Income Tax Appellate Tribunal - Kolkata
Anandalok Medical Centre (P) Ltd., ... vs Dcit, Cc-Xxi, Kolkata, Kolkata on 23 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA BENCH "A" KOLKATA
Before Shri Aby.T Varkey, Judicial Member and
Shri Waseem Ahmed, Accountant Member
IT(SS)A No.147/Kol/2014
Assessment Year :2010-11
Anandalok Medical Centre V/s. DCIT, Central Circle-
(P) Ltd., XXI,
Sevoke Road, Siliguri,
Darjeeling-734 001
[P AN No. AADCA 8941 N]
अपीलाथ /Appellant .. यथ /Respondent
अपीलाथ क ओर से/By Appellant Shri Subash Agarwal, Advocate
यथ क ओर से/By Respondent Shri Rajat Subhra Biswas, CIT-DR
सन
ु वाई क तार ख/Date of Hearing 11-01-2017
घोषणा क तार ख/Date of Pronouncement 23-02-2017
आदे श /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is directed against out of order of Commissioner of Income Tax (Appeals)-II, Kolkata dated 10.09.2014. Assessment was framed by DCIT,CC-XXI, Kolkata u/s 153A/143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide his order dated 31.03.2014 for assessment year 2010-11. Assessee has raised following grounds of appeal:-
"1. For that on the facts and on the circumstances of the case, the ld. CIT(A) was not justified in confirming the action of the AO in making the addition of Rs.55,949/- on account of alleged undisclosed interest income.
IT(SS)A No.147/Kol/2014 A.Y. 2010-11 Anandalok Medical Centre (P) Ltd. Vs. DCIT CC-XXI, Kol. Page 2
2. For that on the facts and on the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.6,99,363/ made by the AO on account of the alleged undisclosed in Fixed Deposits."
Shri Subash Agarwal, Ld. Advocate appeared on behalf of assessee and Shri Rajat Subhra Biswas, Ld. Departmental Representative represented on behalf of Revenue.
2. At the outset, it was observed that the issue raised in both grounds of appeal is inter-connected therefore we have clubbed them together for the sake of convenience.
The inter-connected issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the addition of ₹55,949/- and ₹6,99,363/- on account of undisclosed interest and undisclosed investment in fixed deposits.
3. Briefly, the facts are that assessee a Private Limited Company is engaged in business of medical & diagnostic clinic. The assessee for the year under consideration has shown interest on fixed deposits (FD) for ₹ 97,456.00 but in the Annual Information Report (AIR for short) interest income was shown for Rs.1,53,407.00. Accordingly, the AO observed the difference of interest income for ₹55,949/- which was not disclosed in assessee's return of income. The Assessing Officer also observed that the corresponding investment in FD on interest income of ₹55,949/- has also not been disclosed by assessee. Accordingly, AO worked out the undisclosed investment in FD @ 8% on the undisclosed interest income of ₹55,949/- which worked out to ₹6,99,363/- (55,949 x 100 ÷8). The AO called upon the assessee and sought explanation for the aforesaid difference of interest income and undisclosed investment. In reply thereto, the assessee submitted that the interest has been offered to tax on accrual and year-to-year basis. The assessee, further submitted that in the immediate preceding assessment year, the interest income were shown for ₹1,24,352/- but for the same year, the income was shown in AIR for ₹50,686/-. However, AO disregarded the claim of assessee and treated the undisclosed interest income for ₹55,949/- and its IT(SS)A No.147/Kol/2014 A.Y. 2010-11 Anandalok Medical Centre (P) Ltd. Vs. DCIT CC-XXI, Kol. Page 3 corresponding investment of ₹6,99,363/- as undisclosed income and added to the total income of assessee.
4. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that bank has been showing interest expense on the maturity of FD. But the assessee has been showing the interest income on accrual basis. Therefore, the difference was observed not only in the year under consideration but also in the immediate preceding assessment year. The assessee also submitted that the AO has not brought any defect in its return and books of account but has just relied on third party information. However, Ld. CIT(A) disregarded the claim of assessee by observing as under:-
"5. I have considered the submission of the appellant and perused the assessment order. It is observed that on facts there is no dispute that the AO had made addition on account of interest and undisclosed investment in FDR on the basis of the information submitted by the bank in AIR return. However, it is also a fact that there was difference in the amount of interest as informed by the bank and the amount of the interest shown by the appellant in the books of account. It is observed that in the curse of assessment proceedings, the AO allowed an opportunity to the appellant to explain and reconcile the difference in the interest as reported by the bank vis-a-vis credited by the appellant in the profit and loss account. In response, the appellant only submitted that in the year under consideration the accrued interest was Rs.97,456/- but the bank had uploaded the figure of Rs.1,53,405/- which includes last year interest and that during assessment year 2009-10, the accrued interest credited by the assessee was Rs.1,24,352/- whereas as per bank it was only Rs.50,686/-. Thus, it is observed that before the AO the only contention of the appellant was that in the year under consideration bank had included the interest of A.Y. 2009-10 and it had resulted into difference in the amount of interest as per the bank and as per the appellant. But, the appellant did not submit any reconciliation statement etc. either before the AO or in the course of appellate proceedings. I am of the opinion that even if the contention of the appellant is considered that the interest of Rs.1,53,407/- as reported by the bank includes last year's interest, even then the amount of the interest is snot reconciled. I am of the opinion that the onus was on the appellant to submit the complete year-wise reconciliation of FDR and interest income before the AO. However, the appellant has failed to discharge its onus cast upon him. The appellant should have proven before the AO that the difference in the amount of interest was not due any additional FDRs not recorded in the books of account. Under the circumstances, I am IT(SS)A No.147/Kol/2014 A.Y. 2010-11 Anandalok Medical Centre (P) Ltd. Vs. DCIT CC-XXI, Kol. Page 4 not inclined to interfere with the view taken by the AO and the additions made by him on account of interest income and investment in FDRs are confirmed. The ground no 1 and 2 are dismissed."
Being aggrieved by this, assessee came in second appeal before us.
5. Ld. AR for the assessee before us reiterated same submissions as made before Ld. CIT(A). Ld. AR filed paper book which is running pages 1 to
52. On the other hand, Ld. DR vehemently relied on the order of Authorities Below and prayed before Bench that the issue may be restored to the file of AO for further verification.
6. We have heard rival contentions of both the parties and perused the materials available on record. The issue in the instant case relates to the mismatch in the interest income and its corresponding investment viz a viz the information gathered on the basis of AIR. The AO has treated the same as undisclosed income of assessee and Ld. CIT(A) has also confirmed the order of AO. On examination of orders of Authorities Below and other materials available on record, we find that the addition has been solely made by the Authorities Below on the basis of AIR and none of the Authorities Below has brought on record any defect in the return of income filed by assessee and other documents. We also find that the claim of assessee that it has been following the mercantile system of accounting has not been adjudicated by the Authorities Below. Indeed, the difference was observed in interest income between amount shown by assessee and reflected in the AIR. However, no other material has been brought on record with regard to undisclosed investment in the FDR but the addition has been made on the premise of Authorities Below. However, the information gathered from the AIR cannot be brushed aside therefore, we are of the view that the issue needs to be re- examined by AO in accordance with the law and in the light of the observation as discussed above. Therefore for the limited purpose as set out above, the matter stands restored to the file of AO. Needless to add that any material, adverse to the assessee, will have to be confronted to the assessee by the IT(SS)A No.147/Kol/2014 A.Y. 2010-11 Anandalok Medical Centre (P) Ltd. Vs. DCIT CC-XXI, Kol. Page 5 AO, and that, in case AO intends to pass any fresh order as a result of these directions, he will do so only after giving due and fair opportunity of hearing to the assessee, in accordance with the law and by way of a speaking order.
7. In the result, assessee's appeal stands allowed for statistical purpose.
Order pronounced in the open court 23/02/2017
Sd/- Sd/-
(Aby. T. Varkey) (Waseem Ahmed)
(Judicial Member) (Accountant Member)
Kolkata,
*Dkp
दनांकः- 23/02/2017 कोलकाता ।
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. अपीलाथ /Appellant-Anandalok Medical Centre (P), Ltd. Sevoke Road, Siliguri, Darjeeling-734001
2. यथ /Respondent-DCIT, Central Circle-XXI, Kolkata
3. संब*ं धत आयकर आय-
ु त / Concerned CIT Kolkata
4. आयकर आय-
ु त- अपील / CIT (A) Kolkata
5. 0वभागीय 3त3न*ध, आयकर अपील य अ*धकरण, कोलकाता / DR, ITAT, Kolkata
6. गाड7 फाइल / Guard file.
By order/आदे श से, /True Copy/ उप/सहायक पंजीकार आयकर अपील य अ*धकरण, कोलकाता ।