M/s Kamesh Bhargava Hospital and Research Centre (P) Ltd., Chandigarh V. DCIT, Chandigarh

CO 40/CHANDI/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6421 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 06-12-2016

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A, CHANDIGARH , ! ' # $ %! , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.30/CHD/2014 / ASSESSMENT YEAR : 2005-06 THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT & C.O.NOS.40 & 43/CHD/2016 IN ./ ITA NO.30/CHD/2014 / ASSESSMENT YEAR : 2005-06 M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT ./ ITA NO.33/CHD/2014 / ASSESSMENT YEAR : 2008-09 2 THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT & C.O.NO.9/CHD/2014 IN ./ ITA NO.33/CHD/2014 / ASSESSMENT YEAR : 2008-09 M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT ./ ITA NO.34/CHD/2014 / ASSESSMENT YEAR : 2009-10 THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT & C.O.NO.10/CHD/2014 IN ./ ITA NO.34/CHD/2014 3 / ASSESSMENT YEAR : 2009-10 M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT ./ ITA NO.35/CHD/2014 / ASSESSMENT YEAR : 2010-11 THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT & C.O.NO.11/CHD/2014 IN ./ ITA NO.35/CHD/2014 / ASSESSMENT YEAR : 2010-11 M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT ./ ITA NO.36/CHD/2014 / ASSESSMENT YEAR : 2011-12 4 THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT & C.O.NO.12/CHD/2014 IN ./ ITA NO.36/CHD/2014 / ASSESSMENT YEAR : 2011-12 M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI ASHWANI KUMAR, CA & SHRI ADITYA KUMAR, CA ! / REVENUE BY : DR.ASHISH GUPTA, CIT(DR) ' # $ /DATE OF HEARING : 23.05.2019 %&'( $ /DATE OF PRONOUNCEMENT : 31. 07.2019 & ./ ITA NOS.1218 TO 1222/CHD/2017 / ASSESSMENT YEARS: 2007-08 TO 2011-12 THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. 5 ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT ./ ITA NOS.723 TO 725/CHD/2017 / ASSESSMENT YEARS: 2009-10 TO 2011-12 M/S KAMLESH BHARGAVA HOSPITAL & RESEARCH CENTRE (P) LTD., H.NO.761, SECTOR 8-B, CHANDIGARH. THE D.C.I.T., CENTRAL CIRCLE-1(1), CHANDIGARH. ./PAN NO: AAACK7161 P /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI JASPAL SHARMA, ADV. ! / REVENUE BY : SHRI HARJINDER SINGH, SR.DR ' # $ /DATE OF HEARING : 23.05.2019 %&'( $ /DATE OF PRONOUNCEMENT : 07.2019 /ORDER PER BENCH : ALL THE CAPTIONED APPEALS RELATE TO THE SAME ASSES SEE AND ARE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS), CHANDIGARH, [(IN SHORT CIT(A)] PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT),IN QUANTUM PROCEEDINGS AND CONSEQUENT PENALTY PROCEEDI NGS AND RELATE TO DIFFERENT ASSESSMENT YEARS. THE ASSES SEE HAS FILED CROSS OBJECTIONS IN THE APPEALS FILED BY THE REVENUE IN QUANTUM PROCEEDINGS. 2. BRIEF FACTS LEADING TO THE PRESENT APPEALS ARE T HAT 6 A SURVEY WAS CONDUCTED ON THE ASSESSEE ON 21.09.201 0 U/S 133A OF THE ACT, WHICH WAS CONVERTED INTO SEARC H 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 ASSE SSEE FOR SIX YEARS PRIOR TO THE YEAR OF SEARCH AND FOR T HE 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 PARTIA L 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 WER E 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 OBJECTIO N RELATING TO ASSESSMENT YEAR 2008-09,BE FIRST TAKEN UP FOR HEARING. THE APPEAL OF THE REVENUE IN ITA 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 I N NATURE. THE SAME, THEREFORE, NEED NO ADJUDICATION. 6. GROUND NO.2 RAISED BY THE REVENUE READS AS UNDER: 2. THE LD CIT (A) HAS ERRED ON THE FACTS AN D 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 T HAT 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 I T 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 ENCOMPASSIN G 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 TH E DIARY FROM WHICH THE AO NOTED THAT THERE WAS A DIFFERENCE IN THE TOTAL CASH RECEIPTS AND THE AMOUN T DEPOSITED IN THE BANK REFLECTED IN THE SAID DOCUMEN T, WHICH HE TABULATED AS UNDER: NET CASH COLLECTION AS PER A-2 CASH DEPOSIT AS PER A-2 DIFFERENCE 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 ENTIR E 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 I N THE DIARY THUS PROVING THAT ALL THE CASH RECEIPTS I N THE DIARY HAD BEEN ACCOUNTED FOR BY THE ASSESSEE. THE A O WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AN D HELD THAT SINCE THE ASSESSEE HAD FAILED TO PROVE TH AT 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 O F 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 T HE INCOME OF THE ASSESSEE U/S 68 OF THE ACT. 10. BEFORE THE LD.CIT(A), THE ASSESSEE REITERATED H IS CONTENTIONS BY FILING DETAILED SUBMISSIONS AND ALSO VARIOUS DETAILS AND WORKINGS TO PROVE THAT THE ENTI RE CASH RECEIPTS REFLECTED IN THE DOCUMENT A-2 HAD BEE N ACCOUNTED FOR IN THE BOOKS OF THE ASSESSEE. THE 10 LD.CIT(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 RECEIPT S 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 TH E CASH RECEIPTS AND CASH DEPOSITED IN BANK BY THE DIRECTOR DURING THE IMPUGNED YEAR. THE LD. DR CONTENDED THAT THE ASSESSEE HAD FAILED TO PROVE THA T 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 RELIE D UPON THE FINDINGS OF THE AO AT PARA 4.2 OF HIS ORDE R 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 T HE BOOKS. ON PERUSAL OF ANNEXURE-2 IT IS CLEAR THAT THERE ARE CASH RECEIPTS WHICH HAS BEEN COLLECTED BY SH. AKHIL BHARGWA, DIRE CTOR OF COMPANY AND IT IS ALSO CLEAR THAT ALL THE RECIPTS H AVE NOT BOOKED INTO BOOKS, BECAUSE IT IS A PERSONAL DAIRY O F SH. AKHIL BHARGWA IN WHICH HE HAS MAINTAINED DAY TO DAY RECEI PTS 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 DET AILS 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 TH E TOTAL CASH RECEIPTS ACCORDING THE ANNEXURE -2 IS 6.68 CR. BUT THE ASSESSEE HAS SHOWN IN HIS BOOKS ONLY 1.23 CR. (DEPO SITED IN BANKS OF COMPANY), SO THERE IS DIFFERENCE OF 5.45 C R. WHICH HAS NOT BEEN EXPLAIN BY ASSESSEE. IN HIS REPLY ASSE SSEE SAID THAT HIS REVENUE RECEIPTS DEPOSITED BANKS DURI NG THIS TIME IS MORE FROM THE CASH RECEIPTS IN THE ANNEXURE -2. THIS REPLY IS ALSO NOT ACCEPTED BECAUSE ASSESSEE HAS FAI LED 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 COLLECT ION IN HIS DAIRY AND ALSO NOT ENTERED THE DEPOSIT DETAILS OF T HE RECEIPTS BANKS. THIS REPLY IS ALSO NOT ACCEPTED BECAUSE SH. AKHIL BHARGWA IS THE ADMINISTRATIVE DIRECTOR OF THE COMPA NY AND HE HAS DAY TO DAY WATCH ON THE COMPANY ACTIVITIES A ND ON PERUSAL OF ANNEXURE-2, IT IS ALSO CLEAR THAT SH. AK HIL BHARGWA HAS MAINTAINED THIS DAIRY ON REGULAR BASIS. THE ASSESSEE HAS INTENSELY HAS NOT SHOWN THESE CASH REC EIPTS IN HIS INCOME SO ACCORDING THE SECTION 68 OF THE IT. A CT, 1961, THE DIFFERENCE AMOUNT OF 5.45 CR. WILL BE TAXED AS A IN COME IN THE HAND OF ASSESSED COMPANY. 12 THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONTENDED THAT IT HAD DEMONSTRATED BEFORE BO TH THE AO AND THE CIT(A) THAT THE CASH RECEIPTS REFLEC TED IN THE DOCUMENTS HAD BEEN DULY ACCOUNTED FOR IN THE BOOKS OF THE ASSESSEE AND ALSO DEPOSITED IN THE BAN K 12 ACCOUNT OF THE ASSESSEE AND, THEREFORE, THE LD.CIT( A) HAD RIGHTLY HELD THAT THERE WAS NO REASON TO HOLD A NY 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 AUTHORIT IES 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 DIRECT OR 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 EXTRAC TED FROM THIS DOCUMENT, IT WAS FOUND THAT THERE WAS A DIFFERENCE IN THE CASH RECEIPTS REFLECTED BY DR.AKH IL BHARGAVA FROM ASSESSEES BUSINESS OF RUNNING THE HOSPITAL AND AMOUNT DEPOSITED IN BANK, TO THE EXTEN T 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. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THERE IS NO 13 DENYING THE FACT THAT THERE WAS A DIFFERENCE OF 5.4 5 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 TH E ASSESSEE CONTENDED THAT IT WAS EXPLAINED TO THE LOW ER AUTHORITIES THAT THE DIARY WAS NOT A COMPLETE AND EXACT RECORDING OF ALL THE CASH RECEIVED BY DR.AKHI L 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 COLLE CTION 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 07.1 1.2007 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 19.0 2.2008 23-02-2008, 24-02-2008, 04.03.2008 09.03.2008 14.0 3.2008 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, 0 8-05-2008, 09-05-2008, 10-05-2008, 11-05-2008, 22-05-2008, 2 3-05-2008, 24-05-2008, 25-05-2008, 26-05-2008, 01-06-2008, 0 5-06-2008, 06-06-2008, 07-06-2008, 08-06-2008, 15-06-2008, 1 9-06-2008, 20-06-2008, 07-07-2008, 22-07-2008, 23-07-2008, 2 4-07-2008, 25-07-2008, 26-07-2008, 27-07-2008, 28-07-2008, 2 9-07-2008, 07-08-2008, 08-08-2008, 09-08-2008, 10-08-2008, 1 7-08-2008, 09-10-2008, 12-10-2008, 19-10-2008, 20-10-2008, 2 6-10-2008, 27-10-2008, 05-11-2008, 15-11-2008, 25-11-2008, 2 8-11-2008, 12-12-2008, 26-12-2008, 07-01-2009, 08-01-2009, 2 5-01-2009, 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 12.0 6.2009 13-06-2009, 14-06-2009, 15-06-2009 1-06-2009 17.0 6.2009 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, 1 2-03-2010, 13-03-2010, 14-03-2010, 15-03-2010, 16-03-2010, 1 7-03-2010 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, 0 7-08-2010, 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, 2 2-08-2010, 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. A KHIL BHARGAVA WAS AN INCOMPLETE DIARY WITH INCOMPLETE RE CORDS OF RECEIPTS AND DEPOSITS. THE SAID DIARY WAS MAINTAINE D 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 OU R ATTENTION TO THE FACT THAT IT WAS ALSO POINTED OUT TO THE AO THAT THE ANNEXURE DID NOT CONTAIN THE NOTI NGS OF THE CHEQUE/DD ENTRIES ALSO WHICH PROVED THAT TH E DIARY/ANNEXURE A-2 WAS INCOMPLETE DIARY WITH INCOMPLETE RECORDS. THE LD.COUNSEL FOR THE ASSESSEE 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 AMOU NT 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 I N 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. T HIS FURTHER PROVES THE POINT THAT THE DIARY MAINTAINED BY DR. A KHIL WAS AN INCOMPLETE DIARY WITH INCOMPLETE RECORDS SINCE A LL 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 T HE 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 TH E 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.AKH IL 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 F AR 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.10 2 TO 108, COMPARING THE DAY WISE CASH RECEIPT AS NOTE D 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 ACCOUNTE D FOR IN THE BOOKS OF THE ASSESSEE WAS ON THE HIGHER SIDE AS COMPARED TO THAT SHOWN IN THE DIARY. OUR ATTENTI ON 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 AGAINST RS.6,68,11,879/- REFLECTED IN THE DIARY. TH E LD.COUNSEL FOR THE ASSESSEE, THEREFORE, CONTENDED T HAT IT WAS THUS SUFFICIENTLY DEMONSTRATED TO THE AUTHORITIES BELOW THAT THE ASSESSEE HAD ACCOUNTED F OR ALL THE CASH RECEIPTS AND NO AMOUNT OF CASH REFLECT ED 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 DEPOS ITED IN THE BANK AND, THEREFORE, HE PRESUMED THAT TO THE EXTENT THE CASH RECEIPT WAS DEPOSITED IN THE BANK I S STOOD ACCOUNTED FOR IN THE BOOKS OF THE ASSESSEE, 19 WHILE THE BALANCE REMAINED UNACCOUNTED FOR. TO THIS , THE LD.COUNSEL FOR THE ASSESSEE POINTED OUT THAT TH E AO HAD MISSED OUT TO CONSIDER A MAJOR FACT WHICH WA S DEMONSTRATED BEFORE HIM THAT THE DIARY DID NOT CONTAIN DETAIL OF ALL THE CASH ACTUALLY DEPOSITED B Y THE ASSESSEE IN THE BANK AND AS PER THE ACTUAL FIGURES OF THE CASH DEPOSITED IN THE BANK A MAJORITY OF THE CA SH 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 DIAR Y, 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 PA GE 16 OF THE ASSESSMENT ORDER AS UNDER: FURTHER, AS REGARDS THE AMOUNTS APPEARING AS DEPOS ITS, 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 AR E THE BANKS OF THE ASSESSEE COMPANY WHICH ARE REFLECTED IN THE BALANCE SHEET. IN LIGHT OF THE ABOVE, IT IS SUBMITT ED THAT T HE SAID ANNEXURE MUST BE READ AS A WHOLE WHEREIN THE D EPOSITS ARE CONSIDERED TO BE ACCOUNTED FOR AND THUS, SINCE THE TOTAL CASH RECEIPTS OF THE ASSESSEE IS MORE THAN THE COLL ECTION MENTIONED IN THE DIARY (AS DEMONSTRATED IN OUR EARL IER SUBMISSIONS DATED 26.03.2013), THE ENTIRE DIARY SHO ULD 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 THI S, A TOTAL OF RS.24.80 CRORES HAS BEEN DEPOSITED IN THE BANKS AS CASH DURING THE RELEVANT PERIOD BY THE ASSESSEE. THIS GO ES TO PROVE THE FACT THAT THE AMOUNTS RECEIVED BY DR. AKHIL BHA RGAVA HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS SINCE THESE BANKS FORM PART OF THE BALANCE SHEET OF THE COMPANY. THE STATE MENT 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 FILE D BEFORE THE AO REFLECTING THE MONTHWISE CASH RECEIPT S 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 POINT ED OUT THEREFROM THAT AGAINST THE TOTAL CASH COLLECTIO NS 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 ASSESSE E, 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, TH E ASSESSEE HAD ACTUALLY DEPOSITED RS.6.587 CRORES IN THE BANK. OUR ATTENTION WAS ALSO DRAWN TO THE MONTH WIS E 21 DETAIL OF CASH RECEIPT SHOWN IN THE DIARY,A-2 AND T HE CASH DEPOSITED IN VARIOUS BANK ACCOUNTS OF THE ASSESSEE, POINTING OUT THE SAME FACT, PLACED AT PAP ER BOOK PAGE NOS.93 AND 94. THUS IT WAS CONTENDED THAT IT WAS DULY DEMONSTRATED TO THE AUTHORITIES BELOW T HAT THE CONTENTION OF THE REVENUE THAT THE ASSESSEE HAD NOT DEPOSITED ITS CASH RECEIPTS IN THE BANK, THUS N OT 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 ACCO UNT. OUR ATTENTION WAS DRAWN TO THE STATEMENT MADE BEFOR E THE AO IN THIS REGARD AT PAGE 17 OF THE ASSESSMENT ORDER AS UNDER: FURTHER, ANOTHER APPROACH TO VERIFY THE SAID AMOUN TS SHOWN AS COLLECTION, COULD BE TO COMPARE THE TOTAL INCOME BOOKED BY THE ASSESSEE WITH THE TOTAL CASH/CHEQUE D EPOSITS MADE IN THE BANK ACCOUNT. THUS, SUMMATION OF ALL TH E AMOUNT OF CHEQUES AND CASH DEPOSITED IN THE BANK ACCOUNT W AS PRODUCED BEFORE YOUR HONORS ON 25/03/2013. ON REVIE W OF THE COMPILATION IT WAS SUBMITTED THAT THE TOTAL REVENUE BOOKED BY THE ASSESSEE IN THE DIFFERENT YEARS WAS MORE THAN T HE 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 THA T THE ASSESSEE HAD NOT ACCOUNTED FOR THE CASH RECEIPT S TO THE EXTENT OF RS.5.45 CRORES NOTED IN THE DIARY IN ANNEXURE A-2 AND DELETED THE ADDITION SO MADE BY TH E AO. OUR ATTENTION WAS DRAWN TO THE FINDINGS OF THE LD.CIT(A) AT PARA 4.3 TO 4.3.4 AS UNDER: 4.3 I HAVE CONSIDERED THE SUBMISSION OF LD. COUNSE L. AT THE OUTSET, IT MAY BE MENTIONED THAT SECTION 68 HAS NO APPLICATION TO THE FACTS OF THIS ISSUE AS THIS SECT ION 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 CAN NOT 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 IS SUE IS WHETHER THE AMOUNT IN QUESTION IS TAXABLE IN THE HA NDS 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 MATT ER WITH THE ASSESSING OFFICER. TO COMPREHEND THE ISSUE, IT WOULD BE APPROPRIATE TO UNDERSTAND THE MANNER IN WHICH THE E NTRIES WERE MADE IN ANNEXURES A-2 AND A-116. A-116 CONTAIN S ENTRIES ONLY FOR FOUR MONTHS OF THE F.Y. 2010-11. T HIS 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 PO RTION OF CASH IN HAND AT THE END OF THE DAY IS HANDED OVE R TO DR. AKHIL BHARGAVA FOR KEEPING THE AMOUNT IN CASH CHEST . THE AMOUNT RECEIVED AT THE END OF THE DAY IS ENTERE D BY DR. AKHIL BHARGAVA IN THE DIARY ANNEXURISED AS A-2. THE AMOUNT SHOWN AS HAVING BEEN GIVEN TO DR. AKHIL BHAR GAVA 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 ISS UE. 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 I N A-116, MEANING THEREBY THAT THE RECEIPTS WERE NOT UNDERSTATED BY THE APPELLANT. SIMILARLY, THE EXPENS ES DEBITED BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS T ALLY WITH THE ENTRIES MADE IN A-116, MEANING THEREBY THAT EXP ENSES CLAIMED BY THE APPELLANT ARE NOT INFLATED. IN NUTSH ELL, THE APPELLANT HAS NOT UNDERSTATED ITS RECEIPTS AND HAD NOT OVERSTATED ITS EXPENSES. IT MAY BE MENTIONED THAT T HE A- 116 PERTAINS TO ONLY FOUR MONTHS (17.05.2010 TO 21.09.2010), BUT THIS CONCLUSION WILL MUTATIS-MUTAN DIS APPLY TO THE OTHER PERIOD/YEARS ALSO. 4.3.3 THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION BY COMPARING THE AMOUNTS PERTAINING TO CAS H 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 INC OMPLETE DIARY WITH INCOMPLETE RECORD OF RECEIPTS AND DEPOSI TS. IT HAS ALSO BEEN MENTIONED BY THE APPELLANT IN ITS REPLY T HAT-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 S AME PERIOD AND THE ASSESSING OFFICER HAS NOT CONTROVERT ED THE SUBMISSION OF THE APPELLANT IN THIS REGARD,, WHICH MEANS THAT THE FIGURES MENTIONED BY THE APPELLANT ARE COR RECT. BE AS IT MAY, THE ENTRIES IN THIS ANNEXURE A-2 REGARDI NG RECEIPT OF CASH BY DR. AKHIL BHARGAVA AND DEPOSIT T HEREOF IN THE BANK ACCOUNT CANNOT FORM THE BASIS OF ADDITION, SINCE AS DISCUSSED ABOVE, THE APPELLANT HAS NOT UNDERSTATED ITS RECEIPTS AND MOREOVER, 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 ACCOUNT S THAN THE CASH RECEIPTS RECORDED IN ANNEXURE A-2 AND SO T HE CASH RECEIPTS ARE IN NO WAY UNDERSTATED. 4.3.4 IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASS ESSING 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 A ND ALSO THE DOCUMENTS REFERRED TO BEFORE US. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). AS R IGHTLY STATED BY THE LD.CIT(A), THE AO HAS MADE THE IMPUGNED ADDITION OF RS.5.45 CRORES BY COMPARING TH E 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.CIT(A) HAS HELD THAT NO ADDIT ION OF THE DIFFERENCE WAS WARRANTED BASED ON CERTAIN FA CTS 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 REVENUE BEFORE US. THE REVENUE HAS ALSO NOT BEE N ABLE TO POINT OUT ANY PERVERSITY IN THE CONCLUSION DRAWN BY THE LD.CIT(A) BASED ON THE ABOVE FACTS, TH AT THERE WERE NO UNACCOUNTED CASH RECEIPTS OF THE ASSESSEE. FURTHER WE HAVE ALSO CAREFULLY GONE THROU GH ALL THE DETAILS AND DOCUMENTS REFERRED TO BY THE LD.COUNSEL FOR THE ASSESSEE BEFORE US TO DEMONSTRAT E 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 SHOW N RECEIVED BY THE DIRECTOR OF THE ASSESSEE COMPANY WA S NOT NOTED AS DEPOSITED IN THE BANK AND, THEREFORE, IT WAS HELD THAT THE DIFFERENCE REMAINED UNACCOUNTED F OR IN THE BOOKS OF THE ASSESSEE. 23. FIRSTLY WE FAIL TO UNDERSTAND HOW THE FACT NOT ED 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 T HE 26 DIARY/DOCUMENT CAN BE SAID TO BE UNACCOUNTED IF THE Y 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 TH AT IT HAD ACCOUNTED FOR CASH RECEIPTS MUCH MORE THAN THAT REFLECTED IN THE DIARY. IN FACT WE FIND THAT T HE ASSESSEE HAD EVEN FILED A DAY WISE DETAIL CORRELATI NG 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 AN D ESTABLISHED THE FACT THAT ALL CASH RECEIPTS NOTED I N 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 BEE N POINTED OUT TO US AS NOT REFLECTED IN THE BOOKS OF ACCOUNT BY THE ASSESSEE FROM THE VOLUMINOUS DETAILS FILED TO THE REVENUE AUTHORITIES. THE DETAIL FILED BY THE ASSESSEE COMPARING THE DAILY CASH RECEIPTS NOTED IN THE DIARY AND THAT REFLECTED IN THE BOOKS OF ACCOUN T FOR THE ENTIRE YEAR, THE MONTHLY SUMMARY OF THE CAS H RECEIPTS NOTED IN THE DIARY AND THAT REFLECTED IN T HE 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 TO TAL 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 POINTED OUT ANY ANOMALY IN THE SAME. THI S FACT IN ITSELF ESTABLISHES THAT ALL THE CASH RECEIP TS 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 CONSIDERIN G 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 A LSO, WE FIND NO STRENGTH IN THE SAME ALSO BECAUSE THE FACTS REVEAL OTHERWISE. THE ASSESSEE HAS DEMONSTRAT ED 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 AMOUNT OF CASH RECEIVED BY IT. THIS FACT HAS ALSO REMAINED UNCONTROVERTED BEFORE US. THEREFORE, THERE REMAINS NO BASIS WITH THE REVENUE FOR JUSTIFY ING 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 AN D DEPOSITS, NOT NOTED IN THE SAME AND WHICH HAS NOT BEEN REBUTTED BY THE REVENUE. THE SAID DOCUMENT, W E 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 TH E ASSESSEE IS THE FACT THAT ITS RETURNED INCOME FOR T HE IMPUGNED YEAR EXCEEDED THE AMOUNT OF CASH RECEIPTS NOTED IN THE DIARY, ANNEXURE A-2. THUS BY ALL COUNTS, WE AGREE WITH THE LD.CIT(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 HOLDI NG THE ENTRIES TO THIS EXTENT AS UNACCOUNTED FOR IN TH E BOOKS OF THE ASSESSEE, HAS BEEN RIGHTY DELETED BY T HE CIT(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 FACTS AND IN L AW 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 THAT THE ASSESSEE HAD CLAIMED DEPRECIATION @ 40% ON SURGICAL EQUIPMENTS. WHEN THE ASSESSING OFFICER QUESTIONED T HE ASSESSEE REGARDING THE CLAIM OF HIGHER RATE OF DE PRECIATION, THE ASSESSEE SUBMITTED THAT THESE EQUIPMENTS WERE IN THE NATURE OF LIFE SAVINGS EQUIPMENTS AND SO HIGHER RAT E OF DEPRECIATION WAS ALLOWABLE FOR THE SAME. THE ASSESS ING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF T HE ASSESSEE AND RESTRICTED THE DEPRECIATION TO 15% ON THESE ITEMS. 30 29. DURING APPELLATE PROCEEDINGS THE LD.COUNSEL FOR THE ASSESSEE CONCEDED ITS CLAIM OF DEPRECIATION @ 4 0% ON THE ASSETS PURCHASED UP TO FINANCIAL YEAR 2005-0 6 STATING THAT IT WAS CUMBERSOME TO SEGREGATE THE ASSETS UPTO THAT YEAR. REGARDING THE ASSETS PURCHAS ED THEREAFTER, THE ASSESSEE WAS ASKED BY THE LD.CIT(A) TO FILE THE LIST OF ASSETS WHICH WERE ELIGIBLE FOR CLA IM OF DEPRECIATION @ 40%. THE ASSESSEE ACCORDINGLY FILE A REVISED CLAIM OF DEPRECIATION IN ALL THE YEARS INVO LVED. THE LD.CIT(A) ACCORDINGLY ON THE BASIS OF THE REVIS ED CLAIM SO FILED BY THE ASSESSEE, DISALLOWED DEPRECIA TION 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.CIT(A) AT PARAS 5.3 TO 5.3.2 OF THE ORDER A RE AS UNDER: 5.3 1 HAVE CONSIDERED THE SUBMISSION OF THE LD. CO UNSEL. THE APPELLANT HAS DECIDED TO FOREGO THE CLAIM OF HI GHER 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 AN D LATER, IT WAS NOTICED BY THE UNDERSIGNED THAT THE APPELLANT HAS CLAIMED HIGHER RATE OF DEPRECIATION O N CERTAIN ITEMS WHICH WERE NOT LIFE SAVINGS EQUIPMENT S AND DEPRECIATION @ 40% WAS NOT ALLOWABLE. THEREFORE, TH E APPELLANT WAS REQUIRED TO FILE LIST OF ASSETS, WHIC H WERE 31 ELIGIBLE FOR CLAIM OF DEPRECIATION @ 40% DURING THE COURSE OF APPELLATE PROCEEDINGS AND THE APPELLANT HAS FILED R EVISED CLAIM OF DEPRECIATION FOR ASSETS PURCHASED AFTER F. Y. 2005- 06. 5.3.2 THE APPELLANT WAS ALSO REQUIRED TO WORK OUT T HE ALLOWABLE DEPRECIATION FOR VARIOUS YEARS AND THE SA ME HAS BEEN FILED. THE DEPRECIATION TO BE DISALLOWED A S PER THE OBSERVATIONS IN PARA 6.3 AND 6.3.1 ABOVE, AS SU BMITTED 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 DISALL OWED FOR THE YEAR IN QUESTION IS OF RS. 27,71,054/- AS AGAINST R S. 49,28,847/-, DISALLOWED BY ASSESSING OFFICER. HENCE , THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS RESTR ICTED TO RS.27,71,054/-. GROUND OF APPEAL NO.4 IS PARTLY ALL OWED. 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 T HE AO HAD SPECIFICALLY POINTED OUT THE ASSETS PURCHASE D DURING THE YEAR WHICH WERE NOT ELIGIBLE FOR DEPRECIATION @ 40% AND, THEREFORE, CONTENDED THAT T HE 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 CIT(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 CL AIM, WHICH WAS DULY FILED BY THE ASSESSEE AND AFTER GOIN G THROUGH IT THE LD.CIT(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 INTERFERE IN THE ORDER OF THE LD.CIT( A). 32. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE FACTS RELA TING TO THE CASE ARE THAT THE AO HAD DISALLOWED THE CLAI M 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 RA TE 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 FOREGO NE 33 ITS CLAIM OF DEPRECIATION AT HIGHER RATE ON THE WDV OF ASSETS. THEREFORE, THERE IS NO DISPUTE VIS--VIS TH E 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 ASSESSEE, THE LD.CIT(A) HAD NOTED FROM THE DETA ILS OF ASSETS PURCHASED DURING THE YEAR THAT CERTAIN ASSETS DID NOT QUALIFY FOR HIGHER RATE OF DEPRECIAT ION AND ACCORDINGLY ASKED THE ASSESSEE TO FILE A REVISE D CALCULATION OF DEPRECIATION. THE SAME WAS DULY FILE D, GONE THROUGH BY THE LD.CIT(A) AND NO DISCREPANCY OR ANOMALY FOUND IN THE SAME AND EXCESS DEPRECIATION A S WORKED OUT BY THE ASSESSEE AMOUNTING TO RS.27,71,054/- WAS UPHELD BY THE LD.CIT(A). BEFORE US, THE LD. DR HAS BEEN UNABLE TO POINT OUT ANY ANOMALY OR DISCREPANCY IN THE FINDINGS OF THE CIT(A ). THE LD. DR HAS BEEN UNABLE TO POINT OUT FROM THE REVISED CALCULATION FILED BY THE ASSESSEE TO THE CI T(A), ANY INCORRECTNESS IN THE CLAIM OF THE ASSESSEE. IN THE LIGHT OF ANY DISCREPANCY HAVING NOT BEEN POINTED OU T BY THE LD. DR ON THE FACTS RELATING TO THE REVISED COMPUTATION FILED BY THE ASSESSEE, WE FIND NO REASO N TO INTERFERE IN THE ORDER OF THE LD.CIT(A) RESTRICT ING 34 THE DISALLOWANCE MADE BY THE AO ON THE EXCESS CLAIM OF DEPRECIATION TO RS.27,71,054/-. MOREOVER, WE FIN D THAT THE EXCESS DEPRECIATION AS WORKED OUT BY THE A O ON THE ADDITIONS MADE DURING THE YEAR AMOUNTED TO RS.10,70,314/-, WHILE THE LD.CIT(A) HAS DISALLOWED THE EXCESS DEPRECIATION ON THE ADDITIONS MADE DURIN G THE YEAR TO RS.27,71,054/-. IN VIEW OF THE SAME, SI NCE THE LD.CIT(A) HAS DISALLOWED THE EXCESS DEPRECIATIO N ON THE ADDITIONS MADE DURING THE YEAR MORE THAN WHA T 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 I TS CROSS OBJECTION RELATES TO THE ISSUE OF DISALLOWANC E OF INTEREST EXPENSES U/S 36(1)(III) OF THE ACT AND REA DS AS UNDER: 35 THE 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 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 FACT THAT THE ADVANCE WAS MADE FOR BUSINESS PURPOSE. 34. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEB ITED A LARGE AMOUNT TO THE PROFIT AND LOSS ACCOUNT ON ACCO UNT OF INTEREST PAID ON BORROWED FUNDS. AT THE SAME TIME, THE ASSESSEE HAD MADE INTEREST FREE ADVANCES AS UNDER: A) M/S SILVER OAK FOUNDATION RS. 21,42,000/- B) ADVANCE FOR LAND RS. 21.50.000/- TOTAL RS. 42,92,000/- 35. THE ASSESSING OFFICER QUESTIONED THE ASSESSEE REGARDING BUSINESS EXPEDIENCY FOR MAKING THESE ADVA NCES AND ALSO ABOUT PROPORTIONATE DISALLOWANCE OF INTERE ST U/S 36(L)(III) OF THE ACT. THE ASSESSEE FILED A REPLY, THE CONTENTS OF WHICH WERE SUMMARIZED BY THE LD.CIT(A) AT PARA 3.1.1 OF HIS ORDER AS UNDER: (I) M/S SILVER OAK FOUNDATION IS RUNNING A COLLEGE UNDER THE NAME AND STYLE OF 'SILVER OAK COLLEGE OF NURSING', IMPARTING MEDICAL/ NURSING EDUCATION TO THE STUDENTS. THE NURSES TRAINED IN THE COLLEGE ARE PROVIDED TO THE HOSPITAL AND SO COMMERCIAL EXPEDIENCY STANDS EXPLAINED. 36 (II) REGARDING ADVANCE FOR PURCHASE OF LAND AT ABHIPUR, THE SAME WAS SHOWN AS ADVANCE, SINCE THE TRANSACTION WAS NOT COMPLETE. LATER, WHEN THE REGISTRY WAS DONE, THE ASSET WAS TRANSFERRED TO THE FIXED ASSET SCHEDULE. THE LAND WAS PURCHASED WITH INTENTION TO EXPAND THE HOSPITAL FACILITY AND TO ATTRACT THE RURAL CLIENTELE, BUT LATER ON IT WAS OBSERVED THAT THE SCOPE WAS NOT VERY HIGH IN THAT AREA AND SO THE LAND WAS SOLD. (III) THE INTEREST DEBITED TO THE PROFIT AND LOSS ACCOUNT PERTAINS TO LOANS RAISED FOR SPECIFIC PURPOSES AND NO PART OF THESE LOANS WERE USED FOR MAKING THESE ADVANCES AND SO IT CANNOT BE SAID THAT THE INTEREST BEARING FUNDS WERE USED FOR MAKING THESE INTEREST FREE ADVANCES. (IV) THE RATIO OF THE JUDGEMENT OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD. (286 ITR 1) HAS BEEN AMPLIFIED, DISCUSSED AND CLARIFIED BY HON'BLE SUPREME COURT IN THE CASES OF M/S CORE HEALTH CARE LTD. (298 ITR 194) AND M/S S.A. BUILDERS LTD. (288 ITR 1) AND AS THE ADVANCES WERE GIVEN ON THE GROUND OF COMMERCIAL EXPEDIENCY, NO DISALLOWANCE IS REQUIRED TO BE MADE. 36. THE ASSESSING OFFICER DID NOT AGREE WITH THE EXPLANATION OF THE ASSESSEE AND DISALLOWED PROPORTI ONATE INTEREST OF RS. 5,15,119/-, COMPUTED @ 12% PER ANNU M ON THE AFORESAID INTEREST FREE ADVANCES WITH THE FOLLO WING OBSERVATIONS: (I) THERE IS NO EVIDENCE THAT THE IMPUGNED LAND FOR WHICH ADVANCE IS GIVEN, WAS TO BE PURCHASED FOR THE HOSPITAL. (II) THERE IS NO EVIDENCE THAT THE AMOUNT PAID AS ADVANCE FOR LAND WAS NOT OUT OF THE BORROWED FUNDS. 37 (III) THE FUNDS DIVERTED BY THE APPELLANT ARE NOT OUT OF OWN FUNDS. (IV) THE JUDGEMENT OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF M/S ABHISHEK INDUSTRIES LTD. IS APPLICABLE ON THE FACTS OF THE CASE. 37. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL FOR THE ASSESSEE FILED WRITTEN SUBMISSION, MAINLY REITERATING THE SUBMISSIONS MADE BEFORE THE ASSESSI NG OFFICER. 38. THE LD.CIT(A) REJECTED ALL THE CONTENTIONS MADE BY THE ASSESSEE AND UPHELD THE DISALLOWANCE MADE. 39. BEFORE US THE SOLE ISSUE RAISED BY THE LD.COUNS EL FOR THE ASSESSEE WAS THAT IT HAD SUFFICIENT OWN INTERES T FREE FUNDS FOR THE PURPOSE OF MAKING THE INVESTMENT. OUR ATTENTION WAS DRAWN TO THE PROFITS EARNED BY THE AS SESSEE DURING THE YEAR ITSELF AS REFLECTED IN THE AUDITED FINANCIAL STATEMENTS, COPY OF WHICH WAS FILED BEFORE US, AMOU NTING TO RS.2.12 CRORES AND IT WAS POINTED OUT THAT THE INVE STMENT IN RELATION TO WHICH DISALLOWANCE WAS MADE AMOUNTED TO RS.42.92 LACS. IT WAS, THEREFORE, CONTENDED THAT I N VIEW OF VARIOUS DECISIONS OF VARIOUS JUDICIAL AUTHORITIES, THE PRESUMPTION WAS THAT THE INVESTMENT HAS BEEN MADE O UT OF OWN INTEREST FREE FUNDS OF THE ASSESSEE CALLING FOR NO 38 DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT. 40. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF AUTHORITIES BELOW. 41. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF THE AUTHORITIES BELOW. IT IS SETTLED LAW THAT WHERE SUFFICIENT OWN INTEREST FREE FUNDS ARE AVAILABLE, T HE PRESUMPTION IS THAT NON BUSINESS ADVANCES/INVESTMEN TS HAVE BEEN MADE OUT OF THE SAID INTEREST FREE FUNDS. THE HON'BLE SUPREME COURT HAS HELD SO IN THE CASE OF CI T (LTU) VS RELIANCE INDUSTRIES LTD. IN CIVIL APPEAL NO.37 OF 2019 DATED 02-01-19. IN VIEW OF THE ABOVE SETTLED LAW AND CONSIDERING TH E UNCONTROVERTED FACT THAT THE ASSESSEE HAD OWN INTER EST FREE FUNDS IN THE FORM OF PROFITS OF THE YEAR ALONE AMOU NTING TO RS.2.12 CRORES WHICH WERE MORE THAN SUFFICIENT FOR MAKING THE IMPUGNED INVESTMENTS OF RS.42.92 LAKHS, WE HOLD THAT NO DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE A CT WAS WARRANTED IN THE PRESENT CASE, SINCE THE INVESTMENT S ARE PRESUMED TO HAVE BEEN MADE OUT OF OWN INTEREST FREE FUNDS OF THE ASSESSEE. THE DISALLOWANCE SO MADE OF RS.5,1 5,190/- U/S 36(1)(III) OF THE ACT IS, THEREFORE, DIRECTED T O BE DELETED. 39 THE GROUND RAISED BY THE ASSESSEE IS THEREFORE ALLO WED. THE CROSS OBJECTION FILED BY THE ASSESSEE STANDS ALLOWED. 42. WE SHALL NOW TAKE UP THE APPEAL OF THE REVENUE AND THE ASSESSES CROSS OBJECTION RELATING TO A.Y 2009-1 0 ITA NO.34/CHD/2014(A.Y.2009-10): 43. GROUND NOS.1, 5 AND 6 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND NEED NO ADJUDICATION. 44. GROUND NO.2 RAISED BY THE REVENUE READS AS UNDE R: 2. THE LD CIT (A) HAS ERRED ON THE FACTS AND IN LA W IN DELETING ADDITION OF RS.3,72,00,000/- MADE U/S 68 O F 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 O F ACCOUNT. 45. IT WAS COMMON GROUND BETWEEN THE PARTIES THAT T HE ISSUE RAISED IN GROUND NO.2 AS ABOVE WAS SIMILAR AN D IN FACT IDENTICAL TO GROUND NO.2 RAISED IN REVENUES APPEAL IN ITA NO.33/CHD/2014 FOR A.Y 2008-09 DEALT WITH US ABOVE. IT WAS POINTED OUT THAT THE ISSUE AROSE FROM THE DIFFERENC E OF CASH RECEIPTS AND THE AMOUNT OF CASH DEPOSITED IN BANK A S NOTED IN DOCUMENT A-2 FOUND DURING SEARCH. THAT DURING TH E IMPUGNED YEAR THE SAID DIFFERENCE WAS RS.3.72 CRORE S WHICH 40 WAS ADDED BACK TO THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT. BOTH THE PARTIES CONTENDED THAT THEIR PLEADING S WERE IDENTICAL TO THAT MADE IN GROUND NO. 2 OF ITA NO.33/CHD/2014 FOR A.Y 2008-09. 46. SINCE ADMITTEDLY IDENTICAL ISSUE HAS ALREADY BE EN DEALT WITH BY US IN REVENUES APPEAL FOR A.Y 2008-09 IN IT A NO.33/CHD/2014, OUR DECISION ON THE SAME RENDERED A T PARAS 21 TO 26 OF OUR ORDER ABOVE WILL APPLY TO TH E PRESENT GROUND ALSO, FOLLOWING WHICH WE UPHOLD THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE OF RS.3.72CRORES . THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS THEREFORE DISMISSED 47. GROUND NO.3 RAISED BY THE REVENUE READS AS UND ER: 2. THE LD CIT (A) HAS ERRED ON THE FACTS AND IN LA W IN DELETING ADDITION OF RS.2,23,00,000/- MADE U/S 68 O F THE ACT SINCE THE ASSESSEE HAS FAILED TO PROVE IF T HE RECEIPTS AS PER ANNEXURE A-119 HAVE BEEN ACCOUNTED FOR IN THE REGULAR BOOKS. 48. BRIEF FACTS RELATING TO THE ISSUE ARE THAT AS P ER ANNEXURE A-119, SEIZED DURING THE COURSE OF SEARCH, THE RECEIPTS FROM ECHS AND CGHS WERE TO THE TUNE OF RS. 13.61 CRORES, WHEREAS THE ASSESSEE HAD SHOWN RECEIPTS OF ONLY RS. 11.38 CRORES IN ITS BOOKS OF ACCOUNTS AND SO THE AD DITION OF 41 THE DIFFERENCE, BEING RS. 2.23 CRORES, WAS MADE BY THE ASSESSING OFFICER. 49. BEFORE THE LD.CIT(A) THE ASSESSEE CONTENDED THA T THERE WAS A MISTAKE IN TOTALING THE AMOUNT OF RECEIPTS FR OM ECHS AND CGHS REFLECTED IN ANNEXURE A-119 AND THAT THE T OTAL WAS LESS THAN THE AMOUNT ACCOUNTED FOR BY THE ASSES SEE IN ITS BOOKS OF ACCOUNT. THE LD.CIT(A) ASKED THE AO TO COMPUTE THE TOTAL AMOUNT OF RECEIPTS IN ANNEXURE A-119, WHO IN TURN CONVEYED TO THE CIT(A) THAT THE TOTAL OF ANNEXURE A -119 WAS RS.9,39,65,366/-. THE LD.CIT(A) NOTED THAT SINCE TH E ASSESSEE HAD SHOWN MORE RECEIPTS IN ITS BOOKS OF AC COUNT AT RS.11.38 CRORES AS COMPARED TO THAT REFLECTED IN AN NEXURE A-119, THE ADDITION WAS WRONGLY MADE BY THE AO. HE FURTHER NOTED THAT THE ENTIRE AMOUNT RECEIVED BY THE ASSESS EE FROM ECHS AND CGHS WAS THROUGH CHEQUES ONLY AND, THEREFO RE, HELD THAT THERE WAS NO QUESTION OF ANY UNDERSTATEME NT OF THE SAID RECEIPTS. THE ADDITION THEREFORE MADE BY T HE AO ON THIS ACCOUNT OF RS.2.23 CRORES WAS DELETED BY THE L D.CIT(A). 50. BEFORE US THE LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE DETAIL, WHICH WAS THE COPY OF REC ALCULATION OF THE TOTAL RECEIPTS OF ANNEXURE A-119 AS WORKED O UT WITH THE ASSESSING OFFICER DURING REMAND PROCEEDINGS P LACED AT 42 PAPER BOOK PAGE NO.68-70 AND WHICH WAS FILED TO THE CIT(A). IT WAS POINTED OUT THEREFROM THAT THE TOTAL RECEIPT S IN ANNEXURE-119 ON RECALCULATION CAME TO RS.9,84,64,1 42/- WHICH AS NOTED BY THE CIT(A) WAS LESS THAN THAT REC ORDED IN THE BOOKS OF THE ASSESSEE AT RS.11.38 CRORES. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE CIT (A) HAD RIGHTLY DELETED THE ADDITION MADE ON ACCOUNT OF SU RPLUS RECEIPTS NOTED IN THE DOCUMENT A-119 ON FINDING THE SAME TO BE FACTUALLY INCORRECT. 51. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE AO. 52. WE HAVE HEARD THE RIVAL CONTENTIONS. THE ISSUE BEFORE US RELATES TO THE ADDITION MADE TO THE INCOME OF TH E ASSESSEE ON ACCOUNT OF HIGHER RECEIPTS FROM ECHS AN D CGHS NOTED IN A DOCUMENT ANNEXURE A-119 AS AGAINST THAT REFLECTED IN THE BOOKS OF THE ASSESSEE BY RS.2.23 C RORES. THE LD.CIT(A), WE FIND, DELETED THE ADDITION WHEN THE F IGURES ON RECALCULATION OF THE AMOUNTS MENTIONED IN DOCUMENT A-119 BY THE AO WAS FOUND TO BE LESS THAN THAT ACCOUNTE D FOR IN THE BOOKS OF THE ASSESSEE. THE LD.DR HAS NOT CONTRO VERTED THE ABOVE FACT BEFORE US. THE FINDINGS OF THE CIT(A ) THEREFORE THAT THERE WAS NO UNDERSTATEMENT OF RECEIPTS AS PER 43 DOCUMENT A-119,WE HOLD, CALLS FOR NO INTERFERENCE O N OUR PART. THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.2.23 CRORES ON ACCOUNT OF DOCUMENT A-119 IS THEREFORE UP HELD. GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS THEREFORE DISMISSED. 53. GROUND NO.4 RAISED BY THE REVENUE READS AS UNDE R: 4. THE LD CIT (A) HAS ERRED ON THE FACTS AND IN LA W 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 SAVI NG EQUIPMENTS. 54. IT WAS COMMON GROUND THAT THE ISSUE RAISED IN GROUND NO.4 ABOVE WAS IDENTICAL TO THAT RAISED IN GRO UND NO.3 OF THE REVENUES APPEAL FOR A.Y 2008-09 IN ITA NO.33/CHD/2014 DEALT WITH US ABOVE AND RELATED TO E XCESS DEPRECIATION ALLEGEDLY CLAIMED BY THE ASSESSEE ON L IFE SAVING EQUIPMENTS. IT WAS POINTED OUT THAT THE BEFORE THE CIT(A), THE ASSESSEE HAD WITHDRAWN ITS CLAIM OF EXCESS DEP RECIATION ON THE WDV OF ASSETS AS ON 31-03-2006 AND FOR THE A SSETS PURCHASED THEREAFTER HAD FILED A REVISED CLAIM OF DEPRECIATION AS PER WHICH ACCORDINGLY THE CIT(A) HA D RESTRICTED THE DISALLOWANCE TO RS.11,28,169, AS AGA INST RS.46,70,605/- DISALLOWED BY THE A.O. 44 55. SINCE ADMITTEDLY THE ISSUE IS IDENTICAL TO THAT IN GROUND NO.3 OF THE REVENUES APPEAL FOR A.Y 2008-09 IN ITA NO.33/2014 DEALT WITH US ABOVE, OUR DECISION RENDER ED THEREIN AT PARA 32 OF OUR ORDER WILL APPLY TO THE P RESENT GROUND, FOLLOWING WHICH WE UPHOLD THE ORDER OF THE LD.CIT(A) ALLOWING RELIEF ON ACCOUNT DEPRECIATION CLAIMED AT HIGHER RATE ON LIFE SAVING EQUIPMENTS ,AMOUNTING TO RS.35, 42,436/- GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IS DISMISSED. IN EFFECT THE APPEAL OF THE REVENUE IS DISMISSED. WE SHALL NOW TAKE UP THE CROSS OBJECTION FILED BY T HE ASSESSEE FOR A.Y 2009-10. CO NO.10/CHD/2014 (A.Y 2009-10) 56. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UND ER: 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 ACC OUNT BY RESORT TO PROVISIONS OF SECTION 36(1)(III) IGNOR ING THE FACT THAT THE ADVANCE WAS MADE FOR THE PURPOSE OF BUSINE SS. 57. IT WAS COMMON GROUND BETWEEN THE PARTIES THAT T HE ISSUE IN THE ABOVE GROUND WAS IDENTICAL TO THAT RA ISED IN GROUND NO.1 OF ASSESSES C.O. NO.9/CHD/2014, AND RE LATED 45 TO DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE A CT, IN RELATION TO PURPORTED NON BUSINESS ADVANCES MADE T O THE SAME PARTIES AS IN A.Y 2008-09 AS UNDER: SILVER OAK FOUNDATION RS.76,64,165/- ADV. FOR LAND RS.21,50,000/- 58. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT HIS ARGUMENT AGAINST THE SAID DISALLOWANCE UPHELD BY TH E CIT(A) WAS THE SAME AS IN A.Y 2008-09, THAT THE ASSESSEE H AD SUFFICIENT OWN INTEREST FREE FUNDS, IN THE FORM OF PROFIT FOR THE YEAR AMOUNTING TO RS.2.44 CRORES AS AGAINST THE IMPUGNED ADVANCES OF RS.98.14 LACS, FOR MAKING THE ADVANCES AND THE PRESUMPTION THEREFORE IS THAT THE ADVANCES HAVE BEEN MADE OUT OF OWN INTEREST FREE FU NDS. 59. SINCE ADMITTEDLY THE ISSUE IS IDENTICAL TO THAT IN GROUND NO.1 OF THE ASSESSES CROSS OBJECTION FOR A. Y 2008- 09 IN CO NO.9/2014 DEALT WITH US ABOVE, OUR DECISIO N RENDERED THEREIN AT PARA 41 OF OUR ORDER WILL APPLY TO THE PRESENT GROUND, FOLLOWING WHICH WE DELETE THE DISA LLOWANCE OF INTEREST OF RS.11,77,000/-. GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 46 60. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UND ER: 2. THAT HE WAS FURTHER NOT JUSTIFIED TO ARBITRARILY UPHOLD THE DISALLOWANCE AMOUNTING TO RS. 15,00,000/- PAID BY T HE RESPONDENT TO MR. RAJNEESH RAMITRA AS CONSULTATION FEES. THE ABOVE GROUND WAS NOT PRESSED BEFORE US. HENCE, THE SAME IS DISMISSED AS NOT PRESSED. THE CROSS OBJECTION OF THE ASSESSEE IS THEREFORE PARTLY ALLOWED. 61. WE SHALL NOW TAKE UP THE APPEAL OF THE REVENUE AND THE ASSESSES CROSS OBJECTION RELATING TO A.Y 2010-1 1. ITA NO.35/CHD/2014(A.Y. 2010-11): 62. GROUND NOS.1, 5 AND 6 BEING GENERAL IN NATURE NEED NO ADJUDICATION. 63. GROUND NO.2 RAISED BY THE REVENUE READS AS UNDE R: 2. THE LD CIT (A) HAS ERRED ON THE FACTS AND IN LA W IN DELETING ADDITION OF RS.2,50,00,000/- MADE U/S 68 O F 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 O F ACCOUNT. 64. IT WAS COMMON GROUND BETWEEN THE PARTIES THAT T HE ISSUE RAISED IN GROUND NO.2 AS ABOVE WAS SIMILAR AN D IN FACT IDENTICAL TO GROUND NO.2 RAISED IN REVENUES APPEAL IN ITA 47 NO.33/CHD/2014 FOR A.Y 2008-09 DEALT WITH US ABOVE. IT WAS POINTED OUT THAT THE ISSUE AROSE FROM THE DIFFERENC E OF CASH RECEIPTS AND THE AMOUNT OF CASH DEPOSITED IN BANK A S NOTED IN DOCUMENT A-2 FOUND DURING SEARCH. THAT DURING TH E IMPUGNED YEAR THE SAID DIFFERENCE WAS RS.2.50 CRORE S WHICH WAS ADDED BACK TO THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT. BOTH THE PARTIES CONTENDED THAT THEIR PLEADING S WERE IDENTICAL TO THAT MADE IN GROUND NO.2 OF ITA NO.33/CHD/2014 FOR A.Y 2008-09. 65. SINCE ADMITTEDLY IDENTICAL ISSUE HAS ALREADY BE EN DEALT WITH BY US IN REVENUES APPEAL FOR A.Y 2008-09 IN IT A NO.33/CHD/2014, OUR DECISION ON THE SAME RENDERED A T PARAS 21 TO 26 OF OUR ORDER ABOVE WILL APPLY TO THE PRESENT GROUND ALSO, FOLLOWING WHICH WE UPHOLD THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE OF RS.2.50 CRORES . THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS THEREFORE DISMISSED 66. GROUND NO.3 RAISED BY THE REVENUE READS AS UNDE R: 3. THE LD CIT (A) HAS ERRED ON THE FACTS AND IN LA W 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 WAS COMMON GROUND THAT THE ISSUE RAISED IN GROUND NO.3 ABOVE WAS IDENTICAL TO THAT RAISED IN GROUND NO.3 OF THE REVENUES APPEAL FOR A.Y 2008-09 IN ITA NO.33/CHD/2014 DEALT WITH US ABOVE AND RELATED TO E XCESS DEPRECIATION ALLEGEDLY CLAIMED BY THE ASSESSEE ON L IFE SAVING EQUIPMENTS. IT WAS POINTED OUT THAT THE BEFORE THE CIT(A),THE ASSESSEE HAD WITHDRAWN ITS CLAIM OF EXCE SS DEPRECIATION ON THE WDV OF ASSETS AS ON 31-03-2006 AND FOR THE ASSETS PURCHASED THEREAFTER HAD FILED A REVISED CLAIM OF DEPRECIATION AS PER WHICH ACCORDINGLY THE CIT(A) HA D RESTRICTED THE DISALLOWANCE TO RS.2,22,608/- AS AGA INST RS.31,69,177/- DISALLOWED BY THE A.O. 68. SINCE ADMITTEDLY THE ISSUE IS IDENTICAL TO THAT IN GROUND NO.3 OF THE REVENUES APPEAL FOR A.Y 2008-09 IN ITA NO.33/2014 DEALT WITH US ABOVE, OUR DECISION RENDER ED THEREIN AT PARA 32 OF OUR ORDER WILL APPLY TO THE P RESENT GROUND, FOLLOWING WHICH WE UPHOLD THE ORDER OF THE LD.CIT(A) ALLOWING RELIEF ON ACCOUNT DEPRECIATION CLAIMED AT HIGHER RATE ON LIFE SAVING EQUIPMENTS ,AMOUNTING TO RS.35, 42,436/- GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS DISM ISSED. 69. GROUND NO.4 RAISED BY THE REVENUE READS AS UNDE R: 4. THE LD CIT (A) HAS ERRED ON THE FACTS AND IN LA W IN 49 DELETING ADDITION OF RS.16,92,72,420/- MADE U/S 68 OF THE ACT SINCE THE ASSESSEE HAS FAILED TO EXPLAIN TH E ENTRIES MADE ON PAGE 4 OF THE ANNEXURE A-120 OF THE SEIZED MATERIAL. 70. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT ENTRIES AS UNDER HAD BEEN RECORDED AT PAGE NO. 4 OF DOCUM ENTA- 120 FOUND DURING SEARCH: 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 71. THE ASSESSEE WAS ASKED TO EXPLAIN THE SAID ENTR IES AND IT HAD SUBMITTED THAT THESE WERE VARIOUS ROUGH NOTI NGS BY THE ACCOUNTANT IN RESPECT OF 'THINGS TO DO', WHICH WAS EVIDENT FROM OTHER NOTINGS ON THE SAME PAGE AND THE SE NOTINGS PERTAINED TO AUDIT OBSERVATIONS. IT WAS ALS O SUBMITTED THAT THAT THESE ENTRIES WERE RELATABLE TO BALANCES OF THE BANK AS ON THAT DATE. THE ASSESSING OFFICER RECORDED THE STATEMENT OF DR. MANJARI BHARGAVA, WHO SE NAME WAS MENTIONED IN THE FIRST PAGE OF THE DIARY A ND SHE HAD EXPLAINED THAT SHE HAD ONLY WRITTEN HER NAME ON THE DIARY, BUT ENTRIES IN THE DIARY HAD NOT BEEN MADE B Y HER. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND ADDED ENTIRE AMOUNT OF RS. 50 16,92,72,420/- U/S 68 OF THE ACT. 72. THE LD.CIT(A) WENT THROUGH THE CONTENTS OF THE IMPUGNED DOCUMENTS AND NOTED THAT THE NOTINGS IN TH E SAME PERTAINED 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. HE, ALSO NOTED THA T FOR THE FIGURES MENTIONED IN THE SAID DOCUMENT WHICH FORMED THE BASIS OF THE ADDITION, THEY WERE SHOWN BY THE ASSES SEE TO BE REFLECTING THE BALANCES OF THE BANK ACCOUNTS AS PER THE BOOKS OF ACCOUNT. HE, THEREFORE, HELD THAT THE ADDI TION COULD NOT BE MADE ON THE BASIS OF SCRIBBLINGS OF SO ME STAFF MEMBER SINCE THE PERSON NAMED IN THE DIARY DR.MANOJ BHARGAVA HAD DENIED NOTING ANYTHING IN THE DIARY. T HE LD.CIT(A) HELD THAT IT WAS PROBABLY ONLY RECONCILIA TION OF AUDIT OBSERVATION REGARDING BANK BALANCES BY SOME S TAFF AND, THEREFORE, DELETED THE ADDITION MADE. THE RELE VANT FINDINGS OF THE LD.CIT(A) AT PARAS 6.3.1 TO 6.3.3 O F THE CIT(A) ARE AS UNDER: 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 STAF F MEMBER, WHOSE STATEMENT IN RESPECT OF VARIOUS ENTRI ES 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 O F 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 A T 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 RE GULAR (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 BANK 13,99,404 13,99,404 13,99,404 13,99,404 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 0062,081 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/ STATEMEN T 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. GROUND S OF APPEAL NOS. 5.1 TO 5.3 ARE ALLOWED. 52 73. BEFORE US THE LD. DR RELIED UPON THE FINDINGS O F THE AO THAT SINCE DR.MANOJ BHARGAVA, WHOSE NAME FOUND MENTIONED IN THE DIARY, HAD FAILED TO GIVE ANY SATI SFACTORY EXPLANATION OF THE ENTRY, THE ADDITION WAS RIGHTLY MADE. OUR ATTENTION WAS DRAWN TO PARA 6.2 OF THE AOS ORD ER AS UNDER|: 6.2 THE ASSESSEE REPLY IS DULY CONSIDERED, BUT NOT ACCEPTED BECAUSE ASSESSEE HAS FAILED TO GIVE ANY SATISFACTORY EXPLANATION REGARDING THESE ENTRIES. O N 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 ASS ESSEE NOT ACCEPTED BECAUSE HE HAS NOT GIVEN ANY SPECIFIC REPL Y ON THIS. IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION THES E ENTRIES WILL BE TREATED AS INCOME AMOUNTING TO RS. 16,92,72,410/- IS ADDED TO INCOME OF THE ASSESSEE C OMPANY 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 INAC CURATE PARTICULAR OF INCOME. 74. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED UPON THE ORDER OF THE CIT(A). 75. WE HAVE HEARD THE RIVAL CONTENTIONS CAREFULLY A ND PERUSED THE ORDERS OF AUTHORITIES BELOW. UNDOUBTEDL Y, THE ADDITION IN THE IMPUGNED CASE HAS BEEN MADE ON ACCO UNT OF ENTRIES NOTED IN DOCUMENT ANNEXURE A-120 AS UNDE R: 53 - 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 76. FURTHER IT IS NOT DENIED THAT THE DOCUMENTS MEN TIONED THE NAME OF DR.MANJARI BHARGAVA ON THE FIRST PAGE B UT IN HER STATEMENT MADE TO THE AO SHE HAS DENIED MAKING ANY ENTRY IN THE SAME AND HAS STATED THAT THE SAME MAY HAVE BEEN MADE BY SOME STAFF MEMBER. NO STATEMENT OF ANY STAFF MEMBER HAS BEEN RECORDED BY THE SEARCH TEAM. THE LD.CIT(A), WE FIND, HAS GONE THROUGH THE CONTENTS O F THE DOCUMENT, ANNEXURE A-120, AND HAS NOTED THAT IT ONL Y CONTAINS SOME GENERAL NOTINGS ABOUT THE REMINDERS O F THE WORK TO BE DONE, HOW THE WORK IS TO BE DONE AND SOM E OBSERVATION PROBABLY OF AUDIT. THE REVENUE HAS NOT DISPUTED THIS FACT BY POINTING OUT OTHERWISE FROM T HE DOCUMENT. AS FOR THE FIGURES NOTED IN THE DOCUMENT WHICH WERE THE BASIS OF ADDITION MADE, WE FIND THAT BEFOR E THE LD.CIT(A) THE ASSESSEE HAD EXPLAINED THE SAME TO B E PERTAINING TO BALANCES IN ITS VARIOUS BANK ACCOUNTS ON THE SAID DATES, HAD FILED A RECONCILIATION OF THE FIGUR ES REFLECTED IN THE BALANCE SHEET WITH THE BALANCES IN ITS BANK ACCOUNTS ON THAT DATE AND HAD SUBSTANTIATED THE SAM E WITH COPIES OF THE RELEVANT BANK STATEMENTS. THIS EXPLAN ATION 54 HAS ALSO NOT BEEN SHOWN TO BE FALSE BEFORE US. WE T HEREFORE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) HOL DING THE IMPUGNED FIGURES IN THE DOCUMENT TO BE MERE ROUGH NOTINGS MADE DURING AUDIT AND THUS DELETING THE ADD ITION MADE BY THE A.O. 77. THE ORDER OF THE LD.CIT(A) IN DELETING THE ADDI TION OF RS.16.92 CRORES IS, THEREFORE, UPHELD. GROUND OF APPEAL NO.4 IS ACCORDINGLY DISMISSED. IN EFFECT APPEAL OF THE REVENUE IS DISMISSED. WE SHALL NOW TAKE UP ASSESSES CROSS OBJECTION FOR A .Y 2010-11 CO NO.11/CHD/2014: ( A.Y 2010-11) 78. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UND ER: 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 ACC OUNT BY RESORT TO PROVISIONS OF SECTION 36(1)(III) IGNOR ING THE FACT THAT THE ADVANCE WAS MADE FOR THE PURPOSE OF BUSINE SS. 79. IT WAS COMMON GROUND BETWEEN THE PARTIES THAT T HE ISSUE IN THE ABOVE GROUND WAS IDENTICAL TO THAT RA ISED IN GROUND NO.1 OF ASSESSES C.O. NO.9/CHD/2014,AND REL ATED TO 55 DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT ,IN RELATION TO PURPORTED NON BUSINESS ADVANCES MADE TO THE SAM E PARTIES AS IN A.Y 2008-09 AS UNDER: SILVER OAK FOUNDATION RS.91,69,805/- PSIDC RS.21,50,000/- 80. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT HIS ARGUMENT AGAINST THE SAID DISALLOWANCE UPHELD BY T HE CIT(A) WAS THE SAME AS IN A.Y 2008-09, THAT THE ASS ESSEE HAD SUFFICIENT OWN INTEREST FREE FUNDS, IN THE FORM OF RESERVES FOR THE YEAR AMOUNTING TO RS.6.10 CRORES A S AGAINST THE IMPUGNED ADVANCES ADDITIONALLY MADE DURING THE YEAR OF RS.11 LACS, FOR MAKING THE ADVANCES AND THE PRESUMP TION THEREFORE IS THAT THE ADVANCES HAVE BEEN MADE OUT O F OWN INTEREST FREE FUNDS. 81. SINCE ADMITTEDLY THE ISSUE IS IDENTICAL TO THAT IN GROUND NO.1 OF THE ASSESSES CROSS OBJECTION FOR A. Y 2008- 09 IN CO NO.9/2014 DEALT WITH US ABOVE, OUR DECISIO N RENDERED THEREIN AT PARA 41 OF OUR ORDER WILL APPLY TO THE PRESENT GROUND, FOLLOWING WHICH WE DELETE THE DISA LLOWANCE OF INTEREST OF RS.11,03,376/-. GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS 56 ALLOWED. 82. GROUND NO.2 RAISED BY THE ASSESSEE IN CROSS OBJ ECTION READS AS UNDER: 2. THAT HE WAS FURTHER NOT JUSTIFIED TO ARBITRARIL Y ADD A SUM OF RS.11,00,000/- ON ACCOUNT OF DIFFERENCE BETWEEN AUDITED TRIAL BALANCE AND TRIAL BALANCE FOUND DURIN G THE COURSE OF SEARCH AS ANNEXURE A-110. 83. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT AS PER PROVISIONAL TRIAL BALANCE IN ANNEXURE A-110, GROSS RECEIPTS WERE OF RS. 21.24 CRORES, BUT AS PER THE PROFIT AND LOSS ACCOUNT, THE RECEIPTS WERE ONLY OF RS. 17.93 CRORES AND SO THERE WAS A DIFFERENCE OF RS. 3.31 CRORES. THE ASSE SSEE HAD EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THAT SALE OF MEDICINES/IMPLANT OF RS.3.20 CRORES WAS REF LECTED SEPARATELY AS MEDICINES CONSUMED. THE ASSESSING OFF ICER FOUND THAT EVEN IF THE SAID RECEIPTS WERE ACCOUNTED FOR, THERE WOULD BE DIFFERENCE OF RS.11,00,000/- AND SO HE MADE ADDITION OF THIS AMOUNT OF RS. 11,00,000/-. 84. THE LD.CIT(A) UPHELD THE ORDER OF THE AO. 85. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE REIT ERATED THE CONTENTIONS MADE BEFORE THE LOWER AUTHORITIES T HAT THE GROSS RECEIPTS OF RS.21.24 CRORES WERE MENTIONED IN THE PROVISIONAL TRIAL BALANCES AND, THEREFORE, WAS A PR OVISIONAL 57 FIGURE AND EVEN OTHERWISE THE DIFFERENCE BETWEEN TH E ACTUAL RECEIPTS RECORDED BY THE ASSESSEE AND PROVISIONAL F IGURE WAS MEAGRE BEING RS. 11 LACS ONLY AND, THEREFORE, WARR ANTED NO ADDITION. THE LD. DR RELIED UPON THE ORDER OF THE C IT(A). 86. WE HAVE HEARD THE RIVAL CONTENTIONS. THE ISSUE RELATES TO ADDITION MADE ON ACCOUNT OF DIFFERENCE OF GROSS RECEIPTS AS REFLECTED IN THE PROVISIONAL TRIAL BALANCE SEIZE D FROM THE ASSESSEES PREMISES BEING ANNEXURE A-110 AND THAT R EFLECTED IN THE PROFIT & LOSS ACCOUNT AMOUNTING TO RS.11 LAC S. SINCE IT IS AN ADMITTED FACT THAT THE DOCUMENT ANNEXURE A -110 WAS A PROVISIONAL TRIAL BALANCE OF THE ASSESSEE, TH E ONUS RESTED ON THE ASSESSEE TO EXPLAIN THE DIFFERENCE BE TWEEN THE GROSS RECEIPTS REFLECTED IN THE SAME AND THAT ACCOU NTED FOR IN THE BOOKS OF THE ASSESSEE. WHATSOEVER AND HOWSOE VER MEAGRE THEY WERE THE ASSESSEE WAS REQUIRED TO GIVE A PLAUSIBLE EXPLANATION FOR THE SAME SINCE THE RECORD INGS IN THE PROVISIONAL TRIAL BALANCE WAS ADMITTEDLY MADE B Y THE ASSESSEE ITSELF AND, THEREFORE, THERE WAS REASON BE HIND RECORDING THE GROSS RECEIPTS AT RS.21.24 CRORES WHI CH WAS BEST KNOWN TO THE ASSESSEE ONLY. IT COULD NOT HAVE BEEN BRUSHED ASIDE AS BEING MERE PROVISIONAL FIGURE AND DIFFERENCE BETWEEN THE PROVISIONAL AND ACTUAL FIGUR E BEING 58 MEAGRE. THE ACTION OF THE LD.CIT(A), THEREFORE, IN CONFIRMING THE ADDITION OF RS.11 LACS ON ACCOUNT OF THE SAME I S, THEREFORE, UPHELD. GROUND NO.2 RAISED BY THE ASSESSEE IS DISMISSED. THE CROSS OBJECTION FILED BY THE ASSESSEE IS PARTL Y ALLOWED. 87. WE SHALL NOW DEAL WITH REVENUES APPEAL AND ASSE SSES CROSS OBJECTION PERTAINING TO A.Y 2011-12.WE SHALL FIRST TAKE UP THE REVENUES APPEAL. ITA NO.36/CHD/2014(A.Y.2011-12): 88. GROUND NOS.1, 9 AND 10 RAISED BY THE REVENUE IN THIS APPEAL ARE GENERAL IN NATURE AND, HENCE NEED NO ADJUDICATION. 89. GROUND NO.2 RAISED BY THE REVENUE READS AS UNDE R: 2. THE LD CIT (A) HAS ERRED ON THE FACTS A ND 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. IT WAS COMMON GROUND BETWEEN THE PARTIES THAT T HE ISSUE RAISED IN GROUND NO.2 AS ABOVE WAS SIMILAR AN D IN FACT 59 IDENTICAL TO GROUND NO.2 RAISED IN REVENUES APPEAL IN ITA NO.33/CHD/2014 FOR A.Y 2008-09 DEALT WITH US ABOVE. IT WAS POINTED OUT THAT THE ISSUE AROSE FROM THE DIFFERENC E OF CASH RECEIPTS AND THE AMOUNT OF CASH DEPOSITED IN BANK A S NOTED IN DOCUMENT A-2 FOUND DURING SEARCH. THAT DURING TH E IMPUGNED YEAR THE SAID DIFFERENCE WAS RS.35 LACS WH ICH WAS ADDED BACK TO THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT. BOTH THE PARTIES CONTENDED THAT THEIR PLEADINGS WER E IDENTICAL TO THAT MADE IN GROUND NO. 2 OF ITA NO.33/CHD/2014 FOR A.Y 2008-09. 91. SINCE ADMITTEDLY IDENTICAL ISSUE HAS ALREADY BE EN DEALT WITH BY US IN REVENUES APPEAL FOR A.Y 2008-09 IN IT A NO.33/CHD/2014, OUR DECISION ON THE SAME RENDERED A T PARAS 21 TO 26 OF OUR ORDER ABOVE WILL APPLY TO TH E PRESENT GROUND ALSO, FOLLOWING WHICH WE UPHOLD THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE OF RS.35 LACS . THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS THEREFORE DISMISSED 92. GROUND NO.3 RAISED BY THE REVENUE READS AS UNDE R: 3. THE LD CIT (A) HAS ERRED ON THE FACTS 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 WAS COMMON GROUND THAT THE ISSUE RAISED IN GROUND NO.3 ABOVE WAS IDENTICAL TO THAT RAISED IN GROUND NO.3 OF THE REVENUES APPEAL FOR A.Y 2008-09 IN ITA NO.33/CHD/2014 DEALT WITH US ABOVE AND RELATED TO E XCESS DEPRECIATION ALLEGEDLY CLAIMED BY THE ASSESSEE ON L IFE SAVING EQUIPMENTS. IT WAS POINTED OUT THAT THE BEFORE THE CIT(A), THE ASSESSEE HAD WITHDRAWN ITS CLAIM OF EXCESS DEP RECIATION ON THE WDV OF ASSETS AS ON 31-03-2006 AND FOR THE A SSETS PURCHASED THEREAFTER HAD FILED A REVISED CLAIM OF DEPRECIATION AS PER WHICH ACCORDINGLY THE CIT(A) HA D RESTRICTED THE DISALLOWANCE TO RS.(3,10,449/-) AS A GAINST RS.32,30,593/-/- DISALLOWED BY THE A.O. 94. SINCE ADMITTEDLY THE ISSUE IS IDENTICAL TO THAT IN GROUND NO.3 OF THE REVENUES APPEAL FOR A.Y 2008-09 IN ITA NO.33/2014 DEALT WITH US ABOVE, OUR DECISION RENDER ED THEREIN AT PARA 32 OF OUR ORDER WILL APPLY TO THE P RESENT GROUND, FOLLOWING WHICH WE UPHOLD THE ORDER OF THE LD.CIT(A) ALLOWING RELIEF ON ACCOUNT DEPRECIATION CLAIMED AT HIGHER RATE ON LIFE SAVING EQUIPMENTS ,AMOUNTING TO RS.32, 30,593/- GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS DISMISSED. 61 95. GROUND NO.4 RAISED BY THE REVENUE READS AS UNDE R: 4. THE LD CIT (A) HAS ERRED ON THE FACTS A ND 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. BRIEFLY STATED, THE AO NOTED FROM A SEIZED DOCU MENT ANNEXURE A-95 PAGE NO.84, THAT THE CASH COLLECTION REFLECTED THEREIN WAS OF RS.10,01,05,101/-. HE FURTHER NOTED THAT IN THE BOOKS OF ACCOUNT THE SAME WAS REFLECTED AT RS.9,68,66,118/- ONLY AND SO THE AO PROPOSED TO ADD THE DIFFERENCE OF RS.32,38,983/- (10,01,05,101 9,68,6 7,118). THE ASSESSEE WHEN CONFRONTED WITH THE SAME SUBMITTE D THAT THE IMPUGNED DOCUMENT WAS A HANDWRITTEN DOCUMENT REFLECTING THE COLLECTION AS PER THE COLLECTION REG ISTER AS ON THE DATE OF SEARCH, DEPICTING THE RECEIPTS AS COPI ED FROM THE BILLING SOFTWARE SUMMARY. IT WAS CONTENDED THAT THE SAID SOFTWARE HAD VARIOUS FLAWS DUE TO WHICH THE SOFTWAR E WAS USED ONLY FOR BILLING PURPOSE AND NOT ACCOUNTING PU RPOSE AND, THEREFORE, THE AMOUNT REFLECTED ON THE SOFTWAR E COULD NOT BE TAKEN TO BE SACROSANCT. THE AO WAS NOT SATIS FIED WITH THE REPLY OF THE ASSESSEE AND MADE AN ADDITION OF RS.32,28,983/- ON THE GROUND THAT THE ENTIRE RECEIP TS WERE NOT DECLARED IN THE BOOKS OF ACCOUNT. 62 97. BEFORE THE LD.CIT(A) THE ASSESSEE REITERATED TH E CONTENTIONS MADE BEFORE THE AO. THE LD.CIT(A) AFTER CONSIDERING THE CONTENTIONS OF THE ASSESSEE AND ON GOING THROUGH THE IMPUGNED DOCUMENT DELETED THE ADDITION MADE ON FINDING THAT THE BILLING SOFTWARE SUMMARY, WHICH WAS COPIED IN THE SEIZED DOCUMENT, RELATED/PERTAINED TO THE PRECEDING YEAR I.E. YEAR ENDING 31.3.2010 AND, THER EFORE, WAS NOT RELEVANT FOR THE IMPUGNED YEAR AT ALL. HE F URTHER NOTED DISCREPANCY IN THE BILLING SOFTWARE PRINTOUT AS HAVING ADDED THE FIGURE OF REFUND TO THE COLLECTION MADE W HILE REFLECTING THE NET COLLECTION FROM OPD. HE, THEREFO RE, HELD THAT THE DATA REFLECTED IN THE BILLING SOFTWARE PRI NTOUT COULD NOT BE RELIED UPON AND, THUS DELETED THE ADDITION M ADE. 98. BEFORE US THE LD. DR RELIED UPON THE ORDER OF T HE AO, WHILE THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON T HE ORDER OF THE CIT(A). 99. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES. THE ISSUE BEFORE US RELATES TO DIFFERENCE IN CASH RECEI PTS AS RECORDED IN A DOCUMENT SEIZED DURING SEARCH, NUMBER ED ANNEXURE-95. PAGE 84 AND THAT AS SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BEING RS.10,01,05,101/- AND RS.9,68,66,118/- RESPECTIVELY, RESULTING IN A DIFFE RENCE OF 63 RS.32,38,983/-. THE ASSESSEE HAS EXPLAINED THE DOCU MENT TO BE HANDWRITTEN/COPIED EXTRACT OF THE RECEIPTS OF TH E ASSESSEE AS REFLECTED IN THE BILLING SOFTWARE SUMMARY. THE R EVENUE HAS NOT DISPUTED THIS FACT AND THE SAME IS EVIDENT FROM THE COPIES OF THE SAID TWO DOCUMENTS PLACED BEFORE US A T PAPER BOOK PAGE NO.38 AS BEING THE BILLING SOFTWARE SUMMA RY AS UNDER: 366 GE10277 31/03/2010 18:51 C 300 PARMOD KUMA R 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 ADMISSI ON 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 REF UND RF002298 IP013683 31/03/2010 10:56 C -1,000.00 REF UND 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 CGH SGC 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.8,80,8 93.50 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-CRED IT CARD ADVANCE AMOUNT. :2491471,00 64 AND ANNEXURE-95, PAGE 84, PLACED AT PAPER BOOK PAGE NO.39, THE CONTENTS OF WHICH ARE REPRODUCED AS UNDE R: TOTAL COLLECTION CASH RS.10,01,05,101.60 CHEQUE RS. 20,15,258 DRAFT RS. 31,05,000 CREDIT CARD RS. 80,40,853.50 TOTAL OPD COLLECTION 16724217.10 REFUNDS 286939.00 NET 18928749.10 TOTAL IPD COLLECTION 98425276 REFUNDS 4087812 NET 94337464 100. IT IS EVIDENT THAT THE SUMMARY OF TOTAL RECEI PTS OF THE ASSESSEE AS RECORDED IN THE SOFTWARE WERE NOTED IN THE IMPUGNED DOCUMENT. THE DEPARTMENT NOTED THAT WHILE THE CASH RECEIPTS SHOWN THEREIN AMOUNTED TO RS.10 CRORE S ODD, THE ASSESSEE HAD SHOWN RECEIPTS IN ITS BOOKS OF RS. 9.68 CRORES ONLY AND ON ACCOUNT OF ABSENCE OF ANY PLAUS IBLE EXPLANATION ADDED BACK THE DIFFERENCE AS UNRECORDED CASH RECEIPTS. 101. ON GOING THROUGH THE ORDER OF THE LD.CIT(A) DELETING THE ADDITION MADE, WE FIND THAT ONE OF THE REASON F OR DELETING THE ADDITION WAS THE FACT NOTED BY THE CIT (A) THAT THE BILLING SOFTWARE SUMMARY RELATED TO THE PERIOD ENDING 31.3.2010 PERTAINING TO ASSESSMENT YEAR 2010-11 AND THUS DID NOT PERTAIN TO THE IMPUGNED YEAR I.E. 2 011-12. THE 65 FINDINGS OF THE LD.CIT(A) AT PARA 6.3.1 OF HIS ORDE R ARE AS UNDER: 6.3.1 I HAVE PERUSED THE RELEVANT PAGE OF ANNEXURE A-95, WHICH IS A HANDWRITTEN PAGE, ON WHICH CASH COLLECTI ON 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 H AVE BEEN IMPORTED FROM THE PRINTOUT OF THE BILLING SOFTWARE. THE PRINTOUT OF THE BILLING SOFTWARE WAS SUBMITTED BEFO RE THE ASSESSING OFFICER ALSO AND A PERUSAL OF THIS PRINTO UT REVEALS THAT THE PRINTOUT PERTAINS TO THE YEAR ENDING ON 31 .03.2010 AND SO NONE OF THE FIGURES MENTIONED ON THIS PAGE A RE RELEVANT TO THE YEAR UNDER CONSIDERATION I.E. F.Y. 2010-11 AND ADDITION COULD NOT HAVE BEEN MADE IN THIS YEAR ON T HE BASIS OF NOTINGS ON THIS PAGE. 102. THIS FACT THAT THE NOTINGS IN THE BILLING SOFT WARE SUMMARY SHEET PERTAINED TO FINANCIAL YEAR 2010-11 H AS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US AND PERU SAL OF THE SUMMARY SHEET AS REPRODUCED ABOVE REAFFIRMS THE FINDINGS OF THE LD.CIT(A) ALSO. THEREFORE, WE AGREE WITH THE LD.CIT(A) THAT THE RECEIPTS NOTED FROM THE SUMMARY SHEET IN DOCUMENT A-95, PAGE 84 DID NOT PERTAIN TO THE IMPUG NED YEAR AND, THEREFORE, NO ADDITION ON ACCOUNT OF ANY DIFFERENCE IN THE CASH RECEIPTS RECORDED IN THE SAME AND AS PE R THE BOOKS OF ACCOUNT WAS LIABLE TO BE MADE. EVEN OTHERWISE ON CAREFUL PERUSAL OF THE SUMMARY A S PER THE BILLING SOFTWARE SUMMARY SHEET, WE FIND THA T THERE IS NO MAJOR DIFFERENCE IN THE CASH RECEIVED AS REFLECT ED IN THE 66 COMPUTER GENERATED SUMMARY AND THAT RECORDED IN THE BOOKS OF ACCOUNT. THE FIRST SUMMARY GIVES THE BREAK -UP OF THE TOTAL RECEIPTS IN VARIOUS MODES AS UNDER: CASH = RS.10,01,05,101/- CHEQUE = RS. 20,15,258/- DRAFT = RS. 31,05,000/- CREDIT CARD = RS. 80,40,843/- ------------------ ---- RS.11,32,66,202/ - ------------------ ----- 103. THE BREAKUP OF THE AFORESAID COLLECTION FROM OPD AND IPD IS GIVEN BELOW: OPD COLLECTIONS CASH = RS.1,76,25,384/- CHEQUE = RS. 1,17,471/- DRAFT = RS. 3,05,000/- CREDIT CARD = RS. 8,80,893/- = ------------------ RS.1,89,28,749/- ------------------ 104. SIMILARLY, THE IPD COLLECTIONS ARE GIVEN AS U NDER: CASH = RS.8,24,79,717/- CHEQUE = RS. 18,97,787/- DRAFT = RS.2,98,00,000/- CREDIT CARD = RS. 71,59,960/- ---------------- TOTAL = RS.9,43,37,461/- ---------------- 105. ON TOTALING EACH MODE OF COLLECTIONS FROM TH E OPD AND IPD , THE SAME TALLIES WITH THE TOTAL COLLECTIO NS FOR DIFFERENT MODES AS REFLECTED ABOVE(1,89,28,749 + 9,43,37,461 = 11,32,66,210). THE TOTAL OF THE OPD A ND IPD 67 COLLECTIONS AS AGGREGATED ABOVE BEING RS.1,89,28,74 9/- AND RS.9,43,37,464/-, WE FIND ARE REFLECTED AGAINST THE TOTAL O.P.D COLLECTION NET / TOTAL I.P.D COLLECTION NET IN THE SUMMARY SHEET AS UNDER: 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 THE SAME COLUMN ARE MENTIONED REFUNDS OF RS.2,86,939/- AND RS.40,87,812/- IN OPD AND IPD AN D THE NET COLLECTION AFTER REDUCING REFUNDS BEING NET 18928149.10 AND NET 9433746400 RESPECTIVELY ,MEANING THEREBY THAT THE TOTAL COLLECTIONS REFLECTING CASH, CHEQUE, DRAFT, E TC. RECORDED IN ANNEXURE -95, PAGE 84 ARE INCLUSIVE OF THESE REF UNDS ,WHICH HAVE TO BE REDUCED, THEREFORE, TO ARRIVE AT THE NET CASH COLLECTION. THE REFUNDS SO REFLECTED IN THE SU MMARY SHEET AMOUNT TO APPROXIMATELY RS.42 LACS(OPD 2LACS + IPD 40LACS) AND DIFFERENCE BETWEEN THE CASH COLLECTED A S RECORDED IN THE DOCUMENT/SUMMARY SHEET AND THAT REC ORDED IN THE BOOKS OF ACCOUNT IS APPROXIMATELY RS.32 LACS AND, THEREFORE, WHAT EMERGES, THEREFORE, IS THAT THERE I S NO SHORT COLLECTIONS IN CASH RECORDED IN THE BOOKS OF THE AS SESSEE, IN FACT, HIGHER CASH COLLECTION RECORDED AND FOR THIS REASON ALSO, THERE IS NO NEED FOR MAKING ANY ADDITION ON A CCOUNT OF UNACCOUNTED CASH COLLECTIONS MADE FROM OPD/IPD. 68 THE ORDER OF THE CIT(A), THEREFORE, DELETING THE AD DITION IS UPHELD. GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IS DISMISSED. 106. GROUND OF APPEAL NO.5 RAISED BY THE REVENUE R EADS AS UNDER: 5. THE LD CIT (A) HAS ERRED ON THE FACTS A ND 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. 107. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT TH E ASSESSING OFFICER HAD MADE ADDITION OF RS.28,33,000/- ON THE BASIS OF FIGURES RECORDED AT PAGE NO. 19 OF ANNEXUR E A-127, THE NOTINGS ON THIS PAGE WERE AS UNDER: '7,05,000 4,48,000 1,00,000 7,26,000 1,36,000 7,18,000 = 28,50' THE ASSESSEE HAD SUBMITTED BEFORE THE ASSESSING OFFICER THAT IT WAS AN UNDATED PAGE WITH SOME ROUGH CALCULATIONS AND SO IT WAS NOT POSSIBLE TO RECONCIL E THE SAME. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE APPELLANT AND ADDED THE SUM TOTA L OF THE 69 FIGURES MENTIONED ON THIS PAGE OF RS. 28,33,000/-,T O THE INCOME OF THE ASSESSEE. 108. BEFORE THE LD.CIT(A) THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE LD.CIT(A) DELET ED THE ADDITION SO MADE ON FINDING THAT THE ENTRIES WERE M ERE SCRIBBBLINGS AND, THEREFORE, COULD NOT BE SAID TO BE UNACCOUNTED INCOME OR RECEIPTS OF THE ASSESSEE. THE RELEVANT FINDINGS OF THE CIT(A) AT PARA 7.4 OF HIS ORDER ARE AS UNDER: 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 O F THIS ANNEXURE ARE RELATABLE TO THE BILLS ISSUED BY M/S SILVER OAK MEDICOS. THE ADDITION MADE ON THIS ACCOU NT IS ACCORDINGLY DELETED. GROUND OF APPEAL NO. 5(B) I S ALLOWED. 109. BEFORE US, THE LD. DR RELIED UPON THE ORDER O F THE AO, 70 WHILE THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON T HE ORDER OF THE CIT(A). 110. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREF ULLY GONE THROUGH THE ORDER OF THE CIT(A). WE HAVE NOTED THAT THE LD.CIT(A) ON PERUSING THE DOCUMENT NOTED THAT WHILE THE NOTINGS ON OTHER PAGES OF THE IMPUGNED ANNEXURE A- 127, WERE RELATABLE TO CERTAIN BILLS ISSUED BY THE PROPR IETORSHIP CONCERN OF DR.MANJARI BHARGAVA, THE ENTRIES MADE O N THE IMPUGNED DOCUMENT I.E. PAGE 19 OF ANNEXURE A-127, W ERE NEITHER RELATABLE TO THE ENTRIES MADE ON OTHER PAGE S OF THE DOCUMENT, NOR DID THE FIGURES DEPICT ANYTHING ,WITH THE TOTAL ALSO NOT TALLYING. THE CIT(A) HAS FOUND THAT THIS A NNEXURE WAS MAINTAINED BY SOME EMPLOYEES WHOSE STATEMENT WA S NOT RECORDED DURING SEARCH OR POST SEARCH AND SINCE NOT HING CAN BE DERIVED FROM THESE ENTRIES, HE TREATED THE SAME AS MERE SCRIBBLING. 111. THE ABOVE FINDINGS OF THE CIT(A) HAVE NOT BEE N CONTROVERTED BY THE REVENUE BEFORE US. THE REVENUE HAS NOT BEEN ABLE TO GIVE ANY MEANING TO THE NOTINGS MADE I N THE SAID DOCUMENT, NOR HAS IT BEEN ABLE TO RELATE IT TO ANY OTHER PAGE OF THE IMPUGNED DOCUMENT. THE ORDER OF THE CIT (A) ,THEREFORE, DELETING THE ADDITION SO MADE OF RS. 28 .33 LACS, 71 TREATING THEM AS ROUGH NOTINGS ,WE HOLD, CALLS FOR NO INTERFERENCE ON OUR PART. GROUND NO.5 RAISED BY THE REVENUE IS, THEREFORE, DISMISSED. 112 GROUND OF APPEAL NO.6 RAISED BY THE REVENUE RE ADS AS UNDER: 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. 113. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT TH E ASSESSING OFFICER NOTICED SOME ENTRIES AT PAGES OF ANNEXURE A -21, WHICH WAS A REGISTER. THE ASSESSEE HAD EXPLAINED T HAT THIS ANNEXURE WAS MAINTAINED BY THE STAFF AND REFLECTED DETAILS OF PAYMENTS RECEIVED FROM ECHS/ CGHS PATIENTS ON AC COUNT OF BILLING DONE BY THE APPELLANT FOR MEDICINES AND OTHER PAYMENTS RECEIVED BY SISTER CONCERNS. THE ASSESSING OFFICER WAS ALSO CONVEYED THAT THE AMOUNTS REFLECTED WERE V ERIFIABLE WITH THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER W AS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND MADE ADDITION OF RS. 60,74,000/-, WHICH WAS SUM OF THE ' PROFIT' COLUMN OF THIS REGISTER. 72 114. THE LD.CIT(A) DELETED THE ADDITION OBSERVING AS UNDER: 8.3.1 THE APPELLANT HAS EXPLAINED THAT FOR ECHS/ CGHS PATIENTS, TREATED BY THE APPELLANT HOSPITAL, T HE BILLS ARE ISSUED ON VARIOUS COUNTS LIKE OPD, SURGER Y, 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 PAT IENT- 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 ENT RIES WERE MADE BY SOME STAFF MEMBER, PROBABLY FOR THE PURPOSES OF BIFURCATION OF RECEIPTS (FROM ECHS/ CGH S) AMONG VARIOUS CONCERNS CARRIED ON BY THE GROUP. THI S REGISTER WAS MAINTAINED BY SOME EMPLOYEE, WHO COULD HAVE EXPLAINED THE NOTINGS ON THIS REGISTER, BUT TH E EXPLANATION/ STATEMENT OF THE PERSON, WHO HAD MADE THESE NOTINGS, WAS NOT RECORDED AT THE TIME OF SEAR CH 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 P ROFIT, THE PROFIT DECLARED IN M/S ANVIT ENTERPRISES AND M/S SI LVER 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 COR RECT, 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 ADDIT ION PARTICULARLY BECAUSE THE AMOUNTS ARE RECEIVED THROU GH CHEQUES FROM ECHS/ CGHS AND SO CANNOT REMAIN UNACCOUNTED AND ALSO BECAUSE THESE ARE MERE BIFURCA TION 73 OF RECEIPTS AMONG VARIOUS CONCERNS OF THE GROUP. MO REOVER, THE CLAIM OF THE APPELLANT THAT THESE AMOUNTS ARE D ULY 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 T HIS DISCUSSION, ADDITION MADE ON THIS ACCOUNT IS DELETE D. GROUND OF APPEAL NO. 5(C) IS ALLOWED. 115. BEFORE US THE LD. DR RELIED UPON THE ORDER OF THE AO AND THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE CIT(A). 116. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE A LSO GONE THROUGH THE ORDER OF THE CIT(A). WE FIND THAT THE C IT(A) HAS GIVEN A FACTUAL FINDING THAT THE REGISTER CONTAINS DETAILS OF RECEIPTS FROM ECHS/CGHS WHICH WAS ALL RECEIVED BY W AY OF CHEQUE DULY ACCOUNTED FOR IN THE BOOKS OF THE ASSES SEE AND ITS SISTER CONCERNS. THE SAME HAS NOT BEEN CONTROVE RTED BY THE REVENUE BEFORE US. THIS ALONE, WE FIND ,IS SUF FICIENT FOR DELETING THE ADDITION MADE, AS RIGHTLY DONE BY THE CIT(A). 117. FURTHER, WE FIND, THAT THE LD.CIT(A) HAS ALSO GIVEN A FINDING THAT THE REGISTER CONTAINED MERELY A BIFURC ATION OF THE RECEIPTS ON VARIOUS COUNTS LIKE MEDICINES, MRI, IMPLANT, CT SCAN AND THE LAST COLUMN WAS PROFIT. THE CIT(A) HAS ALSO GIVEN A FINDING THAT THE TOTAL OF THE PROFIT C OLUMN HAS BEEN REFLECTED BY WAY OF PROFITS OF M/S ANVIT ENTER PRISES AND M/S SILVER OAK MEDICOS. THE AFORESAID FACTUAL FINDI NGS OF 74 THE LD.CIT(A) HAVE ALSO REMAINED UNCONTROVERTED B EFORE US. IN VIEW OF THE SAME, WE DO NOT FIND ANY REASON T O INTERFERE IN THE ORDER OF THE CIT(A) DELETING THE A DDITION OF RS.60.74 LACS. GROUND OF APPEAL NO.6 IS, THEREFORE, DISMISSED. 118. GROUND NO.7 RAISED BY THE REVENUE READS AS UN DER: 7. THE LD CIT (A) HAS ERRED ON THE FACTS A ND 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. 119. BRIEF FACTS, AS STATED IN THE CIT(A)S ORDER A RE THAT, THIS ANNEXURE (WHICH WAS A REGISTER) CONTAINED DETAILS O F ADVANCES RECEIVED FROM VARIOUS PATIENTS COVERED BY ECHS/ CGHS AND ALSO THE DETAILS OF PAYMENTS RECEIVED FROM ECGS/ CGHS. THE ASSESSEE HAD CLAIMED BEFORE THE ASSESSING OFFICER THAT THE RECEIPTS WERE DULY REFLECTED IN TH E BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY, BUT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSES SEE AND MADE ADDITION OF SUM TOTAL OF THE AMOUNT OF THE ADV ANCES, ENTERED IN THIS DOCUMENT AMOUNTING TO RS.36,03,000/ -. 120. THE LD.CIT(A) DELETED THE ADDITION HOLDING AS UNDER: 75 9.3.1 A PERUSAL OF THIS ANNEXURE REVEALS THAT IT C ONTAINS DETAILS OF ADVANCES RECEIVED FROM VARIOUS ECHS/ CGH S 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 T HAT THE AMOUNTS ARE DULY REFLECTED IN THE BOOKS OF ACCOUNTS HAS NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. THE ADD ITION MADE ON THIS ACCOUNT IS ACCORDINGLY DELETED. GROUND OF APPEAL NO. 5(D) IS ALLOWED. 121. THE LD. DR RELIED UPON THE ORDER OF THE AO, WH ILE THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER O F THE CIT(A). 122. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE ORDERS OF AUTHORITIES BELOW. THE FACTUAL FINDIN GS OF THE LD.CIT(A) THAT THE ANNEXURE REVEALED ADVANCES RECEI VED FROM ECHS/CGHS PATIENTS WHICH WERE RECEIVED BY WAY OF CHEQUES, HAS NOT BEEN CONTROVERTED BY THE REVENUE. THE LD.CIT(A) HAS NOTED THE ASSESSEES CLAIM THAT THE A MOUNTS WERE DULY REFLECTED BOOKS OF ACCOUNT HAS REMAINED UNCONTROVERTED BY THE AO. THE LD. DR WAS UNABLE TO POINT OUT ANY INFIRMITY IN THE ORDER OF THE CIT(A), NOR H E WAS ABLE TO CONTROVERT THE FACTUAL FINDINGS OF THE CIT(A). W E, THEREFORE, FIND NO REASON TO INTERFERE IN THE ORDER OF THE CIT(A). GROUND OF APPEAL NO.7 RAISED BY THE REVENUE IS 76 DISMISSED. 123. GROUND OF APPEAL NO.8 RAISED BY THE REVENUE IS AS UNDER: 8. THE LD CIT (A) HAS ERRED ON THE FACTS AND IN LA W 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. 124. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT AN AMOUNT OF RS. 45,17,000/- WAS SEIZED FROM THE PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARCH AND SEIZURE OP ERATION. THE ASSESSING OFFICER NOTICED THAT THE CASH IN HAND AS PER ANNEXURE A-116 WAS MUCH LESS THAN THE AMOUNT FOUND OF RS. 45,80,420/- AND SO HE SOUGHT THE EXPLANATION ON THE ISSUE. THE ASSESSEE HAD EXPLAINED THAT 'A-L 16' WAS A PETTY CASH BOOK OF THE COMPANY AND THE CASHIER WAS HANDIN G OVER CASH EVERYDAY TO DR. AKHIL BHARGAVA FOR KEEPING THE MONEY IN CURRENCY CHEST AND THIS FACT WAS RELATABLE TO AN NEXURE A- 2, IN WHICH EQUAL AMOUNT HAD BEEN ENTERED AS IN A-116. TH E ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLAN ATION OF THE ASSESSEE AND MADE ADDITION OF THE AMOUNT SEIZED OF RS. 45,17,000/-. 125. THE CIT(A) DELETED THE ADDITION HOLDING AS UND ER: 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 NOT ICED THAT AS ON THE DATE OF SEARCH I.E. 21.09.2010, THE ENTRI ES HAD BEEN MADE IN TALLY ACCOUNTS ONLY UPTO 01.09.2010. A S PER THESE COMPUTERIZED ACCOUNTS, CASH IN HAND AS ON 01.09.2010 WAS OF RS. 62,80,060/-. THE APPELLANT HA S 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 R S. 61,85,666/-, WHICH SHOULD HAVE BEEN COMPARED BY THE ASSESSING OFFICER WITH THE CASH FOUND DURING THE SE ARCH, WHICH HAS NOT BEEN DONE. IN FACT, THE CASH FOUND WA S MUCH LESS THAN THE CASH IN HAND AS PER THE BOOKS OF ACCO UNTS. THE ENTRIES IN THE BOOKS OF ACCOUNTS ARE NOT CONTRO VERTED BY THE ASSESSING OFFICER. AS THE CASH FOUND WAS LES S THAN CASH IN HAND REFLECTED IN THE BOOKS OF ACCOUNTS, TH E CASH FOUND/ SEIZED CANNOT BE TREATED AS UNACCOUNTED. HEN CE, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT RIGHT IN MAKING THE ADDITION OF THE SEIZED CASH AND SO THE ADDITION MAD E ON THIS ACCOUNT IS DELETED. GROUND OF APPEAL NO. 7 IS ALLOW ED. 126. BEFORE US LD.DR RELIED ON THE ORDER OF THE AO , WHILE THE LD.COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A) 127. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW. THE LD. CIT(A) HAS GIVEN FACTUAL FINDINGS AFTER GOING THROUGH THE DOCUMENTS BEFORE HIM THAT THE IMPUGNED DOCUMENT ,A- 78 116,WAS PETTY CASH BOOK, THE CASH REFLECTED IN WHIC H WAS HANDED OVER TO DR.AKHIL BHARGAVA AND WAS RELATABLE TO ENTRIES MADE IN A DIARY MAINTAINED BY HIM, ANNEXURE A-2. THIS FINDING HAS NOT BEEN CONTROVERTED BY THE REVEN UE BEFORE US. 128. THE LD.CIT(A) HAS ALSO FOUND THAT THE CASH FO UND WAS FAR LESS THAN THE CASH REFLECTED IN THE BOOKS OF TH E ASSESSEE ON THE SAID DATE. THE REVENUE HAS NOT CONTROVERTED THESE FINDINGS OF THE LD.CIT(A), NOR POINTED ANY INFIRMIT Y IN THE SAME. 129. IN VIEW OF THE UNCONTROVERTED FACTUAL FINDING S OF THE LD.CIT(A),THAT THE DOCUMENT A-116, WHICH FORMED THE BASIS OF ADDITION WAS ONLY A PETTY CASH BOOK NOT REFLECTI NG THE CASH BALANCE AS ON THAT DATE AND THAT THE CASH BALA NCE ON THE SAID DATE AS PER BOOKS WAS MORE THAN THAT ACTUA LLY FOUND, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A) DELETING THE ADDITION MADE OF RS.45,17,00 0/-ON ACCOUNT OF TREATING CASH FOUND AS UNACCOUNTED. GROUND OF APPEAL NO.8 IS DISMISSED. IN EFFECT THE APPEAL OF THE REVENUE IS DISMISSED. 79 WE SHALL NOW DEAL WITH THE CROSS OBJECTION OF THE ASSESSEE FOR A.Y 2011-12 CO NO.12/CHD/2014: A.Y( 2011-12) 130. GROUND NO.1 RAISED BY THE ASSESSEE READS AS U NDER: 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 ACC OUNT BY RESORT TO PROVISIONS OF SECTION 36(1)(III) IGNOR ING THE FACT THAT THE ADVANCE WAS MADE FOR THE PURPOSE OF BUSINE SS. 131. IT WAS COMMON GROUND BETWEEN THE PARTIES THAT THE ISSUE IN THE ABOVE GROUND WAS IDENTICAL TO THAT RA ISED IN GROUND NO.1 OF ASSESSES C.O. NO.9/CHD/2014,AND REL ATED TO DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT ,IN RELATION TO PURPORTED NON BUSINESS ADVANCES MADE TO THE SAM E PARTIES AS IN A.Y 2008-09 AS UNDER: SILVER OAK FOUNDATION RS.91,69,805/- PSIDC RS.25,00,000/ - 132. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THA T HIS ARGUMENT AGAINST THE SAID DISALLOWANCE UPHELD BY T HE CIT(A) WAS THE SAME AS IN A.Y 2008-09, THAT THE AD VANCES WERE THE SAME AS IN PRECEDING YEAR EXCEPT ADDITIONA L ADVANCE GIVEN TO PSIDC OF 3.50 LACS, THAT THE ASSES SEE HAD SUFFICIENT OWN INTEREST FREE FUNDS ,IN THE FORM OF RESERVES 80 FOR THE YEAR AMOUNTING TO RS.7.72 CRORES AND THE PRESUMPTION THEREFORE IS THAT THE ADVANCES HAVE BEE N MADE OUT OF OWN INTEREST FREE FUNDS. 133. SINCE ADMITTEDLY THE ISSUE IS IDENTICAL TO TH AT IN GROUND NO.1 OF THE ASSESSES CROSS OBJECTION FOR A. Y 2008- 09 IN CO NO.9/2014 DEALT WITH US ABOVE, OUR DECISIO N RENDERED THEREIN AT PARA 41 OF OUR ORDER WILL APPL Y TO THE PRESENT GROUND, FOLLOWING WHICH WE DELETE THE DISA LLOWANCE OF INTEREST OF RS.11,00,376/-. GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 134. GROUND NO.2 WAS STATED TO BE NOT PRESSED, BY THE LD.COUNSEL FOR THE ASSESSEE AND, HENCE THE SAME IS DISMISSED AS NOT PRESSED. THE CROSS OBJECTION FILED BY THE ASSESSEE IS PARTL Y ALLOWED. 135. WE SHALL NOW TAKE UP THE APPEAL OF THE REVENU E AND THE CROSS OBJECTION OF THE ASSESSEE RELATING TO A.Y 2005-06 IN ITA NO.30/CHD/14 AND CO NO.40& 43/CHD/16 RESPECTIVELY 81 ITA NO.30/CHD/2014(A.Y.2005-06) : 136. THE SOLE ISSUE RAISED IN THE PRESENT APPEAL RE LATES TO ADDITION MADE ON ACCOUNT OF SHARE CAPITAL INTRODUCE D DURING THE YEAR AMOUNTING TO RS.90 LACS REMAINING UNEXPLAI NED. 137. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY OF RS.90 LACS DURING THE YEAR FROM THE FOLLOWING PERSONS: 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/- THE ASSESSING OFFICER ASKED THE APPELLANT TO PRODUC E THE INCOME TAX RETURNS, BANK STATEMENTS AND CONFIRM ATIONS IN RESPECT OF RECEIPT OF THE SHARE APPLICATION MONE Y FROM THE ABOVE PERSONS. THE ASSESSEE FILED PANS AND ADDRESSE S OF THESE PERSONS, BUT COULD NOT FILE THE RETURNS OF IN COME AND BANK STATEMENTS AND THE REASON GIVEN WAS THAT THESE PERSONS WERE UNABLE TO LOCATE THEIR RETURNS AND BAN K STATEMENTS AT SHORT NOTICE. CONFIRMATIONS FROM SH.A MARDEEP SINGH SIDHU AND SH. BHUPINDER BAIDWAN WERE ALSO FILED. THE ASSESSEE DID NOT FILE THE CONFIRMATIONS FROM SH . ARJINDER BAINS AND ARJINDER BAINS (HUF) AND REASON GIVEN WAS THAT 82 HIS RELATIONS WITH SH. ARJINDER BAINS WERE STRAINE D. IT WAS REQUESTED THAT THE ASSESSING OFFICER COULD GET NECESSARY INFORMATION FROM THE CONCERNED PARTY. IT WAS ALSO S UBMITTED THAT NATURE, SOURCE AND IDENTITY OF THE INVESTORS W AS ESTABLISHED AND NO CASE COULD BE MADE OUT TO DOUBT THE GENUINENESS, EXISTENCE OR IDENTITY OF THE INVESTO RS AND SO PROVISIONS OF SECTION 68 COULD NOT BE INVOKED. TH E APPELLANT HAD RELIED UPON THE JUDGEMENTS OF HON'BLE SUPREME COURT IN THE CASES OF M/S LOVELY EXPORTS (P ) LTD. (216 CTR 195), AFFIRMING THE JUDGEMENT OF HON'BLE D ELHI HIGH COURT (299 ITR 268) AND OF M/S STELLER INVESTM ENT LTD. (251 ITR 263), AFFIRMING THE JUDGEMENT OF HON'BLE D ELHI HIGH COURT (192 ITR 287). THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE APPELLANT AND HELD THAT THE CREDITWORTHINESS AND GENUINENESS OF TRANSACTION W AS NOT PROVED. HE ACCORDINGLY, MADE ADDITION OF ENTIRE AMO UNT OF RS.90 LACS. 138. DURING APPELLATE PROCEEDINGS BEFORE THE CIT(A ), THE ASSESSEE SUBMITTED ADDITIONAL EVIDENCE BY WAY OF CONFIRMATION OF THE PARTIES WHICH AFTER CONSIDERING THE OBJECTION OF THE AO WAS DULY ADMITTED BY THE CIT(A) . THE LD.CIT(A) THEREAFTER, AFTER CONSIDERING ALL THE EVI DENCES ON 83 RECORD FOUND THAT THE CONTENTION OF THE AO THAT THE CHEQUES SHOWN TO BE GIVEN TO THE ASSESSEE AND THAT DEPOSITE D IN THE BANK DID NOT TALLY, WAS FACTUALLY INCORRECT. HE FOU ND THAT THE CHEQUES RECEIVED FROM SHRI ARJINDER BAINS AND S HRI ARJINDER BAINS(HUF) MATCHED WITH THE CHEQUE NUMBER MENTIONED IN THE BANK STATEMENT OF THE ASSESSEE COM PANY. HE FURTHER FOUND THAT EVEN WITH REGARDS TO THE CHEQ UE RECEIVED FROM SHRI AMARDEEP SINGH SANDHU AND SHRI BHUPINDER BAIDWAN, THERE WAS NO MISMATCH, WITH THE CHEQUES HAVING BEEN DULY CREDITED IN THE BANK ACCOU NT OF THE ASSESSEE. THE LD.CIT(A) FURTHER NOTED THAT THE MONEY RECEIVED FROM SHRI ARJINDER BAINS AND SHRI ARJINDER BAINS(HUF) WAS SUBSEQUENTLY RETURNED TO THESE PERSO NS AND NO SHARE ALLOTTED, DUE TO STRAINED RELATION OF THE ASSESSEE WITH THEM. HE ALSO NOTED THAT ON THE REQUEST OF TH E ASSESSEE SUMMON HAD BEEN ISSUED TO SHRI ARJINDER BA INS FOR CONFIRMING THE INVESTMENT BUT THE AO DID NOT SUBMIT THE REPORT ON THE ENQUIRY THEREAFTER CONDUCTED. ON THE BASIS OF THE ABOVE FINDINGS THE LD.CIT(A) HELD THAT THE ASSE SSEE HAD DULY DISCHARGED ITS ONUS OF PROVING GENUINENESS OF THE TRANSACTION AND IT WAS FOR THE DEPARTMENT TO MAKE F URTHER ENQUIRIES, IF THEY HAD ANY DOUBT. ACCORDINGLY, HE D ELETED THE ADDITION MADE OF RS.90 LACS. THE RELEVANT FINDINGS OF THE 84 LD.CIT(A) AT PARAS 3.3 TO 3.3.8 OF HIS ORDER ARE AS UNDER: 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. COU NSEL AND REPORT OF THE ASSESSING OFFICER. I HAVE ALSO PE RUSED THE RECORDS OF THE CASE. IT IS CORRECT THAT THE APPELLA NT WAS ASKED TO FILE CONFIRMATIONS REGARDING SHARE APPLICATION M ONEY, FOR THE FIRST TIME ONLY ON 15.03.2013 AND THE APPELLANT COULD NOT FILE CONFIRMATIONS FROM SH. ARJINDER BAINS AND ARJI NDER BAINS (HUF) DUE TO PAUCITY OF TIME AND AS PER THE VERSION OF THE APPELLANT, ALSO BECAUSE OF THE STRAINED RELATIONSHI P WITH SH. ARJINDER BAINS. ON THE FACTS OF THE CASE, IT IS EVI DENT THAT THE APPELLANT COMPANY WAS PREVENTED BY SUFFICIENT CAUSE FROM FURNISHING THE CONFIRMATIONS BEFORE THE ASSESSING O FFICER AND SO THE ADDITIONAL EVIDENCES PRODUCED BY THE APPELLA NT ARE ADMITTED. THE OBJECTION RAISED BY THE ASSESSING OFF ICER 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 B ECAUSE THERE IS NOTHING WRONG IF CONFIRMATIONS ARE ON A PL AIN PIECE OF PAPER AND THESE CAN CERTAINLY NOT BE AFTERTHOUGHT B EFAUSE THE APPELLANT HAD RECEIVED SHARE APPLICATION MONEY THRO UGH CHEQUES FROM SH. ARJINDER BAINS AND ARJINDER BAINS (HUF). THE CONTENTION OF THE ASSESSING OFFICER THAT THE PA YMENTS MIGHT HAVE BEEN FOR SOME UNDERLYING BUSINESS TRANSA CTION IS NOT SUPPORTED BY ANY EVIDENCE AND NO DOCUMENT WA S 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 INCORRE CT. ALL THE SHARE APPLICATION MONEY RECEIVED FROM ALL T HE PERSONS HAVE BEEN CREDITED TO THE BANK ACCOUNT OF T HE APPELLANT COMPANY. THE APPELLANT HAS PROVIDED SUFFI CIENT 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 REGARDI NG 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 THROU GH 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 APPELL ATE 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 RE PORT 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), N O SHARES WERE ALLOTTED, POSSIBLY DUE TO STRAINED RELATIONSHIP AND THE MONEY WAS RETURNED TO THESE PERSONS AND FOR THIS REASON ALSO, THE GENUINENESS O F 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 GENUINEN ESS OF TRANSACTION IS PROVED. THE APPELLANT HAS DISCH ARGED ITS ONUS AND THE ONUS WAS SHIFTED TO THE DEPAR TMENT. 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 UNDISCLO SED INCOME OF THE ASSESSEE. IT MAY BE THAT THERE ARE SO ME 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 PERSON S WHO ARE ALLEGED TO HAVE REALLY ADVANCED THE MONEY I S 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 I N THE HANDS OF THE COMPANY ITSELF.' 3.3.6 THE AFORESAID JUDGMENT OF DELHI HIGH COURT WA S AFFIRMED BY HON'BLE SUPREME COURT. THE HON'BLE DELH I 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 TRANSMITTE D THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE B RIBER; (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/ SUBSCRIBER ARE FURNISHED TO THE DEPARTMEN T ALONG WITH COPIES OF THE SHAREHOLDERS REGISTER, SHA RE APPLICATION FORMS, SHARE TRANSFER REGISTER, ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATI ON BY THE ASSESSEE; (5) THE DEPARTMENT WOULD NOT BE JUSTI FIED IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/ SUBSCRIBER FAILS OR NEGLECTS TO RESPOND T O 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 A O 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 TRANSA CTION AND THE VERACITY OF THE REPUDIATION. IN THE CASE OF PRIVATE PLACEMENT THE LEGAL REGIME W OULD NOT BE THE SAME. A DELICATE BALANCE MUST BE MAINTAI NED WHILE WALKING THE TIGHTROPE OF SS. 68 AND 69 OF THE IT ACT. THE BURDEN OF PROOF CAN SELDOM BE DISCHARGED T O 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. BU T IF THE AO FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALIN GS, FIE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREA T 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 SQUAR ELY 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 TH E 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 ALL OWED. 139. AGAINST THE SAME THE REVENUE HAS COME UP IN APPEAL BEFORE US RAISING THE FOLLOWING EFFECTIVE GROUND: 1.THE LD.CIT(A) HAS ERRED ON THE FACTS AND IN LAW IN ALLOWING THE RELIEF RS.90,00,000/- TO THE ASSESSEE IN RESPECT OF ADDITION OF RS.90,00,000/- U/S 68 OF THE INCOME TAX ACT,1961 SINCE THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS 140. BEFORE US, THE LD. DR RELIED UPON THE ORDER O F THE AO, WHILE THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON T HE ORDER OF THE LD.CIT(A). 141. WE HAVE HEARD RIVAL CONTENTIONS AND HAVE CARE FULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD.CIT( A).THE ADMISSION OF ADDITIONAL EVIDENCE BY THE LD.CIT(A) H AS NOT BEEN CHALLENGED BY THE DEPARTMENT BEFORE US. THE REVENUE HAS NOT CONTROVERTED THE FACTUAL FINDINGS OF THE LD .CIT(A) 88 THAT CONFIRMATIONS, PAN AND DETAILS OF CHEQUES ISS UED BY THE INVESTORS AND CREDITED IN THE BANK ACCOUNT OF T HE ASSESSEE WERE SUBMITTED. NO DISCREPANCY HAS BEEN PO INTED OUT BY THE LD.DR IN THE AFORESAID DOCUMENTS. THE LD .CIT(A) HAS ALSO WE FIND SPECIFICALLY DEALT WITH THE CONTEN TION OF THE AO THAT THERE WAS MISMATCH IN THE CHEQUES SHOWN TO BE ISSUED BY THE INVESTORS AND THAT SHOWN AS DEPOSITED BY THE ASSESSEE IN HIS BANK ACCOUNT. THE LD.CIT(A) HAS VER IFIED THIS FACT AND GIVEN A CATEGORICAL FINDING THAT THERE WAS NO SUCH MISMATCH. THE LD.DR HAS BEEN UNABLE TO CONTROVERT T HIS FINDING OF THE LD.CIT(A). NO OTHER ANOMALY OR FACT HAS BEEN BROUGHT TO OUR NOTICE BY THE LD.DR CASTING ANY DOUB T ON THE GENUINENESS OF THE TRANSACTION. THE LD.CIT(A) HAS A LSO GIVEN A FINDING THAT SHARE APPLICATION MONEY RECEIVED FRO M TWO PERSONS WAS RETURNED SUBSEQUENTLY, WHICH ALSO HAS N OT BEEN CONTROVERTED BY THE REVENUE BEFORE US. WE THEREFORE AGREE WITH THE LD.CIT(A) THAT THE ASSESSEE HAD DULY DISCH ARGED ITS ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION AND WITH THE REVENUE NOT POINTING OUT ANY REASON TO DOUBT TH E SAME, THERE REMAINS NO BASIS FOR TREATING THE SHARE CAPIT AL AS UNEXPLAINED . IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE CIT(A), 89 DELETING THE ADDITION MADE OF RS.90 LACS ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY. THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. IN EFFECT THE APPEAL OF THE REVENUE IS DISMISSED. C.O.NOS.40 & 43/CHD/2016: 142. THE ASSESSEE HAS FILED TWO CROSS OBJECTIONS BEFORE US RAISING IDENTICAL GROUND VIS--VIS THE VALIDITY OF THE ASSESSMENT FRAMED AS UNDER: THAT THE ORDER PASSED U/S 153A READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 BY THE LD. ASSESSING OFFICER IS AGAINST LAW AND FACTYS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO HOLD THAT EVEN IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, ASSESSMENT U/S 153A COULD BE PROCEEDED WITH. CROSS OBJECTION ---- 143. MOREOVER, WE FIND THAT BOTH THE CROSS OBJECTIO NS ARE TIME BARRED BY 1000 DAYS AND 1016 DAYS RESPECTIVELY . THE ASSESSEE HAS FILED AN APPLICATION REQUESTING CONDO NATION OF THE DELAY IN FILING OF THE SAME STATING THAT SINCE ITS ASSESSMENT PROCEEDINGS HAD BEEN ALLOWED ON MERITS B Y THE CIT(A), IT DID NOT CONSIDER IT FIT TO FILE APPEAL B EFORE THE I.T.A.T. UNTIL THE ORDER PASSED BY THE I.T.A.T. IN M/S MALA BUILDERS PVT. LTD. VS. ACIT, CC-II IN AUGUST 2016 H OLDING THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL F OUND 90 DURING SEARCH, NO ASSESSMENT COULD BE FRAMED. NOTIN G THAT THE FACTS OF THE PRESENT CASE WERE IDENTICAL AND TH E ASSESSEES CASE WOULD SUCCEED EVEN ON THE LEGAL GRO UND, IT ACCORDINGLY FILED CROSS OBJECTION THEREAFTER IN 201 6 RESULTING IN THE IMPUGNED DELAY. 144. CONSIDERING THE EXPLANATION GIVEN BY THE ASSE SSEE IN ITS APPLICATION FOR CONDONATION OF DELAY, WE FIND T HAT THERE WAS REASONABLE CAUSE FOR THE DELAY IN FILING THE IM PUGNED CROSS OBJECTION. MOREOVER WE FIND THAT THE GROUNDS RAISED IN THE CROSS OBJECTION ARE LEGAL, WHICH THE ASSESSE E IN ANY CASE, COULD HAVE RAISED BEFORE US DURING THE COURSE OF HEARING OF THE APPEAL OF THE REVENUE ALSO WITHOUT R AISING THE SAME BY WAY OF A CROSS OBJECTION. IN VIEW OF TH E SAME THEREFORE, WE CONSIDER IT FIT TO ADJUDICATE THE GRO UND RAISED BY THE ASSESSEE IN IS CROSS OBJECTION. 145. THE LD.COUNSEL FOR THE ASSESSEE POINTED OUT T HAT THE ASSESSMENT IN THE PRESENT ASSESSEE WAS FRAMED U/S 1 53A R.W.S. 143(3) OF THE ACT CONSEQUENT TO SEARCH PROCE EDINGS CONDUCTED ON THE ASSESSEE ON 21.9.2010. IT WAS POIN TED OUT THAT IN THE ASSESSMENT FRAMED, THE SOLE ADDITION MA DE WAS OF RS.90 LACS ON ACCOUNT OF UNEXPLAINED SHARE APPL ICATION MONEY. THEREAFTER THE LD.COUNSEL FOR THE ASSESSEE T OOK US 91 THROUGH THE ASSESSMENT ORDER AND POINTED OUT THEREF ROM THAT THERE WAS NO REFERENCE TO ANY INCRIMINATING MA TERIAL FOUND DURING THE COURSE OF SEARCH WHICH COULD HAVE LED TO THE IMPUGNED ADDITION. IT WAS FURTHER POINTED OUT T HAT EARLIER THE ASSESSMENT FOR THE IMPUGNED YEAR WAS C OMPLETED AND THE ORDER NOW PASSED U/S 153A R.W.S. 143(3) OF THE ACT, MAKING ADDITIONS COULD HAVE BEEN MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH, AS LAID DOWN IN VARIOUS JUDICIAL DECISIONS. OUR ATTENT ION WAS DRAWN TO THE DECISION OF THE ITAT CHANDIGARH BENCH IN THE CASE OF MALA BUILDERS PVT. LTD. VS ACIT REPORTED I N 51 ITR (TRIB) 272 POINTING OUT THEREFROM THE REFERENCE MAD E TO SEVERAL DECISIONS OF THE HONBLE HIGH COURTS HOLDIN G SO. 146. THE LD.DR WAS UNABLE TO BRING TO OUR NOTICE A NY INCRIMINATING MATERIAL FOUND DURING SEARCH WHICH WA S THE BASIS OF THE ADDITION MADE, THOUGH AT THE SAME TIME HE VEHEMENTLY ARGUED THAT VARIOUS HIGH COURTS HAD RULE D OTHERWISE ALSO HOLDING THAT ADDITION NEED NOT BE CO NFINED AND BASED ONLY TO MATERIAL FOUND DURING SEARCH. 147. WE HAVE CONSIDERED THE CONTENTION OF THE LD.CO UNSEL FOR THE ASSESSEE. WE AGREE THAT IT HAS BEEN TIME AN D AGAIN BEEN HELD BY THE VARIOUS HIGH COURTS THAT IF NO 92 INCRIMINATING MATERIAL IS FOUND DURING THE SEARCH A CTION, THE ADDITION IN THE CASE OF ALREADY CONCLUDED ASSES SMENT CANNOT BE MADE WHILE FRAMING ASSESSMENT U/S 153A OF THE ACT. RELIANCE IN THIS RESPECT CAN BE PLACED IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION ITA N O. 523 OF 2013 REPORTED IN (2015) 279 CTR 0389 (BOMBAY) AN D OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS . KABUL CHAWLA 234 TAXMAN 300 (DELHI). THE AFORESAID DECIS IONS HAVE BEEN FURTHER AFFIRMED BY THE DECISION OF THE D ELHI HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. MEETA GUTGU TIA PROP M/S FERNS N PETALS, ITA 306/2017 AND OTHERS DECI DED VIDE ORDER DATED 25.5.2017. 148. WE FIND THAT THE CASE OF THE ASSESSEE IS SQUA RELY COVERED BY THE AFORESAID DECISIONS. ADMITTEDLY NO INCRIMINATING MATERIAL RELATING TO SHARE APPLICATIO N MONEY RECEIVED DURING THE YEAR WAS FOUND DURING SEARCH. T HE ASSESSMENT FOR THE IMPUGNED YEAR WAS ALSO EARLIER COMPLETED. THE AFORESAID CASE LAWS CAN BE WELL APPL IED TO THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND. IN VIEW OF THIS, WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES FOR MAKING ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY FOR THE YEAR UNDER CONSIDERATION. 93 BOTH THE CROSS OBJECTIONS OF THE ASSESSEE ARE ACCORDINGLY ALLOWED. 149. WE SHALL NOW DEAL WITH THE APPEALS RELATING T O THE ISSUE OF PENALTY LEVIED U/S 271(1)(C) OF THE ACT FO R THE ASSESSMENT YEARS AS UNDER: ITA NO.1218/CHD/2017: A.Y 2007-08 ITA NO.1219/CHD/2017: A.Y 2008-09 ITA NO.1220/CHD/2017: A.Y 2009-10 ITA NO.723/CHD/2017: A.Y 2009-10 ITA NO.1221/CHD/2017: A.Y 2010-11 ITA NO.724/CHD/2017: A.Y 2010-11 ITA NO.1222/CHD/2017: A.Y 2011-12 ITA NO.725/CHD/2017: A.Y 2011-12 150. THE REVENUES APPEALS RELATE TO FIVE YEARS, I.E. FOR A.YS 2007-08 TO A.Y 2011-12. THE CHALLENGE OF THE REVENUE IN ALL THE APPEALS, WE FIND, IS AGAINST DELETION BY THE CIT(A) OF PENALTY LEVIED ON ADDITIONS CONFIRMED IN QUANTUM PROCEEDINGS BY THE CIT(A) AS UNDER: 1) DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT. 2) DISALLOWANCE OF EXCESS DEPRECIATION CLAIMED ON EQUIPMENTS. 151. THE REVENUE HAS RAISED IDENTICAL GROUNDS IN A LL ITS 94 APPEALS. FOR THE SAKE OF CONVENIENCE WE ARE REPRODU CING THE GROUND RAISED IN THE REVENUE APPEAL FOR A.Y 2007-08 AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. C1T(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSE SSEE 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. 1,4 0,145/- 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-TA X - III, LUDHINA V. TRIDENT INFOTECH CORPN. LTD.[2013] 34 TAXMANN.COM 132 AS THE ASSESSEE HAD FURNISHED INACC URATE 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 CLAI MING INCORRECT DEPRECIATION. 4. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CA NCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OF F. 152. THE ISSUE RELATING TO DISALLOWANCE OF INTERES T U/S 36(1)(III) OF THE ACT WAS RAISED BEFORE US IN THE C ROSS OBJECTIONS FILED BY THE ASSESSEE FOR A.Y 2008-09 TO A.Y 2011-12 IN CO NOS.9 TO 12/2014, WHICH HAS BEEN DEAL T IN EARLIER PART OF OUR ORDER, WHEREIN WE HAVE DELETED THE ADDITION SO MADE AT PARAS 41, 59, 81 AND 133 OF OU R ORDER ABOVE. NO JUSTIFICATION REMAINS THEREFORE FOR THE L EVY OF 95 PENALTY ON THE SAME. WE THEREFORE DO NOT FIND ANY R EASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A) DELETING TH E PENALTY LEVIED ON THE DISALLOWANCE OF INTEREST U/S 36(1)(II I) OF THE ACT FOR A.Y 2008-09 TO A.Y 2011-12. 153. AS FOR PENALTY LEVIED FOR IDENTICAL DISALLOWA NCE MADE IN A.Y 2007-08, IT HAS BEEN BROUGHT TO OUR NOTICE T HAT THE CROSS OBJECTION FILED BY THE ASSESSEE FOR THE SAID YEAR CHALLENGING THE DISALLOWANCE OF INTEREST U/S 36(1)( III),IN CO NO.32/CHD/14 WAS DISMISSED AS NOT PRESSED VIDE ORDE R DATED 30-10-18. 154. THE FACTS LEADING TO THE LEVY OF PENALTY ARE THAT DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT AMOUNTING TO RS.4,12,314/- HAD BEEN MADE ON ACCOUNT OF INTERE ST FREE ADVANCES MADE TO THE FOLLOWING PARTIES AMOUNTING IN ALL TO RS.34,35,951/-: 1) SILVER OAK FOUNDATION = RS.8,52,951/- 2) A.M. CYBER = RS.4,33,000/- 3) ADVANCE FOR LAND = RS.21,50,000/- TOTAL = RS.34,35,951/- FOR THE REASON THAT THE ASSESSEE WAS NOT ABLE TO ES TABLISH BUSINESS EXPEDIENCY FOR GIVING THESE LOANS AND ADVA NCES AND FURTHER RELYING ON THE DECISION OF THE CIT VS. ABHI SHEK 96 INDUSTRIES LTD., 286 ITR 1(SC) FOR THE PROPOSITION THAT WHERE THE ASSESSEE HAS BORROWED FUNDS OR INTEREST AND CER TAIN AMOUNTS HAD BEEN ADVANCED FOR NON BUSINESS PURPOSES , THE INTEREST TO THE EXTENT OF SUCH ADVANCES HAD TO BE D ISALLOWED U/S 36(1)(III) OF THE ACT. THE CIT(A) UPHELD THE SA ME. THE AO THEREAFTER LEVIED PENALTY ON THE SAID ADDITION. T HE CIT(A) DELETED THE PENALTY LEVIED HOLDING AT PARA 4.3 TO 4 .6 OF HIS ORDER AS UNDER: 4.3 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUBMISSIONS. IT IS A TRITE LAW THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO SEPARATE PROCEEDING S. MERELY BECAUSE ADDITION HAS BEEN MADE TO RETURNED I NCOME DOES NOT MEAN THAT PENALTY IS ALSO LEVIABLE. THE AD DITION MADE IN THE INSTANT CASE IS ON ACCOUNT OF DISALLOWA NCE OF INTEREST. THE APPELLANT HAD CLAIMED THAT THE SAME I S ALLOWABLE, WHEREAS, THE AO HAS HELD THAT IN THE INS TANT 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 INDUSTRI ES LTD. FROM THE AFORESAID FACTS, IT IS CLEAR THAT WHETHER THE INTEREST IS ALLOWABLE OR NOT AND WHETHER THERE IS ANY COMMER CIAL EXPEDIENCY IN A PARTICULAR CASE IS A DEBATABLE ISSU E. THE DECISION IN THE CASE OF CIT VS. RELIANCE PETROPRODU CTS (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 TH E RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION OF THE PENALTY LEVIED U/S 27L(L)(C) OF THE ACT, THE AS SESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED INTEREST E XPENDITURE ON THE BORROWED FUNDS IN ITS PROFIT & LOS:, ACCOUNT . THE AO 97 NOTED THE ASSESSEE TO HAVE MADE INTEREST FREE ADVAN CES ON WHICH NO INTEREST WAS CHARGED BY THE ASSESSEE AND I N VIEW OF THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COUR T IN M/S ABHISHEK INDUSTRIES LTD. (SUPRA) THE ASSESSING OFFI CER 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 R S. 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 L TD. (SUPRA), DOES NOT ESTABLISH THE CASE OF THE REVENUE FOR THE ASSESSEE TO HAVE EITHEI CONCEALED ITS INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF NON- FULFILLMENT OF CITHER OF THE TWIN CONDITIONS NECESS ARY 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 PENALT Y ON THE AFORESAID ADDITION OF RS. 45,14,373/-. THE TRIBUNAL IN ASSESSEE 'S OWN CASE RELATING TO A. Y. 2005-06 VIDE 7 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 AD DITION MADE ON ACCOUNT OF DISALLOWANCE U/S 36(L)(III) OF THE AC T. ACCORDINGLY, WE FIND NO MERITS IN THE ORDERS OF THE AO AND CJT(A PPEALS) 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 CONFIRME D BY THE HON'BLEP UNJAB AND HARYANA HIGH COURT. THE HEAD NOT ES 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 [BO NAFIDE CLAIM] - ASSESSMENT YEAR 200-1-05 - ASSESSEE HAD GI VEN INTEREST- FREE ADVANCES AND BORROWED INTEREST BEARI NG LOAN - ON BASIS OF JUDGMENT OF HIGH CON FT, ASSESSING OFFI CER DISALLOWED INTEREST ON BORROWINGS UNDER SECTION 36( L)(III) AND MADE ADDITION TO INCOME OF ASSESSEE - FURTHER, HE I MPOSED PENALTY - WHETHER SINCE ADDITIONS WERE MADE ON BASI S OF DECISION OF HIGH COURT, IT DID NOT ESTABLISH THAT A SSESSEE HAD EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND, THEREFORE, PENALTY WAS T O 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. CORPORAT ION LTD. (SUPRA). THE PENALTY IMPOSED BY THE AO IS ACCORDING LY CANCELLED. THIS GROUND OF APPEAL IS ALLOWED. 155. BEFORE US THE LD. DR RELIED UPON THE ORDER OF THE AO LEVYING THE PENALTY AND CONTENDED THAT SINCE THE AS SESSEE HAD NOT BEEN ABLE TO PROVE BUSINESS EXPEDIENCY OF T HESE ADVANCES ITS CLAIM WAS MALAFIDE AND BOGUS AND THUS PENALTY HAD BEEN RIGHTLY LEVIED BY THE AO. 156. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 157. WE HAVE GONE THROUGH THE ORDER OF THE LD.CIT( A) AND DO NOT FIND ANY REASON TO INTERFERE IN THE SAME. TH E LD.CIT(A) HAS FOLLOWED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TRIDENT INFOTECH(SUPRA) WHEREIN PENALTY LEVIED ON IDENTICAL DISALLOWANCE OF INTEREST U/S 36(1)(III) WAS DELETED HOLDING THAT MERE DISALLOWANCE OF INTEREST FOLLOWING DECISI ON OF THE COURT IN THE CASE OF ABHISHEK INDUSTRIES(SUPRA) DOE S NOT ESTABLISH THAT THE ASSESSEE HAD CONCEALED /FURNISHE D INACCURATE PARTICULARS OF INCOME, PARTICULARLY WHEN ALL PARTICULARS RELATING TO THE CLAIM HAD BEEN DULY DIS CLOSED. THE FACTS LEADING TO THE DISALLOWANCE OF INTEREST I N THE 99 PRESENT CASE ARE IDENTICAL. THE REVENUE HAS NOT BEE N ABLE TO DISTINGUISH THE SAID DECISION BEFORE US. WE THEREFO RE UPHOLD THE ORDER OF THE LD.CIT(A) DELETING THE PENALTY LEV IED ON DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT FOR A.Y 2007-08. IN EFFECT PENALTY LEVIED ON DISALLOWANCE OF INTERES T U/S 36(1)(III) OF THE ACT FOR A.Y 2007-08 TO A.Y 2011-1 2 , IS HELD TO BE RIGHTLY DELETED BY THE LD.CIT(A). 158. AS FOR THE PENALTY LEVIED ON DISALLOWANCE OF EXCESS DEPRECIATION, THE SAME RELATES TO DEPRECIATION CLAI MED AT HIGHER RATES ON WDV OF ASSETS AS ON 01-04-06 , WHIC H THE ASSESSEE HAD CONCEDED BEFORE THE LD.CIT(A) STATING THAT IT WOULD BE DIFFICULT TO BIFURCATE THE OPENING BALANCE OF ASSETS ON THAT DATE BETWEEN THAT ELIGIBLE FOR DEPRECIATION AT HIGHER RATE AND OTHERWISE. 159. THE LD.CIT(A) DELETED THE PENALTY LEVIED ON T HE SAME HOLDING AS UNDER: 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 CLA IM OF DEPRECIATION ON SURGICAL EQUIPMENT. AS PER THE DEPR ECIATION CHART FILED BY THE APPELLANT, THE APPELLANT HAD CLA IMED DEPRECIATION OF CERTAIN MEDIAL EQUIPMENTS WORTH RS. 2,47,38,3427- @ 15% AND DEPRECIATION ON CERTAIN SUR GICAL EQUIPMENTS VALUED AT RS. 2,51,21,8957- @ 40%. THUS, IT IS 100 APPARENT FROM THE FACTS ON RECORD THAT THE APPELLAN T HAD CLAIMED DEPRECIATION ON THE MEDICAL/SURGICAL EQUIPM ENTS AT TWO DIFFERENT RATES I.E. 15% AND 40%. THE AO HAD DISALL OWED PART OF THE CLAIM OF DEPRECIATION @ 40% ON THE GROUND TH AT THE SURGICAL EQUIPMENTS ON WHICH THE DEPRECIATION WAS C LAIMED @ 40% WAS NOT LIFE SAVING EQUIPMENT. THE APPELLANT'S CONTENTION WAS THAT THE SURGICAL EQUIPMENTS ON WHICH THE DEPRE CIATION WAS CLAIMED @ 40% WAS LIFE SAVING EQUIPMENT. THE ON LY ISSUE TO BE CONSIDERED HERE IS WHETHER MAKING OF SUCH CLA IM BY THE APPELLANT IN THE RETURN OF INCOME LED TO CONCEALMEN T OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME, SO AS TO INVITE THE PROVISIONS OF SECTION 271(L)(C ). PENALTY IN THIS C ASE HAS BEEN LEVIED FOR CONCEALMENT OF INCOME. THE RELEVANT PORT ION 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 A SSESSMENT PROCEEDINGS WHEN THE ASSESSEE WAS ASKED TO PRODUCE CORROBORATIVE DOCUMENTARY EVIDENCES TO ESTABLISH IT S CLAIM. HAD THE CASE OF THE ASSESSEE NOT BEEN TAKEN UP FOR SCRUTINY, THE TRUE FACTS WOULD HAVE NEVER COME TO LIGHT AND T HE 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 PAS SED U/S 271(L)(C) TO SUGGEST THAT THE APPELLANT HAD CONCEAL ED ANY PARTICULARS OF INCOME, WHETHER THERE IS ANY CONCEAL MENT OR NOT WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTIC ULARS OF HIS INCOME. THE COMPLETE FACTS REGARDING THE CLA IM OF DEPRECIATION HAD BEEN MENTIONED IN THE DEPRECIATION CHART FILED WITH RETURN OF INCOME AND NOTHING HAD BEEN CONCEALE D THEREIN. THEREFORE, IT CANNOT BE HELD THAT THE APPELLANT HAD CONCEALED THE PARTICULARS OF INCOME. 5.5 AS REGARDS, FURNISHING OF INACCURATE PARTICULAR S, IF IS AN UNDISPUTED POSITION IN THE PRESENT CASE THAT NO INF ORMATION GIVEN IN THE RETURN WAS FOUND TO BE, INCORRECT OR I NACCURATE. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUP PLIED BY DIE APPELLANT IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. THE ONLY ISSUE IN DISPUTE IS TH AT 101 APPELLANT HAD CLAIMED DEPRECIATION ON CERTAIN SURGI CAL EQUIPMENTS AT A RATE OF 40% ON THE GROUND THAT THES E EQUIPMENTS WERE LIFE SAVING. THE AO HAS HELD THAT S OME OF THESE EQUIPMENTS WERE NOT LIFE SAVING AND REDUCED T HE DEPRECIATION CLAIMED ON THESE EQUIPMENTS TO 15%. WH ETHER 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 LA W, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME. SUCH CLAIM MADE IN THE RETURN CANNOT AM OUNT TO THE FURNISHING OF INACCURATE PARTICULARS. HENCE, THE AP PELLANT CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS. CASE LAWS RELIED UPON BY THE APPELLANT ARE APPLICAB LE 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 A PEX COURT OBSERVED AS UNDER:- 'IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNL ESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENA LTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, M AKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISH ING 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 PROC EEDINGS AND PENALTY PROCEEDINGS ARE DIFFERENT IN NATURE AND THA T THE FINDINGS GIVEN IN THE ASSESSMENT PROCEEDINGS, THOUG H MAY CONSTITUTE GOOD EVIDENCE, CANNOT CONSTITUTE CONCLUS IVE EVIDENCE FOR THE PURPOSES OF LEVYING PENALTY, (PLEASE SEE CI T 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 FO R THE PURPOSE OF SECTION 271(L)(C) OF THE ACT, THE MERE MAKING OF AN INCORRECT CLAIM DOES NOT AMOUNT TO FURNISHING OF INACCURATE P ARTICULARS OF INCOME. WHERE THE ASSESSEE HAS SUBMITTED ALL THE MA TERIAL AND RELEVANT FACTS RELATING TO THE CLAIM AND HAS MA DE A COMPLETE DISCLOSURE, BUT TAKES A LEGAL CONTENTION O R POSITION 102 THAT A PARTICULAR RECEIPT IS NOT TAXABLE AS INCOME OR THAT A PARTICULAR EXPENDITURE OR LOSS IS ALLOWABLE AS DEDU CTION, THE MERE FACT THAT THE ASSESSING OFFICER TOOK A DIFFERE NT VIEW OF THE ALLOWABILITY OF THE EXPENDITURE OR LOSS OR THE TAXABILITY OF THE RECEIPT, WITHOUT ANYTHING MORE AND WITHOUT UNEA RTHING ANY NEW MATERIAL OR FACT KEPT BACK BY THE ASSESSEE, CAN NOT INVITE PENALTY ON THE GROUND OF FURNISHING INACCURATE PART ICULARS OF INCOME. ' (II) COMMISSIONER OF INCOME TAX VS LAKHANI FOOTWEA R [20121 347 ITR 478 (P&H) THE HON 'BLE JURISDICTIONAL HIGH COURT HAS HELD THA T 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 L TD [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, I MPUGNED ORDER SETTING ASIDE THE LEVY OF PENALTY UNDER SEC.2 71(L)(C) CANNOT BE HELD TO BE ERRONEOUS - NO SUBSTANTIAL QUE STION OF LAW ARISES. (IV) COMMISSIONER OF INCOME-TAX-I, LUDHIANA V. EAST MAN INTERNATIONAL F20141 41 TAXMANN.COM 239 (PUNJAB & HARYANA) SECTION 271(L)(C), READ WITH SECTION 37(1) OF THE I NCOME-TAX ACT, 1961 - PENALTY - FOR CONCEALMENT OF INCOME [DISALLO WANCE OF CLAIM, EFFECT OF] - ASSESSMENT YEAR 2005-06 - DURIN G ASSESSMENT PROCEEDINGS, ASSESSING OFFICER REJECTED ASSESSEE'S CLAIM FOR CERTAIN EXPENSES BEING PRIOR PERIOD EXPEN SES - COMMISSIONER (APPEALS) AS WELL AS TRIBUNAL CONFIRME D 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 FURNIS HING OF INACCURATE PARTICULARS OF INCOME - HELD, YES - WHET HER, THEREFORE, IN VIEW OF FACT THAT, ASSESSEE HAD DISCL OSED ALL NECESSARY PARTICULARS RELATING TO ITS CLAIM FOR DED UCTION OF PRIOR PERIOD EXPENSES, TRIBUNAL RIGHTLY SET ASIDE IMPUGNE D 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 F URNISHING OF INCORRECT PARTICULARS UNLESS IT WAS ESTABLISHED THAT ASSESSEE HAD ACTED WITH A MALA FIDE INTENTION OR HA D CLAIMED DEDUCTIONS BEING AWARE OF THE WELL SETTLED LEGAL PO SITION. THE ASSESSEE HAD CLAIMED DEDUCTIONS ON ACCOUNT OF S ET OFF OF UNABSORBED BUSINESS LOSSES AGAINST THE INCOME FR OM THE CAPITAL GAINS, WHICH WAS HELD NOT TO BE MALA FIDE. HOWEVER, THE ASSESSING OFFICER IMPOSED PENALTY ON THE ASSESS EE. 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 AWAR E OF THE WELL SETTLED LEGAL POSITION. THE TRIBUNAL HAD OBSER VED 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 ABO VE FINDINGS OF THE TRIBUNAL WERE ILLEGAL OR PERVERSE I N ANY MANNER SO AS TO PERSUADE THIS COURT TO INTERFERE TH EREWITH. HENCE, THE DELETED OF PENALTY WAS JUSTIFIED.' 5.7 REFERENCE IN PARTICULAR MAY BE MADE TO THE DECI SION OF THE HON'BLE DELHI ITAT IN THE CASE OF LALA HARBH AGWAN DASS MEMORIAL AND DOCTOR PREM HOSPITAL PVT LTD. V/S ITO (2012) 23 TAXMAN.COM 32. IN THIS CASE, THE FACTS WE RE SIMILAR THE FACTS IN THE CASE OF THE APPELLANT. IN THIS CAS E, THE ASSESSEE HAD CLAIMED DEPRECIATION @ 40% ON CT SCANN ER ON THE GROUND THAT CT SCANNER WAS LIFE SAVING EQUIPMEN T. THE AO RESTRICTED THE DEPRECIATION TO THE RATE OF 25% AND THEREAFTER IMPOSED PENALTY ON THE DISALLOWANCE OF EXCESS DEPRE CIATION. THE HON'BLE ITAT DELETED THE PENALTY AND HELD THAT SUCH DISALLOWANCE CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS, ESPECIALLY WH EN 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 C ORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULA RS OF 104 INCOME OF THE ASSESSEE, BUT IT CANNOT BE DISPUTED T HAT 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 PLA Y AND WORK TO THE DISADVANTAGE OF THE ASSESSEE.' 5.9 THUS THE HON'BLE DELHI HIGH COURT HAD DRAWN TH E DISTINCTION BETWEEN BONAFIDE CLAIM AND MALAFIDE C LAIM, APPLYING THIS TEST IN THE PRESENT CASE IT CANNOT BE SAID BY ANY STRETCH OF IMAGINATION THAT THE CLAIM OF THE APPELL ANT WAS MALAFIDE. 5.10 AS SUBMITTED BY THE APPELLANT, THE TRANSACTI ON 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 TW O DIFFERENT RATES OF 15% AND 40% AND THE CLAIM WAS AL SO CERTIFIED BY THE AUDITOR. IT IS FURTHER SEEN FROM T HE SUBMISSIONS OF THE APPELLANT THAT IN TAX AUDIT REPORT NO ADVERS E COMMENTS WERE MADE BY THE AUDITOR REGARDING THE CLAIM OF DEP RECATION AT THE RATE OF 40% CLAIMED ON SURGICAL EQUIPMENT. IT I S ALSO SEEN THAT THE CIT(A) HAD REDUCED THE DISALLOWANCE MADE B Y THE AO ON ACCOUNT OF DEPRECIATION FURTHER ESTABLISH ING THAT THE ISSUE WAS DEBATABLE. IT IS THUS APPARENT THAT T HE CLAIM OF DEPRECIATION @ 40% ON CERTAIN SURGICAL EQUIPMENTS W AS 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 TH E 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 @ 1 5% 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 D ISALLOWED, THE SAME CAN BE CLAIMED IN THE SUBSEQUENT YEARS AND AS SUCH THE WHOLE EXERCISE OF CLAIM OF DEPRECATION @ 1 5% OR 40% WOULD BROADLY BE REVENUE NETURAL. AS SEEN FRO M 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. COUNSE L FOR THE 105 APPELLANT HAS, INTER-ALIA, SUBMITTED THAT SINCE IT IS CUMBERSOME TO SEGREGATE THE ASSETS PURCHASED UPTO F Y 2005-06, ON WHICH DEPRECIATION IS ALLOWABLE @ 40% A ND 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.' 160. BEFORE US, THE LD. DR RELIED UPON THE ORDER O F THE AO STATING THAT CLEARLY THE CLAIM OF EXCESS DEPRECIAT ION WAS MALAFIDE AND BOGUS ,BEING CONTRARY TO THE EXPLICIT PROVISIONS OF LAW WITH REGARD TO THE ALLOWABLE RATE OF DEPRECI ATION AND THUS PENALTY HAD BEEN RIGHTLY LEVIED BY THE AO. 161. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A). 162. WE HAVE GONE THROUGH THE ORDER OF THE CIT(A). WE DO NOT FIND ANY INFIRMITY IN THE SAME. THE LD.CIT(A), WE FIND, HAS DELETED THE PENALTY NOTING THAT THE ASSESSEE HA D NOT CONCEALED ANY PARTICULARS REGARDING THE CLAIM OF DEPRECIATION ON THE SURGICAL EQUIPMENTS, HAVING DIS CLOSED ALL FACTS RELATING TO THE SAME IN THE DEPRECIATION CHART FILED. NO DETAIL FILED BY THE ASSESSEE WAS FOUND TO BE INC ORRECT OR ERRONEOUS. THE LD.CIT(A) HAS FURTHER NOTED THAT THE DISALLOWANCE WAS ONLY ON ACCOUNT OF RATE AT WHICH T HE DEPRECIATION WAS TO BE CLAIMED ON THE SURGICAL EQU IPMENTS WITH THE ASSESSEE CLAIMING 40%, WHILE THE AO RESTRI CTED IT TO 106 15% STATING THAT THE ASSET DID NOT QUALIFY SURGICAL EQUIPMENTS. THE CIT(A) NOTED THAT WHETHER PARTICULA R EQUIPMENT WAS A LIFE SAVING EQUIPMENT, QUALIFYING F OR DEPRECIATION @ 40%, WAS A DEBATABLE ISSUE AND CLAIM OF THE ASSESSEE COULD NOT BE CLEARLY UNSUSTAINABLE IN LAW . HE, THEREFORE, HELD THAT THE CLAIM OF THE ASSESSEE WAS NOT MALAFIDE AND THE ASSESSEE THEREFORE COULD NOT BE SA ID TO HAVE CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME. HE FURTHER NOTED THAT THE ASSESSEE HAD FORE GONE THIS CLAIM FOR THE REASON THAT THE SAME WOULD BE ALLOWED IN SUBSEQUENT YEARS. 163. THE LD. DR HAS BEEN UNABLE CONTROVERT THE FI NDINGS OF THE CIT(A) THAT FULL AND COMPLETE DISCLOSURE REGARD ING THE PARTICULARS OF CLAIM OF DEPRECIATION WAS FILED BY T HE ASSESSEE. LD.DR HAS ALSO NOT BEEN ABLE TO CONTROVER T THE FINDINGS OF THE LD.CIT(A) THAT WHETHER AN ASSET QU ALIFIED AS LIFE SAVING EQUIPMENT ,QUALIFYING FOR DEPRECIATION AT HIGHER RATE, WAS A DEBATABLE ISSUE. MOREOVER IT IS AN UND ISPUTED FACT THAT THE ASSESSEE HAD CONCEDED TO THE DISALLOW ANCE , FOR THE REASON THAT IN ANY CASE 100% WAS ALLOWABLE SPRE AD OVER A PERIOD OF TIME. IT IS NOT THAT THE CLAIM OF THE ASSESSEE WAS FOUND WHOLLY UNTENABLE. WE, THEREFORE, SEE NO REASO N TO 107 INTERFERE IN THE ORDER OF THE CIT(A) DELETING PENAL TY LEVIED ON DISALLOWANCE OF EXCESS DEPRECIATION IN ALL THE IMPU GNED YEARS. IN EFFECT THE GROUNDS OF APPEAL RAISED BY THE REVEN UE AGAINST THE ORDER OF THE CIT(A) DELETING THE PENALT Y LEVIED ON DISALLOWANCE OF INTEREST AND EXCESS DEPRECIATION F OR A.YS 2007-08 TO A.Y 2011-12 IS, THEREFORE, DISMISSED. ALL THE APPEALS OF THE REVENUE ARE THEREFORE DISMIS SED. 164. WE SHALL NOW TAKE UP ASSESSES APPEALS AGAINST CONFIRMATION OF LEVY OF PENALTY. ITA NOS.723 TO 725/CHD/2017(A.YS.2009-10 TO 2011-12 ): 165. THESE APPEAL OF THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD.CIT(A) CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, RELATE TO ASSESSMENT YEARS 2009-10, 201 0-11 AND 2011-12 RESPECTIVELY. THE ASSESSEE HAS CHALLENGED T HE ORDER OF THE CIT(A) CONFIRMING THE LEVY OF PENALTY ON THE DISALLOWANCE OF CONSULTANCY CHARGES IN ASSESSMENT Y EARS 2009-10 AND 2011-12, WHILE IN ASSESSMENT YEAR 2010- 11 THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF PENALTY LEVIED ON DISALLOWANCE OF RS.11 LACS BEING DIFFERENCE OF T HE AUDITED FIGURES AND THE FIGURES SHOWN IN THE PROVISIONAL TR IAL 108 BALANCE REFLECTING RECEIPTS OF THE ASSESSEE. VIS--VIS THE ISSUE OF PENALTY LEVIED ON DISALLOWAN CE OF COMMISSION EXPENSES OF RS.15 LACS, THE FACTS AS NOT ED IN THE ORDER OF THE CIT(A) ARE THAT THE AO HAD CLAIMED EXP ENSES OF RS.15 LACS AS CONSULTANCY CHARGES PAID TO SHRI RAJN EESH RAMITRA, WHO WAS AN NRI AND SHAREHOLDER OF THE ASSE SSEE COMPANY. THE AO DISALLOWED THE SAME HOLDING THEM TO BE INGENUINE SINCE THE ASSESSEE HAD FAILED TO PROVIDE ANY EVIDENCE REGARDING THE SERVICES RENDERED BY SHRI RA JNEESH RAMITRA. THE CIT(A) UPHELD THE ORDER OF THE AO HOL DING THAT THE ASSESSEE HAD NOT FILED ANY EVIDENCE REGARDING T HE SERVICES RENDERED EVEN BY ELECTRONIC MODE LIKE EMAI L, VIDEO CONFERENCING ETC. PROVIDED BY SHRI RAJNEESH RAMITRA . THEREAFTER THE AO IMPOSED PENALTY ON THIS DISALLOWA NCE @ 100% ON TAX SOUGHT TO BE EVADED. THE LD.CIT(A) UPHE LD THE PENALTY SO LEVIED HOLDING THAT IN THE ABSENCE OF SUBSTANTIATION OF THE GENUINENESS OF THE CLAIM BY T HE ASSESSEE, THE EXPENDITURE WAS CLAIMED ONLY WITH A V IEW TO REDUCE THE TAX LEVIABLE AND, THEREFORE, PENALTY HAD BEEN JUSTIFIABLY LEVIED ON THE DISALLOWANCE SO MADE. 166. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE REL IED ON THE SUBMISSIONS FILED BEFORE THE LD.CIT(A) DURING APPEL LATE 109 PROCEEDINGS, REPRODUCED AT PARA 9.4 OF THE ORDER AS UNDER: 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. ASSESSI NG OFFICER HAS ERRED IN IMPOSING THE PENALTY U/S 271(L)(C) OF INCO ME TAX ACT AS THE DISALLOWANCE U/S 37 OF INCOME TAX ACT AMOUNT ING TO RS.1500000/- IS ALREADY UNDER APPEAL BEFORE HON'BLE IT AT, CHANDIGARH. WHEN BONAFIDE CLAIM MADE BY THE ASSESSE S IS NOT SUSTAINABLE IN LAW, IT IS NOT A CASE FOR IMPOSING T HE PENALTY U/S 271(L)(C) OF INCOME TAX ACT ESPECIALLY WHEN TAX HAS BEEN DEDUCTED AT SOURCE ON THE PAYMENTS MADE. THE COMPAN Y HAD PAID CONSULTANCY CHARGES OF RS.1500000/- TO SH. RAJ NEESH RAMETRA WHO IS A NRI SHAREHOLDER OF THE COMPANY AND IS A TECHNOCRAFT WHO HAD PROVIDED CONSULTANCY SERVICES T O THE COMPANY IN A HEALTHCARE SYSTEM, PROCEDURES AND REGA RDING DAY TO DAY ADMINISTRATION. THE PAYMENTS -WERE MADE AS PER THE TERMS OF AGREEMENT AND WORKSHOPS WERE HELD IN T HE HOSPITAL AND CONSULTANCY WAS ALSO PROVIDED VIA E-MA IL, TELE CONFERENCING, VIDEO CONFERENCING ETC. HE IS A NON-R ESIDENT AND TRAVEL FREQUENT TO INDIA. COPY OF HIS PASSPORT, INC OME 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 D OES NOT MEAN CONCEALMENT OF INCOME NOR FURNISHING INACCURAT E 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 C ONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE P ARTICULARS. - NATIONAL TEXTILES V. CIT (2001) 249 ITR 125 (GUJ) - WHERE IT WAS HELD THAT THOUGH THE DEPARTMENT WAS JU STIFIED IN TREATING THE CASH CREDITS AS INCOME OF THE ASSESSEE THERE WAS 110 NOTHING TO LEAD TO A REASONABLE AND POSITIVE INFERE NCE THAT THE ASSESSEE'S EXPLANATION WAS FALSE CIRCUMSTANCES DO NOT JUSTIFY IMPOSITION OR PENALTY EVEN BY TAKING RECOUR SE TO EXPLANATION. 1 TO S. 271(1)(C). CHANDRAYAL BASSA V INCOME TAX APPELLATE TRIBUNAL (2 003) 261ITR 67 (RAJ.) & DEVSONS P. LTD V CIT(2011) 196 TAXMAN 21 (DEL)- WHERE IT WAS HELD THAT NO PENALTY IS LEVIABLE IF TH E FACTS OF THE TRANSACTIONS ARE DISCLOSED. -CIT V. TRADERS AND TRADERS 244 ITR 367 (MADRAS HIG H COURT) & WOODWARD GOVERNOR INDIA FP) LTD, V CIT (2002) 253 I TR 475 (DEI) & CIT V DHARAM CHAND L. SHAH (1993) 204 ITR 462 (BOM) WHERE IT WAS HELD THAT THE FACT CERTAIN ADDITIONS W ERE 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 JUDGEMEN TS, IT IS PRAYED THAT APPROPRIATE RELIEF MAY KINDLY BE ALLOWE D TO THE ASSESSEE ON THE GROUNDS OF APPEAL AND THE PENALTY I MPOSED MAY KINDLY BE CANCELLED. ' 167. REFERRING TO THE SAME THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT SHRI RAJNEESH RAMITRA WAS A TECHNOCR AFT AND HAD PROVIDED CONSULTANCY SERVICES TO THE ASSESSEE I N HEALTHCARE SYSTEM PROCEDURE AND DAY-TO-DAY ADMINIST RATION AND THE SERVICE HAD BEEN PROVIDED BY WAY OF HEALTH WORKSHOP IN THE HOSPITAL AND VIA EMAIL, TELECONFERE NCING, VIDEO CONFERENCING, ETC.. IT WAS POINTED OUT THAT T HE PAYMENT HAD BEEN MADE AS PER THE AGREEMENT ENTERED INTO WIT H HIM 111 AND TDS ALSO HAD BEEN DEDUCTED ON THE SAME. IT WAS FURTHER CONTENDED THAT EVIDENCES BY WAY OF COPY OF HIS PASS PORT, INCOME TAX RETURNS, PAN AND ADDRESS HAD BEEN DULY F ILED. IT WAS, THEREFORE, CONTENDED THAT MERE DISALLOWANCE OF CLAIM WOULD NOT LEAD TO LEVY OF PENALTY WHEN OTHERWISE, A LL PARTICULARS RELATING TO THE CLAIM HAD BEEN DULY DIS CLOSED BY THE ASSESSEE. 168. THE LD. DR, ON THE OTHER HAND, RELIED UPON TH E ORDER OF THE CIT(A) POINTING OUT THAT SINCE THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF THE CLAIM, THE PART ICULARS FURNISHED WERE UNDOUBTEDLY INACCURATE AND INCORRECT AND PENALTY, THEREFORE, HAD BEEN RIGHTLY CONFIRMED BY T HE CIT(A). HE DREW OUR ATTENTION TO PARA 9.5 OF THE ORDER OF C IT(A) AS UNDER: 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 R AMITRA WAS NOT A GENUINE CLAIM. THE APPELLANT HAD FAILED TO FU RNISH ANY EVIDENCE WITH REGARD TO ANY SERVICE RENDERED BY SH. RAJNEESH RAMITRA. IT IS ALSO FACT ON RECORD THAT SH. RAJNEES H 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 WI TH A VIEW TO REDUCE THE TAX LIABILITY. THE AO WAS THEREFORE FULL Y JUSTIFIED IN IMPOSING PENALTY U/S 271(L)(C ) AGAINST THIS ADDITI ON. THE PENALTY IMPOSED ON THIS DISALLOWANCE IS CONFIRMED. THE APPEAL OF THE APPELLANT IS PARTLY ALLOWED. 169. HAVING HEARD THE RIVAL CONTENTIONS WE ARE NOT IN 112 AGREEMENT WITH THE LD.CIT(A). UNDISPUTEDLY ALL PART ICULARS RELATING TO THE CLAIM HAD BEEN DULY DISCLOSED AND T HE DISALLOWANCE MADE FOR WANT OF EVIDENCE TO PROVE THE RENDERING OF SERVICES BY THE SAID CONSULTANT. IT IS ALSO A FACT ON RECORD THAT THE PAYMENT WAS MADE THROUGH BANKING CHANNELS AND EVEN TDS DEDUCTED ON THE SAME. CLEARLY ,IT IS NOT THE CASE THAT THE CLAIM OF THE ASSESSEE WAS FOU ND TO BE WHOLLY FALSE BY THE REVENUE. WE THEREFORE HOLD THAT THOUGH IT MAY BE A FIT CASE FOR MAKING DISALLOWANCE OF EXP ENSES,BUT DEFINITELY THE ASSESSEE CANNOT BE CHARGED WITH HAVI NG CONCEALED/FURNISHED INACCURATE PARTICULARS OF INCOM E RELATING TO THE SAME. WE THEREFORE DIRECT THAT THE PENALTY LEVIED ON THE DISALLOWANCE OF CONSULTANCY CHARGES O F RS. 15 LACS BE DELETED. GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITA NOS.723 & 725/CHD/2017 ARE, THEREFORE, ALLOWED. THE APPEALS OF THE ASSESSEE IN ITA NOS.723 & 725/CHD/2017 ARE ALLOWED. 170. AS FAR THE APPEAL FILED BY THE ASSESSEE RELAT ING TO ASSESSMENT YEAR 2010-11 IN ITA NO.724/CHD/2017, TH E ISSUE RELATES TO ADDITION MADE OF RS.11 LACS, THE F ACTS 113 RELATING TO WHICH, AS REPRODUCED IN THE ORDER OF TH E CIT(A) AT PARA 11.3 OF HIS ORDER ARE AS UNDER: 11.2 AS REGARDS, THE PENALTY ON ADDITION OF RS. 11 LAKHS U/S 37 IS CONCERNED, IT IS SEEN FROM THE ASSESSMENT ORD ER THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT AS PE R 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. TH E AO ACCORDINGLY HELD THAT THIS AMOUNT OF RS. 11 LAKHS I S 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 ABL E TO EXPLAIN THE REASONS FOR THE DIFFERENCE AND THEREFORE THE SA ME WAS TO BE TREATED AS UNACOUNTED RECEIPTS. THE AO THEREAFTER L EVIED PENALTY ON THIS ADDITION @ 100% OF TAX SOUGHT TO BE EVADED. 171. THE LD.CIT(A) ON FINDING THAT THE ASSESSEE WA S UNABLE TO CONTROVERT THE FINDINGS OF THE LD.CIT(A) IN QUAN TUM PROCEEDINGS THAT RS.11 LACS REPRESENTED UNACCOUNTED RECEIPTS OF THE ASSESSEE, UPHELD THE PENALTY LEVIED . 172. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE RE LIED UPON THE SUBMISSIONS MADE BEFORE THE LD.CIT(A), REPRODUC ED AT PARA 11.4 AS UNDER: 11.4 AR OF THE APPELLANT VIDE WRITTEN SUBMISSION S DATED 02/03/2017. RELEVANT PART OF THE WRITTEN SUBMISSION S IS REPRODUCED AS UNDER :- 'WITHOUT PREJUDICE TO THE SUBMISSIONS AS PER GROUND OF APPEAL NO.-L ABOVE, IT IS FURTHER SUBMITTED THAT THE LD. A SSESSING 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 AMOUN TING TO RS.1100000/- IS ALREADY UNDER APPEAL BEFORE HON 'BL E ITAT, CHANDIGARH. THIS ADDITION IS MADE ON ACCOUNT OF DIF FERENCE 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 W HICH MAY BE INCOMPLETE AND WITHOUT VERIFICATION AND IT CANNOT B E A CASE FOR IMPOSING PENALTY U/S 271(L)(C) OF INCOME TAX ACT. H ENCE, IT IS PRAYED THAT THE APPROPRIATE RELIEF MAY KINDLY BE GR ANTED TO THE ASSESSEE AND PENALTY IMPOSED MAY KINDLY BE CANCELLE D. RELIANCE MAY BE PLACED ON THE FOLLOWING JUDGMENTS : - - CIT VS. SANGRUR VANASVATI MILLS LTD. (2008) 303 I TR 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 E VIDENCE 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 ACCO UNT OF UNDISCLOSED NET PROFIT, THERE IS NO OTHER MATERIAL AVAILABLE WITH AO EXCEPT PROVISIONAL P&L ACCOUNT, WHICH TOO WAS SU BSEQUENTLY 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 I TR 475 (DEL.) & CIT V DHARAM CHAND L. SHAH (1993) 204 ITR 462(BOM)- WHERE IT WAS HELD THAT THE FACT CERTAIN ADDITIONS W ERE 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 JUDGMENT S, IT IS 115 PRAYED THAT APPROPRIATE RELIEF MAY KINDLY BE ALLOWE D TO THE ASSESSEE ON THE GROUNDS OF APPEAL AND THE PENALTY I MPOSED MAY KINDLY BE CANCELLED. ' 173. REFERRING TO THE SAME THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE DIFFERENCE RELATED TO THE FIGURE S OF RECEIPTS REFLECTED IN THE PROVISIONAL TRIAL BALANCE FOUND DURING THE COURSE OF SEARCH AND THAT REFLECTED IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE, WHICH THE ASSESSEE WAS UNABLE TO EXPLAIN. IT WAS CONTENDED THAT BEING PROVISIONAL FIGURES THEY WERE JUST ESTIMATES AND, THEREFORE, IT COULD N OT BE SAID CATEGORICALLY THAT THE ASSESSEE HAD CONCEALED THE I NCOME TO THE EXTENT OF RS.11 LACS. 174. THE LD. DR, ON THE OTHER HAND, RELIED UPON TH E ORDER OF THE CIT(A). HE DREW OUR ATTENTION TO PARA 11.5 O F THE ORDER OF CIT(A) AS UNDER: 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 EXP LAIN THE DIFFERENCE IN THE RECEIPTS. THE CIT(A) HAS CATEGORI CALLY HELD THAT THE DIFFERENCE OF RS. 11 LAKHS WAS THE UNACCOU NTED RECEIPTS OF THE APPELLANT. THE APPELLANT HAS NOT BE EN ABLE TO CONTROVERT THIS FINDING OF THE CIT(A). THE AO WAS T HEREFORE FULLY JUSTIFIED IN IMPOSING PENALTY U/S 271(L)(C ) ON THIS ADDITION. THE PENALTY IMPOSED ON THIS ADDITION IS C ONFIRMED. THE APPEAL OF THE APPELLANT IS PARTLY ALLOWED. 175. WE HAVE HEARD THE RIVAL CONTENTIONS. WE FIND MERIT IN 116 THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. ADMITTEDLY, THE ADDITION HAS BEEN MADE ON ACCOUNT O F DIFFERENCE IN RECEIPTS REFLECTED IN THE PROVISIONAL TRIAL BALANCE FOUND DURING THE SEARCH AND THAT SHOWN IN T HE BOOKS OF ACCOUNT, WHICH THE ASSESSEE WAS UNABLE TO OFFER ANY EXPLANATION ABOUT. THE FIGURES REFLECTED IN THE PROVISIONAL TRIAL BALANCE CANNOT BE SAID TO THE FIN AL FIGURES OF RECEIPTS AND, THEREFORE, AS RIGHTLY STATED BY TH E LD.COUNSEL FOR THE ASSESSEE, THE ADDITION MADE IS N OT ON ACCOUNT OF ANY CONCRETE FINDING THAT THE ASSESSEE H AD NOT DISCLOSED INCOME TO THE EXTENT OF DIFFERENCE BETWEE N THE TWO DOCUMENT. WE THEREFORE HOLD THAT THOUGH IT MAY BE A FIT CASE FOR MAKING ADDITION BUT IN THE FACTS OF THE CASE THE ASSESSEE CANNOT BE CHARGED WITH HAVING CONCEALED/FU RNISHED ANY INACCURATE PARTICULARS OF INCOME SO AS TO ATTRA CT LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. WE, THEREFORE, DI RECT THE DELETION OF PENALTY ON THE ADDITION OF RS.11 LACS. THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWED. IN THE RESULT; 1) THE APPEAL OF THE REVENUE IN ITA NO.33/CHD/2014 IS DISMISSED AND THE CO NO.9/CHD/2014 FILED BY THE ASSESSEE IS ALLOWED. 117 2) THE APPEAL OF THE REVENUE IN ITA NO.34/CHD/2014 IS DISMISSED AND THE CO NO.10/CHD/2014 FILED BY THE ASSESSEE IS PARTLY ALLOWED. 3) THE APPEAL OF THE REVENUE IN ITA NO.35/CHD/2014 IS DISMISSED AND THE CO NO.11/CHD/2014 FILED BY THE ASSESSEE IS PARTLY ALLOWED. 4) THE APPEAL OF THE REVENUE IN ITA NO.36/CHD/2014 IS DISMISSED AND THE CO NO.12/CHD/2014 FILED BY THE ASSESSEE IS PARTLY ALLOWED. 5) THE APPEAL OF THE REVENUE IN ITA NO.30/CHD/2014 IS DISMISSED AND THE CO NOS.40 & 43/CHD/2016 FILED BY THE ASSESSEE ARE ALLOWED. 6) THE APPEALS OF THE ASSESSEE IN ITA NO.723 TO 725/CHD/2017 ARE ALLOWED. 7) THE APPEALS OF THE REVENUE IN ITA NOS.1218 TO 1222/CHD/2017 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ' # $ %! (SANJAY GARG) (ANNAPURNA GUPTA) /JUDICIAL MEMBER &' /ACCOUNTANT MEMBER )' /DATED: 31 ST JULY, 2019 * ! * 118 &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35# / GUARD FILE &) ' / BY ORDER, / ASSISTANT REGISTRAR