Income Tax Appellate Tribunal - Ahmedabad
Dr. Keyur Harshadrai Parikh,, ... vs Dy.Cit, Central Circle-2(3),, ... on 16 November, 2016
आयकर अपीलीय अिधकरण,
अिधकरण अहमदाबाद यायपीठ 'ए' अहमदाबाद।
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH, AHMEDABAD
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND
SHRI MANISH BORAD, ACCOUNTANT MEMBER
IT(SS)A No. 233/Ahd/2012
िनधा रण वष / Assessment Year : 2009-10
CIMS Hospital Pvt Ltd, ACIT,
Nr. Shukan Mall, Off Science Vs Central Circle-2(3),
City Road, Sola, Ahmedabad Ahmedabad
PAN : AABCC 6721 A
आयकर अपील सं./ ITA No. 1912/Ahd/2015
िनधा रण वष / Assessment Year : 2009-10
Dr. Keyur Harsadrai Parikh, DCIT,
381-A, 17th Lane, Vs Central Circle-2(3),
Satyagrah Chhavani, Ahmedabad
Jodhpur Tekra, Ahmedabad
PAN : AFSPP 5662 G
अपीलाथ /
अपीलाथ (Appellant) यथ
यथ /
थ (Respondent)
Assessee by : Shri S.N. Soparkar, AR
Revenue by : Shri K. Madhusudan, Sr DR
सुनवाई क तारीख/ Date of Hearing : 11/11/2016
घोषणा क तारीख / Date of Pronouncement: 16/11/2016
आदेश/O R D E R
PER R.P. TOLANI, JUDICIAL MEMBER:-
\ These are two appeals of different assessees - one being company and other being a Director. The issue being similar and grounds being inter- connected, these appeals were heard together and are being disposed of by this common order for the sake of convenience.
2. Following grounds raised by the assessee(s) in their respective appeals:-
IT(SS)A No. 233/Ahd/2012: Assessee- CIMS Hospital Pvt Ltd The Learned Commissioner (Appeal) erred in fact and in law in directing the addition of Rs.3,20,000/- in the hands of Dr. Keyur Parikh as unaccounted IT(SS)A Nos. 233/Ahd/2012 & ITA No.1912/Ahd/2015 Assessee- CIMS Hospital Pvt Ltd & Dr. Keyur H. Parikh AY : 2009-2010 2 cash balance in assessment year 2009-10 which was given by him to the appellant-company.ITA No. 1912/Ahd/2015 : Assessee- Dr. Keyur Harsadrai Parikh
1. The learned Commissioner (Appeals) erred in fact and in law in accepting the validity of the re-opening of the case u/s 148 only on the basis of the findings of the Hon'ble Commissioner (Appeals)-III, Ahmedabad in the appellate order dated 27.01.2012 in case of CIMS Hospitals Pvt Ltd.
2. The learned Commissioner (Appeals) erred in fact and in law in confirming addition on account of unexplained cash of Rs.3,20,000/- on the ground that CIT(A)-III has deleted addition of Rs.4,25,000/- for Assessment Year 2009-10 in case of CIMS Hospital Pvt Ltd and given the finding that Rs.4,25,000/- belong to the Appellant by ignoring the fact that the appellant has duly disclosed the cash on 31.03.2008 in his wealth tax return.
3. Brief facts are - an amount of Rs.4,25,000/- was added in the hands of Hospital by the AO, rejecting the assessee's explanation that the said amount was contributed by Dr. Keyur Parikh, one of the Directors who was assessed to Income-tax and Wealth-tax. The fact of this contribution was reflected in the Wealth-tax Return of Dr. Keyur Parikh which was accepted by the Department. The assessee, CIMS Hospital Pvt Ltd challenges the addition though deleted the addition in the hands of CIMS Hospital Pvt Ltd. According to assessee, the ld. CIT(A) travelled beyond his powers by directing this amount to be added in the hands of Dr. Keyur Parikh, who was not a party to appeal, by following observations:-
"...However, since Dr. Keyur Parikh has claimed the cash of Rs.4,25,000 as belonging to him, in my considered view, the addition of balance amount of unexplained cash cannot be made in the hands of the appellant company but in the hands of Dr. Keyur Parikh. Further, merely that Dr. Keyur Parikh has paid wealth tax on the cash amount of Rs.4,25,000/- as on 31.03.2008 does not prove that the amount of Rs.4,25,000/- is explained for income tax purposes also. The AO is therefore directed to tax the balance cash of Rs.3,20,000/- in the hands of Dr. Keyur Parikh in assessment year 2009-10 and not in the hands of the appellant-company."
IT(SS)A Nos. 233/Ahd/2012 & ITA No.1912/Ahd/2015 Assessee- CIMS Hospital Pvt Ltd & Dr. Keyur H. Parikh AY : 2009-2010 3 3.1 Based on this finding, completed assessment of Dr. Keyur Parikh was re-opened u/s 148. During the course of reassessment, feeling bound by the direction issued by ld. CIT(A), the AO rejected explanation that it had the source and accepted Dr. Parikh's contributing this amount and the transaction being reflected in his wealth-tax return. The addition was accordingly made.
3.2 Aggrieved, assessee preferred first appeal, where the reopening of assessment was challenged on the ground that ld. CIT(A)-III, Ahmedabad could not have issued such directions in the case of an assessee who was not a party to appeal before him and challenged the addition on merits also. On merits, ld. CIT(A) confirmed the addition on the reasoning that ld. CIT(A)- III, Ahmedabad had already given finding that the amount of Rs.4,25,000/- belonged to appellant Dr. Keyur Parikh by following observations:-
"8.1 The AO has discussed in detail the cash balance, cash book and the withdrawal of the appellant which is justified. It is seen that the appellant was regularly maintaining the books of account and as on 21.08.2008 cash balance was Rs.1,05,116/- only as against the cash found of Rs.4,25,000/-. The AO has given the benefit of cash in hand of Rs.1,05,116/- shown in the cash book and only excess cash of Rs.3,20,000/- was added as unexplained cash. It is seen that the same amount of Rs.4,25,000/- was also added in the case of CIMS Hospital Pvt Ltd in AY 2009-10 however the above addition of Rs.4,25,000/- has already been deleted by the CIT(A)-III, Ahmedabad vide order and he has given the finding that Rs.4,25,000/- belong to the appellant Dr. Keyur Parikh."
3.3 Aggrieved, both the parties are in appeal before us.
4. Ld. Counsel for the assessee contends that ld. CIT(A) while deciding the appeal of CIMS Hospital Pvt Ltd cannot decide and direct that the addition in that case should be deleted in the hands of company and added in a third party's assessment without hearing the affected party. This is against the principle of natural justice and amounts to an untenable direction. Same being non-est cannot be a valid foundation for re-opening IT(SS)A Nos. 233/Ahd/2012 & ITA No.1912/Ahd/2015 Assessee- CIMS Hospital Pvt Ltd & Dr. Keyur H. Parikh AY : 2009-2010 4 of assessment in the hands of Dr. Keyur Parikh. Reliance is placed on the decision of ITAT, Ahmedabad "D" Bench in the case of ITO vs. Biotech Ophthalmic Pvt Ltd in ITA No.443/Ahd/2011 and CO No.71/Ahd/2011, wherein ITAT while deciding assessee's cross-objection has decided the following grounds:-
"9. The assessee has also moved a cross-objection which seeks to expunge CIT(A)'s directions to bring this deemed dividend to tax in the hands of Shri Mehul P. Asnami, director in assessee's company."
4.1 ITAT dealt with the provisions of Section 153(3) regarding the power of CIT(A) for issuing direction and held as under:-
"19. As we part with our adjudication on this issue, we may also take note of learned Departmental Representative's contention that the assessee has no locus standi to raise any grievance against these directions as he is not the aggrieved party vis-à-vis these directions. We are unable to see any merits in this plea either. The manner in which the appeal has been decided by the CIT(A) gives an impression, which is a wholly inappropriate impression and which has also been reiterated before us by the learned Departmental Representative, that the impugned additions have been deleted in the hands of the assessee as these additions are required to be made in the hands of someone else. The deletion of the impugned addition in the hands of the assessee company has been thus projected to be, though perhaps at a somewhat subliminal level, dependent of the addition being confirmed in the hands of the director. The directions given by the CIT(A) do prejudice interests of the assessee inasmuch as these directions not being implemented may be viewed as detrimental to the interests of the assessee but then the directions suffer from legal infirmities, from glaring procedural flaws, and are incapable of being implemented anyway. In any case, since these directions are given in the case of this assessee and the appellate order by the CIT(A) in the case of this assessee cannot be challenged, in appeal before us, by a third party, the only way to prevent these directions reaching the finality is a challenge by this assessee himself, particularly because, as is the settled legal position, the statutory provisions are to be construed ut res magis valeat quam pereat i.e., in such a manner as to make it workable rather than redundant. The assessee before us, therefore, has, in our considered view, locus standi to challenge legality of these directions. 20. In view of the above discussions, and bearing in mind entirety of the case, we vacate the directions in questions. The cross objection is thus allowed."
IT(SS)A Nos. 233/Ahd/2012 & ITA No.1912/Ahd/2015 Assessee- CIMS Hospital Pvt Ltd & Dr. Keyur H. Parikh AY : 2009-2010 5 4.2 Thus, it is pleaded that ld. CIT(A) was unjustified in giving such a direction to add the impugned amount in the hands of Dr. Keyur Parikh consequently. The direction in question deserves to be expunged from the appellate order.
5. Adverting to the appeal of Dr. Keyur Parikh, the ld. Counsel for the assessee once again contends that the direction of ld. CIT(A) is held to be untenable and it cannot form a valid basis for re-opening of assessment. Therefore, the reassessment in the case of Dr. Keyur Parikh deserves to be quashed being based on untenable non-est ground.
6. Apropos merits, ld. Counsel contends that the assessee has demonstrated the source of contribution made in CIMS Hospital Pvt Ltd by ample evidence and discharged its burden in effective terms by filing the cash flow statement; complete facts with the transaction in question is reflected in the wealth-tax return which is accepted by the Department. The assessee's explanation has been brushed aside on the basis of assumptions; therefore, the addition cannot be sustained in the hands of the assessee on merits also. Reliance is placed on the Hon'ble Gujarat High Court judgment in the case of Pipushkumar O. Desai vs. CIT, reported in [2001] 247 ITR 568 (Guj) and ITAT decision in the case of Jagat Mineral Pvt Ltd vs. DCIT in ITA No.2750/Ahd/2011.
7. We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. In our considered view, while deciding the appeal of CIMS Hospital Pvt Ltd, ld. CIT(A) was not authorized to add that amount in the case of Director who was not a party to the CIMS Hospital Pvt Ltd appeal proceedings. The subject matter before him was whether the amount was liable for addition in the case of CIMS Hospital Pvt Ltd or not. Since the ld. CIT(A) exceeded IT(SS)A Nos. 233/Ahd/2012 & ITA No.1912/Ahd/2015 Assessee- CIMS Hospital Pvt Ltd & Dr. Keyur H. Parikh AY : 2009-2010 6 his jurisdiction in giving this direction which does not fall within the four corners of his powers enshrined in this behalf, following the Co-ordinate Bench decision in the case of Biotech Ophthalmic Pvt Ltd (supra), we expunge the direction of ld. CIT(A) contained to this effect in the case of CIMS Hospital Pvt Ltd.
8. Adverting to the appeal of Dr. Keyur Parikh, since the assessment has been re-opened only on the basis of a direction issued by ld. CIT(A) in CIMS Hospital Pvt Ltd case which is held to be untenable and non-est, the foundation of proceedings u/s 147/148 becomes invalid and deserves to be quashed. However, we may like to adjudicate the issue on merits as well. In our considered view, ld. CIT(A) confirmed the addition not applying his independent mind and discretion; and merely upholding the addition on the ground that the CIT(A) in the case of CIMS Hospital Pvt Ltd has directed to make the additions, the same is confirmed. In our view, the confirmation of the addition cannot be upheld. Besides, the assessee discharged his burden by providing necessary cash flow statements and demonstrated that the transaction in question was reflected in the wealth- tax return which was accepted by the Department. Therefore, in our view, this amounts to discharge of burden cast upon the assessee in this behalf. Further, the Department cannot blow hot and cold and take a divergent decision qua addition in wealth-tax and income-tax proceedings. Thus, the grounds of the assessee(s) are allowed on both the counts.
9. In the result, both the appeals by the assessee(s) are allowed.
Order pronounced in the Court on 16th November, 2016 at Ahmedabad.
Sd/- Sd/-
(MANISH BORAD) (R.P. TOLANI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 16/11/2016
*Biju T., Sr. PS
IT(SS)A Nos. 233/Ahd/2012 & ITA No.1912/Ahd/2015 Assessee- CIMS Hospital Pvt Ltd & Dr. Keyur H. Parikh AY : 2009-2010 7 आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबंिधत आयकर आयु / Concerned CIT
4. आयकर आयु (अपील) / The CIT(A)
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदेशानुसार/ BY ORDER, TRUE COPY उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad