l ie d u p on the ord e r of a uth or it ie s be lo w.
41 . We ha ve he a r d th e ri va l su bmi s si ons , p e r us e d the or de r s of the a u th or iti e s be l ow . I t i s s e tt le d l a w tha t wh e re suf fi c ie nt ow n i n te re s t fre e fu nd s are a va i la b l e , the pr e sump ti on is th a t n on b us in e s s a dv a nce s /in ve s tme n ts ha v e be e n ma d e ou t o f th e s a i d i nte re st f r ee fu nd s . The Hon 'b l e S up re me C our t h a s h e l d so in th e ca se o f C I T ( L TU ) vs Re l ia nce I nd us tr i e s Ltd . in Ci vi l Ap p e a l n o.37 o f 2 0 1 9 da t e d 0 2 -0 1 -19 .
I n vie w of the ab ove se ttle d la w a n d con si d e r i ng t he un con tr ove rte d fa c t tha t the a sse ss ee h a d o wn i nte re st f ree fu nd s i n th e f orm o f p r ofi ts of t he ye a r a l one a moun ti ng to Rs. 2. 1 2 c ro re s whi ch w e re mor e th a n su ff i ci e nt for ma k i ng the i mpu gn e d i n ve s tme n ts of Rs. 4 2. 9 2 l a k hs, w e ho ld t ha t no di sa l l ow a nc e o f i n te re s t u /s 3 6 ( 1) ( ii i ) of the Ac t w a s wa r r a n te d in the pre se n t ca se , si nc e the i n ve s tme n ts a r e pr e sume d t o ha v e bee n ma d e ou t of ow n i nt e r e s t fr ee fu nd s of th e a s se s see . Th e d is a l low a n ce s o ma d e of Rs. 5, 1 5 ,1 9 0 /- u/s 3 6 ( 1) ( ii i ) of t h e A ct is , th e re for e , d i re cte d to b e de le te d. 39 Th e gr ou nd ra i se d b y th e a s se sse e is t he re fore a l low e d .
Th e C r oss Ob j e c tio n f il e d by t he a s se sse e sta nd s a ll ow e d .
42 . W e s ha l l n ow tak e up the a ppe al of the Re ve n ue a n d the a s se s se s C ross O bj e c ti on re l ati ng to A .Y 2 0 0 9 -10 ITA N o. 34 /C h d / 2 01 4( A. Y.2 00 9 -1 0) :
43 . G r oun d N os. 1 , 5 a n d 6 r a i se d b y t he Re ve nue are ge ne r a l i n n a ture a n d n ee d no a d ju d ic a ti on. 44 . G r oun d N o. 2 r a i se d b y the Re ve nue re a d s a s un de r :
"2. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.3,72,00,000/- made u/s 68 of the Act since the assessee has failed to prove that the whole amount related with cash receipts in Annexure A-2 was deposited in banks and shown in the books of account."
45 . I t w a s c ommon gr ou nd b e twee n th e pa rt ie s that the is sue r a i se d in gro un d N o. 2 a s a bo ve w a s simi l a r a n d in f a ct id e n ti ca l to gr oun d N o. 2 r a i se d in Re ve n ue s a p pe a l i n I TA N o.3 3 /C h d /2 0 1 4 fo r A. Y 2 0 0 8-0 9 de a lt w i th us a b ov e . I t w a s poi n te d ou t th a t th e i ss ue a r ose fr om th e d if f e re nce o f c a sh re ce i p ts a nd the a moun t of ca s h d e po si te d i n ba nk a s n ote d in doc ume nt A -2 f oun d d u r in g se a rc h. Tha t d ur i ng t he imp ug ne d y e a r th e s a id d i ffe re n ce w a s Rs .3 . 72 c ror e s w h i ch 40 wa s a d d e d b a ck to the in co me of th e a sse s see u/s 6 8 of t he Act . B ot h the pa r ti e s c on te n de d th a t the i r p le ad i ng s were id e n ti ca l to th a t ma d e in g r oun d no . 2 of I TA N o.3 3 /C h d /2 0 1 4 f or A .Y 2 0 0 8 -09 .
46 . S in ce a d mitt e d ly id e nti ca l i ss ue ha s a l re a d y bee n d e a lt wi th b y us in Re ve n ue s a p pe a l for A .Y 2 00 8 - 0 9 in I TA N o.3 3 /C h d /2 0 1 4 , ou r d e c is i on on th e sa me r e nd e re d a t pa r a s 21 t o 2 6 of ou r or d e r a b ove w il l a pp l y to the p re se nt gr oun d a l so, fol lo wi n g wh i ch w e up h ol d th e or d e r of t he C I T( A) d e l e t in g the a d d i tio n ma d e of Rs. 3 .7 2 cr or e s .
Th e gr oun d of a p p e a l N o.2 r a i sed b y th e Re ve nue i s the re fo re d i smi ss e d 4 7 . G r oun d N o. 3 r a i se d b y the Re ve nue re a d s a s un de r :
"2. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.2,23,00,000/- made u/s 68 of the Act since the assessee has failed to prove if the receipts as per Annexure A-119 have been accounted for in the regular books."
48 . Brief fa c ts re l ati n g to t he i s sue a re th a t as pe r An ne x ure A-1 1 9 , se ize d du r in g th e c our se o f se a rc h, t he re ce i p ts fr om EC H S a nd C G H S w e re to the t un e of Rs. 1 3. 6 1 cr or e s, w he re a s th e a s se s se e h a d sh ow n r e ce i p ts of onl y R s. 11 . 38 c r or e s in its b ook s of a cco un ts a n d so the a d di ti on of 41 the di f fe re nce , b e i ng R s. 2 . 2 3 c r or e s, w a s ma d e b y t he Ass e ss i ng O ff ice r.
49 . B e f ore t he Ld. C IT( A) th e a s se s se e co nte nde d th at th e re wa s a mi sta ke i n to ta l in g th e a moun t of r e ce i pt s f rom EC H S a nd C G H S r e fl e cte d i n A nn e xu re A -1 1 9 a n d th a t th e t ota l wa s le ss th a n t he a mo un t a ccou nt e d for b y the a ss e ssee i n its b ook s of a cc ou nt. Th e Ld . C I T( A) a s k e d the AO t o c omp ute the tota l a moun t of r e ce i p ts in Ann e xu re A -1 19 , w ho i n t ur n con ve ye d to the C I T( A) t ha t the tota l of A nn e xu re A -1 19 w a s Rs. 9, 3 9 ,6 5 ,3 6 6 /- . Th e Ld .C I T(A ) n ote d th a t si n ce t he a sse sse e ha d s how n mor e r e ce ip ts i n it s b ook s of a cc oun t a t Rs. 11 . 3 8 cr or e s a s co mpa r e d to tha t r e f le cte d i n An ne xure A-1 1 9, t he a d d iti on w a s w r ong ly ma d e b y the A O. H e fu r the r note d t ha t the e nt ir e a mou nt r e ce i ve d b y t he a sse sse e f ro m EC H S a nd C G HS w a s th r oug h ch e q ue s on ly a n d , the re f ore , he l d th a t t he re w a s n o q u e s tio n o f a n y u nd e rs ta te me nt of the sa i d r e ce ip ts. Th e a d d i ti on t h e re fore ma d e b y th e AO on thi s a cc oun t of Rs. 2 .2 3 cr or e s w as d e le te d b y the Ld . C I T( A) . 50 . B e f ore us t he Ld .C o un se l for the a s se sse e dr e w ou r a tte n ti on to the d e t a il , wh i ch w as th e c op y of rec a lc ul a ti on of th e t ota l re ce ip ts of A nn e x ur e A -1 19 a s wo rk e d o ut w i th the As se ssi n g Off i ce r du r in g re ma nd p r oce e d i ngs p l a ce d a t 42 pa p e r bo ok p a ge no. 6 8 -70 a nd w h ic h w a s f il e d to the CI T( A) . I t w a s p oi nte d ou t th e re f r om th a t the tot a l re ce ip ts in An ne x ure -1 1 9 on r e ca l cu la t ion ca me t o R s. 9, 8 4, 6 4 ,1 4 2 /- wh i ch a s n ote d by th e CI T(A ) w a s l e ss th a n t ha t re cor d e d in the B o oks of th e a sse ssee at Rs .1 1 .3 8 cr or e s . The Ld. C ou ns e l f or the a sse ssee c onte nde d th a t the C I T(A ) h a d ri gh tl y d e le te d th e a d d it ion ma d e on a c cou nt of sur p l us re ce i p ts n ote d in t he d ocu me n t A -1 19 on fi n di n g t h e sa me to be f a ctu a l ly i nc or r e ct.
5 1 . Th e Ld . D R, on th e othe r h a nd , re l ie d u p on the ord e r of the A O. 52 . W e ha ve he a r d th e ri v a l con te ntion s. Th e is sue be fore us r e l a te s to th e a dd i ti on ma d e to th e in come of t he a sse sse e on a cc oun t of h igh e r r e ce ip ts f r om E C HS a nd C GH S note d in a d ocu me n t An n e xu re A-1 1 9 as a g a in st tha t re fle c te d i n the bo ok s of t he a sse ss ee b y R s.2 . 2 3 cror e s . The Ld. C I T( A) , w e f i nd , d e le te d the a dd it ion w h e n the fi gur e s on re ca l cu la t ion of th e a mou nts me nt ion e d i n d ocu me n t A-1 1 9 by th e AO was f oun d to b e le ss tha n th a t a c cou nte d for i n the B o oks of the a ss e ssee . The L d .D R h a s not c ont ro ve r te d the a b ove f a ct bef or e u s. Th e f in d in gs of the CI T( A) th e re fore tha t th e re was no u nd e rs ta te me n t of r e ce ip ts as pe r 43 doc ume nt A -1 19 , w e hol d , c a ll s for no i n te r fe re nce o n our pa r t. Th e or de r of th e C I T( A) d e l e tin g the a d d it ion o f Rs. 2 .2 3 cr or e s on a c cou nt of d oc ume n t A-1 1 9 i s th e re f ore up h e l d.
G r oun d of appeal N o. 3 r a i se d by the Re ve nue is the re fo re d i smi ss e d .
53 . G r oun d N o. 4 r a i se d b y the Re ve nue re a d s a s un de r :
"4. The Ld CIT (A) has erred on the facts and in law in allowing the relief of Rs.35,42,436/- in respect of excess depreciation claimed since the assessee has failed to prove the claim of higher depreciation on life saving equipments."
54 . It w a s common gr ou nd t ha t the iss ue ra i se d i n g roun d N o.4 a b ove w a s i d e n ti ca l to t ha t r a i se d i n gr ou nd N o. 3 of t he Re ve n ue s a p pe a l fo r A. Y 2 0 0 8 -09 in I TA N o.3 3 /C h d /2 0 1 4 d e a l t with us ab ov e a n d re la te d t o e xce ss de pre ci a ti on a lleg e d ly cl a i me d b y t he a ss e ssee on li f e s a vi ng e q ui p me n ts. I t wa s p oi nte d ou t th a t the be f ore th e CI T( A) , the a sse s see ha d w i th d ra w n i ts cl a i m of e xce s s de p re ci a ti on on th e W DV of a sse ts a s on 31 -0 3 -2 00 6 a nd for t h e a sse ts pu r ch a se d the re a f te r had f i le d a r e vi se d cl a im of de pre ci a ti on as per wh i ch a c cor d in gl y th e C I T( A) h ad re str i cte d the d i sa l low a n ce to Rs .1 1 , 28 , 1 69 , as a g ain st Rs. 46 , 7 0, 6 0 5/- d is a ll ow e d b y t he A .O .
4455 . S in ce a d mit te d ly th e is su e is id e n ti ca l to th a t in Gr ou nd N o. 3 of t he Re ve nue s a p pe a l f or A. Y 20 0 8 -0 9 in I TA N o.3 3 /2 0 14 dealt w i th us a b ove , our de ci si on r e nde re d the re i n a t p a r a 3 2 of ou r or d e r w i ll a p p ly to th e p re se nt gr oun d , fol l ow in g w hi ch w e u ph ol d th e or d e r of t he Ld . C I T( A) a ll ow i ng r e l ie f on a c cou nt d e p reci a ti on c la i me d a t h i ghe r ra t e o n li fe sa vi ng e q ui p me n ts ,amo un tin g to Rs. 3 5, 4 2 ,4 3 6 /-
G r oun d of appeal N o. 4 r a i se d by the Re ve nue is di smi ss e d .
I n e ffe c t the a p pe a l o f the Re ve nue is d i smi ss e d . W e sh a l l n ow t ak e up the C r oss O b j e cti on fi le d by t he a sse sse e for A. Y 2 0 0 9-1 0 .
C O N o .1 0/C h d /2 01 4 ( A. Y 2 0 09 -1 0) 56 . G r oun d N o. 1 r a i se d b y the a s se s se e re a d s a s u nde r :
"1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals), Chandigarh is against law and facts on the file in as much as he was not justified to arbitrarily uphold the disallowance of Rs. 11,77,700/- out of interest account by resort to provisions of section 36(1)(iii) ignoring the fact that the advance was made for the purpose of business.
57 . I t w a s c ommon gr ou nd b e twee n th e pa rt ie s that the is sue i n the a bove gr oun d w a s i de nt ic a l to t ha t r ais e d i n gr oun d N o .1 of a ss e sse s C . O. N o. 9/C h d /2 01 4 , a n d r e l a te d 45 to di sa l l ow a nc e of i nt e re s t u/s 3 6 (1 ) (i i i) of th e Ac t, in re la t ion t o p ur por te d no n bu sine ss a d va n ce s ma d e to t he sa me p a rt ie s a s in A .Y 20 0 8 -0 9 a s u nd e r :
S il ve r O a k Fo unda t ion R s. 76 , 6 4, 1 65 /- Ad v . Fo r La n d Rs. 2 1 ,5 0 ,0 0 0 /- 58 . Th e L d .C oun se l f or t he a ss e ssee co nte nd e d tha t h is
a rg ume n t a ga i ns t th e sa i d d i sa l lowa n ce u phe l d b y th e C I T( A) wa s t he sa me a s i n A. Y 2 0 08 -0 9 , th a t t he a ss e ssee h a d suf fi c ie nt ow n i nte re st f ree fu nd s, in t he f or m of p r of it f or the ye a r a moun ti ng to Rs .2 . 44 cr or e s as a ga i ns t t he imp ug ne d a dv a nc e s of Rs. 9 8.1 4 l a cs, f or ma k in g t he a dv a nc e s and the p re s ump ti on the re fo re is tha t t he a dv a nc e s h a ve bee n ma de ou t of ow n i nt e re st f ree fun ds . 59 . S in ce a d mit te d ly th e is su e is id e n ti ca l to th a t in Gr ou nd N o. 1 of the a sse sse s C ross O b j e ct ion fo r A. Y 2 0 0 8- 09 i n C O N o. 9 /2 0 1 4 d e a lt w i t h u s a b ove , ou r de ci si on re nde re d the re i n a t p a r a 4 1 of our or d e r wi l l a ppl y to t he pr e se n t gr ou nd , fo ll ow i ng w h i ch we de le te the d is al low a n ce of in te re st o f Rs.1 1 ,7 7 ,0 0 0 /-.
G r oun d of a p pe a l N o. 1 r a i se d b y th e a sse s see is a ll ow e d .
4660 . G r oun d N o. 2 r a i se d b y the a s se s se e re a d s a s u nde r :
2. That he was further not justified to arbitrarily uphold the disallowance amounting to Rs. 15,00,000/- paid by the respondent to Mr. Rajneesh Ramitra as consultation fees.
Th e a b ove gr oun d w a s n ot p r e sse d be f ore u s. He nce , the s a me i s d i smi sse d a s n ot p re sse d.
Th e C ro ss O b j e ct ion of th e a s ses se e i s th e re fore pa r tl y a l low e d.
61 . W e s ha l l n ow tak e up the a ppe al of the Re ve n ue a n d the a s se s se s C ross O bj e c ti on re l ati ng to A .Y 2 0 1 0 -11 . ITA N o. 35 /C h d / 2 01 4( A. Y. 20 10 -1 1 ):
62 . G r oun d N os .1 , 5 a nd 6 b e i ng ge ne r a l i n n a tur e nee d no a dj ud i ca t ion .
63 . G r oun d N o. 2 r a i se d b y the Re ve nue re a d s a s un de r :
"2. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.2,50,00,000/- made u/s 68 of the Act since the assessee has failed to prove that the whole amount related with cash receipts in Annexure A-2 was deposited in banks and shown in the books of account."
64 . I t w a s c ommon gr ou nd b e twee n th e pa rt ie s that the is sue r a i se d in gro un d N o. 2 a s a bo ve w a s simi l a r a n d in f a ct id e n ti ca l to gr oun d N o. 2 r a i se d in Re ve n ue s a p pe a l i n I TA 47 N o.3 3 /C h d /2 0 1 4 fo r A. Y 2 0 0 8-0 9 de a lt w i th us a b ov e . I t w a s poi n te d ou t th a t th e i ss ue a r ose fr om th e d if f e re nce o f c a sh re ce i p ts a nd the a moun t of ca s h de po si te d i n ba nk a s note d in doc ume nt A -2 f oun d d u r in g se a rc h. Tha t d ur i ng t he imp ug ne d y e a r th e s a id d i ffe re n ce w a s Rs .2 . 5 0 c ror e s w h i ch wa s a d d e d b a ck to the in co me of th e a sse s see u/s 6 8 of t he Act . B ot h the pa r ti e s c on te n de d th a t the i r p le ad i ng s were id e n ti ca l to th a t ma d e in gr ou nd n o. 2 of I TA N o.3 3 /C h d /2 0 1 4 f or A .Y 2 0 0 8 -09 .
65 . S in ce a d mitt e d ly id e nti ca l i ss ue ha s a l re a d y bee n d e a lt wi th b y us in Re ve n ue s a p pe a l for A .Y 2 00 8 - 0 9 in I TA N o.3 3 /C h d /2 0 1 4 , ou r d e c is i on on th e sa me r e nd e re d a t pa r a s 2 1 to 2 6 o f ou r o rd e r a b ov e w il l a pp l y to th e p re se nt gr oun d a l so, fol l ow in g wh i ch w e up h ol d th e or d e r of t he C I T( A) d e l e t in g the a d d i tio n ma d e of Rs. 2 .5 0 c r or es .
Th e gr oun d of a p p e a l N o.2 r a i sed b y th e Re ve nue i s the re fo re d i smi ss e d 66 . G r oun d N o. 3 r a i se d b y the Re ve nue re a d s a s un de r :
"3. The Ld CIT (A) has erred on the facts and in law in allowing the relief of Rs.29,46,569/- in respect of excess depreciation claimed since the assessee has failed to prove the claim of higher depreciation on life saving equipments.."48
67 . It w a s common gr ou nd t ha t the iss ue ra i se d i n g roun d N o.3 a b ove w a s id e n ti ca l to th a t r a is e d in gr oun d N o.3 of the Re ve n ue s a pp e a l for A. Y 20 0 8 -0 9 in I TA N o.3 3 /C h d /2 0 1 4 d e a l t with us ab ov e a n d re la te d t o e xce ss de pre ci a ti on a lleg e d ly cl a i me d b y t he a ss e ssee on li f e s a vi ng e q ui p me n ts. It was p oi nt e d o ut th a t the be fore t he C I T( A) ,th e a s se sse e had w i th dra w n i ts cl a i m of e xce ss de pre ci a ti on on th e W D V o f a s se ts a s on 3 1 -0 3 -2 00 6 a n d f or the a sse ts p u rc ha s e d the re a f te r ha d fi le d a re vi se d c la i m of de pre ci a ti on as per wh i ch a c cor d in gl y th e C I T( A) h ad re str i cte d the d i sa l lo wa n ce to Rs. 2, 2 2 ,6 0 8 /- as a g ain st Rs. 31 , 6 9, 1 7 7/- d is a ll ow e d b y t he A .O .
68 . S in ce a d mit te d ly th e is su e is id e n ti ca l to th a t in Gr ou nd N o. 3 of t he Re ve nue s a p pe a l f or A. Y 20 0 8 -0 9 in I TA N o.3 3 /2 0 14 dealt w i th us a b ove , our de ci si on r e nde re d the re i n a t p a r a 3 2 of ou r or d e r w i ll a p p ly to th e p re se nt gr oun d , fol l ow in g w hi ch w e u ph ol d th e or d e r of t he Ld . C I T( A) a ll ow i ng r e l ie f on a c cou nt d e p reci a ti on c la i me d a t h i ghe r ra t e o n li fe s a vi ng e q u ip me nts , a moun ti ng to Rs. 3 5, 4 2 ,4 3 6 /- Gr ou nd of a p p e a l N o. 3 r a i se d b y the Re ve nue is d ismi sse d . 69 . G r oun d N o. 4 r a i se d b y the Re ve nue re a d s a s un de r :
"4. The Ld CIT (A) has erred on the facts and in law in 49 deleting addition of Rs.16,92,72,420/- made u/s 68 of the Act since the assessee has failed to explain the entries made on Page 4 of the Annexure A-120 of the seized material."
70 . Th e br i e f f a ct s r e le va n t to the i ssu e a re th a t e ntr i e s a s un de r h a d be e n re c or de d a t pa g e N o. 4 of docu me n tA- 12 0 f ou nd du r in g se a r c h:
18-12-2009 4,22,78,168
19-12-2009 4,16,02,105
21-12-2009 4,32,49,160
22-12-2009 4,21,14,297
16,92,72,420
7 1. Th e a s se s see w a s a sk e d to e xp la i n th e sa i d e n tr ie s a nd it ha d su b mitt e d tha t the se we re va r i ou s r oug h n oti ng s b y the a c cou nta n t in r e s pe ct of "thi ng s t o d o", w h ic h wa s e vi de n t fr om oth e r not in gs on the s a me p a ge a n d th e se not in gs p e r ta i ne d to a u di t ob se r v a ti ons . It was a ls o su bmi tte d tha t tha t the se en tr ie s we re re la t a b le to b a la n ce s of t he ba nk a s on tha t d a te . Th e Ass e s si ng O ff ic e r r e cor de d the sta te me nt of Dr . Ma n j a r i B ha r ga v a , wh os e na me w a s me n ti one d in th e f ir s t p a ge o f th e d i a r y an d sh e ha d e xp l a ine d tha t s he h a d on ly w r i tte n he r n a me o n the d ia r y, bu t e n tr ie s i n th e d ia r y ha d n ot b ee n ma d e b y he r. The A sse ssi n g Of f ic e r was n ot sa t is fie d w it h the e xp l a na ti on of t he a sse s see a n d ad d e d e nt ire a moun t of Rs. 50 1 6, 9 2, 7 2 ,4 2 0 /- u /s 68 of th e Act .
7 2. Th e Ld . C I T( A) went t hr ou gh th e c onte n ts of the imp u gne d d ocu me n ts a n d no te d t ha t th e not i n gs i n th e sa me p e r ta i ne d to r e mi nd e r s i n th e f or m o f job s to b e don e , some b a si cs a bo u t how to d o t he w or k a n d s ome oth e r ob se r v a ti ons , p r ob a b l y of a u di t. H e , a l so n ote d th at f or th e fi gu r e s me n ti one d i n th e sa i d d oc ume n t w hi ch f or me d the b a si s of the a d diti on , th e y we re show n by t he a s se s se e to b e re f le cti ng the b a la n ce s of the b a nk a cc oun ts a s p e r the b ook s of a c cou n t. H e , t he re fore , he l d th a t the a d d it ion cou ld n ot be ma d e o n t he b a si s of s cr i b bl i ngs of some s ta ff me mb e r s in ce th e pe r s on na me d in the d i a r y D r . Ma noj B ha r g a va h a d d e n ie d n oti ng a nyth in g i n th e dia r y. Th e Ld. C I T( A) h e l d th a t i t w a s p r ob abl y onl y re con ci liat ion of a ud i t ob se rv a ti on r e ga r d in g b a nk b a l a nc e s b y s ome s ta ff a nd , th e re f ore , d e le te d the a d d iti on ma de . Th e re le va n t fi n di n gs of th e Ld .C I T(A ) a t p a r a s 6 . 3 .1 to 6 . 3 . 3 of th e C I T( A) a r e a s u nd e r :
"6.3.1 I have gone through the various pages of the impugned diary. On the first page of the diary, Dr. Manjari Bhargava has written her name. The entries in this diary have, however, been made by some staff member, whose statement in respect of various entries made in this diary was not recorded at the time of search or in the post search inquiry. However, a perusal of the various pages of this diary reveals 51 that the notings pertain to reminders in the form of jobs to be done, some basics about how to do the work and some other observations, probably of audit. For the sake of ready reference, relevant notings at page No.4 of the diary are reproduced below:
"Package Income - ?
- Misc Income • Rs. 5,78,200 - What is this Liveries and Lines
- 18-12-2009 - Rs. 4,22,78,168
- 19-12-2009 - Rs. 4,16,02,105
- 20-12-2009 -Rs. 4,32,49,160
- 21-12-2009 Rs. 4,21,14,927 (1) SIDBI Term Loan Payment (Rs 2.5 crore)-'Not Made Regular (2) Corp. Bank - 50021 Payment not regular (3) Corp. Bank not regular (4) Corp. Bank CMEDI/01/060001 not regular (5) Corp. Bank CMEDI//01/50006 not regular 6.3.2 The figures mentioned at page No. 4, which form the basis of addition, are explained to be balances of the bank accounts as per books of accounts on the respective dates, which are as under:
Date 18-12-2009 19-12-2009 21-12-2009 22-12-2009 PSB T/L 2,15,08,704 2,15,08,704 2,14,14,685 2,14,14,685 Corporation 13,99,404 13,99,404 13,99,404 13,99,404 Bank Sub Total 2,29,08,108 2,29,08,108 2,28,14,089 2,28,14,089 CC 1,94,01,559 2,00,62,081 2,00,62,081 ^00^62,081 Total 4,23,09,667 4,29,70,189 4,28,76,170 4,28,76,170 As per 4,22,78,168 4,16,02,105- 4,32,49,150 4,21,42,977 Difference 31,499 13,68,084 (3,72,980) 7,33,193 6.3.3 As already discussed, clarification/ statement of the person, who had written this diary, was not recorded. In any case, the appellant has explained the notings on this diary and addition cannot be made on the basis of scribblings by some staff member, who was probably reconciling the audit observations regarding bank balances. The addition made on this account is accordingly deleted. Grounds of appeal Nos. 5.1 to 5.3 are allowed."52
7 3. B e f ore us t he Ld . D R r e lie d up on th e fi n di n gs of th e AO tha t s i nce Dr .Ma n oj B h a r ga v a , w hos e na me f ou nd me n tio ne d i n th e d i a r y, h a d fa i le d t o gi ve a n y sa ti sf a ct or y e xp l a na ti on of the e ntr y , the a dd it ion w a s r ig htl y ma d e .
Ou r a t te n ti on w as d r a w n to p a r a 6 . 2 of the A O 's or d e r a s un d e r |:
"6.2 The assessee reply is duly considered, but not accepted because assessee has failed to give any satisfactory explanation regarding these entries. On the perusal of this ann. 120, it is clear that this is a diary of Mrs. Manjari Bhargwa one of the director of the company. During the proceedings the statement has been recorded by this office dated on 25-03-13, in the statement she has said that on the diary name has been written by her only, but regarding these entries she does not know anything and these are not in her hand writing. The reply of assessee not accepted because he has not given any specific reply on this. In the absence of any satisfactory explanation these entries will be treated as income amounting to Rs. 16,92,72,410/- is added to income of the assessee company u/s 68 of the IT. Act, 1961. Penalty proceedings u/s 271(1)
(c) of the Income Tax Act, 1961 are being initiated for concealing the particular of income/furnishing inaccurate particular of income."
7 4. Th e Ld .C ou ns e l fo r the a sse ssee , on th e ot he r ha n d, r e l ie d up on the or d e r of the CI T( A) .
7 5. W e ha ve h e a r d t he r i va l con te n ti ons ca re f ul ly and p e r use d t he or der s of a uth or it ie s be lo w. U nd oub te d ly , the a d di ti on i n the impu gn e d c a se ha s b ee n ma de o n a cc oun t of e n tr ie s no te d in d oc ume n t An ne xur e A -12 0 a s unde r : 53
- 1 8 -1 2 -2 0 0 9 - R s. 4, 2 2 ,7 8 , 16 8 - 1 9 -1 2 -2 0 0 9 - R s. 4, 1 6 ,0 2 , 10 5 - 2 0 -1 2 -2 0 0 9 - R s. 4, 3 2 ,4 9 , 16 0 - 2 1 -1 2 -2 0 0 9 - R s. 4, 2 1 ,1 4 , 92 7
7 6. F ur th e r i t i s n ot de nie d t ha t the d ocu me n ts me nti on e d the n a me of D r . Ma nj a r i B h a r ga v a on t he f ir s t pa g e bu t in he r s ta te me nt m a d e t o the AO sh e ha s de nie d ma k in g a n y e n tr y in the sa me a n d ha s s ta te d th a t the sa me ma y ha v e b ee n ma d e b y s ome sta f f me mb e r . N o st a te me nt of a ny s ta ff me mb e r has b ee n re co rde d by t he se a r c h te a m. Th e Ld. C I T( A) , w e f i n d , ha s gon e t hr ou gh the con te nts of th e d ocu me nt , A nn ex ur e A-1 2 0, a n d h a s n ote d th a t i t on l y con ta i ns s ome ge ne r a l n oti n gs ab out th e re mi nd e r s of the w or k t o be d one , h ow th e w or k i s to b e d one and s ome ob se r v a ti on p ro ba b l y of a ud i t. The R e ve nue ha s n ot d is pu te d th is f a ct by p oin ti ng ou t oth e r w is e fr om the d ocu me nt . As for th e f i gure s no ted i n the d ocu men t w hi ch w e re t he b a si s of a d d it ion ma d e , w e f i nd th a t b e for e the Ld. C I T( A) th e a s se s se e ha d e xpla i n e d the sa me t o b e p e r ta i ni ng to b a la nc e s in it s v a ri ou s b a n k a c cou n t s on th e sa i d d a te s, h ad f il e d a re con ci li a ti on of the f i gure s r e fle c te d in t he ba la n ce s he e t wi th th e b a la n ce s i n i ts b a nk a cc oun ts on th a t d a te a n d h a d sub sta n ti a te d the sa me wi th cop i e s o f th e re le va n t b a nk st a te me nts . Th is e xp l a na t ion 54 ha s a l so no t b ee n sh ow n to b e f a ls e be fore u s. We the re f ore fi n d n o i n fi r mit y in the or d e r of t he Ld . C I T( A) h ol d in g th e imp u gne d fi gu r es in th e d ocu me n t to be me r e ro ugh not in gs ma d e d ur i ng a ud i t a nd thu s d e le ti ng the a d d it ion ma d e b y th e A. O. 7 7. Th e or d e r of th e Ld . C I T( A) i n d e l e ti n g the a d di ti on of Rs. 1 6. 9 2 c ro re s is , th e re f ore , u phe l d .
G r oun d of a p p e a l N o.4 is a c cor d i ng ly d is mi sse d. I n e ffe c t a ppe a l of th e Re ve n ue i s d is mis se d . W e s ha l l no w ta ke u p a sse sse s C ross O bj e c ti on f or A .Y 2 01 0 -1 1 C O N o .1 1/C h d /2 01 4 : ( A .Y 20 1 0-1 1 ) 78 . G r oun d N o. 1 r a i se d b y t he a s se s se e re a d s a s u nde r:
"1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals), Chandigarh is against law and facts on the file in as much as he was not justified to arbitrarily uphold the disallowance of Rs. 11,00,376/- out of interest account by resort to provisions of section 36(1)(iii) ignoring the fact that the advance was made for the purpose of business."
79 . I t w a s c ommon gr ou nd b e twee n th e pa rt ie s that the is sue i n the a bove gr oun d w a s i de nt ic a l to t ha t r ais e d i n gr oun d N o. 1 of a ss e s se s C . O . N o.9/C h d /2 01 4 , a nd r e la te d to 55 di sa l l ow a nc e of in te re st u /s 3 6( 1 ) (i i i) of t he A ct , in r e l a ti on to p ur p or te d n on b usi n e ss a d va n ce s ma d e to t he sa me pa r ti e s a s i n A .Y 2 0 0 8 -09 a s un d er :
S il ve r O a k Fo unda t ion R s. 91 , 6 9, 8 05 /- P SI D C Rs .2 1 , 50 , 0 00 /-
80 . Th e L d .C oun se l f or t he a ss e ssee co nte nd e d tha t h is a rg ume n t a ga i n st th e sa i d d i sa l l ow a nc e up he ld b y the C I T( A) w a s the s a me a s in A .Y 2 0 0 8 -09 , th a t t he a ss e ssee ha d s uf fi ci e n t ow n in te re st free f un ds , in the f or m of Re se r ve s f or t he ye a r a mou nti n g to R s. 6. 1 0 cr ore s a s a g a in st the i mpu gn e d a d va n ce s a d d i ti onal l y ma d e d ur in g t he ye a r of Rs. 11 l a cs , f or ma k i ng t he a dv a nc e s a nd th e p re s ump ti on the re fo re i s tha t th e a dv a nce s ha ve be e n ma d e out of ow n in te re st free f und s.
81 . S in ce a d mit te d ly th e is su e is id e n ti ca l to th a t in Gr ou nd N o. 1 of the a sse sse s C ross O b j e cti on fo r A. Y 2 0 0 8- 09 i n C O N o. 9 /2 0 1 4 d e a lt w i t h u s a b ove , ou r de ci si on re nde re d the re i n a t p a r a 4 1 of our or d e r wi l l a ppl y to t he pr e se n t gr ou nd , fo ll ow i ng w h i ch we de le te the d is al low a n ce of in te re st o f Rs.1 1 ,0 3 ,3 7 6 /-.
G r oun d of a p pe a l N o. 1 r a i se d b y th e a sse s see is 56 a ll ow e d .
82 . G r oun d N o.2 r a i se d by the a sse ssee in C r oss O b je cti on re a d s a s u nde r:
"2. That he was further not justified to arbitrarily add a sum of Rs.11,00,000/- on account of difference between audited trial balance and trial balance found during the course of search as Annexure A-110."
83 . Th e b ri e f fa c ts r e le v a nt to the i ssu e a re th a t a s p e r pr ov is io na l t ri a l b a l a nc e in An ne xur e A-1 1 0 , gr oss re ce ip ts we re of Rs . 2 1.2 4 c ro re s, b u t a s pe r the p r ofit a nd l oss a ccou nt , th e r e ce i p ts we re on ly of Rs. 1 7 .9 3 cr o r e s a n d so the re w a s a d if fe r e n ce of Rs. 3 .31 cr or e s . The a sse ssee h a d e xp la ine d d ur i ng the cou rs e of a ss e ss me n t p ro cee d in gs tha t sa l e of me d i ci nes/i mp la n t of R s. 3 . 2 0 c ro re s w a s r e f le cte d se p a r a te ly a s me d ic ine s co ns ume d . Th e A sse ss in g O f fi ce r fou nd t ha t e ve n i f the sa i d re ce i p ts we re a ccoun te d f or, the re w oul d be di f fe re nce of Rs .11 ,0 0 , 00 0 /- a n d so h e ma d e a dd i ti on of th i s a moun t of Rs. 1 1 , 00 , 0 00 /-. 84 . Th e Ld . C I T( A) u p he l d t he or de r of th e AO . 85 . B e f ore u s, th e Ld .C oun se l f or th e a sse s see re i te ra te d the co nte nt ion s ma d e b e f ore the low e r a ut hor i ties th a t the gr oss r e ce ip ts of Rs .2 1 .2 4 cr or e s w e re me n ti one d in the pr ov is io na l t ri a l b a l a nc e s a n d, t he re fo re , w a s a pr ovi si on a l 57 fi gur e a nd e ve n o the r wi se the d if fe re n ce be t wee n the a ctu al re ce i p ts re co rde d by the a s se sse e a nd p r ovi si on a l fi gu r e w as me a gr e be in g R s. 1 1 la c s on l y a nd, th e re f ore , w a rr a nte d no a dd i ti on. Th e Ld . DR r e l ie d u p on th e or de r of t he CI T(A ). 86 . W e h a ve he a r d th e r iv a l c onte nt io ns . The is sue re l a te s to a dd i ti on ma d e on a c cou nt of di ff e re n ce o f gr oss re ce i p ts a s r e fle cte d i n th e p r ovi si on a l tri a l b a l a n ce se ize d f ro m t he a sse sse e 's p re mi se s be in g An ne xur e A- 11 0 a nd t hat r e f le cte d in th e P r of it & Lo ss Acc oun t a mo u nt in g t o Rs .1 1 l a c s. S in ce it i s a n a d mit te d fa c t th a t th e d ocu me n t An n e xur e A-1 1 0 wa s a p r ov is ion a l tr ia l b a la n ce of th e a sse ssee , th e on us re ste d on the a ss e ssee to e xp la i n the d if fe re n ce be twee n t he gr oss r e ce i p ts r ef l e cte d i n t he s ame a n d th a t a cc oun te d f or in th e b ook s o f the a s se s se e . W ha t soe ve r a nd h ow so e ve r me a gr e the y wer e the a s se sse e was re q ui re d to g iv e a pl a us i bl e e xp l a na t ion f or th e sa me si nc e th e re cor d i ng s i n the p r ovi s ion a l t ri a l b a l a n ce w as a d mi tte d l y ma d e by t he a sse sse e it se l f and, th e r ef or e, th e re was r e a son b e h in d re cor d i ng the gros s r e ce i p ts a t Rs. 2 1 .2 4 cr or e s w hi c h w a s be st k now n to th e a sse ssee on ly. I t c oul d not h a ve be e n br u sh e d a s ide as be in g mer e p r ovi si on a l f ig ur e a nd di f fe re nce be twe e n the p r ovi si on a l a n d a ct ua l fi gu re b ei ng 58 me a gr e . Th e a c ti on of the Ld .C I T( A ), th e re fore , i n con f ir mi ng the a d d i tio n of R s.1 1 la c s on a c cou nt of the s a me is, the re fo re , up he l d.
G r oun d N o. 2 r a i se d b y the a s se s se e i s d i smi sse d. Th e C r oss O b je cti on fi le d b y th e a sse ssee i s p a rt ly a ll ow e d .
87 . W e sh a ll no w d ea l w ith Re v e nue s a p p e a l a nd a ss e sses C ro ss Ob j e c tio n pe rt a in i ng to A .Y 2 0 1 1 -12 . W e s ha l l fi r st ta k e u p the Re ven ue s a ppe a l.
ITA N o. 36 /C h d / 2 01 4( A. Y.2 01 1 -1 2) :
88 . G r oun d N os. 1, 9 a nd 1 0 r a i se d by th e Re ve n ue in th is a pp e a l a re gen e r a l in n a tu re a n d, he n ce n ee d no a dj ud i ca t ion .
89 . G r oun d N o. 2 r a i se d b y the Re ve nue re a d s a s un de r :
"2. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.35,00,000/- made u/s 68 of the Act since the assessee has failed to prove that the whole amount related with cash receipts in Annexure A-2 was deposited in banks and shown in the books of account."
90 . I t w a s c ommon gr ou nd b e twee n th e pa rt ie s that the is sue r a i se d in gro un d N o. 2 a s a bo ve w a s simi l a r a n d in f a ct 59 id e n ti ca l to gr oun d N o. 2 r a i se d in Re ve n ue s a p pe a l i n I TA N o.3 3 /C h d /2 0 1 4 fo r A. Y 2 0 0 8-0 9 de a lt w i th us a b ov e . I t w a s poi n te d ou t th a t th e i ss ue a r ose fr om th e d if f e re nce o f c a sh re ce i p ts a nd the a moun t of ca s h de po si te d i n ba nk a s n ote d in doc ume nt A -2 f oun d d u r in g se a rc h. Tha t d ur i ng t he imp ug ne d ye a r the sa i d d if fe re n ce w a s Rs .3 5 l a cs w hi c h w a s a dd e d b a c k to th e in come of the a ss e s see u/s 6 8 of the Ac t. B oth th e pa rt ie s con te n de d tha t th e i r p le a din gs w e re id e n ti ca l to th a t ma d e in g r oun d no . 2 of I TA N o.3 3 /C h d /2 0 1 4 f or A .Y 2 0 0 8 -09 .
91 . S in ce a d mitt e d ly id e nti ca l i ss ue ha s a l re a d y bee n d e a lt wi th b y us in Re ve n ue s a p pe a l for A .Y 2 00 8 - 0 9 in I TA N o.3 3 /C h d /2 0 1 4 , ou r d e c is i on on th e sa me r e nd e re d a t pa r a s 2 1 t o 2 6 of ou r or d e r a b ove w il l a pp l y to the p re se nt gr oun d a l so, fol l ow in g wh i ch w e up h ol d th e or d e r of t he C I T( A) d e l e t in g the a d d i tio n ma d e of Rs. 3 5 l a cs .
Th e gr oun d of a p p e a l N o.2 r a i sed b y th e Re ve nue i s the re fo re d i smi ss e d 92 . G r oun d N o. 3 r a i se d b y the Re ve nue re a d s a s un de r :
"3. The Ld CIT (A) has erred on the f acts and in law in allowing the relief of Rs.32,30,593/- in respect of excess depreciation claimed since the assessee has failed to prove the claim of higher 60 depreciation on life saving equipments."
93 . It w a s common gr ou nd t ha t the iss ue ra i se d i n g roun d N o.3 a b ove w a s id e n ti ca l to th a t r a is e d in gr oun d N o.3 of the Re ve n ue s a p pe a l f or A .Y 2 00 8 -09 in I TA N o.3 3 /C h d /2 0 1 4 d e a l t with us ab ov e a n d re la te d t o e xce ss de pre ci a ti on a lleg e d ly cl a i me d b y t he a ss e ssee on li f e s a vi ng e q ui p me n ts. I t w a s p oi nte d out th a t t he b e f ore the CI T( A) , the a sse s see ha d w i th d ra w n i ts cl a i m of e xce s s de p re ci a ti on on th e W DV of a sse ts a s on 31 -0 3 -2 00 6 a nd for t h e a sse ts pu r ch a se d the re a f te r had f i le d a r e vi se d cl a im of de pre ci a ti on as per wh i ch a c cor d in gl y th e C I T( A) h ad re str i cte d the dis a ll ow a n ce to Rs. (3 , 1 0, 4 4 9/-) a s ag a in st Rs. 32 , 3 0, 5 9 3/- /- d is a ll ow e d b y t he A .O . 94 . S in ce a d mit te d ly th e is su e is id e n ti ca l to th a t in Gr ou nd N o. 3 of t he Re ve nue s a p pe a l f or A. Y 20 0 8 -0 9 in I TA N o.3 3 /2 0 14 dealt w i th us a b ove , our de ci si on r e nde re d the re i n a t p a r a 3 2 of ou r or d e r w i ll a p p ly to th e p re se nt gr oun d , fol l ow in g w hi ch w e u ph ol d th e or d e r of t he Ld . C I T( A) a ll ow i ng r e l ie f on a c cou nt d e p reci a ti on c la i me d a t h i ghe r ra t e o n li fe sa vi ng e q ui p me n ts ,amo un tin g to Rs. 3 2, 3 0 ,5 9 3/-
G r oun d of appeal N o. 3 r a i se d by the Re ve nue is di smi ss e d .
6195 . G r oun d N o. 4 r a i se d b y the Re ve nue re a d s a s un de r :
"4. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.32,38,983/- made u/s 68 of the Act since the assessee has failed to explain the entries made in the Annexure A-95 of the seized material."
96 . B r i e f ly s ta te d, th e AO n ote d f r om a se i z e d d ocume nt An ne x ure A-9 5 p a ge N o. 8 4 , tha t th e c a sh c oll e c ti on r e f le cte d the re i n w a s o f Rs. 1 0 ,0 1 ,0 5 ,1 0 1 /- . H e fu rt he r n ote d tha t i n the b ook s of a cc oun t the s a me was r e f le cte d at Rs. 9, 6 8 ,6 6 ,1 1 8 /- on ly a nd s o the A O pr op ose d to a d d t he di f fe re nce of Rs.3 2, 3 8 ,9 8 3/- ( 1 0 , 0 1 ,0 5 , 10 1 - 9 , 68 , 6 7, 1 1 8) . Th e a sse sse e w he n con f ro nte d w it h th e sa me submi tte d tha t the i mpu gn e d d ocu me n t was a ha n d w ri tt e n do cume nt re fle c ti ng the co ll e c ti on a s pe r the col le c tio n re gi st e r a s on the d a te of se a r ch , d e p i cti ng the re ce ip ts a s cop ied f r om t he bi l li n g sof tw a r e su m ma r y. I t w a s con te n de d th a t the sa id sof tw a r e h a d va ri ous fl a w s du e to w hi ch th e sof tw a r e w as use d o nl y f or bil l in g p ur p ose a nd n ot a cc oun ti ng p ur p ose a nd , th e re f ore , th e a moun t re fl e cte d o n the s oftwa r e co uld not b e t a ke n to be s a cr osa nct . Th e AO wa s n ot sa ti sf i e d w i th the re p ly of th e a s se s se e a nd ma d e an a d di ti on of Rs. 32 , 2 8, 9 8 3/- o n t he gr ou nd tha t th e e nt ire re ce i p ts we re not d e c la re d in the b ook s of a c cou nt .
6297 . B e f ore the Ld . C I T( A) t he a s s e s se e re i te r a te d t he con te n ti ons ma d e be f ore the AO . The Ld . C I T(A ) a fte r con si de r in g the con te nti on s of the a s se sse e a nd on goi ng thr ou gh th e i mpu gn e d d oc ume n t d e le te d the a d diti on ma d e on fi n di n g t ha t th e b il l in g sof twa r e summa r y , w h i ch w a s cop i e d in the se ize d d ocu me n t, r e l a te d /pe r ta ine d to t he pr e ce d i ng ye a r i. e . ye a r e n d in g 3 1 .3 .2 0 1 0 a n d , the re f ore , wa s no t re le v a nt for the i mp ug ne d ye a r a t a l l . H e fu rt he r note d di s cre p a n cy i n the b il l in g s oftw a r e pr i n tout a s h a vi ng a dd e d t he fi gu re of re f un d to t he col le cti on ma d e w h ile re fle c ti ng the ne t c oll e c ti on fr om O P D. H e , the ref or e , he ld tha t the d a ta re fl e c te d i n the b il lin g s of tw a re p r intou t c oul d not b e re l ie d up on a nd , th us d e le te d t he a d d it ion ma de . 98 . B e f ore u s th e Ld. D R re li e d up on th e or de r o f th e AO , wh i le the Ld. C ou ns e l for th e a s ses se e re l ie d up on t he or de r of th e C I T( A) .
99 . W e h a ve he a r d th e c onte nt ion s of b ot h t he p a rt ie s. The is sue be f ore us r e l a te s to di f fe re nce i n ca s h re ce ip ts a s re cor de d i n a docu me n t se ize d d u ri n g se a r ch , n umb e r e d An ne x ure -9 5 . Pag e 8 4 a nd th a t a s sh ow n i n t he bo oks of a ccou nt of the a sse ssee b e ing Rs .1 0 ,0 1 , 05 , 1 01 /- and Rs. 9, 6 8 ,6 6 ,1 1 8 /- r e spe ct ive l y, r es ul ti ng i n a d if f e re nce of 63 Rs. 32 , 3 8, 9 8 3/-. Th e a ss e ss ee ha s e xp la i ne d the d ocu me n t to be h a nd w r i tte n /cop i e d e xtr a c t of the re ce i p ts of the a ss e ssee a s r e f le cte d i n the b il l in g s of tw a re su mma r y. Th e Re ve nue ha s not d i sp u te d th is fa c t a n d t he sa me i s e vi de nt fr om t he cop i e s of the sa i d tw o d ocu me nt s p la c e d be fo re us at Pa p e r B ook p a ge N o. 3 8 a s be i n g the b ill i ng sof tw a r e sum mary a s un de r :
366 GE10277 31/03/2010 18:51 C 300 PARMOD KUMAR 367 GE10278 31/03/2010 19:04 C 500 PARMOD KUMAR 368 GE10279 31/03/2010 19:26 C 35 INJD 369 IP013719 31/03/2010 21:06 C 10,000.00 Admission Advance RO130370 31/03/2010 21:55 C 1,000.00 SS 13 GE102781 3,08,060.000 REFUND RF002297 IP013684 31/03/2010 10:17 C -5,200.00 Refund RF002298 IP013683 31/03/2010 10:56 C -1,000.00 Refund RF002299 IP013654 31/03/2010 11:38 C -85 Refund RF002300 GE102730 31/03/2010 12:53 C -300 BHUSHAN KUMAR RF002302 GE102658 31/03/2010 14:49 C -1,000.00 CGHSGC 13 (6) -9.035.00 (168) 2,99,025.00 Total 11,78,24,467.10 Cash : Rs.100105101.60 Cheque : Rs. 20,1 5,258.00 Draft : Rs.31,05,000.00 Credit Card : Rs. 80,40,853.50 TOTAL O.P.D COLLECTION ; 1672421.10 Refunds 286939.00,Net: 18928149.10 TOTAL I.P.D COLLECTION : 98425276.00 Refund 4087812.00 Net:: 9433746400 OPD Cash : Rs. 17625384.60 Cheque : Rs. 1,17,471:00 OPD Draft : Rs.3,05,000.00 Credit Card : Rs.8,80,893.50 IPD Cash : Rs. 824797 17.00 Cheque : Rs. 18,97,787.00 IPD Draft : Rs28060 000.00 Credit Card : Rs. 71,59,960.00 Amount in Abbrevations Used. C- Cash, B-Bank, D-Draft, R-Credit Card Advance Amount. :2491471,00 64 and A nn e xu re -95 , p a ge 8 4, pl a ce d at paper boo k p a ge N o.3 9 , th e con ten ts of w h ic h a r e r e p r od uce d a s u nd e r :
T otal Col l ec ti on Ca sh Rs.1 0 , 01 , 0 5, 1 0 1 . 6 0 Ch equ e Rs. 2 0 ,1 5 , 25 8 D raf t Rs. 3 1 ,0 5 , 0 00 Cred i t C ard Rs. 8 0, 4 0 ,8 5 3 .5 0 T otal O PD Col l ec t ion 16 7 2 4 21 7 . 10 Ref un d s 28 6 9 3 9. 0 0 Ne t 18 9 2 8 74 9 . 10 T otal IPD Co ll e c ti o n 98 4 2 5 27 6 Ref u n ds 4 08 7 8 1 2 Ne t 94 3 3 7 46 4 10 0 . I t i s e v ide nt t hat t he s umma r y o f tota l r e ce i pt s of t he a sse sse e a s re co rd e d i n the softw a r e we re n ote d i n t he imp ug ne d do cum e nt. Th e D e p a r tme nt n ote d th a t w hi l e the ca sh r e ce ip ts show n th e re i n a mou n te d to Rs. 1 0 cr or e s od d, the a s se s se e h ad s how n r e ce i p ts i n it s b oo ks of R s. 9. 6 8 cr or e s on l y a nd on a c coun t of a b se nce of a n y pl a u si ble e xp la na ti on a d ded b a ck th e d i ff er e n ce a s u nr e cor d e d c a sh re ce i p ts .
10 1 . On goi ng th r ou g h th e or d e r of th e Ld .C I T(A ) d e l e ti ng the a d d i ti on ma d e , we f i nd th at one o f the rea s on f or de le ti ng the a d di ti on w a s th e fa c t not e d b y th e CI T( A) tha t the b il l in g so ftw a r e summa r y re la t e d to th e pe riod e nd i ng 31 . 3. 2 0 10 p e r ta i ni n g to a sse ssm e nt ye a r 2 0 1 0 -11 a n d th us di d no t p e r ta i n to th e i mp ugn ed ye a r i.e . 20 1 1 -1 2. The 65 fi nd i ng s of t he Ld .C I T(A ) a t p a r a 6 . 3. 1 of h is or d e r a re a s un de r :
"6.3.1 I have perused the relevant page of Annexure A-95, which is a handwritten page, on which cash collection of Rs. 10,01,05,101.60 is mentioned and 'net' has been worked out at Rs. 9,43,37,464/-. The appellant has explained that the figures mentioned on this page have been imported from the printout of the billing software. The printout of the billing software was submitted before the Assessing Officer also and a perusal of this printout reveals that the printout pertains to the year ending on 31.03.2010 and so none of the figures mentioned on this page are relevant to the year under consideration i.e. F.Y. 2010-11 and addition could not have been made in this year on the basis of notings on this page."
10 2 . Thi s f a ct th a t the n oti ng s in the b i ll i ng s oftw a r e sum ma r y s he e t p e r ta i ne d t o fi na nci a l ye a r 2 0 10 -1 1 ha s not be e n c ont ro ve r te d b y th e Re ve n ue be f ore u s a nd pe r usa l of the summ a r y s he e t as r e p r oduce d a bov e re a ff ir ms t he fi nd i ng s of th e L d .C I T(A ) a l so. Th e re f ore , we a gr ee w i th t he Ld. C I T( A) th a t t h e re ce i pt s n ote d fr om the su m ma r y sh ee t in doc ume nt A -9 5, p a ge 8 4 d id n ot p e r ta i n to the imp u gne d ye a r a n d , the re f or e , n o a d d i ti on on a cc oun t of a ny d if f e re nce in th e c a sh r e ce ip ts r e co rde d in th e s a me a n d a s p e r t he boo ks o f a cco un t w a s l ia bl e to be ma de .
Ev e n othe r w i se on ca r e f ul pe ru sa l o f t he su mma r y as pe r the bi l li n g s oft w a re s umma r y sh ee t, we f in d that the re i s no ma j or di f fe r e nc e in the ca sh r e ce ive d a s re f lecte d i n t he 66 comp ut e r ge ne ra te d s umma r y a nd t ha t r e co rde d in t he boo ks o f a cco un t. The f ir s t s um ma r y gi ve s t he br e a k -u p of the to ta l re ce i pt s in v a r iou s mod e s a s un d e r :
Cash = Rs .1 0 ,0 1 ,0 5 , 10 1 /-
C h e q ue = Rs . 2 0 , 15 , 25 8 / -
D r a ft = Rs . 3 1, 0 5 ,0 0 0 /-
Credit Card = Rs . 8 0 ,4 0 , 84 3 /-
----------- -----------
Rs. 1 1 ,3 2 ,6 6 ,2 0 2 /-
----------- ------------
10 3 . Th e b r e a k up of th e a fore sa i d c olle cti on fr om O PD a n d I P D i s gi ve n be low :
OP D c ol le cti on s ca sh = Rs .1 , 76 , 25 , 3 84 /-
C h e q ue = Rs . 1 , 1 7, 4 71 /-
D r a ft = Rs . 3 ,0 5 ,0 0 0 / -
Credit Card = Rs . 8 ,8 0 ,8 9 3 / -
= ------ ------------
Rs .1 , 89 , 28 , 7 49 /-
------ ------------
10 4 . Si mil a r l y, th e I PD c oll e c ti ons a re gi v e n a s un de r :
Cash = Rs .8 , 24 , 79 , 7 17 /-
C h e q ue = Rs . 1 8 ,9 7 , 78 7 /-
D r a ft = Rs .2 , 98 , 00 , 0 00 /-
C r e d i t ca r d = Rs . 7 1 ,5 9 , 96 0 /-
------ ----------
To ta l = Rs .9 , 43 , 37 , 4 61 /-
------ ----------
10 5 . On tota li ng e a c h mod e of co ll e c ti ons fr om th e O P D
a nd I P D , th e s a me ta ll i e s w ith th e to ta l co ll e c tio ns f or di f fe re nt mo de s as re fl e c ted a b ov e ( 1, 8 9 ,2 8 ,7 4 9 + 9, 4 3, 3 7 ,4 6 1 = 1 1 ,3 2 ,6 6 ,2 1 0 ). Th e tot a l of the O PD an d I P D 67 col le cti on s a s a gg re ga te d a b ove be i ng Rs .1 , 89 , 2 8,7 4 9/- a n d Rs. 9, 4 3 ,3 7 ,4 6 4 /- , we fin d a re re fle c te d a g a in st the TOTAL O.P.D COLLECTION Net / TOTAL I.P.D COLLECTION Net i n th e summa r y sh e e t a s u n de r:
TOTAL O.P.D COLLECTION ; 1672421.10 Refunds 286939.00,Net: 18928149.10 TOTAL I.P.D COLLECTION : 98425276.00 Refund 4087812.00 Net:: 9433746400 In t he sa me c olu mn are m e nti one d re fu nds of Rs. 2, 8 6 ,9 3 9 /- a n d Rs .4 0 ,8 7 ,8 1 2 /- i n O P D a nd I P D a n d t he ne t col le ct ion a f te r re du ci ng re f un ds b e i ng Net 1 8 9 2 8 1 49 . 1 0 a nd Ne t 94 3 3 7 46 4 0 0 r e s p e cti ve l y , me a n in g t he re by th a t t he tota l co ll e c tio ns r e f le cti ng ca s h, ch e q ue , d r a ft, e tc. r e co rde d in A nn e xu re - 95, p a ge 8 4 a re inc lu si ve of the se re fu nd s ,w h ic h h a ve to b e re du ce d, the re f ore , to a r r i ve a t th e net ca sh col l e cti on . Th e re fu nd s s o re fle c te d in th e su mma r y she e t a mo un t to a p p r oxi ma te l y Rs .4 2 l a cs( O P D 2 l a cs + I P D 40 l a cs ) a nd d i f f e re n ce b etwe e n th e c a sh col l e cte d as re cor de d i n th e doc ume n t/su m ma r y sh ee t a n d tha t r e c or de d in the bo ok s of a cco un t is a ppr oxi ma te ly Rs. 3 2 l a cs a nd , the re fo re , w h a t eme r ge s , the re fore , i s th a t the re is no s ho rt col le cti on s i n cas h r e cor de d i n the b ook s of t he a ss e ssee , in fa ct , hi gh e r c a sh c oll e c ti on re cor de d a n d for th is r e a s on a ls o, the re i s no ne e d f or ma k i ng a ny a d d it ion o n ac cou nt of un a ccou n te d c a sh c ol le cti on s ma d e f r om O P D /I P D. 68 Th e or d e r o f t he C I T( A) , th e r e f ore , d e le ti n g th e a ddi ti on is u ph e l d .
G r oun d of appeal N o. 4 r a i se d by the Re ve nue is di smi ss e d .
10 6 . Gr ou nd of a p pea l N o. 5 r a ise d b y t he Re ve n ue re ad s a s un de r :
"5. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.28,33,000/- made u/s 68 of the Act since the assessee has failed to explain the entries made on Page 19 of the Annexure A-127 of the seized material."
10 7 . B r ie f f a ct s re le va nt to the i ssue a re th a t the Asses si ng Of fi ce r had made a d di ti on of Rs .2 8 ,3 3 , 00 0 / - on t he ba s is of fi gu re s re c or de d a t p a ge N o. 1 9 o f A nn e xu r e A- 12 7 , Th e no tin gs on t hi s p a ge we re a s un d e r :
"7,05,000 4,48,000 1,00,000 7,26,000 1,36,000 7,18,000 = 28,50"
Th e a sse sse e ha d su bmi tte d b e f ore the Ass e ssi ng Of fi ce r th a t it wa s an u nd a te d pa ge w i th some r ou gh ca l cul a ti on s a n d so i t w a s not p ossi b l e to r e co nci l e t he sa me . Th e As ses si ng O f fi ce r wa s n ot sa ti sf ie d w i th t he e xp la na ti on of the a p pe ll a n t a n d a dd e d t he sum t ota l of the 69 fi gur e s me n tio ne d on t hi s p a ge of R s. 2 8 ,3 3 ,0 00 /-,t o t he in come of t he a sse s see .
10 8 . B e f ore the Ld. C I T( A) th e a ss e sse e re ite r a te d t he sub mi ss ion s ma d e be f ore th e AO . Th e Ld .C I T(A ) d e le te d t he a dd i ti on so ma d e on fi nd i ng tha t th e e n tr ie s w e re me re scr i b bb l i ngs a nd , the re fo re , co ul d n ot be sa i d to be un a ccou n te d i nc ome or r e c e i pts of the a s ses see . The re le va n t f i nd i ng s o f the CI T(A ) a t pa ra 7 .4 of hi s or d e r a re a s un de r :
"7.4 A perusal of other pages of this annexure (a note pad) reveals that these contain some entries alongwith the bills numbers and these entries are relatable to the bills issued by M/s Silver Oak Medicos, a proprietorship concern of Dr. Manjari Bhargava. However, the entries made at page No. 19 are not relatable to entries made on other pages of this annexure. This annexure was maintained by some employee, who could have explained the no tings made on this annexure, but the explanation/ statement of the person, who had made these notings, was not recorded at the time of search or post search enquiries. Be as it may, these entries are mere scribblings, whose sum has also not been correctly worked out (the total of these entries is 28.33 lacs, whereas the total on this page is mentioned as 28.50) and cannot be said to be unaccounted income/ receipt of the appellant, particularly when the entries made on other pages of this annexure are relatable to the bills issued by M/s Silver Oak Medicos. The addition made on this account is accordingly deleted. Ground of appeal No. 5(b) is allowed."
10 9 . B e f ore u s, the Ld . DR r e l ie d up on th e or de r o f t he AO, 70 wh i le the Ld. C ou ns e l for th e a s ses se e re l ie d up on t he or de r of th e C I T( A) .
11 0 . We h a ve h e a r d th e r iv a l con te ntion s a nd c a r e f ul ly go ne thr ou gh th e or de r of the CI T( A) . W e h a ve n oted th a t t he Ld. C I T( A) on p e ru si ng th e d oc ume n t no te d tha t w h i le t he noti n gs on othe r p a ge s of the imp u gn e d An n e xu re A- 12 7, we re re la t a ble to ce r ta i n b i ll s is su e d b y the p r opr i e tor sh i p con ce r n of D r .Ma n j a ri B h a r ga v a , the e ntr ie s ma d e on t he imp ug ne d d oc um e nt i .e . pa g e 1 9 of An ne xur e A -1 2 7, w e re ne i the r re l a ta b le to the e ntr ie s ma d e on oth e r pa g e s of t he doc ume nt, n or d i d th e fi gu re s de pi ct a ny thi n g , w it h the to tal a ls o n ot ta ll yi n g. The C I T( A ) ha s f oun d th a t t hi s An ne xure wa s ma i n ta in e d by s ome e mp loy e e s w h ose st a te me nt w as not re cor de d du r in g se a r c h or p os t sea r ch a n d s in ce noth in g ca n be de ri ve d f r om the se e ntr ie s , he tr e a te d t he s a me a s me re scr i b bl i ng .
11 1 . Th e a b ov e fi ndi n gs of the C I T( A) ha v e not b e en con tr ove rte d b y the Re ve n ue be f ore u s. Th e R e ve nue h a s not be e n a b le to gi ve a ny me a n i ng to the n oti ng s ma d e in the sa i d do cume nt , n or h a s i t be e n a ble to re l a te it to a n y o the r pa g e of the imp u gne d d oc ume n t. Th e or de r of the C I T(A ) ,th e re f ore , de le ting t he a d d it ion so ma d e of R s. 2 8 .3 3 la c s, 71 tr e a ti ng the m as r ou gh n oti ng s ,we h ol d, c a l ls f or no in te r fe re n ce on our pa r t.
G r oun d N o. 5 r a i se d by the Re ve n ue i s, the re f ore, di smi ss e d .
11 2 Gr ou nd of a p pea l N o. 6 r a ise d b y t he Re ve n ue re ad s a s un de r :
"6. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.60,74,000/- made u/s 68 of the Act since the assessee has failed to explain the entries made in the Annexure A- 21 of the seized material."
11 3 . B r ie f f a ct s re le va nt to the i ssue a r e th a t the Asses si ng Of fi ce r no tice d s ome e nt rie s a t p a ge s of An ne xur e A-2 1 , wh i ch wa s a r e gi st e r . Th e a s se s se e ha d e xp la i ne d th a t th is a nn e xu re w a s ma i n ta in e d by the st a ff a n d r e f le cte d de ta il s of pa y me n ts re ce iv e d f r om EC H S / C G H S pa t ie nts on a c cou nt of b il l in g don e b y the a p pe l l a nt fo r me d i ci ne s a nd othe r pa y me n ts r e ce i ve d b y s i ste r c oncer n s. The A sse ss ing O f fi ce r wa s a l so con ve yed t ha t th e a mou nt s r e fle c te d w e re ve r if i a ble wi th th e bo ok s o f a cco un ts. The A sse ssi n g O f fi ce r w a s not sa ti sf ie d w it h the e xp l a na t ion o f t he a sse ssee a nd ma d e a dd i ti on of Rs. 6 0 ,7 4 ,0 0 0 /-, w hi ch w a s sum of the 'p r ofi t' col umn of thi s r e gi st e r .
7211 4 . Th e Ld .C I T(A ) d e l e te d the a dd i ti on ob se r vi ng a s und e r :
8.3.1 The appellant has explained that for ECHS/ CGHS patients, treated by the appellant hospital, the bills are issued on various counts like OPD, surgery, room rent, medicines, dialysis, scanning etc. It is also explained that consolidated amount is received from ECHS/CGHS in respect of various patients. According to the appellant, this register (A-21) contains patient-
wise detail of the amounts received from ECHS/ CGHS, which had been bifurcated among various sister concerns.
8.3.2 A perusal of various pages of A-21 reveals that the explanation of the appellant is correct. This register (A-21) contains details of receipts from ECHS/ CGHS and these receipts have been bifurcated by making various columns like Med (medicines), MRI, implant, CT etc. The last column on various pages of this register is 'profit'. The entries were made by some staff member, probably for the purposes of bifurcation of receipts (from ECHS/ CGHS) among various concerns carried on by the group. This register was maintained by some employee, who could have explained the notings on this register, but the explanation/ statement of the person, who had made these notings, was not recorded at the time of search or post search enquiries. The Assessing Officer has made the addition by adding up all the figures mentioned in the 'profit' column of this register. The Ld. Counsel has submitted that the purpose, basis and methodology of working out the profit by the writer of this register is not known, but even if the impugned amount (total of the 'profit' column) is taken as profit, the profit declared in M/s Anvit Enterprises and M/s Silver Oak Medicos itself is more than this amount of Rs. 60,74,000/- and so no addition is called for. The contention of the Ld. Counsel in this regard is correct, since the profit declared by M/s Anvit Enterprises and M/s Silver Oak Medicos is Rs. 28,77,590/- and Rs. 48,18,545/- respectively during the year in question. Be as it may, the Assessing Officer is not right in making this addition particularly because the amounts are received through cheques from ECHS/ CGHS and so cannot remain unaccounted and also because these are mere bifurcation 73 of receipts among various concerns of the group. Moreover, the claim of the appellant that these amounts are duly reflected in the books of accounts of the appellant or sister concerns of the appellant, has not been controverted by the Assessing Officer. In view of this discussion, addition made on this account is deleted. Ground of appeal No. 5(c) is allowed."
11 5 . B e f ore us t he Ld . D R r e l i e d up on t he or d e r of the A O a nd t he Ld .C ou n s e l f or th e a s se sse e re lie d up on th e o rde r of the CI T(A ).
11 6 . W e ha ve he a r d the r i va l c onte nt ion s a nd ha v e a ls o go ne thr ou gh the or d er of th e C I T(A ). W e f in d th a t th e CI T(A ) ha s giv e n a f a ctu a l fi n d in g tha t th e r e gi ste r con ta i ns d e ta i l s of re ce i p ts f r om ECH S /C G HS w hi ch w a s a l l re ce i ve d by wa y of che q ue du l y a cc oun te d f or in th e b ook s of th e a s se sse e a nd its si ste r co nce rns . Th e sa me h as no t be e n c ont rove r te d by the Re ve n ue b e for e us . Thi s a lon e , we f i nd , is su ff i ci e n t for de le ti ng the a dd iti on ma d e , a s r i gh tl y d on e b y t he C I T(A ). 11 7 . Fu r the r , we f ind , th a t th e Ld .C I T(A ) ha s a l so gi ve n a fi nd i ng th a t th e r e gis te r c on ta in e d me re l y a b i fu r ca ti on of the re ce i pt s on v a r iou s cou nts l ik e me d i ci ne s, MRI , I mp la n t, C T S ca n a n d th e l a s t c ol umn was prof i t. Th e C I T( A) ha s a ls o g iv e n a f in d in g th a t th e tota l of th e p ro fi t co l umn ha s be e n re f le cte d b y w a y of p r ofi ts of M /s A nv it En te r p r is e s a nd M /s S il ve r O a k Me d i cos . Th e a f or e sa i d f a ctu a l f i nd i ngs of 74 the Ld .C I T( A) ha v e a ls o re ma i ne d u nc ontr ov e r te d b e f ore us.
I n vie w of t he sa me , we d o n ot fi n d a n y re a s on to in te r fe re i n the or de r of the CI T( A ) d e le ti n g the ad d i ti on of Rs. 60 . 7 4 l a cs.
G r oun d of a p p e a l N o.6 is , th e re f ore , d i smi ss e d . 11 8 . Gr ou nd N o. 7 r a is e d b y the Re ve nue re a d s a s u nder :
"7. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.36,03,000/- made u/s 68 of the Act since the assessee has failed to explain the entries made in the Annexure A-3 of the seized material."
11 9 . B r i e f f a cts , a s sta te d i n the CI T(A )' s o rd e r ar e tha t, thi s a nn e xu re ( w hi ch was a re gi ste r ) c on ta ine d de ta i ls of a dv a nc e s re ce i ved fr om va r i ous p a ti e n ts cove re d b y EC H S / C GH S a n d a l so t he de ta i l s o f pa yme n ts re ce i ve d f rom EC G S / C GH S . Th e a s se s see ha d c la ime d b e f ore t he Ass e s si ng Of fi ce r tha t t he re ce i p ts we re d ul y r e f le cte d i n the bo ok s of a ccou nt s o f t he ass e ssee comp a n y, b ut the A sse ss in g O f fi ce r wa s n ot sa ti sf ied w i th the e xp l ana ti on of t he a ss e s see a n d ma de a d d i ti on of s um tota l of th e a moun t of th e a d va n ce s, e nte re d in t hi s docu me nt a mou nt i n g to Rs. 36 , 0 3, 0 0 0/-. 12 0 . Th e Ld . C I T( A) d e l e te d t he a d d it ion hol d in g a s un d er : 75
"9.3.1 A perusal of this annexure reveals that it contains details of advances received from various ECHS/ CGHS patients and also billing amount in some of cases. The amounts mentioned in this annexure pertain to ECHS/ CGHS patients, in respect of which the amounts are received through cheques and so these amounts cannot remain unaccounted. Moreover, the claim of the appellant that the amounts are duly reflected in the books of accounts has not been controverted by the Assessing Officer. The addition made on this account is accordingly deleted. Ground of appeal No. 5(d) is allowed."
12 1 . Th e Ld. DR r e li ed up on the or de r o f th e AO , w h ile the Ld. C ou ns e l f or t he a s se s see re lie d up on the ord e r of t he C I T( A) .
12 2 . W e h a ve he a r d the ri v a l co nte ntion s a n d g one th r ou gh the or de r s of a uth or i tie s be l ow . The f a ctu a l f in d i n gs of t he Ld. C I T( A) t ha t th e A nne xu re re ve ale d a d va n ce s re ce i ve d f ro m EC H S/C G H S p a ti e n ts w hi ch we re re ce ive d by way of che q ue s, h a s not b e e n con tr ove rte d by th e Re ven ue . The Ld. C I T( A) h a s no te d the a sse ssee 's cl a im th a t th e amoun ts we re d u ly re f le cte d b ook s of a cc oun t ha s r e ma i ne d un con tr ove rte d by th e AO . Th e L d . D R wa s un a ble to p oi nt out a ny in fi r mi ty i n the or de r of th e C I T(A ) , n or h e w a s a b le to c ont ro ve r t th e f a ctu a l f in din gs of th e CIT( A) . We, the re fo re , f in d no r e a so n to i nte r fe re i n t he or de r of t he C I T( A) .
G r oun d of appeal N o. 7 r a i se d by the Re ve nue is 76 di smi ss e d .
12 3 . G r oun d of a ppe a l N O .8 r a ise d by th e Re ve n ue i s a s un de r :
"8. The Ld CIT (A) has erred on the facts and in law in deleting addition of Rs.45,17,100/- made u/s 69A of the Act since the assessee has failed to explain the cash seized during the search."
12 4 . B r i e f f a ct s re le v ant t o the is sue ar e th a t a n a moun t of Rs. 4 5 , 17 , 0 00 /- was se iz e d f ro m t he p r e mi s e s of t he a sse sse e d ur i n g th e co ur se of se ar ch a n d s e i zu re op e ra t ion . Th e As se ssi n g O ffi ce r n oti ce d th at th e ca s h in ha n d a s pe r An ne x ure A -1 1 6 w a s mu ch le ss th a n t he a moun t f oun d of Rs. 4 5, 8 0, 4 2 0 /- a n d so h e s ou g ht t he e xp la n a ti on on t he is sue . Th e a sse ss ee h a d e xp la i ned tha t 'A -l 1 6 ' w a s a p e tty ca sh b ook of th e comp a n y a n d th e ca s hie r w a s h a nd i ng ove r ca sh e ve r yd a y to D r . A kh i l B h a r g a va f or ke e p in g th e mon ey in cu r r e n cy che st a nd thi s fa c t wa s r e l a ta b le to An n e xure A- 2, i n w hi ch e q ua l a mo un t h a d b ee n e nte re d a s i n A-1 1 6 . The Ass e ss i ng O ff ice r w a s n ot s a ti sf ie d w it h the e xpl an a ti on of the a sse ssee a nd ma d e a d d it ion of th e a mou nt s e ize d of R s. 45 , 17 , 0 00 /-.
12 5 . Th e C I T(A ) d e l e te d th e a d di ti on h ol di n g a s u n de r:
"11.3 I have considered the facts of the issue. The Annexure 77 A-l16 is a petty cash book and cash is handed over to Dr. Akhil Bhargava each day for keeping the same in the currency chest. The amount given to him everyday is mentioned in A-l 16 and is relatable to the entries made by Dr.Akhil Bhargava in the diary A-2, which was also seized. Thus, the conclusion of the Assessing Officer that cash in hand reflected in A-l 16 is actual cash in hand as per the books of accounts, is not correct.
11.3.1 The accounts of the appellant are maintained on computerised accounting system Tally' and it is noticed that as on the date of search i.e. 21.09.2010, the entries had been made in tally accounts only upto 01.09.2010. As per these computerized accounts, cash in hand as on 01.09.2010 was of Rs. 62,80,060/-. The appellant has prepared its cash book after this date by importing the entries made in the daily cash book i.e. A-116 and cash in hand as per this cash book as on 21.09.2010 is of Rs. 61,85,666/-, which should have been compared by the Assessing Officer with the cash found during the search, which has not been done. In fact, the cash found was much less than the cash in hand as per the books of accounts. The entries in the books of accounts are not controverted by the Assessing Officer. As the cash found was less than cash in hand reflected in the books of accounts, the cash found/ seized cannot be treated as unaccounted. Hence, it is held that the Assessing Officer was not right in making the addition of the seized cash and so the addition made on this account is deleted. Ground of appeal No. 7 is allowed."
12 6 . B e f ore u s Ld .D R re lie d on the or d e r of t he A O, w h ile the Ld .C o un se l f or th e a sse sse e re lie d on the ord e r o f t he C I T( A) 12 7 . We h a ve con si de re d t he r iv a l con te nti on s a n d go ne thr ou gh t he o rde r of the a ut hori ti e s be l ow . Th e Ld . C I T( A) ha s giv e n fa c tua l f in d in gs a fte r g oi ng t hr ou gh t he doc ume nts b e fore h im th a t the i mp ug ne d d ocu me n t , A- 78 11 6 ,w a s p e tty ca s h b oo k, th e ca sh r e f le cte d in w h ic h w a s ha n de d o ve r to D r . Ak hi l B ha r ga va a nd w a s re la ta b l e to e nt rie s ma d e i n a d i a r y ma i n ta i n e d by h im, An ne x ur e A-2 . Th i s fi n di n g ha s n ot b ee n con tr ov e r te d b y th e Re ve nue be fore u s.
12 8 . Th e Ld . C I T( A) h a s a ls o fo un d tha t t he c a sh fou nd w a s fa r l e s s th a n the c a sh r e f le cte d in t he B ook s o f the a sse ssee on t he sa i d d a te. The Re ve n ue ha s n ot c ont ro ve r te d the se fi nd i ng s of the Ld. C I T( A) , nor poi n te d a n y i n fi rmit y i n t he sa me .
12 9 . I n view of the un con tr ove r te d fa ctu a l fi n di n gs o f t he Ld. C I T( A) , tha t t h e d ocu me n t A-1 16 , w h ic h f or me d t he b a si s of a d d it ion w a s on l y a pe tty c a sh b ook not re flec ti ng t he ca sh ba la n ce a s on th a t d a te a n d th a t th e ca s h ba l a nc e on the s a id da te a s p e r b ook s w a s mor e t ha n th a t a ctu al ly fou nd , w e fi nd n o r e a son to i nte r fe re in th e ord e r of t he Ld. C I T( A) de le ti ng th e a dd i ti on ma d e of Rs .4 5 ,1 7 ,0 0 0 /-on a ccou nt of t r e a ting c a sh f oun d a s u na c cou nte d.
G r oun d of a p p e a l N o.8 is d i smi ss e d .
I n e ffe c t the a p pe a l o f the Re ve nue is d i smi ss e d . 79 W e s ha l l no w d e a l w ith th e C ross Ob j e c ti on o f t he a sse sse e for A. Y 2 0 1 1-1 2 C O N o .1 2/C h d /2 01 4 : A. Y( 2 01 1- 12 ) 13 0 . Gr ou nd N o. 1 r a is e d b y the a sse ssee re a d s a s un der :
"1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals), Chandigarh is against law and facts on the file in as much as he was not justified to arbitrarily uphold the disallowance of Rs. 11,00,376/- out of interest account by resort to provisions of section 36(1)(iii) ignoring the fact that the advance was made for the purpose of business."
13 1 . I t w a s c ommon gr ou nd b e twee n th e pa rt ie s that the is sue i n the a bove gr oun d w a s i de nt ic a l to t ha t r ais e d i n gr oun d N o. 1 of a ss e s se s C . O . N o.9/C h d /2 01 4 , a nd r e la te d to di sa l l ow a nc e of in te re st u /s 3 6( 1 ) (i i i) of t he A ct , in r e l a ti on to p ur p or te d n on b usi n e ss a d va n ce s ma d e to t he sa me pa r ti e s a s i n A .Y 2 0 0 8 -09 a s un d er :
Si lv e r Oa k F ou nd a ti on Rs .9 1 ,6 9 ,8 0 5 /- PS I D C R s.2 5 , 00 , 0 00 /-
13 2 . Th e L d .C o un se l for th e a ss e ssee c onte n de d th at h is a rg ume n t a ga i n st th e sa i d d i sa l l ow a nc e up he ld b y the C I T( A) w a s the sa me a s i n A .Y 200 8 -0 9 , th a t th e a dv a nc es we re the s a me as in p re ce din g ye a r e xce p t a d d iti on al a dv a nc e gi ve n to P S I D C of 3 . 50 l a cs, th a t the a sse ssee h a d suf fi c ie nt ow n in te re s t f ree fu nd s ,i n the f or m of Re se rve s 80 for t he ye a r a mou nti n g to Rs. 7 .7 2 c r or e s a nd t he pr e sump ti on the r e f ore i s th a t the a d va n ce s h a ve b e e n ma d e out of ow n i nt e res t f r ee f un ds .
13 3 . Si nc e a d mitt e d ly t he i ss ue is id e nti ca l to tha t in Gr ou nd N o. 1 of the a sse sse s C ross O b j e cti on fo r A. Y 2 0 0 8- 09 i n C O N o. 9 /2 0 1 4 d e a lt w i t h u s a b ove , ou r de ci si on re nde re d the re i n a t p a r a 41 o f ou r or d e r wi l l ap p ly t o the pr e se n t gr ou nd , fo ll ow i ng w h i ch we de le te the d is al low a n ce of in te re st o f Rs.1 1 ,0 0 ,3 7 6 /-.
G r oun d of a p pe a l N o. 1 r a i se d b y th e a sse s see is a ll ow e d .
13 4 . Gr ou nd N o.2 w a s s ta te d t o b e not p r e ss e d , by t he Ld. C ou ns e l fo r th e a s se sse e a nd , he nce the s a me is di smi ss e d a s n ot p r e sse d .
Th e C r oss O b je cti on fi le d b y th e a sse ssee i s p a rt ly a ll ow e d .
13 5 . We s ha l l n ow t a ke u p th e a p pe al of th e Re ve n ue a n d the C ro ss O b je ction of the a sse ssee re l a ti n g to A.Y 20 0 5 -0 6 in I TA N o. 3 0 /C hd /1 4 and CO N o. 4 0 & 4 3 /C hd /1 6 re spe c ti ve l y 81 ITA N o. 30 /C h d / 2 01 4( A. Y.2 00 5 -0 6) :
13 6 . The s ol e i ss ue r a i se d i n the p re se n t a p p e a l r e l a te s to a dd i ti on ma d e o n a cco un t of s ha re ca p i ta l i nt r odu ce d d ur i ng the ye a r a mou nt in g to Rs. 9 0 l a cs r e ma i ni n g u ne xp la i n e d .
13 7 . B r i e f f a cts r e l a ti n g t o the i ssu e a re tha t th e a sse ssee ha d r e ce i ve d sh a r e a pp l i ca ti on m on e y of Rs. 9 0 l a cs d ur i ng the ye a r f r om t he f oll ow i ng p e r s ons :
Sh. Amandeep Singh Sidhu Rs.40,00,000/-
Sh. Bhupinder Baidwan Rs.10,00,000/-
Sh. Arjinder Bains Rs.30,00,000/-
Arjinder Bains (HUF) Rs.10,00,000/-
Total Rs.90,00,000/-
Th e As se ssi n g O ff ic e r a s ke d the a p p e l la n t to p ro du ce the i n come t a x re tur n s, ba n k sta t e me n ts a n d c on fi r ma tio ns in r e s pe ct of r e cei p t of t he sh a r e a p p l ic a ti on mon e y fr om t he a bo ve pe r son s. The a s se s see f i le d P AN s a nd a ddr e sse s of the se pe r s ons , b u t cou ld n ot fi l e th e re tu r ns of i nc ome a n d ba n k st a te me n ts a nd t he re a so n g iv e n was tha t the se pe r son s we re un a b l e to lo ca te th e i r re tu rn s a nd bank sta te me n ts a t s hor t no tic e . C on fi r ma ti on s f r o m S h. Ama r d e e p Si ng h S i dh u a nd S h. B hu pi n de r B a id w a n we re a ls o f il e d . Th e a ss e ss ee d id not f il e the c on fir ma ti ons f r o m S h . A r ji nd e r B a in s a nd Ar j in d e r B a in s ( HU F ) a n d r e a s on gi ve n w a s tha t 82 hi s r e la t ion s w ith Sh . Ar j in d e r B a i n s w e re st ra in e d . It wa s r e q ue s te d tha t th e Ass e s si ng O ff i ce r cou ld ge t ne ce ssa ry in for ma t ion f r o m th e c onc e r ne d pa r ty. I t w a s a l so su bmi tte d tha t na tu r e , sou rc e and ide n tity of the i nve stor s was e sta b l i she d a nd no c a se c oul d be ma d e o ut to d ou bt t he ge n ui ne ne ss, e xi ste n ce or i de nt ity of th e i nve s tor s a n d so pr ov is io ns of se cti on 68 cou l d not be i n voked . The a pp e l l a nt had r e l ie d up on the ju d ge me nts of H on 'b le Su pr e me C o ur t in the c a se s o f M/s Love ly Exp or ts ( P ) Ltd . (2 1 6 C TR 1 95 ) , a ff i r min g the j ud ge me n t of H on 'b l e De lhi Hi gh C ou r t ( 2 99 I TR 2 6 8 ) a nd of M /s S te l l e r I nve st me n t Ltd . (2 5 1 I TR 2 6 3) , a f fi r mi ng th e j u dgeme n t of H on'b le D e l hi H i gh C our t (1 9 2 I TR 2 8 7 ) . Th e A ss e ss in g O f fi ce r w a s n ot sa ti sf ie d wi th th e e xp la n ati on of the a p pe lla n t and he l d th a t t he cr e d i tw or thi ne ss a n d ge nu in e ne ss o f tr a ns a cti o n w a s not pr ov e d . He a c cord in gl y, ma d e a dd i ti on of e n ti re a mou nt of Rs. 90 la cs.
13 8 . D ur i ng a pp e ll a te p r ocee d ing s b e f ore the C I T( A) , t he a sse sse e su b mit te d a d di ti on a l e v i de nce by way of con fi r ma ti on of th e p a r tie s wh ic h a ft e r c onsid e r i n g the obj e c ti on of t he AO w a s d u ly a dmi tte d by th e C I T( A ). The Ld. C I T( A) th e r e a fte r , a f te r con si de r i ng a l l the e v ide nce s on 83 re cor d f oun d th a t th e con te n ti on of the AO t ha t th e che q ue s sho wn to be gi ve n to the a sse ssee a nd th a t de posi te d i n t he ba n k d id n ot t a l l y, w a s f a ctu a l ly in cor r e c t. He fo un d tha t the che q ue s re ce i ve d fr om S h ri A rj i nd e r B a in s a n d Sh ri Ar ji n d e r B a i n s(H UF ) ma t che d w i th th e che q ue nu mbe r me nt ion e d in the ba n k s ta te me nt of the a s se sse e comp a n y.
He fu rt he r f ound th a t e ve n w i th re ga r d s to t he c he que re ce i ve d f r om S hr i A ma r de e p S i ng h Sa n d hu and Sh r i B hu pi n de r B a id w a n , th e re wa s no mi s ma tch , w i th t he che q ue s h a vi n g b ee n du l y cr e di te d in t he b a nk a c cou nt of the a sse sse e . Th e Ld . C I T( A) fu rt he r n ote d th a t th e mon ey re ce i ve d fr om S hr i Ar j in d e r B a i ns and Sh r i A r ji n de r B a in s( H U F) w a s su bs e q ue nt ly re tu r ne d to the se p e rs ons a n d no sha r e a l lot ted , d ue to s tr a i ne d re la tio n o f t he a sse ssee wi th the m. He a ls o note d t hat on the re q ue st of t he a sse sse e summo n ha d b e e n is sued t o S hr i A r ji nd e r B a i ns f or con fi r min g th e i n ve s tme n t b ut t he AO d id n ot s u b mit t he re p or t on the e nq u ir y t he re a fte r con d uc te d . O n the ba s is of the a bo ve f in d ings th e Ld .C I T( A ) h e l d t ha t t he a sse ssee h a d du ly di sc ha r ge d i ts onu s of p rov in g ge nu ine nes s of the tr a ns a cti on a n d i t wa s f or the D e p a r tme nt to ma k e fu rt he r e nq u i rie s , if t he y h a d a n y d ou bt . Ac cor d in gl y, h e de le te d t he a dd i ti on m a d e of Rs .9 0 la c s. Th e re le v a nt f i nd i ng s of t he 84 Ld. C I T( A) a t p a r a s 3 .3 to 3 . 3 .8 of hi s or d e r a re a s u nd e r :
3.3 I have considered the submission of the Ld. Counsel and report of the Assessing Officer. I have also perused the records of the case. It is correct that the appellant was asked to file confirmations regarding share application money, for the first time only on 15.03.2013 and the appellant could not file confirmations from Sh. Arjinder Bains and Arjinder Bains (HUF) due to paucity of time and as per the version of the appellant, also because of the strained relationship with Sh.
Arjinder Bains. On the facts of the case, it is evident that the appellant company was prevented by sufficient cause from furnishing the confirmations before the Assessing Officer and so the additional evidences produced by the appellant are admitted. The objection raised by the Assessing Officer that the confirmations are on plain piece of paper, are an afterthought and that the payments were for some underlying business transaction do not hold water because there is nothing wrong if confirmations are on a plain piece of paper and these can certainly not be afterthought befause the appellant had received share application money through cheques from Sh. Arjinder Bains and Arjinder Bains (HUF). The contention of the Assessing Officer that the payments might have been for some underlying business transaction is not supported by any evidence and no document was found at the time of search also to indicate such a possibility. 3.3.1 The Assessing Officer has mentioned in his report that the bank account statements submitted showed some amounts and cheque numbers, which do not match with the bank statements is factually incorrect. All the share application money received from all the persons have been credited to the bank account of the appellant company. The appellant has provided sufficient evidence in the form of cheques received from Sh. Arjinder Bains and Arjinder Bains (HUF) and the cheque numbers match with the cheque numbers mentioned in the bank statement of the appellant company. The Assessing Officer has also contended that the entries regarding share application money in the bank statement of Sh. Amardeep Singh Sidhu and Sh. Bhupinder Baidwan are not proper and do not correlate with the entries of the bank statement of the appellant company, but the contention of the Assessing Officer in this regard is not 85 correct. The share application money received through cheques has been duly credited in the bank account of the appellant company.
3.3.2 The appellant had submitted before the Assessing Officer in the assessment proceedings to issue summons to Sh.Arjinder Bains for confirming the investment in share application money. In fact, in the report of the Assessing Officer filed in the appellate proceedings, it has been mentioned that the summons have been issued to, Sh.Arjinder Bains and the complete report was to be sent after proper verification, but no report has been received afterwards and it has been conveyed to the 3.3.3 It is also seen that against the money received from Sh. Arjinder Bains and Arjinder Singh (HUF), no shares were allotted, possibly due to strained relationship and the money was returned to these persons and for this reason also, the genuineness of transaction cannot be doubted.
3.3.4 For the purposes for making addition u/s 68 of the Act, the identity of the creditor, capacity of the creditor and genuineness of transaction is to be proved. The appellant has submitted PANs and details of cheques, which have been duly credited to the account of the appellant company and so the identity and genuineness of transaction is proved. The appellant has discharged its onus and the onus was shifted to the Department. If the Assessing Officer had any doubt about creditworthiness, he should have made due enquiries. 3.3.5 The Hon'ble Delhi High Court has held in the case of M/s Steller Investment Ltd. (supra) as under:
"It is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are alleged to have really advanced the money is sought to be reopened, that would have made some 86 sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself."
3.3.6 The aforesaid judgment of Delhi High Court was affirmed by Hon'ble Supreme Court. The Hon'ble Delhi High Court has again held in the case of M/s Lovely Exports (P) Ltd. (supra) as under:
"The assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the Briber; (4) if relevant details of the address or PAN identity of the creditor/ subscriber are furnished to the Department along with copies of the shareholders register, share application forms, share transfer register, etc. it would constitute acceptable proof or acceptable explanation by the assessee; (5) the Department would not be justified in drawing an adverse inference only because the creditor/ subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/ subscriber denies or repudiates the transaction set up by the assessee nor should the AO take such repudiation at face value and construe it, without more, against the assessee; (7) the AO is dutybound to investigate the creditworthiness of the creditor/ subscriber, the genuineness of the transaction and the veracity of the repudiation.
In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of ss. 68 and 69 of the IT Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the AO harbours doubts of the legitimacy of any subscription he is empowered, nay dutybound, to carry out thorough investigations. But if the AO fails to unearth any wrong or illegal dealings, fie cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company. "
3.3.7 The aforesaid judgment of Delhi High Court was also affirmed by Hon'ble Supreme Court. The ratio of 87 these judgements of Hon'ble Supreme Court is squarely applicable to the case of the appellant and so the addition on account of receipt of share application money could not have been made in the case of the appellant. The Assessing Officer has relied upon a number of judgements in the assessment order, but the ratio of these judgements is not applicable to the case of the appellant. .
3.3.8 In view of the above discussion, it is held that the Assessing Officer was not right in making addition on account of share application money received of Rs.90,00,000/-. The addition made on this account is accordingly deleted. Ground of appeal No. 2 is allowed." 13 9 . A ga i nst the sa me the Re ve n ue h a s c ome u p in a p pe a l be fore u s ra i si n g the f ol low i ng e ffe c tive gr oun d :
"1 .T h e L d. C IT (A ) h as erre d o n th e f ac ts an d in l a w in al l o wi n g th e re lief Rs. 9 0, 0 0 ,0 0 0 /- to th e a sse ssee in re sp ec t of ad d i ti on o f R s. 90 , 0 0 ,0 0 0 /- u / s 68 of th e In c o me T ax Ac t, 19 6 1 s in c e th e a sse ssee h a s f ail e d to prove the c red it wo r th ine ss an d gen u in en e ss of tr an sac ti on s"
14 0 . B e f ore u s, the Ld . DR r e l ie d up on th e or de r o f t he AO, wh i le the Ld. C ou ns e l for th e a s ses se e re l ie d up on t he or de r of th e Ld . C I T( A) .
14 1 . We h a ve he a r d r i va l con te n ti ons a n d h a ve c ar e fu l ly gon e th r oug h the or d e r s of a u thori ti e s be l ow . We do not f in d a ny r e a s on to inte r fe re i n the or d e r of the Ld .C I T( A ). The a dmi ss io n of a d d iti on a l e vi de n ce b y th e Ld .C I T( A ) ha s not be e n ch a l le nge d b y the De p a r tmen t be fore us . Th e Re ve nue ha s n ot c ont r ov e r te d the fa c tua l f in d in gs o f th e Ld .C I T(A ) 88 tha t C on fi r ma ti o ns , P AN a nd de ta i ls of c he q ue s i ssu e d b y the i nve s tor s a nd cr e d i te d in th e ba n k a c cou nt of t he a sse sse e we re sub mi tte d. N o d i scr e pa n cy h a s be e n p oi nte d out b y the Ld .D R i n t he a for e s a i d d oc ume nts . Th e Ld .C I T(A ) ha s a l so w e fi n d sp e c if i ca l ly de a l t w i th th e c ont e n tio n o f t he AO tha t the re w a s mi s ma tc h i n th e c he q ue s sh ow n to be is sue d by the inve stor s a nd th a t sh ow n a s d e p osi te d b y t he a sse sse e in hi s ba nk a ccou nt . The Ld .C I T(A ) h a s ve r i fi e d thi s fa ct a nd gi ve n a ca te gor ic a l f i nd ing th a t th e re w as n o su ch mis ma tch . The Ld . DR h a s b e e n u na b l e to con tr ov e r t this fi nd i ng of the Ld .C I T(A ). N o oth er a n oma ly or fa ct h a s be en br ou gh t to ou r n o tic e by th e Ld. D R c a sti n g a n y do u b t on t he ge n ui ne ne ss of th e t ra nsa cti on. Th e Ld. C I T( A) h a s a ls o g iv e n a f i nd i ng th a t sh a r e a p p li ca t ion mon e y r e ce i ve d f ro m t wo pe r son s w a s re t ur n e d s ub se q ue n tly, w h ic h a l so ha s n ot b e e n con tr ove rte d b y the Re ve n ue be for e us. We the ref or e a gree wi th th e Ld . C I T( A) th a t t he a sse ss ee ha d d u ly d isch a r ge d i ts onu s of p r ovi n g th e ge n ui ne ne ss of th e tr a n sa c ti on a nd w i th the Re ve n ue no t p oi nti n g ou t a n y r e a s on to d ou bt th e s a me, the re re ma in s no ba s i s f or tr e ati ng th e s ha re ca p i ta l a s un e xp la ine d .
I n v ie w of the a bov e , we up h old the or de r of t he CI T( A) , 89 de le ti ng t he a ddi ti on ma de of Rs. 9 0 l a cs on a cco un t of un e xp la ine d sh ar e a p p li ca t ion mon e y. The g ro un d of a p p e a l ra i se d b y the Re ve nue is d i smi ss ed .
I n e ffe c t the a p pe a l o f the Re ve nue is d i smi ss e d . C .O .N O s. 40 & 43 /C hd /20 1 6:
14 2 . Th e a s se s see h a s f i le d tw o C r os s O b je cti on s b e f or e us ra i si n g i de nti c a l gr ou nd v is -à -vi s th e v a li d it y of t he a sse ssme nt f ra me d a s u nde r :
"T h a t th e ord er pa s sed u / s 1 5 3A read wi th S ec tion 1 43 ( 3 ) of th e In co me T ax Ac t, 1 96 1 b y th e L d . A sse ssin g Of f icer is ag a in s t l a w a n d f acty s o n the f il e in as mu ch a s h e wa s n o t ju stif ied to ho ld th a t ev e n in th e a b se nc e of an y in cr im in a ti n g ma ter i al f ou n d d u ring se arc h, a sse ssmen t u / s 1 5 3A c ou l d be pr oc ee ded wi th . Cr oss O b jec ti on -- -- 14 3 . Mor e o ve r , we fi nd t ha t bo th the C r oss O b je cti on s a r e time b a r r e d b y 1 0 00 da y s a nd 1 0 1 6 d a ys r e s p ecti v e l y. The a sse sse e h a s fi led a n a p pl i ca ti on r e q ue sti n g c ondon a ti on of the de l a y in fi l in g of the sa me sta tin g t ha t si nc e i ts a sse ssme nt p r oce e d i ngs h a d be en a l l ow e d on mer i ts b y t he C I T( A) , i t d id n o t con si d e r it f i t to fi l e a p p e a l be fore t he I . T. A. T. un ti l th e or de r p a sse d b y th e I . T.A . T. i n M /s Ma l a B ui ld e rs P vt. Lt d . Vs . AC I T, C C -I I i n Au gu st 2 0 1 6 ho ld i ng tha t in th e a bse n ce of a ny in cr i mi na ti n g ma te ri a l f oun d 90 du r in g se a rc h, no a s se s sme n t cou l d b e f ra me d . Noti n g tha t the f a ct s of t he p re se n t ca se w e re i de nt ic a l and t he a sse sse e 's c a se w ou ld su cce e d e ve n on th e le ga l g r oun d, it a ccor d i ng ly fi l ed C r os s O b j e ct ion th e re a fte r in 2016 re su lti n g i n the impu gn e d d e la y.
14 4 . C ons id e ri n g t he e xp l a na t io n g ive n b y the a s se s se e in its a p p l ic a ti on f or c ond on a ti on o f d e l a y, we f i nd tha t th e re wa s r e a s ona b le ca us e f or the del a y i n fi l in g th e imp u gne d C ro ss O bj e c ti on. Mo re ove r we f i nd tha t the g r ound s r a i se d in the C r oss O b je cti on a re le ga l , w h ic h th e a ss e s see in a ny ca se , c oul d ha ve r a ise d be f ore us du r in g th e c our s e of he a r i n g of the ap p e a l of the Re ve n ue a ls o w it hou t r a i si ng the sa me b y w a y o f a C r os s O b je c ti on. I n vi e w of th e sa me the re fo re , we c on si de r it f i t to ad j ud ic a te the g r oun d r a i se d by th e a sse ssee in i s C ro ss O bj e c ti on.
14 5 . Th e Ld .C ou ns e l f or t he a s se s see p oi n te d o ut th a t t he a sse ssme nt i n th e p re se nt a s se sse e w a s f r a me d u/s 15 3 A r. w .s . 1 4 3 (3 ) of t he Act con se q ue n t to se a r ch p roce e d in gs con du cte d on the a sse ssee on 21 . 9. 2 0 10 . I t wa s p oi nte d out tha t i n th e a ss es sme n t fr a me d, t he s ole a d di ti on mad e w a s of Rs .9 0 l a cs o n a ccou nt of un e xp l a ine d sh a re a pp l i ca ti on mone y. The re a fter th e Ld .C ou ns e l f or th e a sse ssee took us 91 thr ou gh th e a sse ss me nt or de r and p oi n te d o ut the re f ro m tha t the re w a s n o r e fe re n ce to a n y in cr i mi na ti n g mate r i a l fou nd du r in g the cou rs e of se a r ch w h ic h cou ld ha v e le d to the i mp ug ne d ad d it ion . I t w a s fu r th e r poi n ted ou t tha t e a r lie r the a sse ss me nt f or th e i mpu gn e d ye a r w a s comp l e te d a nd th e or de r now p a sse d u/s 1 53 A r .w . s. 1 4 3( 3 ) of the Ac t, ma ki n g a d d i ti ons cou ld ha v e be en ma d e on ly on t he b a si s of in cr i min a ti ng ma te r i a l f oun d d ur ing th e c our se o f se a r c h, as la i d d ow n i n va ri ou s j ud i ci a l de ci si on s. O ur a tte nt ion w a s dr a w n t o the de ci si on o f th e I TA T C h a n di ga r h B e n ch i n t he ca se of Ma l a B ui l de r s P vt. Ltd . vs AC I T r e p or te d in 51 I TR ( Tr i b) 2 7 2 p oin t i ng out the re f rom th e r e fe re n ce ma d e to se ve r a l de c is io ns of t he H on' ble Hig h C ou rt s hol d in g so. 14 6 . Th e Ld . DR w a s un a b le to b r i ng to our n oti ce any in cr i min a ti ng m a te r i a l fou nd d uri n g se a r ch w hi ch w as t he ba s is o f the a dd i ti on ma d e , thou gh a t the s ame ti me he ve he me ntl y a r gu e d th a t v a r iou s h i gh c our ts had r u le d othe r wi se a l so hol d in g th a t a d d it ion n ee d n ot be c onf i ne d a nd b a s e d o nl y to ma te r i a l fo un d d ur i ng se a r ch . 14 7 . W e h a ve con si d e re d t he conte nti on of the Ld . C oun se l for th e a sse ssee . We a gr ee th a t i t h a s b e e n ti me a nd a ga i n be e n he ld by t he va r i ous H igh C ou r ts t ha t if no 92 in cr i min a ti ng m a te r ia l is f ou nd du r in g th e se a rc h act ion , the a dd i ti on i n t he c a se o f a l rea d y co ncl u de d a sse ssme nt ca n not b e ma d e wh i le f r a min g a s s e ss me n t u /s 1 5 3 A of t he Act . R e l ia n ce in th i s r e s pe ct can b e p l a ce d in th e c a se of 'C I T Vs. C ont in e n ta l W a r e h ou si ng C or p or a ti on ' I TA No. 5 2 3 of 20 1 3 r e p or te d i n ( 20 1 5 ) 2 79 C TR 0 3 8 9 ( B o mb a y) a n d of the H on 'b le D e l hi H i gh C ou r t i n t he ca se of 'C I T V s. K a bu l C ha w l a ' 23 4 Ta x ma n 3 00 (D e lh i) . Th e a for e sa i d d e c is io ns ha v e bee n f ur t he r a ff ir me d by th e d e ci si on of the D e l hi H i gh C our t i n t he c a se o f 'P r in ci p a l CIT Vs . Me e ta G utg uti a P r op M /s F e r n s 'N ' P e ta ls ", I TA 3 0 6 / 2 0 1 7 a nd oth e r s de ci d e d v ide or de r d a te d 2 5. 5 .2 0 1 7 .
14 8 . We fi n d t ha t t he ca se of the a ss e ssee i s sq uar e ly cove re d by th e a fo re sa i d de ci si on s. A d mit te d l y no in cr i min a ti ng m a te r i a l re la tin g t o sh a r e a p p li c a tio n mon e y re ce i ve d d u r in g th e ye a r w a s f oun d d u r in g se a r ch. The a sse ssme nt fo r th e i mp ugn e d ye a r was a lso e a r l ie r comp l e te d . The a f or e sa i d ca se la w s ca n b e we l l a p p li e d to the fa ct s a n d c irc ums ta nc e s of th e ca se i n h a nd . In vi e w of thi s, w e d o not f in d a n y j u sti fi ca t ion on th e p a r t of th e lowe r a uth or it ie s f or ma ki n g a d d iti on on a ccou nt of s ha r e a pp l ic a ti on mon e y fo r th e ye a r und e r c ons ide r a tio n. 93
B oth the C r oss Ob j e c tio ns of t he a sse s see are a ccor d i ng ly a l lo we d .
14 9 . We s ha l l n ow d e a l w it h the a pp e a ls re l a ti n g t o t he is sue of pe na l ty l e v ie d u/s 27 1 ( 1) ( c) of the Ac t for t he a sse ssme nt ye a r s a s un de r :
ITA N o. 12 1 8/C h d/2 01 7 : A .Y 20 0 7-0 8 ITA N o. 12 1 9/C h d/2 01 7 : A .Y 20 0 8-0 9 ITA N o. 12 2 0/C h d/2 01 7 : A .Y 20 0 9-1 0 ITA N o. 72 3 /C hd /20 17 : A. Y 2 00 9 -10 ITA N o. 12 2 1/C h d/2 01 7 : A .Y 20 1 0-1 1 ITA N o. 72 4 /C hd /20 17 : A. Y 2 01 0 -11 ITA N o. 12 2 2/C h d/2 01 7 : A .Y 20 1 1-1 2 ITA N o. 72 5 /C hd /20 17 : A. Y 2 01 1 -12 15 0 . Th e Re ve nu e 's a p p e a l s r e la te to f iv e ye a r s, i. e . f or A. Ys 2 00 7 -0 8 to A. Y 2 01 1 -1 2 . Th e c ha l le n ge of t he Re ve n ue in a l l th e a ppe a ls , w e fi nd , is a ga i n st d e le t ion b y th e C I T( A) of pe na l ty le vie d on a d d i tio ns con f ir me d in q ua n tu m pr oc ee d i ng s by the CI T( A ) a s un d e r :
1 ) D is a l low a n ce of in te re s t u/s 3 6( 1 ) (i i i) o f the A ct. 2 ) D is a l low a n ce of e xce ss de p rec ia ti on c la i me d on e q u i pme nts .
15 1 . Th e Re ve n ue ha s r a i se d i de nt ic a l gr ou nd s i n a l l i ts 94 a pp e a ls . F or t he sa k e of con ve nien ce we a r e re p r od uc in g the gr oun d r a i se d i n th e R e ve nue a p p e a l f or A .Y 20 0 7 -0 8 a s un de r :
1. On the facts and in the circumstances of the case, the Ld. C1T(A) has erred in allowing the appeal of the assessee without appreciating the facts of the case.
2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty of Rs. 1,40,145/-
on the confirmed addition u/s 36(l)(iii) by relying on the decision of the Hon'ble Punjab & Haryana High Court in the case of Commissioner of Income-tax - III, Ludhina v. Trident Infotech Corpn. Ltd.[2013] 34 taxmann.com 132 as the assessee had furnished inaccurate particulars of income.
3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty of Rs. 19,78,824/- on the confirmed addition on account of excess depreciation claimed u/s 32 as the assessee had furnished inaccurate particulars of income by claiming incorrect depreciation.
4. It is prayed that the order of the Ld. CIT(A) be cancelled and that of the assessing officer may be restored.
5. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard or is disposed off." 15 2 . Th e i ssu e r e l a ti ng to d is a l low a n ce of i n te re s t u/s 36 ( 1 )( i ii ) of th e Ac t w a s ra i se d b e f ore u s in th e Cr oss Ob j e ct ion s fi le d b y th e a sse ssee for A .Y 2 0 0 8-09 t o A. Y 20 1 1 -1 2 i n C O N os .9 t o 1 2 /2 0 1 4 , w h ic h ha s b ee n de a l t i n e a r lie r part of ou r or d e r , w he re i n we h a ve del e te d the a dd i ti on s o ma d e a t p a r a s 41 , 5 9, 8 1 a nd 1 3 3 o f ou r or de r a bo ve . N o j us ti fi ca ti on r e ma i ns th e re f ore f or th e le vy of 95 pe na l ty on the sa me . W e the re f ore d o not fi nd a ny re a son to in te r fe re in t he or d e r of t he Ld .C I T(A ) d e l e ti ng th e pe na l ty le vie d on the d i sa l lo w a nce o f in ter e st u/s 3 6 (1 ) ( ii i ) of th e Act for A. Y 2 00 8 -0 9 t o A .Y 2 0 1 1 -1 2.
15 3 . As for pe na l ty le vie d f or i de nt ica l di sa l l ow anc e ma d e in A .Y 2 00 7 -0 8 , i t h a s b e e n b ro ugh t to our no tic e th a t t he C ro ss O b j e cti on fi l e d b y the ass e ssee for the s a id ye a r cha ll e n gi ng the d i sa l l ow a nc e of int e re s t u/s 3 6 (1 ) ( ii i ), in C O N o.3 2 /C h d /1 4 wa s di s mis se d a s n ot p re ss e d vi de o rd e r da t e d 3 0 -1 0 -18 .
15 4 . Th e fa c ts l e a d ing to th e le vy of p e n a l ty a re tha t di sa l l ow a nc e of inte re st u /s 3 6 ( 1 )( i ii ) of t he Ac t a moun ti ng to Rs. 4 ,1 2 ,3 1 4 /- ha d b e e n ma d e o n a cc oun t of i n te re st f ree a dv a nc e s ma d e to th e fol l ow in g pa r tie s a moun ti ng i n a l l to Rs. 34 , 3 5, 9 5 1/-:
1) Si lv e r Oa k Fo un da t ion = Rs. 8 ,5 2 ,9 5 1 /-
2) A. M. C yb e r = Rs. 4 ,3 3 ,0 0 0 /-
3) Ad va n ce f or l a nd = Rs. 2 1, 5 0, 0 0 0 /-
To ta l = Rs. 3 4, 3 5, 9 5 1 /-
for t he r e a s on tha t th e a sse ssee w a s n ot a bl e to e sta b l i sh bu si ne ss e x pe d ie nc y f or giv i ng th ese l oa n s a nd a dva nc e s a n d fu rt he r re ly in g o n th e de ci si on of the CI T Vs. Ab h is he k 96 I nd u str ie s Ltd . , 28 6 I TR 1 ( SC ) for the p r op osi ti on th a t w h ere the a sse s see h a s bo rr ow e d fu nd s or in te r e st a nd c e r ta in a moun ts h a d b e en a d va n ce d f or non b u si ne ss pu rpo se s , t he in te re st t o the e xte n t of s uc h a d va nc e s h a d to be d i sa l low e d u/s 3 6( 1 ) (i i i) of t he Ac t. The C I T( A ) up h e l d the s ame . Th e A O the re a fte r le vie d p e na l ty on t he sa i d a d d i tio n. The C I T(A ) de le te d the pe nal ty l e v ie d h ol di ng a t p a r a 4 .3 to 4 .6 of hi s or de r a s un de r :
4.3 I have carefully considered the appellant's submissions. It is a trite law that assessment proceedings and penalty proceedings are two separate proceedings.
Merely because addition has been made to returned income does not mean that penalty is also leviable. The addition made in the instant case is on account of disallowance of interest. The appellant had claimed that the same is allowable, whereas, the AO has held that in the instant case there is no commercial expediency and therefore it is not allowable. The AO has made disallowance by placing reliance upon the decision of M/s Abhishek Industries Ltd. From the aforesaid facts, it is clear that whether the interest is allowable or not and whether there is any commercial expediency in a particular case is a debatable issue. The decision in the case of CIT Vs. Reliance Petroproducts (P) Ltd. is applicable in this case.
4.4 Reference in this regard may be made to the case of M/s Trident Infotech. Corporation Ltd. for A.Y. 2004- 05 where penalty on identical issue had been levied by the AO. The Hon'ble I.T.A.T. vide its order in ITA No 1298/Chandi/2009 dated 26.03.2012 held as under:-
"We have heard the rival contentions and perused the record. The issue arising in the present appeal is in relation of the penalty levied u/s 27l(l)(c) of the Act, The assessee during the year under consideration had claimed interest expenditure on the borrowed funds in its Profit & Los:, Account. The AO 97 noted the assessee to have made interest free advances on which no interest was charged by the assessee and in view of the ratio laid down by the Jurisdictional High Court in M/s Abhishek Industries Ltd. (supra) the Assessing Officer computed the disallowance u/s 36(1; (Hi) of the Act. The assessee was held to be liable for le\y of penalty u/s 271(l)(c) of the Act on the aforesaid addition of Rs. 45,14,373/-. The aforesaid addition made on account of application of the judicial ratio laid down by the Jurisdictional High Court in the case of M/s Abhishek Industries Ltd. (supra), does not establish the case of the Revenue for the assessee to have eithei concealed its income or furnished inaccurate particulars of income. In the absence of non-
fulfillment of cither of the twin conditions necessary for levy of penalty u/s 27l(l)(c) of the Act, we find no merits in I'm orders of the authorities below in levying the said penalty on the aforesaid addition of Rs. 45,14,373/-. The Tribunal in assessee 's own case relating to A. Y. 2005-06 vide7 order 28.02 201I in ITA No. 1167/Chd/2009 had deleted the penalty levied u/s 271(1)(c) of the Act on the aforesaid addition made on account of disallowance u/s 36(l)(iii) of the Act. Accordingly, we find no merits in the orders of the AO and CJT(Appeals) in levying penalty u/s 27l(l)(c) of the Act on the aforesaid addition of Rs. 45,14,373/-. "
4.5 The order of the Hon'ble ITAT has been confirmed by the Hon'bleP unjab and Haryana High Court. The head notes of this decision read as under:
"Commissioner of Income-tax -III, Ludhiana v. Trident Infotech Corpn. Ltd.(2013)34 taxmann.com 132 (Punjab & Haryana) I. Section 271(l)(c), read with section 36(l)(iii), of the Income-tax Act, 1961 - Penalty - For concealment of income [Bonafide claim] - Assessment year 200-1-05 - Assessee had given interest- free advances and borrowed interest bearing loan - On basis of judgment of High Con ft, Assessing Officer disallowed interest on borrowings under section 36(l)(iii) and made addition to income of assessee - Further, he imposed penalty - Whether since additions were made on basis of decision of High Court, it did not establish that assessee had either concealed its income or furnished inaccurate particulars of income and, therefore, penalty was to be deleted
- Held, yes [in favour of assessee] [Para 3] 98 4.6 The facts in the appellant's case are identical to the facts in the case of M/s Trident Infotech. Corporation Ltd. (supra). The penalty imposed by the AO is accordingly cancelled. This ground of appeal is allowed.
15 5 . B e f ore us t he Ld . D R r e li e d up on th e or d e r o f the A O le vyi ng the pe n al ty a nd co nte nde d tha t si nce t he a ss e ssee ha d not bee n ab l e to pr ove b us in e s s e xpe d ie n cy of the se a dv a nc e s it s c la im wa s ma l a fi d e a nd b og us a nd thu s pe na l ty ha d b e e n r i ght ly l e v ie d b y the A O. 15 6 . Th e Ld. C ou ns e l for th e a sse s see , on th e othe r h a nd , re lie d up on the or d e r of the CI T( A) .
15 7 . We h a ve g one th r oug h th e or de r of t he Ld . C I T( A) a n d do no t f in d any r e a son to i nte rfe re in the sa me . The LD. C I T( A) has f oll ow e d t he d e ci si on of th e H on' ble Jur is d ic ti ona l H ig h C ou r t in th e c a se of Tr i de nt I nf ote ch (s up r a ) w h e re i n p e na lty l e v ie d on i d e n tic a l di sa l l ow a nc e of i n te re s t u/s 3 6 ( 1) ( ii i ) w a s de le ted ho ld i ng tha t me r e d i sa l low a nc e of i nte rest f ol low i ng de cisi on of t he C our t i n th e ca s e of A bh i sh e k I nd u str ie s (s up r a ) d oe s not e sta b l i sh tha t th e a s se s se e ha d con ce a le d /f ur n i she d in a cc ur a te p a r ticu l a rs of i n co me , p a r ti cul a r l y w he n all pa r ti cu l a rs r e l a ti ng t o the cl a i m ha d bee n d ul y d i sc los e d. Th e f a ct s l e a d ing t o the d is a l low a n ce of i n te re st i n t he 99 pr e se n t c a se a re i de nti ca l . Th e R eve nue ha s n ot be e n a b le to di st in gu is h t he sa i d d e ci si on b e f or e u s. W e t he re fore up h old the or de r of the Ld. C I T( A) de le ting th e pe na l ty l e vie d on di sa l l ow a nc e of i n te re s t u /s 3 6 (1 ) ( ii i ) o f t he Act f or A. Y 20 0 7 -0 8.
I n e f fe ct pe n a l ty l e v ie d o n d is a l low a n ce o f i nte res t u/s 36 ( 1 )( i ii ) of the Ac t f or A. Y 20 0 7 -08 to A .Y 2 0 11 -1 2 , is held to b e r i ght ly de let e d b y the Ld. C I T( A) .
15 8 . As fo r th e pe na l ty l e v ie d on di sa l lo wa n ce of exce ss de pre ci a ti on, t he sa me re la te s to de pre ci a ti on cl a i me d a t hi gh e r r a te s on W D V o f a ss e ts a s on 0 1 -0 4 -06 , w hi ch t he a sse sse e h a d c onc e de d be f ore the Ld .C I T(A ) sta t i n g t ha t it wo ul d be d if fi c ult to bi f ur ca te the o pe ni ng b a la n ce of a sse ts on t ha t d a te be tw e e n tha t e l ig ib le f or de p re ci a ti on a t h ig he r ra t e a nd o the r wis e .
15 9 . Th e Ld. C I T( A) de le te d t he pe n a l ty l e v ie d on the sa me hol d in g a s un d e r:
5.3 I have carefully considered the appellant's submissions. I have also perused the assessment order, the order of CIT(A) and the documents pertaining to claim of depreciation on surgical equipment. As per the depreciation chart filed by the appellant, the appellant had claimed depreciation of certain medial equipments worth Rs.
2,47,38,3427- @ 15% and depreciation on certain surgical equipments valued at Rs. 2,51,21,8957- @ 40%. Thus, it is 100 apparent from the facts on record that the appellant had claimed depreciation on the medical/surgical equipments at two different rates i.e. 15% and 40%. The AO had disallowed part of the claim of depreciation @ 40% on the ground that the surgical equipments on which the depreciation was claimed @ 40% was not life saving equipment. The appellant's contention was that the surgical equipments on which the depreciation was claimed @ 40% was life saving equipment. The only issue to be considered here is whether making of such claim by the appellant in the return of income led to concealment of income or furnishing inaccurate particulars of income, so as to invite the provisions of section 271(l)(c ). Penalty in this case has been levied for concealment of income. The relevant portion of the penalty order reads as under:-
"In view of the above, it is held that the assessee had intentionally concealed income of Rs. 62,34,100/-. This fact came to light only during the course of assessment proceedings when the assessee was asked to produce corroborative documentary evidences to establish its claim. Had the case of the assessee not been taken up for scrutiny, the true facts would have never come to light and the assessee would have managed to evade tax. Thus, it is a clear case of concealment of income by furnishing inaccurate particulars."
5.4 The AO thus has held that the appellant has concealed the particulars of income. However, there is nothing in the assessment order or in the order passed u/s 271(l)(c) to suggest that the appellant had concealed any particulars of income, Whether there is any concealment or not would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. The complete facts regarding the claim of depreciation had been mentioned in the depreciation chart filed with return of income and nothing had been concealed therein. Therefore, it cannot be held that the appellant had concealed the particulars of income.
5.5 As regards, furnishing of inaccurate particulars, if is an undisputed position in the present case that no information given in the Return was found to be, incorrect or inaccurate. In this case, there is no finding that any details supplied by die appellant in its return were found to be incorrect or erroneous or false. The only issue in dispute is that 101 appellant had claimed depreciation on certain surgical equipments at a rate of 40% on the ground that these equipments were life saving. The AO has held that some of these equipments were not life saving and reduced the depreciation claimed on these equipments to 15%. Whether a particular surgical equipment is life saving or not is a debatable issue. This by itself therefore cannot be held to be furnishing of inaccurate particulars of income. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income. Such claim made in the return cannot amount to the furnishing of inaccurate particulars. Hence, the appellant cannot be held guilty of furnishing inaccurate particulars. Case laws relied upon by the appellant are applicable to the facts of the case. The Hon'ble Supreme Court in the case of M/s Reliance Petro Products Pvt. Ltd. has observed that it must be shown that the conditions u/s 271(l)(c) must exist before the penalty is imposed. The Hon'ble Apex Court observed as under:-
"In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars."
5.6 Reference in this regard is also made to the following case laws;
(i) Kanchenjunga Advertising Pvt. Ltd ITA No.944 of 2011 The Hon'ble Delhi High Court in this case, observed as under: -
"It is a well settled position that assessment proceedings and penalty proceedings are different in nature and that the findings given in the assessment proceedings, though may constitute good evidence, cannot constitute conclusive evidence for the purposes of levying penalty, (please see CIT v. Anwar All (1970) 76 ITR 696, CIT v. Khoday Eswarsa and Sons ( 1970) 83 ITR 369, and Anantharam Veerasinghaiam & Co. v. CIT (1980)123 ITR 457). It is also well settled that for the purpose of Section 271(l)(c) of the Act, the mere making of an incorrect claim does not amount to furnishing of inaccurate particulars of income. Where the assessee has submitted all the material and relevant facts relating to the claim and has made a complete disclosure, but takes a legal contention or position 102 that a particular receipt is not taxable as income or that a particular expenditure or loss is allowable as deduction, the mere fact that the Assessing Officer took a different view of the allowability of the expenditure or loss or the taxability of the receipt, without anything more and without unearthing any new material or fact kept back by the assessee, cannot invite penalty on the ground of furnishing inaccurate particulars of income. "
(ii) Commissioner of Income Tax Vs Lakhani Footwear [20121 347 ITR 478 (P&H) The hon 'ble jurisdictional High Court has held that penalty under sec. 271(l)(c) is not leviable in respect of deductions which are debatable and no concealment of income is involved. (iii} Commissioner of Income Tax Vs Lakhani India Ltd [2009] 17 DTK 307 (T&H); [2010] 324 ITR 73. Penalty under sec.271(l)(c) - Concealment - excess claim for deduction under sec. 80HHC - In view of concurrent finding recorded by the CIT(A) and the Tribunal that there was no concealment or misrepresentation by the assessee, impugned order setting aside the levy of penalty under sec.271(l)(c) cannot be held to be erroneous - no substantial question of law arises.
(iv) Commissioner of Income-tax-I, Ludhiana v. Eastman International f20141 41 taxmann.com 239 (Punjab & Haryana) Section 271(l)(c), read with section 37(1) of the Income-tax Act, 1961 - Penalty - For concealment of income [Disallowance of claim, effect of] - Assessment year 2005-06 - During assessment proceedings, Assessing Officer rejected assessee's claim for certain expenses being prior period expenses - Commissioner (Appeals) as well as Tribunal confirmed said disallowance - Thereupon, Assessing Officer passed a penalty order under section 271(l)(c) - Tribunal set aside penalty order - Whether mere making of a claim which was ultimately found to be unsustainable may not by itself amount to furnishing of inaccurate particulars of income - Held, yes - Whether, therefore, in view of fact that, assessee had disclosed all necessary particulars relating to its claim for deduction of prior period expenses, Tribunal rightly set aside impugned penalty order - Held, yes [In favour of assessee] 103 Commissioner of Income-tax v. Rubber Udyog Vikas (P.) Ltd.[2012] 20 taxmann.com 610 (Punj. & Har.) Making an incorrect claim would not tantamount to furnishing of incorrect particulars unless it was established that assessee had acted with a mala fide intention or had claimed deductions being aware of the well settled legal position. The assessee had claimed deductions on account of set off of unabsorbed business losses against the income from the capital gains, which was held not to be mala fide. However, the Assessing Officer imposed penalty on the assessee. The Tribunal held that making an incorrect claim would not tantamount to furnishing of inaccurate particulars unless it was established that the assessee had acted with a mala fide intention or had claimed deductions being aware of the well settled legal position. The Tribunal had observed in plain words that the assessee had disclosed all the particulars along with the return of income and it was not a fit case for levy of penalty. The Tribunal deleted the penalty. Held that the appellant could not show that the above findings of the Tribunal were illegal or perverse in any manner so as to persuade this court to interfere therewith. Hence, the deleted of penalty was justified." 5.7 Reference in particular may be made to the decision of the Hon'ble Delhi ITAT in the case of Lala Harbhagwan Dass Memorial and Doctor Prem Hospital Pvt Ltd. V/s ITO (2012) 23 taxman.com 32. In this case, the facts were similar the facts in the case of the appellant. In this case, the assessee had claimed depreciation @ 40% on CT scanner on the ground that CT scanner was life saving equipment. The AO restricted the depreciation to the rate of 25% and thereafter imposed penalty on the disallowance of excess depreciation. The Hon'ble ITAT deleted the penalty and held that such disallowance cannot be considered as concealment of income or furnishing inaccurate particulars, especially when the relevant particulars were disclosed before the AO. 5.8 The AO has relied upon the case of M/s Zoom Communication Pvt. Ltd. 327 ITR 510. In that case, the Hon'ble Delhi High Court had held as under:-
"It is true that mere submitting a claim which is correct in law would not amount to giving inaccurate particulars of 104 income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bonafide. If the claim besides being incorrect in law is malafide. Explanation 1 to section 271(1) would come into play and work to the disadvantage of the assessee."
5.9 Thus the Hon'ble Delhi High Court had drawn the distinction between bonafide claim and malafide claim, Applying this test in the present case it cannot be said by any stretch of imagination that the claim of the appellant was malafide.
5.10 As submitted by the appellant, the transaction of claim of depreciation was fully disclosed in the audited accounts and the income tax return filed by the company. It is not the AO's case that the claim of deprecation was not genuine or was a bogus claim. The equipments were real and the deprecations on these equipments were claimed at two different rates of 15% and 40% and the claim was also certified by the auditor. It is further seen from the submissions of the appellant that in tax audit report no adverse comments were made by the auditor regarding the claim of deprecation at the rate of 40% claimed on surgical equipment. It is also seen that the CIT(A) had reduced the disallowance made by the AO on account of depreciation further establishing that the issue was debatable. It is thus apparent that the claim of depreciation @ 40% on certain surgical equipments was not a malafide claim. Merely because in the earlier years the deprecation was claimed @ 15% does not prevent the appellant from claiming the deprecation @ 40% if the same is admissible under the Income Tax Rules. Whether, a particular item of medical/surgical equipment falls within the category of life saving equipment or not is always a debatable issue. Moreover, the total deprecation allowable on an asset is only 100% and the claim of deprecation @ 40% or @ 15% in particular year would only imply that the claim of depreciation would be spread over a longer period. Thus, if excess deprecation claimed in the current year is disallowed, the same can be claimed in the subsequent years and as such the whole exercise of claim of deprecation @ 15% or 40% would broadly be revenue netural. As seen from the order of the CIT(A), the appellant had foregone the claim of depreciation @ 40% on account of this issue. The relevant part of the order of the CIT(A) is reproduced below "During the course of appellate proceedings, the Ld. Counsel for the 105 appellant has, inter-alia, submitted that since it is cumbersome to segregate the assets purchased upto FY 2005-06, on which depreciation is allowable @ 40% and also because even if depreciation is claimed @ 15%, the same can be claimed in subsequent years and so he would like to forego the higher rate of claim of deprecation for assets purchased upto FY 2005-06."
16 0 . B e f ore us , t he Ld . DR re l ie d u p on t he o rde r o f the AO sta ti n g th a t cl ea r l y th e cl a i m of e xce ss de pre cia ti on w a s ma la f id e a n d b ogu s , b e i ng con tr a ry to the e x pl i ci t pr ov is io ns of l a w wi th r e ga rd to th e a l l ow a ble r a te of de pre cia ti on a n d thu s pe na l ty h a d b ee n r ig htl y le vie d by the AO . 16 1 . Th e Ld. C ou ns e l for th e a sse s see , on th e othe r h a nd , re lie d up on the or d e r of the CI T( A) .
16 2 . We h a ve g one thr ou gh th e or der o f th e C I T( A) . W e do not f in d a n y in fi r mi ty in t he sa m e . The Ld .C I T(A ) , w e f i nd , ha s d e le te d the p e n a lty noti n g th a t th e a sse ssee h a d not con ce a le d a ny p a rt ic ul a r s r e ga r d in g t he cl a i m of de pre ci a ti on on th e su rg ic a l e q ui p me n ts, ha v in g d is cl ose d a ll f a cts r e l a ti ng to t he sa me in t h e de p re ci a ti on ch a r t f il e d . N o de ta i l f i le d by t he a s se sse e wa s f oun d to be inc or r e ct or e r r one ous . Th e Ld .C I T(A ) has f ur th e r n ote d t ha t t he di sa l l ow a nc e w as on l y on a c cou nt of r a te a t w h i ch t he de pre ci a ti on w a s t o be cl a ime d o n th e su r gi ca l eq u ip me n ts wi th th e a sse ssee cl a i min g 40 %, w h i le the AO re str i cte d it to 106 15 % s ta ti ng th a t the a sse t d id n ot q u a li f y su r gic a l e q ui p me n ts. Th e CI T(A ) no te d th a t wh e th e r pa r t ic ul ar e q ui p me n t was a l if e sa v in g e q ui pme nt , q ua li fy in g f or de pre ci a ti on @ 4 0 %, wa s a d e b a ta b l e i ss ue a n d cl a i m of t he a sse sse e cou l d n ot be c le a r ly uns us ta in a b l e in l a w . H e , the re fo re , he l d th a t th e cl a im of t he a s se s se e was not ma la f id e a n d t he a s se s se e the ref or e cou ld n ot be sai d to ha v e c once a le d or fu rn i sh e d i na c cu ra t e p ar ti cu la r s of in come . He f ur the r note d t ha t the a ss e ssee ha d fo re gone thi s cl a im for the r ea son th a t the sa me w ou ld be al l ow e d i n sub s e q ue nt ye a r s.
16 3 . Th e Ld . DR ha s b e e n un a b le contr ove r t the fi n di ngs of the CI T( A) th a t f ul l a nd c omp le te d i sc los ure re ga r d in g t he pa r ti cu l a rs of cl a im of d e p r ec ia t ion was f il e d by t he a sse sse e . Ld. D R ha s a ls o not b e e n a b le to c ontr ove r t the fi nd i ng s of th e Ld. C I T( A) th a t w h e the r a n a s se t q ua l i fi e d a s li fe s a vi ng e q u i pme nt , q ua l if yi ng f or d e p r e c ia t ion a t h i ghe r ra t e , w a s a de ba ta b le i ss ue . Mor e ove r it i s a n und i sp ute d fa ct th a t the a s se s se e h a d c once de d t o the d is a ll ow a n ce , f or the re a so n t ha t in a n y c a se 10 0 % w a s a l low a b l e sp re a d ove r a p e r i od of t ime . I t is n ot th a t th e cl a i m of t he a ss e s see w a s fou nd w h ol ly un te n a b le . We , th e re f ore , se e n o r e a son to 107 in te r fe re in t he or d e r of t he CI T( A ) d e le ti ng pe n a lty l e v ie d on di sa l l ow a nc e of e xce ss de pre cia ti on i n a l l the imp u gne d ye a r s.
I n e ffe c t the g roun ds of a pp e a l ra is e d b y the Re ve n ue a ga i nst th e or de r of th e CI T( A) d e l e ti n g t he pe n a lt y l e v ie d on di sa l l ow a nc e of i nte re st a nd e xc e s s de p re c ia ti on fo r A .Y s 20 0 7 -0 8 to A. Y 2 0 1 1-1 2 is , the re for e , d is mi sse d.
Al l t he a p pe a l s of th e Re ve n ue a re th e re f ore di smi ss e d . 16 4 . We s ha l l n ow ta k e up a sse ss e s a p pe a l s ag a in st con fi r ma ti on of l e vy of pe na l ty.
ITA N os .7 23 t o 7 2 5/C h d /2 01 7 ( A. Ys. 20 0 9-1 0 t o 2 01 1-1 2 ):
16 5 . Th e se a p p e a l of th e a sse ssee a g ain st th e or de r pa sse d by th e Ld . C I T( A) con f ir mi ng th e l ev y of p e n a lt y u /s 2 7 1 (1 ) (c ) of the Ac t, re l a te to a s se ssme nt ye a r s 2 0 09 -1 0 , 2 010 -1 1 a n d 20 1 1 -1 2 re spe c tive l y. Th e a s se s see h a s c ha l le ng e d th e o rde r of the CI T( A ) con fi r min g the l e vy of pe n a lty on t he di sa l l ow a nc e of c ons ul ta n cy ch a r ge s in a s se s sme nt ye a r s 20 0 9 -1 0 a nd 2 01 1 -1 2 , w h i le i n a sse ss me nt ye a r 2 0 10 - 1 1 t he a sse sse e h a s cha ll e n ge d the co nf ir ma t ion of p e n a l ty l e v ie d on di sa ll ow a nc e of Rs. 1 1 la c s be in g di f fe re nce of the a u di te d fi gur e s and the fi gu r e s s ho wn in t he pr ov i si ona l tr i a l 108 ba l a n ce re f le cti ng r e ce i p ts of the a ss e ssee .
Vi s-à -vi s th e i ssue o f pe n a l ty le vie d o n d i sa l lo wa nce of com mi ssi on e xp ens e s of Rs .1 5 l a cs , th e f a ct s a s n ote d in t he or de r of t he CI T( A) a r e th a t the AO ha d c la i me d e xp e n se s of Rs. 15 l a cs a s co ns ul ta nc y ch a r ge s p a i d to S hri R a jn ee sh Ra mit ra , w h o w a s a n N RI a nd s ha r e hol de r o f t he a ss e ssee comp a ny . Th e A O d is a ll ow e d t he sa me hol d i ng the m to b e in ge n ui ne si nce th e a sse ssee had f a il e d to pr ovi d e a ny e vi de n ce re ga r d ing the se rv i ce s r e n de re d b y S h ri R a jn ee sh Ra mit ra . Th e C I T( A) u p he ld the or de r of the AO h ol d in g that the a sse ssee ha d not fi l e d any e vi de nce r e ga r d in g t he se r vi ce s re n de red e ve n b y e le c troni c mod e l ik e e ma il , v id e o con fe re nc in g e tc. p r ovi d e d by S hr i Ra j ne e sh Ra mi tr a . Th e r e a fte r the AO imp os e d pe n a lt y on th is d is a l low an ce @ 10 0 % on ta x so u gh t to b e e va de d. The Ld . C I T( A) up h e l d the pe na l ty so l e vie d h ol di n g tha t in t he a b se nce of sub s ta nt ia ti on of th e g e n ui ne ne ss of th e cl a i m by t he a sse ssee , th e e xp e n d it ure w a s c la i me d onl y wi th a vi e w to re d uce the ta x l e v ia ble a nd , th e re f ore , pe n a l ty ha d b e en ju sti fi a b l y l e v ie d on the d i sa l lo wan ce s o ma d e . 16 6 . B e f ore us , the Ld . C oun se l fo r the a ss e ssee re l ie d on t he sub mi ss ion s fi le d be fo re the Ld . C I T( A) d ur i ng a pp e ll a te 109 pr oc ee d i ng s, re p rod u ce d a t p a r a 9.4 o f the or de r a s un d e r :
"9.4 AR of the appellant vide written submissions dated 02/03/2017 submitted as under:-
"Without prejudice to the submission as per Ground of Appeal No.-l, It is further submitted that the Ld. Assessing officer has erred in imposing the penalty u/s 271(l)(c) of Income Tax Act as the disallowance u/s 37 of Income Tax Act amounting to Rs.1500000/- is already under appeal before Hon'ble IT AT, Chandigarh. When bonafide claim made by the assesses is not sustainable in law, it is not a case for imposing the penalty u/s 271(l)(c) of Income Tax Act especially when tax has been deducted at source on the payments made. The company had paid consultancy charges of Rs.1500000/- to Sh. Rajneesh Rametra who is a NRI shareholder of the company and is a technocraft who had provided consultancy services to the company in a healthcare system, procedures and regarding day to day administration. The payments -were made as per the terms of agreement and workshops were held in the hospital and consultancy was also provided via E-mail, Tele conferencing, Video conferencing etc. He is a non-resident and travel frequent to India. Copy of his passport, Income Tax return, PAN and address were duly submitted at time of assessment proceedings. This was a normal business expenditure. Disallowance of the same does not mean that income has been concealed or inaccurate particulars has been submitted as the details were duly disclosed in the audited statements. Disallowance of claim by the assessee does not mean concealment of income nor furnishing inaccurate particulars of income.
Reliance may be placed on the following judgments:-
- CIT v Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) -
Where it was held that mere making of a claim which is not sustainable in law, by itself, does not amount to concealment of particulars of income or furnishing inaccurate particulars.
- National Textiles v. CIT (2001) 249 ITR 125 (Guj) - Where it was held that though the Department was justified in treating the cash credits as income of the assessee there was 110 nothing to lead to a reasonable and positive inference that the assessee's explanation was false - circumstances do not justify imposition or penalty even by taking recourse to Explanation. 1 to s. 271(1)(c).
Chandrayal Bassa v Income tax Appellate Tribunal (2003) 261ITR 67 (Raj.) -
& Devsons P. Ltd v CIT(2011) 196 Taxman 21 (Del)- Where it was held that no penalty is leviable if the facts of the transactions are disclosed.
-CIT v. Traders And Traders 244 ITR 367 (Madras High Court) & Woodward Governor India fP) Ltd, v CIT (2002) 253 ITR 475 (Dei) -
& CIT v Dharam Chand L. Shah (1993) 204 ITR 462 (Bom) - Where it was held that the fact certain additions were made in the assessment proceedings would not automatically justify the Revenue to impose penalty u/s 271 (l)(c). In view of the above facts of the case and judgements, it is prayed that appropriate relief may kindly be allowed to the assessee on the grounds of appeal and the penalty imposed may kindly be cancelled. "
16 7 . Re fe r r in g to t he sa me the Ld . C oun se l f or the a sse ssee con te n de d th a t Sh r i Ra j ne e sh Ramit r a w a s a t e chno cr a ft a n d ha d p r ov id e d con su lt a nc y s e r vi ce s to t he a sse s see in He a lt hca re Sy ste m Pr oc e d ur e a nd d a y-to -da y a d mi n is tr a ti on a nd th e se r v ice had b ee n p r ovi d e d by wa y of h e a l th wo rk s hop i n th e hos p ita l a nd vi a e ma i l, te l e c onf e re nci n g, vi de o c on fe re nc ing, e tc. . I t w a s p oin te d out th a t the p a y me nt ha d b ee n ma de a s p e r the a gree me nt e nte re d in to w i th h i m 111 a nd TD S a l so ha d b e e n de d uc te d o n the s a me . I t wa s fu r the r con te n de d tha t e vi de n ce s b y w ay of cop y of hi s p a s sp or t, in come ta x r e turn s, P AN a n d a d d re ss ha d be e n dul y f il e d . I t wa s , t he re fore , c on te n de d tha t me r e d i sa l l ow a nc e of cl a i m wo ul d no t lead to l e vy of p en a lt y when oth e r w ise , al l pa r ti cu l a rs r e l a ting to th e c la i m h a d b e e n du ly d is cl ose d b y the a s se s se e .
16 8 . Th e Ld. D R, on th e othe r ha n d , re l ie d up on t he o rd e r of t he CI T( A) p oi nti n g ou t th a t sin ce the a sse s see ha d f a i le d to e s ta b li sh the ge nu ine ne s s of the cl a i m, the p a r ti cu la r s fu rn i sh e d we re u nd ou b te d l y in acc ur a te a n d i nc or r e ct a n d pe na l ty, the re fore , h a d bee n ri gh tl y c on fi r me d b y t he CI T( A) .
He d re w ou r a t ten ti on to p a r a 9 . 5 of th e or d e r of CI T(A ) a s un de r :
"9.5 I have carefully considered the appellant's submissions. It is evident from the facts recorded in the assessment order as well as in the order of the CIT(A) that the claim of consultancy charges paid to Sh. Rajneesh Ramitra was not a genuine claim. The appellant had failed to furnish any evidence with regard to any service rendered by Sh. Rajneesh Ramitra. It is also fact on record that Sh. Rajneesh Ramitra was NRI and shareholder of the appellant company. It is evident from the facts recorded in the assessment order and in the CIT(A)'s order that the claim of expenditure was with a view to reduce the tax liability. The AO was therefore fully justified in imposing penalty u/s 271(l)(c ) against this addition. The penalty imposed on this disallowance is confirmed. The appeal of the appellant is partly allowed."
16 9 . H a vi ng heard th e r i va l c ont e ntio ns we are not in 112 a gr ee me nt w ith th e Ld . C I T( A) . U n d i sp ute dl y a ll p a r ti cu la r s re la t in g to the c la im ha d b een d u ly d i scl osed and t he di sa l l ow a nc e ma d e for w a nt of e vi de n ce to p r ove the re nde r i n g of s e r vi ce s b y th e s a id con sul ta n t. I t i s a l s o a f a ct on r e c or d t ha t t he p a y me nt wa s ma d e th r ough b a nk i ng cha nn e l s a n d e ve n TD S de du cte d on t he sa me . C le a r l y , it is not t he ca se th at th e cl a i m of t h e a sse sse e w a s fou nd to b e wh ol ly fa l se b y t he Re ve nue . We t he re fore hol d tha t t hou gh it ma y b e a fi t ca se fo r ma k in g d i sa l l ow a nc e of e xpe nse s ,b ut de fi ni te ly the ass e ssee c a nn ot be cha rge d w it h h a vi ng con ce a le d /f ur n is he d in a cc ur a te p a r tic ul a r s of i n come re la t in g to the sa me . W e the re f or e d ire ct t ha t t he pe na l ty le vie d on t he d i sa l l ow a nc e of c onsul ta n cy cha r g e s of Rs. 1 5 la c s be de le te d .
G r oun d s of appeal r a ise d by th e a sse ssee in I TA N os. 7 23 & 7 2 5/C h d /2 01 7 a re , th er e f ore , a l l owe d .
Th e a p pe a l s of the a sse ssee in I TA N o s.7 2 3 & 72 5 /C h d /2 0 1 7 a r e a ll owe d.
17 0 . As fa r the a p p e a l f ile d b y th e a s se s se e r e l a tin g to a sse ssme nt ye a r 2 0 1 0 -1 1 in I TA N o. 7 24 /C h d /2 0 1 7 , t he is sue re la te s to a dd i ti on ma d e of Rs. 1 1 l a cs , th e fa c ts 113 re la t in g to w h i ch , a s re p ro du ce d in the or de r of the CI T( A) a t pa r a 1 1. 3 of hi s or d e r a re a s un de r :
11.2 As regards, the penalty on addition of Rs. 11 lakhs u/s 37 is concerned, it is seen from the assessment order that during the assessment proceedings, the AO noted that as per the seized material, the receipts shown were Rs. 21.24 crores whereas in the P&L account the receipts shown were only Rs. 17.93 crores.
The appellant was able to explain the difference of 3.20 cores but could not explain the difference of Rs.11 lakhs. The AO accordingly held that this amount of Rs. 11 lakhs is unaccounted of the appellant and added the same to the total income of the appellant. The filed an appeal before the CIT(A). The CIT(A) held that the appellant had not been able to explain the reasons for the difference and therefore the same was to be treated as unacounted receipts. The AO thereafter levied penalty on this addition @ 100% of tax sought to be evaded." 17 1 . Th e Ld . C I T( A) o n fi n di n g th a t th e a s se sse e w as un a ble to c on tr ove r t the fi n d in gs of the Ld .C I T(A ) in q ua n tu m pr oc ee d i ng s t hat Rs. 1 1 l a cs r e p re se nte d u na c cou nte d re ce i p ts of t he a sse s see , up he l d the pe n a lty le v ie d . 17 2 . B e f ore u s, th e Ld . C oun se l f or th e a sse ssee re lie d up on the su bmi ss io ns ma de b e f ore the Ld . C I T( A) , r e pr od u ce d at pa r a 1 1. 4 a s u nd e r :
"11.4 AR of the appellant vide written submissions dated 02/03/2017. Relevant part of the written submissions is reproduced as under :-
"Without prejudice to the submissions as per Ground of Appeal No.-l above, it is further submitted that the Ld. Assessing officer has erred in imposing the penalty u/s 271(l)(c) of Income Tax Act as the additions u/s 37 of Income Tax Act amounting to Rs.1100000/- is already under appeal before Hon 'ble ITAT, Chandigarh. This addition is made on account of difference 114 between audited Trial balance and provisional Trial balance which naturally is based on estimation and one can never draw final inference from the provisional figures which may be incomplete and without verification and it cannot be a case for imposing penalty u/s 271(l)(c) of Income Tax Act. Hence, it is prayed that the appropriate relief may kindly be granted to the assessee and penalty imposed may kindly be cancelled. Reliance may be placed on the following judgments :-
- CIT vs. Sangrur Vanasvati Mills Ltd. (2008) 303 ITR 53 (P&H) Where it was held that there is no penalty u/s 271(l)(c) is imposable on estimated addition if there is no evidence of concealment of income.
- CIT vs. Ravail Singh & Co. (2002} 254 ITR 191 (P&H)- Where it was held that penalty u/s 271(l)(c) is not leviable where the additions was made on the basis of estimate and not on any concrete evidence of concealment of any transaction or furnishing of inaccurate particulars.
- Pr. CIT Vs Pragati Industries Whether when at the time of making addition on account of undisclosed net profit, there is no other material available with AO except provisional P&L account, which too was subsequently explained by assessee, no such addition is mandated - YES: HC . CIT v. Traders And Traders 244 ITR 367 (Madras High Court) & Woodward Governor India (P) Ltd. v CIT (2002) 253 ITR 475 (Del.) -
& CIT v Dharam Chand L. Shah (1993) 204 ITR 462(Bom)- Where it was held that the fact certain additions were made in the assessment proceedings would not automatically justify the Revenue to impose penalty u/s 271 (l)(c). In view of the above facts of the case and judgments, it is 115 prayed that appropriate relief may kindly be allowed to the assessee on the grounds of appeal and the penalty imposed may kindly be cancelled. "
17 3 . Re fe r r in g to t he sa me the Ld . C oun se l f or the a sse ssee con te n de d th a t the d i ff e re n ce r e l a te d to t he fi gu r e s of re ce i p ts re f le cted in t he p r ovi sion a l t ri a l b a l a n ce fo und du r in g th e co ur se o f se a r ch a nd th a t re fle c te d i n th e b ooks of a cc oun t of th e a s se sse e , w h ich th e a sse ssee w a s un a b le to e xp la i n. I t w as c ont e nde d th a t b e i n g p r ovi si ona l f igu r es the y we re ju st e st ima t e s a n d , the r e fo re , it cou ld n ot b e sa i d ca te g or ic a ll y t hat th e a s se sse e ha d c onc e a le d the i nc ome to the e xte n t of Rs.1 1 l a cs .
17 4 . Th e Ld . D R, on th e othe r ha n d , r e l ie d up on t he or de r of th e CI T( A) . H e d re w our a tte nt ion to p a ra 1 1 .5 of t he or de r of CI T(A ) a s un d e r :
"11.5 I have carefully considered the appellant's submissions. It is an admitted fact on record that there was a difference in the receipts shown in the P&L account and the receipts shown in the seized documents. It is also an admitted fact on record that the appellant had failed to explain the difference in the receipts. The CIT(A) has categorically held that the difference of Rs. 11 lakhs was the unaccounted receipts of the appellant. The appellant has not been able to controvert this finding of the CIT(A). The AO was therefore fully justified in imposing penalty u/s 271(l)(c ) on this addition. The penalty imposed on this addition is confirmed. The appeal of the appellant is partly allowed."
17 5 . We ha ve he a r d the ri va l co nte ntion s. W e fi n d me rit i n 116 the con te n ti on of th e Ld .C o un se l f or the a s se s se e . Ad mit te d l y, th e a dd i ti on has be e n ma d e on a c cou nt of di f fe re nce in rec e i p ts re f le cte d in th e p r ovi sion a l tr i a l ba l a n ce fou nd du r in g the se a r ch a n d tha t sh ow n i n t he boo ks of a cco un t, w h ic h t he a sse ssee w a s un a b le to of fe r a ny e xp l a na t ion a bo ut. Th e fi gur e s re fle c te d in the pr ov is io na l tr ia l b a la n ce c a nn ot b e sa i d to th e fin a l f ig ur e s of r e ce i pt s a nd , the re fo re , as r i gh tl y sta ted by t he Ld. C ou ns e l f or th e a sse ssee , the a d d it io n ma d e i s n ot on a ccou nt of a n y c onc r e te fi n di n g th a t the a ss e ssee h a d not di sc lo se d i n come to th e e xte nt of di f fe re nce be t we en th e t wo doc ume nt. W e th e re fore h old tha t th ou gh i t ma y b e a f i t c a se for ma ki n g a d d iti on b u t in th e fa c ts of the ca se t he a sse sse e ca n not b e ch a r ge d w ith ha v in g con ce a le d/f ur n i she d a ny in a cc ur a te pa r t ic ul a r s of i nc ome s o a s t o a ttrac t l e vy of pe na l ty u /s 2 7 1 (1 ) ( c) of t he Act . W e , th e re f ore , d i re ct t he de le ti on of pe n a lty on th e a dd i ti on of Rs .1 1 la c s.
Th e a p p e a l of th e a sse sse e is a c cor d i ng ly a l lo we d . I n the re su lt ;
1) Th e a p pe a l of the Re ve n ue i n I TA N o.3 3 /C h d /2 0 1 4 is d i smi ss e d a nd the C O N O . 9/C h d /2 01 4 fi l e d by the a s se s se e i s al lo we d .
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2) Th e a p pe a l of the Re ve n ue i n I TA N o.3 4 /C h d /2 0 1 4 is d is mis se d a n d th e C O N o. 1 0 /C hd /2 0 14 f i le d b y the a s se s se e i s pa r tl y a l l ow e d .
3) Th e a p pe a l of the Re ve n ue i n I TA N o.3 5 /C h d /2 0 1 4 is d is mis se d a n d th e C O N o. 1 1 /C hd /2 0 14 f i le d b y the a s se s se e i s pa r tl y a l l ow e d .
4) Th e a p pe a l of the Re ve n ue i n I TA N o.3 6 /C h d /2 0 1 4 is d is mis se d a n d th e C O N o. 1 2 /C hd /2 0 14 f i le d b y the a s se s se e i s pa r tl y a l l ow e d .
5) Th e a p pe a l of the Re ve n ue i n I TA N o.3 0 /C h d /2 0 1 4 is d is mis se d a nd t he C O N os .4 0 & 4 3 /C h d /2 0 1 6 fi le d b y the a s se sse e a re a ll owe d .
6) Th e a p p e a l s of the a sse ssee in I TA N o. 7 2 3 to 72 5 /C h d /2 0 1 7 a r e a ll owe d .
7) Th e a p p e a l s of t he Re ve nue in I TA N os .1 2 1 8 to 12 2 2 /C hd /2 0 17 a r e di smi ss e d .
O r de r p r o n o u n ce d i n t he O p e n C ou r t .
Sd/- Sd/-
संजय गग अ नपण
ू ा ग%ु ता
(SANJAY GARG) (ANNAPURNA GUPTA)
याय क सद य/Judicial Member लेखा सद य/Accountant Member
)दनांक /Dated: 31st July, 2019
*रती*
118
आदे श क त*ल+प अ,े+षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय-
ु त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आयकर अपील$य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानुसार/ By order, सहायक पंजीकार/ Assistant Registrar