DCIT , CHENNAI V. MS.MEERA ARUN (LEGAL REP OF DR.A.M.ARUN ), CHENNAI

ITA 831/CHNY/2022

AI Insights

The case involves six appeals by the Revenue against the order of the Commissioner of Income Tax (Appeals)-18, Chennai, which pertained to the assessment years 2010-11 to 2015-16. The primary issues revolved around the additions made by the Assessing Officer (AO) on account of excess capitalization of assets, deemed dividend, and unexplained credits in the books of the assessee, Smt. Meera Arun, who was the legal representative of Dr. A.M. Arun. The AO had conducted a search and seizure operation under section 132 of the Income Tax Act, leading to the discovery of incriminating materials. The CIT(A) deleted the additions made by the AO, which was contested by the Revenue in the appeals. The Tribunal, after examining the submissions, remand reports, and the rejoinders, upheld the CIT(A)'s decision, emphasizing that the funds were utilized for business purposes and not for personal gains.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773122 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 07-10-2022
• Other Referred Cases: CIT vs. Shaw Wallace & Co., CIT vs. Kabul Chawla, CIT vs. Manish Build Well (P) Ltd, Keshav Mills Co. Ltd. v. CIT, Ram Prasad Sharma Vs CIT, C. Unni Krishnan Vs CIT, Haji LalMohd. Biri Works Vs CIT, ACIT VS M/s Nirula Handicrafts Bazar Pvt Ltd, Pr.CIT Vs Meetha Gutgutia, CIT vs Harjeev Agarwal, CIT vs. Lancy constructions, CIT Vs Contental Warehousing Corp (Nahava Sheva) Ltd, CIT Vs. Kabul Chawla, CIT Vs. Raj Kumar Arora, CIT Vs. Raj Kumar Arora, CIT Vs. Raj Kumar Arora
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REVENUE EXPENDITURE OR; REVENUE EXPENDITURE OR REPAYMENT OF LOANS THROUGH ASSOCIATE; REVENUE EXPENDITURE OF VHCPL OR; REVENUE EXPENDITURE OR REPAYMENT OF LOANS THROUGH; REVENUE EXPENDITURE OR; ASSESSEES UNEXPLAINED EXPENDITURE OR ASSESSEES UNEXPLAINED; REVENUE; BIPIN. C.N.
• Keywords: Set aside; Additional evidence; Revenue expenditure; Business expenditure; Corroborative evidences; Unexplained cash credit; Unexplained expenditure; Depreciation; Unexplained investment; Deemed dividend; Income from undisclosed sources; Document seized; Documents seized; Capital expenditure; Principle of natural justice; TDS; Wrong claim; Source of fund; Deemed to accrue or arise in india; Recovery proceedings; Related party transaction
• Section: 142(1); 132; 153A; 69C; 2(22)(e); 37(1)

Judgement Text

"आयकर अपीलीय अिधकरण, ‘सी’ ा यपीठ, चे\u0012ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI \u0014ी मनु क ुमा र िग\u0019र, ा ियक सद\u001b एवं \u0014ी एस. आर. रघुना था , लेखा सद\u001b क े सम\" BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.:830, 831, 832, 833, 834 & 835/CHNY/2022 िनधा #रण वष# / Assessment Years: 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 & 2015-16 The Deputy Commissioner of Income Tax, Central Circle -2(1), Chennai. vs. Smt. Meera Arun (Legal Representative of Dr.A.M.Arun) New No.52, Old No.37A, JJ Road, Teynampet, Chennai – 600 018. (अपीला थ%/Appellant) [PAN:ADKPA-7987-M] (&'थ%/Respondent) अपीला थ% की ओर से/Appellant by : Shri Bipin. C.N., CIT &'थ% की ओर से/Respondent by : None सुनवा ई की ता रीख/Date of Hearing : 22.07.2025 घोषणा की ता रीख/Date of Pronouncement : 24.09.2025 आदेश /O R D E R PER BENCH: These six appeals filed by the Revenue are directed against the combined order of the Commissioner of Income Tax (Appeals)-18, Chennai (‘ld.CIT(A)’ in short) dated 20.07.2022 for the assessment years 2010-11 to 2015-16. Since, the issue raised and the facts and circumstances in all these Printed from counselvise.com - 2 - ITA Nos.830 to 835/CHNY/2022 six years are exactly identical, these appeals are heard together and are disposed of by this common order. 2. The facts and circumstances are exactly identical in all the six years and grounds raised are also identical. Hence, we will take the facts and grounds from assessment year 2010-11 in ITA No.830/CHNY/2022 and will decide the issue. The relevant grounds raised in assessment year 2010-11 reads as under:- 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The Ld.CIT(A) erred in deleting the addition of Rs.11,86,42,113/- towards funds received from M/s.Vasan Health Care Pvt Ltd on account of excess capitalization of assets, when the fact of excess capitalization stands admitted. 2.1. The Ld.CIT(A) erred in facts in failing to appreciate that the Manager of M/s. Vasan Health Care Pvt Ltd in his sworn statement admitted that the excess sums recorded for asset capitalization were actually withdrawn and paid to M/s.Vasan Medical Centre India Pvt Ltd or to Dr.A.M.Arun 2.2 The Ld.CIT(A) erred in facts in failing to appreciate that on enquiries with vendors, they admitted that the excess capitalization was made without their knowledge and the assessing officer has assessed the amount withdrawn in the hands of Dr.A.M Arun, the beneficiary of these transactions. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. Printed from counselvise.com - 3 - ITA Nos.830 to 835/CHNY/2022 3. The facts of the case are that, the assessee, an individual is a Director and a shareholder in Vasan Group of Companies viz., (i)M/s.Vasan Healthcare Pvt.Ltd., (ii) M/s Vasan Medical Center (India) Pvt.Ltd., (iii) M/s.Anjana Medicare Services (P) Ltd., (iv)M/s.Assured Best Care Hospitals Pvt.Ltd. A Search & seizure action u/s.132 of the Act was conducted on 01.12.2015 in the residential premises of the assessee and in the business premises as well. During the course of search, certain incriminating materials in the form of records and electronic devices were found and seized. Consequent to the search, notice u/s.153A of the Act was issued and the assessments were completed u/s.153A of the Act on 29.12.2017 for the A.Ys.2010-11 to 2015-16 and u/s.143(3) dated 29.12.2017 for the A.Y.2016-17 making certain additions/disallowances. While doing so, the AO made the following additions as tabulated below based on the incriminating materials/electronic data found and seized:- A.Y. 2010-11 Sl.No. Nature of Addition Amount (in Rs.) (i) Excess capitalization of assets 11,86,42,113/- (ii) Deemed Dividend u/s.2(22)(e) 5,76,04,608/- (iii) Discrepancies in the Balance Sheet of M/s.Vasan Medical Centre & M/s.ABC Hospitals Pvt. Ltd. 2,63,20,547/- (iv) Credits in Ledger account in books of M/s.ABC Hospitals Pvt. Ltd. 3,85,01,683/- (v) Credits in Ledger account M/s.Vasan Healthcare Pvt. Ltd. 2,27,44,677/- (vi) Credits in Ledger account with M/s.Vasan Dental Hospital Pvt. Ltd. 12,09,513/- Printed from counselvise.com - 4 - ITA Nos.830 to 835/CHNY/2022 A.Y. 2011-12 Sl.No. Nature of Addition Amount (in Rs.) (i) Excess capitalization of assets 35,47,69,421/- (ii) Deemed Dividend u/s.2(22)(e) 53,72,06,610/- (iii) Directors Remuneration 12,43,000/- (iv) Allotment of shares on transfer of Business 2,16,30,000/- (v) Amount credited by way of transfer to Ledger Account 2,70,00,000/- (vi) Credits in Ledger account M/s.Vasan Healthcare Pvt. Ltd. 3,00,00,000/- (vii) Credits in Ledger account with M/s.Vasan Dental Hospital Pvt. Ltd. 8,00,000/- (viii) Payments received from M/s.Assured Best Care Hospitals Pvt Ltd., 32,89,001/- A.Y. 2012-13 Sl.No. Nature of Addition Amount (in Rs.) (i) Excess capitalization of assets 65,65,97,475/- (ii) Deemed Dividend u/s.2(22)(e) 10,18,14,826/- (iii) Directors Remuneration 6,00,000/- (iv) Interest Income 48,11,453/- (v) Cash Payment to employee of M/s.Vasan Healthcare Pvt. Ltd. 6,54,000/- (vi) Account with M/s.Vasan Healthcare Pvt. Ltd., credited by City Union Bank 99,72,472/- (vii) Ledger account with M/s. Assured Best Care Hospitals Pvt. Ltd., credited by JV 69,25,000/- A.Y. 2013-14 Sl.No. Nature of Addition Amount (in Rs.) (i) Excess capitalization of assets 71,48,72,841/- (ii) Deemed Dividend u/s.2(22)(e) 5,18,06,488/- (iii) Directors Remuneration 12,00,000/- (iv) Cash Payments 2,85,700/- (v) Cash paid to Shri Ramesh Babu 7,50,000/- (vi) Interest Expenses 1,61,26,027/- Printed from counselvise.com - 5 - ITA Nos.830 to 835/CHNY/2022 (vii) Interest Income from M/s.Vasan Healthcare Pvt. Ltd., 5,24,448/- (viii) Interest Income from M/s.Assured Best Care Hospitals Pvt. Ltd. 11,02,500/- (ix) Account with M/s.Vasan Healthcare Pvt. Ltd., credited by M/s.Vasan Medical Centre India Pvt. Ltd., 10,00,00,000/- (x) Account with M/s.Vasan Healthcare Pvt. LTd., credited by M/s.Vasan Medical Centre India Pvt. Ltd., by Credit Card 5,50,00,000/- (xi) Account credited by M/s.Assured Best Care Hospitals P. Ltd., on account of temporary building 90,00,000/- (xii) Account credited by M/s.Vasan Medical Centre India P. Ltd., under the head “Head Office” 5,17,211/- (xiii) Account credited by M/s. Vasan Medical Centre India P. Ltd., under the head “LIC Interest” 30,00,000/- A.Y. 2014-15 Sl.No. Nature of Addition Amount (in Rs.) (i) Excess capitalization of assets 79,79,09,658/- (ii) Deemed Dividend u/s.2(22)(e) 7,67,36,512/- (iii) Directors Remuneration 7,82,00,000/- (iv) Unaccounted investment in Property (protective basis) 2,08,00,000/- (v) Cash Deposit in Bank Accounts 94,03,000/- (vi) Disallowance of Expenses claimed against Interest 1,01,75,586/- (vii) Credit Card Expenses of Ms. Meera Arun (substantive basis) 2,55,856/- A.Y. 2015-16 Sl.No. Nature of Addition Amount (in Rs.) (i) Excess capitalization of assets 39,45,25,393/- (ii) Deemed Dividend u/s.2(22)(e) 65,56,223/- (iii) Directors Remuneration 6,43,50,400/- (iv) Cash Deposit in Bank Accounts 93,02,000/- Printed from counselvise.com - 6 - ITA Nos.830 to 835/CHNY/2022 (v) Investment in Mutual Funds 63,00,000/- (vi) Investment in shares of M/s.Vasan Healthcare P.Ltd. 5,00,00,000/- (vii) Credit Card Expenses 39,02,917/- (viii) Cash Deposits in bank accounts of Ms.Meera Arun 12,42,949/- (ix) Investment in Mutual Funds by Ms.Meera Arun 35,00,000/- (x) Credit Card Expenses of Ms. Meera Arun 2,00,949/- A.Y. 2016-17 Sl.No. Nature of Addition Amount (in Rs.) (i) Deemed Dividend 25,000/- (ii) Directors Remuneration 1,15,50,400/- (iii) Cash Deposit in Bank Accounts 2,39,45,000/- (iv) Cash Deposits in bank account of Ms. Meera Arun 11,05,000/- (v) Investment in Mutual Funds 15,00,000/- (vi) Credit Card Expenses of Ms. Meera Arun (Substantive basis) 2,81,129/- (vii) Cash loans to M/s. Vasan Health Care P Ltd 23,61,15,000/- (viii) Credits in ledger account in the books of M/s. Vasan Medical Centre India P Ltd 9,06,99,598/- (ix) Cash & Foreign currency seized 9,55,725/- Thus, aggrieved by the above additions, the assessee has filed the Following grounds of appeal before the ld.CIT(A)-18, Chennai. A.Y. 2010-11 Excess Depreciation 1. The Assessing Officer has erred in law and in fact in in assessing the total income at Rs.27,44,88,141/- and making several additions without considering the details submitted and sub missions made orally and in writing. 2. Excess capitalization and funds received from Vasan Health Care a) The Assessing Officer has erred in law and in fact in making an addition of Rs.11,86,42,113/- as excess capitalization, as received from Vasan Health Care Pvt. Ltd. Printed from counselvise.com - 7 - ITA Nos.830 to 835/CHNY/2022 b) The AO has failed to consider the fact that there is no excess capitalization involved and is a question of whether it is a revenue expenditure or capital expenditure incurred towards interior office expenses and wood work etc. and connected expenses at the time of opening of various branches as a project. c) The AO has come to a wrong conclusion based on the sworn in statement and is not correct in stating that the assessee and the Accountant have accepted the excess capitalization. 3.Deemed Dividend a) The learned AO has erred in disallowing a s um of Rs.5,76,04,608 as deemed dividend u/s 2(22)(e) of the IT Act from M/s Vasan Health Care - Rs.3,67,94,526 and M/s ABC Hospital Pvt. Ltd Rs.2,08,10,082. b) The AO is wrong in ignoring the fact the amounts were drawn by Dr. Arun towards business expenses for his group concern and is not a personal drawing for which necessary details were submitted at time of assessment. c) The AO is also not correct in disregarding the fat that the funds drawn for business expansion were also repaid on various dates and this should have been taken into account. Unexplained Credits 4. Group Company Transactions The AO is wrong in adding a sum of Rs. 2,63,20,547 stating that there are discrepancies in balance sheet of M/s Vasan Medical Centre India Private Limited and M/s ABC Hospitals Put. Ltd. which has not been established. The AO has failed to consider the details submitted and there are no discrepancies in the balance sheet and the amounts were drawn for business expenses and debited to the concerned account. 5. The AO has erred in adding a sum of Rs.3,85,01,683 as un explained credit in the books of ABC Hospitals Pvt.Ltd. as the details and confirmation is available. The AO has come to a wrong conclusion without considering the full details submitted and there are no unexplained credits. 6. The AO has erred in adding a sum of Rs.2,27,44,677 as credits in the ledger account of M/s Vasan Healthcare Put. Ltd. The AO has failed to consider the details submitted and that there are no unexplained credits in the ledger account. 7. The AO has erred in adding a sum of Rs. 12,09,513 being credits in the ledger account of Vasan Dental Hospital Put. Ltd. The AO has failed to consider the details submitted and no proper reasons have been given for the additions. Printed from counselvise.com - 8 - ITA Nos.830 to 835/CHNY/2022 4. Before the ld.CIT (A) the assessee assailing the action of the AO, wherein the assessee submitted the following details in respect of the additions made on account of excess capitalisation of assets to the tune of Rs.292,63,16,901/-: “6.2.1 Submissions made on 21.12.2018 1. The Facts of the issue :The Appellant submits that he has not received any amount from M/s. Vasan Health Care Pvt Ltd on account of excess Capitalisation of assets. The AO has added Rs.292,63,16,901/- to the returned income of the Appellant for the AY 2010-11 to 2015-16 as detailed here below: Assessment Year Added on account of excess of 2010-11 11,86,42,113 2011-12 24,37,69,421 2012-13 65,65,97,475 2013-14 71,48,72,841 2014-15 79,79,09,658 2015-16 39,45,25,393 TOTAL 292,63,16,901 For the AY 2010-11 the Ld.AO has added Rs. 11,86,42,113/- in the hands of the Appellant as Funds received from Vasan Healthcare Pvt Ltd on account of excess Capitalisation of Assets. 1.1. The appellant submits that few wrong entries were made through the books of accounts of the Vasan Group Companies to project a healthy financials for the company M/s Vasan Health Care Pvt. Ltd. (hereinafter referred to as VHCPL) to ensure continued loan patronage from banks and also ensure progress and expansion in business to create a goodwill in the market. The company VHCPL wanted to come out with an Initial Public Offering and in order to project availability of Fixed Assets of substantive value, a portion of the revenue expenditure of VHCPL which was claimed to have been spent towards acquisition of fixed assets in the form of Interior Decoration, Furniture and Fittings, etc were actually diverted to M/s Vasan Medical Centre India Pvt. Ltd., (hereinafter referred to as VMCPL) and M/s Assured Best Care Hospital Pvt. Ltd (hereinafter referred to as ABCHPL). Printed from counselvise.com - 9 - ITA Nos.830 to 835/CHNY/2022 1.2 . These amounts which were diverted were limited to a few crores of rupees and the other three entities including the appellant acted as a conduit of these funds which were thereafter spent towards revenue expenditure of VHCPL. The purpose of the diversion is to create a strong asset base for VHCPL while at the same time settling the revenue expenditure due in the form of salaries and other costs through these three entities. 1.3. The entries were cyclic involving a small portion of turnover and if the link between the source and expenditure were appreciated, it can be very well seen that the actual financials do not fit anywhere near in comparison to the phenomenal projections undertaken by the Assessing Officer. While the picture is gloomy in the case of the companies and persons of the Appellant group, the end result of assessments have projected an illusory, unreasonable and excessive income in the hands of the group companies which otherwise is incorrect. 1.4 As stated earlier, the discrepancies in the group companies was limited to the extent of wrong claim of depreciation on the fixed assets, the payment towards which were diverted to other group companies as stated above. It also requires to be appreciated that a part of the transactions are in reality go round and round, funded by the same money received as loan in cash from Shri J. Dinakaran and after routing through various entities reach the same person as repayment of loan. 1.5 Illogical nature of assessments : (a). It is rather disheartening to note that the Investigation Officers despite comprehending the real fact situation in the group of cases, as detailed above, have chosen to ignore the same and as a result the Assessing Officer has taxed the same income in the hands of every entity in the group which participated in the cycle. (b). The assessments in the case is not a normal scrutiny assessment where a discrepancy found is brought to tax in the hands of such assessee. On the contrary, a search action u/s 132 has been carried out in the assessee's case and every other entity or person have been covered either by search or survey by the Department, sparing none. While doing so, the assessment has to be concluded on the Principle of 'Real Income Theory', more particularly when it is a search operation that covered the whole group. One cannot treat the same income in the hands of multiple persons. In the case of the appellant, the fund movement from one entity to another entity is taxed in the hands of every entity which participated in the cycle. (c). The Assessing Officer is fully aware that the same monies are doing rounds and the same is illustrated by the fact that in the concluding part of the Assessment Orders in A.Y 2010-11, 2011-12, 2012-13, 2013-14, 2014- 15, 2015-16 and 2016-17 the Assessing Officer had himself ratified this Printed from counselvise.com - 10 - ITA Nos.830 to 835/CHNY/2022 proposition. For ease of reference, the relevant contents of the Assessment order in A. Y. 2015-16 is reproduced hereunder: “As per information received from ACIT, Central Circle - 3(2), Chennai, a search action u/s 132 of the Act on 28/01/2015 has been carried out in the case of Shri J. Dhinakaran, PAN AIGPD7898D. During the course of search, it was noticed that Shri J. Dhinakaran had advanced a cash loan of Rs. 85,22,33,333/- to the assessee. Shri J. Dhinakaran advanced cash loan after upfront deduction of interest receivable and any outstanding interest due from the party. The assessee in his submission has admitted receipt of cash loan of Rs. 62,73,51,000/- during the year from Shri J. Dhinakaran. Further, the assessee has paid interest expenses of Rs. 11,81,40,001/- being interest of Rs. 8,06,00,001/- and interest on delayed payment of Rs. 3,75,40,000/- during the year which was nothing but interest deducted from the loan disbursed. The cash loan received from Shri J. Dhinakaran has been introduced in the books of M/s Vasan Medical Centre India Pvt. Ltd. and M/s Vasan Health Care Pvt. Ltd. and the repayment of loan has also been carried out from the books of M/s Vasan Medical Centre India Pvt. Ltd. and Vasan Health Care Pvt. Ltd. The cash loan receipts from Shri J. Dhinakaran by Dr. A.M. Arun and cash loan receipt by M/s Vasan Medical Centre India Pvt. Ltd. and M/s Vasan Health Care Pvt. Ltd. from Dr. A.M. Arun in its books and its repayment or in contraventions to provisions of S. 269SS and 269T for which a proposal to initiate penalty proceedings u/s 271D and 271E of the Act are being submitted separately to Addl. CIT, Central Range - 2, Chennai.\" The Assessing Officer has clearly acknowledged and has by himself expressed the source of funds and the intermediaries who participated in the fund movement and its repayment. When the source of funds is clearly proven, has to have been received from Shri J. Dhinakaran, the Learned AO ought not to have taxed it in the hands of the assessee. It is not limited to taxation of income in the hands of the recipient from Shri J. Dhinakaran but each and every entity in the Appellant's Group who acted as a conduit had to suffer the rigours of taxation of the same receipt which is not even income of none of the members in the Appellant's Group. 1.6: Real Income Theory not followed by the Ld AO: (a). When it is profoundly clear that the funds are moving rounds in a cyclic manner, going by the Real Income Theory, the assessment must have been concluded based on the value of unexplained investments, expenditure, etc., since the source of funds is fully established before the Department as out of round tripping of the same quantum of funds. (b). This contention is not an afterthought and the Honourable Commissioner of Appeals may kindly appreciate the fact that in all the statements recorded at the time of search and post-search on 06.05.2016 Printed from counselvise.com - 11 - ITA Nos.830 to 835/CHNY/2022 and 18.05.2016 the scheme adopted by the Appellant's Group of Companies has been impressed on the DDIT(Inv.), Unit -3(2), Chennai. (c). As stated earlier, the purpose of these cyclic transactions is to project the financials in a rosy picture in the case of VHCPL. Accordingly, the method adopted was to book a portion of Capital Expenditure through certain vendors and instead of paying these persons, who are stated to have executed the contract resulting in addition to fixed assets, was routed to other entities/persons of the group to be utilised for the revenue expenses of VHCPL including payment of interest to Shri J. Dhinakaran. Not a single rupee was diverted for personal use or creation of any asset for the directors of the company. The funds have been totally utilised only for the purpose of business, though it would have violated certain provisions of law in treating Revenue expenses as Capital Expenditure. The note on excess capitalisation explaining the methodology employed is provided as Annexure- 1. (d). Therefore the only disallowance that can be made in the case of the company being VHCPL is restricted to the disallowance of depreciation that corresponds to the Fixed Assets that have never come into existence. This fact has been admitted in the deposition of the appellant on 06.05.2016 and 18.05.2016. There is no suppression of revenue and credited to the Profit and Loss A/c and all expenses other than the claim of depreciation on non- existent fixed assets, are genuine and the Audit Report will clearly exemplify the claim that all necessary aspects of revenue recognition in the hands of VHCPL. (e). The truth in the claim made in the preceding paragraph is fully illustrated by the fact that the contents of the sworn disposition dated 06.05.2016 and 18.05.2016, which have been deposed after six months from the date of search being 01.12.2015, does not seek clarification on any other discrepancy or even deficiency other than the solitary aspect of incorrect claim of depreciation. After thorough enquiry during a period of 6 months, could not result in any adverse finding other than the incorrect claim of depreciation. It naturally obviates the other aspects of addition made in the assessment order. The copy of the sworn statement dated 06/05/2016 and 12/05/2016 are appended to this submission as Annexures - 2 and 3. 1.7. The Assessment Order of the Ld AO itself proves that the amount of excess capitalization is not the earnings of the Appellant: (a). With a factual background detailed above, the appellant submits that the addition made in A.Y. 2010-11 by the order u/s 153A dated 29.12.2017 under the title Funds Received from Vasan Health Care Pvt. Ltd. on account of Excess Capitalization of Assets', captioned in Page 3 of the Order is by itself self-explanatory and establishes the fact with regard to the source of funds to have got received from VHCL. The contents of the Assessment Printed from counselvise.com - 12 - ITA Nos.830 to 835/CHNY/2022 Order further elaborates the fact that the money is not the earnings of the appellant but its role is confined to act as a conduit to retract the funds to the original source. Enclosed copy of the Assessment order dated 29.12.2017 as Annexure - 4. (b). The appellant has been left in a very comfortable position, since the Ld AO has himself argued the case on behalf of the Appellant clearly describing the source from which the funds have emanated. As stated earlier and brought out by the AO, the funds which otherwise should be spent for the creation of Fixed Assets, has been diverted to a few entities of the group and the appellant is one such recipient. These funds have not been retained by the Appellant or utilised for acquisition of any assets of personal nature or spent for personal needs, but on the contrary, has flown out of Appellant's hands. Thus, when there is no monetary benefit as a result of the transaction and while the source of funds is out of VHCPL is proven, it not ought to have been treated as income in the hands of the Appellant. (c). It is not clear as to which provision of law under the Income Tax Statute or the Principle of Revenue Recognition, empowered the Ld. AOr to make such a phenomenal but baseless addition of Rs. 11,86,42,113/-. The provisions of S. that abundantly clear the 69C and 68, 69B 69, 69A, corresponding receipt/ credit/ expenditure/ holdings/ assets/ monies/investments etc. have to be unexplained. In the case of the Appellant, none of these conditions are fulfilled and the entire receipt is out of diversion of funds from VHCPL, which is proven beyond doubt\" Similar submissions made for AYs 2011-12 to 2015-16. 6.2.2 Submissions made on 10.01.2019: [QUOTE] a) I submit sir that, out of the above said amount of Rs.292,63,16,901/-, an amount of Rs.139,50,97,004/- was debited to the Fixed Assets account and credited to the Vendors for Assets account by journal entry and by another journal entry the Vendors for Assets account was debited with the same amount and credited the Project Cost account in the books of Vasan Health Care Private Limited (VHCPL). Subsequently this total amount of Rs.139,50,97,004/- was debited to the Project Cost account and credited to Bank account towards payment of Rs.31,10,35,727/- towards Doctors salary, Rs.15,27,32,586/- towards Staff salary, Rs.54,96,75,000/- towards Advertisement expenses, Rs.23,93,14,125/- towards Rental payments, Rs.1,44,36,687/- towards Administrative expenses and Rs.12,79,02,879/- towards Doctors incentives. I submit sir that all the above said payments are made through the Bank and are accounted in the books of accounts of VHCPL. All the above mentioned books and details are very much available with Ld.AO. Printed from counselvise.com - 13 - ITA Nos.830 to 835/CHNY/2022 b) I further submit sir that, out of the above said amount of Rs.292,63,16,901/-, an amount of Rs.153,07,25,000/- was transferred by VHCPL to M/s. Vasan Medical Centre India Private Limited (VMCPL) through Bank and the same was debited to the account of VMCPL and credited to Bank account in the books of accounts of VHCPL. Further, the above said amount was used by VMCPL Rs.10,83,10,000/- towards Advertisement expenses of VHCPL, Rs.45,48,71,750/- towards Intra acular lens purchases for VHCPL and Rs.96,75,43,250/-towards repayment of short term loans to VHCPL through Bank by debiting the VHCPL account and crediting the Bank account in the books of VMCPL. All the above mentioned books and details are very much available with Ld.AO. c) I also submit sir that I am herewith enclosing the extract of Project cost account in the books of accounts of VHCPL, as ANNEX - 1, in proof of payment made through bank towards expenses amounting to Rs.139,50,97,004/- for the AY's from 2012-13 to 2015-16. Also enclosed please find the ledger accounts of the expenses booked and the amount paid towards repayment of short term loans in the books of accounts of VMCPL, as ANNEX- 2, for an amount of Rs.153,07,25,000/- for the AY's from 2010-11 to 2015-16. d) It is very clear from the above that an amount of Rs.292,58,22,004/- (Rs.139,50,97,004/- + Rs.153,07,25,000/-) was spent through Bank either through the books of accounts of VHCPL or VMCPI and no amount was received by me for my personal use on account of the Excess Capitalisation in VHCPL. Further, I submit sir that all the above said statements, books and facts are very much available with the Ld.AO. Hence, I request your goodself to kindly delete the addition of Rs.292,63,16,901/- to my returned income as funds received from VHCPL on account of excess capitalization of assets for the AYS from 2010-11 to 2015-16 since, I have not received any amount on this account as explained above in detail and with all the evidences. 6.2.3 Submissions made on 7.2.2019: \"Further to the submissions made as stated above, I hereby submit to your good self the following for your consideration: 1. Excess Capitalisation - Project Cost Account in VHCPL & Amount transferred to VMCPL : (a). I hereby submit that out of the excess capitalization amount of Rs.292,63,16,901/-, an amount of Rs.139,50,97,004/- has been spent for the expenses of VHCPL through \"Project Cost Account\". First, the said amount of Rs.139,50,97,004/- has been debited to the Fixed Assets account and Credited to Suppliers of Assets account. Subsequently, the same amount was debited to Suppliers of Assets account and was credited to Printed from counselvise.com - 14 - ITA Nos.830 to 835/CHNY/2022 Project Cost account. Later, all the payments towards expenses were debited to the Project Cost account and credited to Bank account. In the process, Project cost account shows a NIL balance at the end of the each year. I hereby confirm that the expenditure was not claimed in the Profit and Loss account of VHCPL and the same was also admitted in the Sworn statement dated 18.05.2016 given by myself as answers to Question No.10, 11 and 12. In this regard, I am hereby submitting the reconciliation statement proving that Doctors Salary, Doctors Incentive, Staff Salary, Advertisement Expenses, Lease Rental Expenses and Administrative Expenses which are debited to Project Cost Ledger account are not debited to Profit and Loss account. Further, I am also hereby submitting a soft copy all ledger accounts for the FY 2013-14 and FY 2014-15 in this regard. (b) I also hereby submit that out of Rs.153,07,25,000/- transferred to VMCPL by VHCPL on account of Excess Capitalisation, an amount of Rs.56,31,18,750/- was spent towards expenses by VMCPL on behalf of VHCPL and the same was not claimed as expense in the Profit and Loss accounts of both the Companies, VHCPL and VMCPL. Further, an amount of Rs.96,75,43,250/- was transferred back by VHCPL to VMCPL towards repayment of short term loans received by VHCPL from VMCPL. This fact was also admitted in the Sworn statement dated 06.05.2016 given by myself as answers to Question No.11, 12 and 13.” 5. During the course of the appellate proceedings, the ld.CIT(A) called for the remand report and the rejoinder from the assessee. The details of the same are given below: “6.3 Remand Proceedings: The above submissions were forwarded to the AO vide this office letter dated 11.01.2019 and a remand report was sought for. The AO furnished the remand report on 11.02.2019 and the same is extracted as under: \"ACIT, Central Circle-2(1) Remand Report dated 11.02.2019 Kind attention is solicited to the above. In pursuance to reference cited above, the report called for u/s.250(4) of IT Act in the subject cited case, it is submitted that during the course of assessment proceedings, the assessee had not submitted any details or explanation with regards to funds received on account of excess capitalization of assets. The provisions of Rule 46A(2) mandate that the reason for admitting additional evidence has to be recorded in writing. Printed from counselvise.com - 15 - ITA Nos.830 to 835/CHNY/2022 As brought out in the case of CIT Vs Valimohmed Ahmed bhai [1982] 134 ITR 214 (Guj) the Assessing Officer has an inherent right to oppose the admission of the additional evidence itself, apart from countering the effect of the additional evidence or producing evidence in rebuttal. The relevant portion of the decision is reproduced for ready reference. …………….Besides, he had a right to object to the production of additional evidence. Since something adverse to the ITO was sought to be done in the course of the appeal by way of augmenting the record, the ITO ought to have been heard and given an opportunity to meet with the additional material by way of cross examination, counter evidence and urging submissions in the context of the augmented record. When a prayer for additional evidence was mode, it was an independent and substantive application seeking a new right. Notice of such application was necessary to the ITO he ought to have been afforded both an opportunity to oppose it and to test the additional evidence or counter the effect thereof or produce evidence in rebuttal. No such order granting the request could have been passed behind the back of the ITO in violation of the principles of natural justice. At the cost of repetition, it be stated that notice of appeal cannot be equated with notice of a future application to lead additional evidence which no one could have anticipated or reasonably foreseen. Ordinarily, the appeal would be decided on the evidence recorded in the course of assessment proceedings. What follows from the above decision is that the Assessing Officer is a necessary party to the 1st stage of Production of Additional Evidence. Additional Evidence cannot be admitted in the absence of making the AO a party to the proceeding, much less using the Additional Evidence in appellate proceedings. The distinction between Rule 46A and the provisions of section 250(4) have been clearly brought out in the case of CIT Vs Manish Build Well (P) Ltd 245 CTR 379 [Delhi. The relevant portion of the judgment is as under. 22……….The fact that sub-Section (4) of Section 250 confers powers on the CIT (A) to conduct an enquiry as he thinks fit, while disposing of the appeal, cannot be relied upon to contend that the procedural requirements of Rule 45A need not be complies with. If such a plea of the assessee is accepted, it would reduce Rule 46A to a dead letter because it would then be open to every assessee to furnish additional evidence before the CIT (A) and thereafter contend that the evidence should be accepted and taken on record by the CIT (A) by virtue of his powers of enquiry under sub-Section (4) of Section 250. This would mean in turn that the requirement of recording reasons for admitting the additional evidence, the requirement of examining Printed from counselvise.com - 16 - ITA Nos.830 to 835/CHNY/2022 whether the conditions for admitting the additional evidence are satisfied, the requirement that the assessing officer should be allowed a reasonable opportunity of examining the evidence etc. can be thrown to the winds, a position which is wholly unacceptable and may result in unacceptable and unjust consequences. The fundamental rule which is valid in all branches of law, including Income Tax Law, is that the assessee should adduce the entire evidence in his possession at the earliest point of time. This ensures full, fair and detailed enquiry and verification. A 7-Judge Bench of the Supreme Court in Keshav Mills Co. Ltd. v. CIT (1965) 56 ITR 365 had observed as under:- \"Proceedings taken for the recovery of tax under the provisions of the Act are naturally intended to be over without unnecessary delay, and so, it is the duty of the parties, both the department and the assessee, to lead all their evidence at the stage when the matter is in charge of the Income-tax Officer.\" 23. It is for the aforesaid reason that Rule 46A starts in a negative manner by saying that an appellant before the CIT (A) shall not be entitled to produce before him any evidence, whether oral or documentary, other than the evidence adduced by him before the assessing officer. After making such a general statement, which is in consonance with the principle stated in the above judgment, exceptions have been carved out that in certain circumstances it would be open to the CIT (A) to admit additional evidence. Therefore, additional evidence can be produced at the first appellate stage when conditions stipulate in the Rule 46A are satisfied and a finding is recorded… … … … We are highlighting these aspects only to press home the point that the conditions prescribed in Rule 46A must be shown to exist before additional evidence is admitted and every procedural requirement mentioned in the Rule has to be strictly complied with so that the Rule is meaningfully exercised and not exercised in a routine or cursory manner. A distinction should be recognized and maintained between a case where the assessee invokes Rule 46A to adduce additional evidence before the CIT (A) and a case where the CIT (A), without being prompted by the assessee, while dealing with the appeal, considers it fit to cause or make a further enquiry by virtue of the powers vested in him under sub Section (4) of Section 250. It is only when he exercises his statutory suomoto power under the above sub section that the requirements of Rule 46A need not be followed. On the other hand, whenever the assessee who is in appeal before him invokes Rule 46A, it's incumbent upon the CIT (A) to comply with the requirements of the Rue strictly. [Emphasis Supplied] The below mentioned Judicial Decisions are also relied upon. Ram Prasad Sharma Vs CIT [1979] 119 ITR 867 (All) C. Unni Krishnan Vs CIT (1997] 140 CTR (Ker) 552 Haji LalMohd. Biri Works Vs CIT [2005] 275 ITR 496 (All) Printed from counselvise.com - 17 - ITA Nos.830 to 835/CHNY/2022 ACIT VS M/s Nirula Handicrafts Bazar Pvt Ltd [ITA No. 3886/Del/2012 dated 12-10- 2012; ITAT Delhi] In the instant case, the assessee has failed to produce the evidences as asked for vide notice u/s 143(2) and u/s 142(1) during the course of the assessment proceedings. In view of the facts stated above, it is requested not to admit the Additional Evidences as the assessee has failed to produce the evidences/explanation in support of its claim under different heads for which disallowance/additions are made. 1. Funds received from M/s. Vasan Healthcare Pvt. Ltd on account of excess capitalization of assets: The search action was carried out on 01.12.2015 at the assessee's premises and the business premises of M/s. Vasan Healthcare Pvt. Ltd. During the course of search, Electronic Device vide annexure in ANN/MS/VHCPL/ED/S, Dated: 30.12.2015 was seized. The seized electronic device contains tally data of M/s. Vasan Healthcare Pvt. Ltd. On analysis of tally data it has been observed that the company had cooked up the accounts by debiting the ledger of the Individual \"Asset Vendors like \"M/s. Citadel Interiors Pvt Ltd\", \"VeRaInnovatives\", \"T. PaneerSelvam\", \"Giriyappa Associates\" \"Anjanadri Constructions\", \"India Constructions\", \"CWIP Project\", \"New CWIP Project\" etc. and crediting the fixed asset accounts. But the actual payments by the company to its. Associates concern mainly M/s. Vasan Medical Centre India Pvt. Ltd, its Director i.e. Dr. A.M. Arun and to various parties as per the instruction of Dr.A.M. Arun. Thus the debits in the ledger account of Asset Vendor or CWIP Projects and the credits to fixed assets. under the heads Building Construction, Leasehold improvements, Furniture and Fixtures and Equipment's has resulted into excess capitalization of fixed assets and excess claim of depreciation on such capitalization. These Asset Vendors have been separately cross verified in respect of their receipts from M/s. Vasan Healthcare Pvt. Ltd and the same was reconciled with the tally data seized, wherein the Asset Vendors has confirmed the excess capitalization of assets on their account without their knowledge. Whereas in case of VeRalnnovatives the funds received were transferred immediately either. M/s.Vasan Medical Centre India Pvt. Ltd or M/s.Anjana Medicare Services Pvt. Ltd or M/s. Vasan Medical Hall or to various parties as instructed by Dr.A.M.Arun. Thus on analysis of tally data and after cross examination of Asset Vendors, the quantum of excess capitalization of the assets was worked out at Rs.292,63,16,901/- which is discussed in details vendor wise in the assessment order of M/s.Vasan Healthcare Pvt Ltd. The assessment year wise details of excess capitalization are as under: Printed from counselvise.com - 18 - ITA Nos.830 to 835/CHNY/2022 Assessment Year Excess Capitalization of Assets (Rs.) 2010-11 11,86,42,113 2011-12 24,37,69,421 2012-13 65,65,97,475 2013-14 71,48,72,841 2014-15 79,79,09,658 2015-16 39,45,25,393 TOTAL 292,63,16,901 The sworn statement of Shri T.Thangavel Manager Accounts of M/s.Vasan Healthcare was recorded on 29.04.2016 to explain how the excess sum recorded for asset capitalization is accounted for. In response to which Shri T. Thangavel stated that the payments debited to Vendors account are actually paid to M/s. Vasan Medical Centre India Pvt. Ltd or to Dr. A.M. Arun. In this regard a sworn statement of Dr. A.M. Arun, Chairman/MD of M/s. Vasan Healthcare Pvt. Ltd was recorded on 06.05.2016 in which he has confirmed that payments were not made to asset vendors but the payments were made to him or to various other parties on his behalf, including to his concerns i.e. M/s.Vasan Medical Centre India Pvt. Ltd. Further Dr.A.M.Arun vide answer to Question No. 11. of sworn statement dated 06.05.2016 copy of which is enclosed as Annexure 'A' has stated that the payments to M/s.Vasan Medical Centre India Pvt Ltd were made on my accounts for settlement of earlier amounts withdrawn from M/s.Vasan Medical Centre India Pvt Ltd towards financial need of M/s.Vasan Healthcare Pvt Ltd. The analysis of Dr.A.M.Arun sworn statement dated 06.05.2016 regarding funds utilization on account of excess capitalization of assets is as under (i) Vide Ans. -3 to above said statement dated 06.05.2016, Dr.A.M.Arun had admitted receipts of Rs.10,18,00,000/- in his hands & Rs.42,53,00,000/- in the hands of M/s. Vasan Medical Centre India Pvt Ltd on account of excess capitalization of assets on account of M/s. Citadel Interiors Pvt Ltd. (ii) As per Question No. 10, out of excess capitalization of funds of Rs.36,70,00,000/- were used for repayment of cash loans of Shri. J. Dinakaran taken by Dr.A.M.Arun, which was confirmed by Dr.A.M. Arun in his answer. Printed from counselvise.com - 19 - ITA Nos.830 to 835/CHNY/2022 (iii) As per Question No.11 of said statement, M/s. Vasan Healthcare Pvt Ltd had paid a sum of Rs.153,07,25,000/- to M/s. Vasan Medical Centre India Pvt Ltd during the A.Y. 2010-11 to A.Y. 2015-16 on account of excess capitalization. In answer, Dr. A.M. Arun had admitted that payments were made under my current account on my instructions to settle earlier amounts drawn out of M/s. Vasan Medical Centre India Pvt Ltd towards the financial needs of M/s. Vasari Healthcare Pvt Ltd. (iv) As per Question No. 15 of said statement, funds of Rs.17,25,00,000/- debited to Vendors Account was paid to Dr.A.M.Arun. In answer to said statement Dr. A.M. Arun has admitted that on these payments he had already admitted disallowance of depreciation (v) As seized Paper Page No-1 of ANN/VJ/AMA/LS/S dated 01.12.2015 he had paid cash of Rs.2,08,00,000/- for purchase of CIT Colony property. Dr. A.M.Arun vide letter dated 26.05.2016 has submitted source of cash payments in account of cash withdrawal from M/s. Vasan Medical Centre India Pvt Ltd. These facts shows that Dr.A.M.Arun has involved in inflating the capitalization of Fixed Assets, and siphoning off the funds of the company i.e. M/s. Vasan Healthcare Pvt Ltd either in his individual capacity or through other parties. Further the assessee has withdrawn the funds for the purpose of personal benefits like investment in property, personal expenses and unaccounted expenses. Therefore the funds so received by the assessee, out of excess capitalization of assets in the hands of M/s. Vasan Healthcare Pvt. Ltd are nothing but the unaccounted income of the assessee. Thus, the amounts so withdrawn from M/s. Vasan Healthcare Pvt Ltd through excess capitalization of Fixed Assets are taxable as unaccounted income in the hands of the assessee, as the so funds withdrawn were never debited to his account and were reflected as a liability in his hands. From the above discussion, it is clear that the assessee has received funds from M/s. Vasan Healthcare Pvt. Ltd on account of excess capitalization of assets as discussed above year wise. The AR vide order sheet noting on 22.12.2017 was asked to furnish the details of utilization of funds withdrawn and how the same are accounted in the books of account. The assessee has not filed any submission during the assessment proceed Hence, the funds withdrawn by the assessee out of books of M/s.Vasan Healthcare Pvt. Ltd either directly or through his group companies for his personal benefits, are taxable as his unaccounted income and the same is being added as unaccounted income in his hands. from A.Ys.2010-11 to 2015-16. During the course of appellate proceedings, it was stated by the assessee's representative that an amount of Rs. 139,50,97,004/- was debited to the Fixed Assets Account and credited to the Vendors A/c by way of Journal Printed from counselvise.com - 20 - ITA Nos.830 to 835/CHNY/2022 Entry and by another journal entry, the vendors A/c was debited with the same amount and credited the Project Cost Account in the books of VHCPL. The amount so credited in the Project Cost Account was subsequently utilized for making payments for various purposes was stated to have been made through banking channel as submitted by the AR in the Written Submissions dt. 10.01.2019. In this connection, the AR has enclosed Ledger extract which was part of the seized material. Further, with regard to payment of Rs.153,07,25,000/-, the AR has submitted that the said money was transferred by VHCPL to M/s. VMCPL through bank and the said amount was used by VMCPL towards Adv. Expenses of VHCPL amounting to Rs.10,83,10,000/-, Rs.45,48,71,750/- towards Intra ocular lens purchases for VHCPL and Rs.96.75,43.250/- towards repayment of short term loans to VHCPL through Bank by debiting the VHCPL account and crediting the Bank account in the books of VMCPL. In this connection, the AR of the Appellant has given ledger extract which is stated to be part of digital evidence that was seized by the department. During the Remand Report proceedings, the details submitted like project ledger accounts, funds transferred from M/s. Vasan Healthcare Pvt. Ltd. (in short VHCPL) to M/s. Vasan Medical Centre India Pvt. Ltd. (in short VMCIPL), copies of statements recorded during the course of search and post search enquiries discussing the nature of entries in project account and funds transferred to VMCIPL, copies of bank statements submitted reflecting the payments made and evidence TDS deducted on expenses incurred through project account were examined and it was noted that: a. The revenue expenditure debited in project account out of excess capitalization from Vendor account under various heads is as under: Type of payment FY 11-12 FY 12-13 FY 13-14 FY 14-15 TOTAL Doctors Salary 64,596,307 181,890,729 64,548,691 311,035,727 Staff Salary 3,245,089 71,185,286 78,302,211 152,732,586 Advertisement 19,925,000 186,000,000 312,000,000 31,750,000 549,675,000 Lease Rental Payment 2,39,314,125 2,39,314,125 Administrative Expenses 14,436,687 14,436,687 Doctors Incentive 6,838,874 70,882,862 46,860,883 3,320,260 127,902,879 Total Amount 26,763,874 339,160,945 611,936,898 417,235,287 1395,097,004 Printed from counselvise.com - 21 - ITA Nos.830 to 835/CHNY/2022 The loan repayment to related parties booked as expenses under Fixed Assets under: Type of of payment FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14 FY 14-15 Grand Total Advertisement payment made through VMC India 31,385,000 76,925,000 108,310,000 Intra Ocular Lens Purchase payment made through VMC India 38.470,000 40,142,500 170,799,250 118,152,000 87,308,000 54,871,750 Repayment towards short term loans 81,700,000 131,645,000 522,082,500 199,200,750 62,23,000 29,308,000 967,543,250 Total Amount 81,700,000 201,500,000 639,150,000 370,000,000 180,375,000 58,000,000 1,530,725,000 The amount debited under excess capitalisation of assets against the above expenses are as under: Type of payment FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14 FY 14-15 Grand Total Excess capitalisation of assets 118,642,113 243,769,421 656,597,425 714,872,841 797,909,658 394,525,393 2,926,316,851 On verification of ledger accounts, bank statements and other supporting evidences filed, it was noticed that all these expenses has been incurred through bank accounts which were not accounted in regular books of accounts. Further, the statements recorded of Dr.A.M.Arun, Managing Director and Shri T.Thangavel, Accounts Manager during the course of search proceedings and during post search enquiries also show that the funds of excess capitalization of assets were used for incurring revenue expenditures and for repayment of inter-group loans which has not been routed through the regular books of accounts, As discussed above, the details furnished during the Remand Report proceedings shows that the funds diverted on account of excess capitalization of assets was either used for revenue expenditure or for repayment of loans through associates concerns. Since, the assessee has inflated the assets by Rs.292 crores over the years, how the Balance Sheet of the assessee got tallied, as it is not explained what will be the corresponding liabilities. Further, considering the consolidated ledger account of M/s. VMCIPL in the Printed from counselvise.com - 22 - ITA Nos.830 to 835/CHNY/2022 books of M/s. VHCPL shows all the payments made through bank account but the ledger account in the books of M/s. VMCIPL is not filed. Hence, it cannot be ascertained how the funds transferred from Ms. VHCPL were used by M/s. VMCIPL with respect to short term loans\", 6.4 Submissions of the Range Head: The Range Head who in turn vide his letter dated 12.02.2019 has submitted as under: \"1. Excess Capitalization: In the assessment order an amount of Rs. 292 Croes had been added at the hands of the assessee Dr. A. M Arun on account of the account available due to excess capitalization since the assessee had not provided any details to prove the contrary. Now that during the remand proceedings. the assessee is taking a stand that the amount had been spent by the company only outside the 'Books of accounts under the head\" project account\" by a jugglery of accounting entries and the assessee Dr. Arun had not siphoned it off 1.1 However, the assessee had not explained as to how the Balance Sheet will tally when Fixed Assets had been inflated by Rs. 292 Crores, without identifying corresponding entries in the liabilities side. This aspect had not been explained satisfactorily. 1.2. Secondly, as per assessee's own claim that out of Rs. 292 Crores, Rs. 139 Crores had been spent by Ms Vasan Healthcare Py. Lid and Rs. 153 Crores had been transferred to Ms Vasan Medical Centre Pvt. Ltd, to be spent for M/s. VHCPL which means physically money' was available to be transferred. But the source for the same in the books (or) outside the books had not been explained by the assessee. 1.3 Though the assessee had provided that the amounts had been paid through banking channel, but reconciliation of TDS with respect to doctor's salary, staff salary, advertisement, lease rental payment, administrative expenses, doctors incentive had not been done 1.4 With respect to M/s VMC - contra account copy regarding the transactions with M/s VHCPL is not Available. - Ledger account copies with respect to \"repayment towards short term loans\" does not show clearly how the amount had been arrived at year- wise. - There is a mismatch in the details provided and the amounts tabulated with regard to Intra Ocular lens purchase payment made through M/s VMC. Printed from counselvise.com - 23 - ITA Nos.830 to 835/CHNY/2022 - Payment of Rs. 153 crores made to M/s VMC, who in turn has spent for M/s VHCPL. But, how the bank balances of M/s VMC were tallied with its balance sheet is not clear, since no details has been furnished in this regard. Hence in view of the above discrepancies it is not clear how M/s VMC has incurred the expenses on behalf of the M/s VHCPL and addition made under this head excess capitalization has to be sustained\" 6.5 Rejoinder of the AR/ LH: The remand report received from the AO was forwarded to the assessee for seeking rejoinder vide this office letter dated 13.03.2019. The submissions of the assessee vide letter dated 22.03.2019 against the remand report is as under: \"I am in receipt of your goodself's letter and the Remand Report of the ACIT along with endorsement of Range Head cited under reference and I herewith submit my Rejoinder objecting to the observations made by the Ld. ACIT: 1. At the outset the Ld. ACIT has stated that \"it is requested not to admit the Additional Evidences\" and quote d the case of CIT Vs. Valim ohmed Ahmed bhai [1982] 134 ITR 214 (Guj) and says that\" Assessing Officer has as in herent right to oppose the admission of the additional evidence\". The Ld. ACIT also stated that \"Additional Evidence cannot be admitted in the absence of making the AO a party to the proceeding, much less using the Additional Evidence in appellate proceedings\". First of all, I deny the contention of the Ld. ACIT that I have submitted additional evidence since all the evidences submitted now to the CIT(A) and the ACIT in the Remand Report proceedings do form part of the seized material and the digital evidence held by the Ld. ACIT. As he had mentioned in his Assessment orders several times that the details are not explained at the time of the assessment, I have now submitted the clarifications in detail along with the statements and documents filed now. Secondly, since the AO is made a party by calling for a Remand Report by the Hon'ble CIT(A), the judgement in the above quoted case is absolutely adhered. 2.I submit sir that the Ld.ACIT had quoted Para Nos. 22 and 23 in the case of CIT Vs. Manish Build Well (P) Ltd 245 CTR379 (Del) and conveniently ignored the concluding judgement Para No.25 of the case where by it was decided that \"CIT (A) shall comply with the requirements of Rule 46A and take a fresh decision on the merits of the addition in accordance with law\". This is a case applicable where the CIT(A) has considered the Additional Evidence Us.250(4) by not giving an opportunity to A0 Under Rule 46A(3). In this case your Honour has called the AO not only during the hearings and also directed us to produce all the records required for the Remand Report Printed from counselvise.com - 24 - ITA Nos.830 to 835/CHNY/2022 of the ACIT. Hence, the case quoted by the Ld.ACIT is does riot apply to my case. 3 Further, I submit sir that the issue of excess capitalization amounting to Rs.292, 63, 1 6, 851/ as discussed in detail at the time of assessment proceedings of Vasan Healthcare Pvt Ltd (VHCPL) and the Company had submitted the same details of Rs. I39, 50,97, 004/ being spent by VHCPL towards revenue expenses through the \"CWIP Project (FY 2011- 12), New CWIP2012-13 (FY 2012-13), PROJECT COST (FY 2012-1 3) PRJCASH and PRJ CASH-1 (FT 2013-14) \" Ledger Accounts. This fact has been admitted by the AO in his assessment orders of VHCPL for the AY 2014-15 and 2015-16 and added U/s.40A(3) a sum of Rs. 20,21, 79,398 for the AY 2014-15 and Rs.7,17,63,402/-and 34,62,366/- for the AY2015-16 under the misunderstanding that the said amounts are paid by cash since the Ledger account name was PRJ-CASH, though all the payments are made through Bank. Further, in his orders for the above said Assessment year's he has stated that \"In response, the assessee 's representative submitted the details called or \"which clearly shows that all the details are already submitted at the time or assessment proceedings. Hence, I submit sir that the claim of the Ld. ACIT that we have produced Additional Evidence is absolutely wrong and far from truth 4. I further submit sir that all the evidences filed now either before the not Ld.AO Hon.CIT(Appeals) are or before the additional evidences but which are all forming part of seized material. Now I only given the explanations on the evidences which form part of records of the Ld AO. I was under severe stress and financial crisis during the financial year 2017-18which had prevented me to adduce the evidences before the AO when the assessment proceedings were taken place before the Ld.AO. Further, the Hon. CIT(Appeals) has asked for the Excess Capitalisation, Deemed Dividend and Remand Report on Director's Remuneration and directed me to produce copies of all the evidences required by the Ld.AO before the Ld. A0. Even while discussing the case the Ld.AO was also present before your goodself. I once again reiterate that all the evidences now produced form part of the seized material and might not have been explained during the assessment proceedings as claimed by the Ld. AO in the assessment orders. Hence all the provisions of Rule46A are adhered to in my case even if the evidences produced now are treated as additional evidences. 5. I submit sir that, with respect to, the amount of Rs. 139,50,97,004/- out of the total Excess Capitalisation amount of Rs.292, 63, 1 6, 851/- was spent for the Revenue Expenses of VHCPL through \"CWIP Project(FY2011- 12),NewCWIP2012-13 (FY 2012-13), PROJECT COST (BY 2012-13) PRJ- CASH and PRJ-CASH-l(FY2013-14) \"ledger Accounts and these are accounted very much in the Regular Books of Accounts and only do not form part of Financial Statements of VHCPL since the Ledger Accounts show a NIL Balance at the end of each Financial year. Hence, I object to the observation of the Ld.ACIT that \"it was noticed that all these expenses has Printed from counselvise.com - 25 - ITA Nos.830 to 835/CHNY/2022 been incurred through Bank accounts which were not accounted in regular books of accounts”. 6. I further submit sir that the Ld. ACIT himself has stated in his Remand Report that \"all these expenses(Rs. 139, 50, 97, 004/-) has been incurred through bank accounts \" and also confirmed by the said observation that the said amount of Rs. 139. 50. 97.004/- was not received by Dr.A.M. Arun. I submit sir that if the said expenses ae not acceptable o the AU, the same has to be dealt in the assessments of VHCPL but not in my assessments, since I have not received even one Rupee out of the above said amount. 7. I also submit sir thạt the Ld. ACIT has also mentioned in his Remand Report that both me and Mr. Thangavel have categorically stated during the search proceedings and during the post search enquiries that the funds of excess capitalization of assets were used for incurring revenue expenditure and for repayment of inter group loans. But the Ld. ACIT has wrongly quoted as if we have stated that the above said payments were not routed through the regular books of accounts. At no point of time we have admitted thạt the above said expenses were not booked in the regular books of Accounts. 8. With respect to the amount of Rs. 153,07,25,000/- out of the excess Capitalisation of assets amounting to Rs.292,63,16,851/-, I submit sir that the Ld. ACIT himself had agreed and confirmed in his Remand Report that \"considering the consolidated ledger account of VMCIPL in the books of VHCPL, shows all the payments made through bank account”. Further, his contention that Ledger account in the books of VMCIPL is not filed is not correct since the sane was submitted to the Ld. ACIT as well to your goodself. This clearly proves beyond any doubt that I did not receive even one Rupee out of the above said amount of Rs. 153, 07,25, 000/-. 9. I submit sir that the Ld.ACIT has categorically confirms and agrees that \"the details furnished during the Remand Report proceedings shows that the funds diverted on account of excess capitalization of assets was either used for revenue expenditure or for repayment of loans through associate concerns'\". This clearly proves that the addition of Rs. 292,63,16,851/- on account of excess Capitalisation of assets made by the Ld.AO during the AY2010-1l to2015-16 has to be deleted. 10. I submit further sir that the Ld. ACIT himself narrated in h Remand Report how the Excess capitalization amount was routed through the books of accounts of VHCPL so that the same do not form part of Balance Sheet since the balances in the Vendors accounts and Project Cost accounts are NIL at the end of each financial year and how the double entry accounting system was used in tallying the Balance Sheet. Again, he concludes by stating that \"the Assessee has inflated the assets by Rs.292 Crores over the year show the Balance Sheet of the Assessee got tallied, as it is not explained what will be the corresponding liabilities\". I only submit sir that his Printed from counselvise.com - 26 - ITA Nos.830 to 835/CHNY/2022 had made contradictory statements at different stages of his Remand Report. 6.6 Rejoinder of the AR/ LH on Range Head's submissions: The AR filed rejoinder on 22.03.2019 objecting to the observations made by the Ld. Addl.CIT, Central Range-2 in his endorsement as Range Head: I here with submit My Rejoinder objecting to the observations made by the ldAddl. CIT, CentralRange-2 in his endorsement as Range ead: 1.Excess Capitalisation: (A). I strongly object to the view of the Addl. CIT in Point No.1 \"now that during the remand proceedings, the assessee is taking a stand that the amount had been spent by the company only outside the \"Books of accounts \"under the head \"Project Account\" by a jugglery of accounting entries\". I submit sir that neither men or VHCPL never stated that the amount had been spent Outside the Books of the company. We have been stating right from the search proceedings that the amount does not form part Financial statements by the planned accounting entries in the Books of accounts. (B) With respect to the view of the Addl. CIT in Point No. 1. 1, I and VHCPL has been continuously submitting both during search and post search proceedings as well during the assessment proceedings that the Excess capitalisation amount has been debited to Fixed Assets account and by a series of Journal entries the Corresponding credits have gone to Bank account reducing the Bank balance on the Assets side of the Balance Sheet, which has been categorically narrated by the Ld. ACIT in the 5th page of his Remand Report dated I1. 02. 2019, Hence, I submit sir that the Fixed Assets are inflated by Rs. 292 Crores on account of Excess Capitalisation of Assets and to the same extent the Bank balance has been reduced so that the Balance Sheet got tallied. (C). With respect to the view of the Addl. CIT in Point No. 1.2, I am also strongly objecting to the view of the Addl. CIT that \"But the source for the same in the Books (or) outside the books had not been explained by the assessee\" I and VHCPL have Submitted that all the payments are made through the bank account of VHCPL, which has been accepted by the Ld. Addl. CIT in Point No. l.3 and all the payments were recorded in the books of accounts of VHCPL as stated above. Hence, the question of proving the source for the payments does not arise. (D). I submit sir that I have provided in detail the reconciliation statements of expenses through Project Account with TDS payments and corresponding Form No.16A for all the years which fact was acknowledged Printed from counselvise.com - 27 - ITA Nos.830 to 835/CHNY/2022 as follows by the Ld ACIT in Page No. 5& 6 of his Remand report \"copies of bank Statements submitted reflecting the payments made and evidence TDS deducted on expenses incurred though Project account were examined\". (E) I also object to the view of the Ld Add. CIT with respect to Point No. 1.4 regarding transfer of Rs. I53 Crores by VHCPL 1o VMCIPL I submit sir that the Ledger account of VHCPL in the books of VMCIPL was very much submitted to the Ld ACIT and if at all any discrepancies are found in this regard the Same shall be dealt in the assessments of VHCPL and VMCIPL but not in my hands since it is proved beyond any doubt that all the payments were made by VHCPL to VMCIPL through bank only and I have not received even a single Rupee out of the above stated Rs. 153 Crores. Further, it is pertinent to state here that even the Ld.ACIT could not find anything contrary to my submissions. Under the above said circumstances and explanations submitted by me to you Honour as well as to the La ACIT I hereby request your Honour to delete the additions made on account or \"Funds received from VHCPL on account of Excess Capitalisation, Deemed Dividend and Director's remuneration\" for the AY 2010-11 to 2016-17\" 6.7 Remand Report of the AO in the case of VHCPL on the same issue: On the same issue of excess capitalisation in the case of VHCPL, the AO furnished the following remand report on 11.11.2020: [QUOTE] A.Excessive Capitalisation and consequent disallowance of depreciation: 1. The modus operandi has been:- (a). Asset account debited (Journal entries) → credited Vendor accounts (journal entries) (b). Vendor account debited (Journal entries) > total Rs, 292,63,16,901/- (i) Credited Bank accounts of the vendors against actual billing towards addition towards assets. (actual payments-Rs. 4,94,897/-) (ii) Towards revenue expenditure of M/s. Vasan Health Care Pvt Ltd - Rs.139,50,97,004/- (actual payments through banking channels). List of payments available running into 124 pages 8009 entries. Verified and found tallying. For these payments TDS deduction were verified with TDS challans. (iii) Transferred to Ms. Vasan Medical Centre India Pvt Ltd Rs. 153,07,25,000/- through banking channels. Checked with bank statements and found tallying Utlisation of Rs.153.07 Cr received from M/s. Vasan Health Care Pvt Ltd by Ms. Vasan Medical Centre India Pvt Ltd: Printed from counselvise.com - 28 - ITA Nos.830 to 835/CHNY/2022 2. Regarding the receipt of Rs.153.07 Cr a current account of VHCPL was maintained in the books of VMCIPL. No separate ledger account was maintained by both the assessees (VHCPL & VMCIPL). For making payments this account was debited and bank account of VMCIPL was credited. From the bank accounts the parties were paid. However, print outs of the excel sheet with details of payments extracted from the VHCPL current account in the books of VMCIPL were furnished. These entries were cross-checked with the bank accounts and found tallied. The Bank accounts of M/s.Vasan Health Care Pvt. Ltd from which fands were transferred to the bank accounts of M/s. Vasan Medical Centre India Pvt Ltd:- S.No Bank and Branch Name Account Number Amount (in Rs) 1 City Union Bank, Trichy 93561 12,20,00,000 2 City Union Bank, Trichy CA 83406 46,68,75,000 3 HDFC, Indore 12400330000104 6,95,00,000 4 Indus Ind Bank 0007 W11122050 1,20,00,000 5 Corporation Bank, Adyar, Chennai ECBCA/01/001900 20,00,000 6 Corporation Bank, Adyar, Chennai ECC/01/120001 1,00,00,000 7 City Union Bank, Anna Nagar, Chennai CA 102342 60,00,000 8 City Union Bank, Trichy CA108257 84,23,50,000 Total 153,07,25,000 The Bank accounts of M/s. Vasan Medical Centre India Pvt Ltd in which funds were received from the bank accounts of M/s. Vasan Health Care Pvt Ltd:- SNo Bank and Branch Name Account Number Amount (in Rs) 1 City Union Bank, Trichy CA 108258 8,17,00, 000 2 City Union Bank, Trichy CA 128567 144,90,25,000 Total 153,07,25,000 Printed from counselvise.com - 29 - ITA Nos.830 to 835/CHNY/2022 3. Out of the sum of Rs.153.07 Cr received by M/s.Vasan Medical Centre India Pvt Ltd, an amount of Rs.56,31,81,750/- has been claimed to have been spent towards the revenue expenses of M/s. Vasan Health Care Pvt Ltd. as below: Type of Payment AY 2010- 11 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 TOTAL Advertisement expenses paid through VMCPL 0 3,13,85,000 7,69,25,000 0 0 0 10,83,10,000 Intraocular Lens Purchases through VMCPL 0 3,84,70,000 4,01,42,500 17,07,99,250 11,81,52,000 8,73,08,000 45,48,71,750 TOTAL 0 698,55,000 11,70,67,500 17,07,99,250 11,81,52,000 8,73,08, 000 56,31,81,750 (Total Revenue Expenditure of VHCPL Rs.195,82,78,754/- (139,50,97,004+56,31,81,750). For the Revenue expenses of VHCPL amounting to Rs.56,31,81,750/- payment wise breakup were already available along with bank statements. The payment details were Checked with bank statements and found matching. Partywise details for the entire Rs.56,31,81,750/- was given. S.No Party Name Amount (in Rs) Advertisement payment made by VMC India Pvt Ltd (10,83,10,000) 1 AC Films 40,00,000 2 Astraa Communications 3,25,00,000 3 Maitri Print and Production 1,49,65,000 4 Market Level Advertising and Promotions 4,48,45,000 5 Shree Ambica Agencies 1,20,00,000 IOL Payments made by VMC India Pvt Ltd (45,48,71,750) 6 Abbot Medical Optics Pvt Ltd 9,56,44,000 7 Bausch and Lomb Eyecare India Pvt Ltd 7,71,11,000 Printed from counselvise.com - 30 - ITA Nos.830 to 835/CHNY/2022 8 Delhi Hospital Supply Pvt Ltd 24,00,000 9 Nova Medica Distributors 1,77,72,000 10 Optho Equip Inc 32,32,000 11 Parekh Integrated Services Pvt Ltd 24,30,79,750 12 Raj Meditech 48,25,000 13 SVS Eye Needs 85,92,000 14 Udhayam Enterprises 22,16,000 Total 56,31,81,750 Out of this Party confirmation available for a sum of Rs.9,18,15,000/-. For the balance No party confirmation or bills furnished. A verification of Ledger account copies along with trial balance of VMCIPL revealed that these were not claimed as expenditure in the hands of VMCIPL. These party names do not appear both in ledger accounts as well as in trial balance of M/s. VMCIPL. 4.Further, out of Rs.153.07 Cr, Rs.96.75 Cr was claimed to have been adjusted towards the loan given by VMCIPL to VHCPL. No separate Ledger accounts are available for the loan account. But all the transaction entries are made through a current account ledger of VHCPL in the books of VMCIPL. All transactions have been through banking channels only. (Details given during the earlier remand report proceedings). Receipt of money checked. No other documents were available in this regard. Revenue expenditure of VHPCL of Rs. 139,50,97,004/- out of PRJ cash and similar accounts: 5.The assessee had claimed in its submission before the Ld. CIT(A) a sum of Rs.139,50,97,004/- towards revenue expenditure of VHCPL as below out of PRJ cash and the like accounts: Type of Payment AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 TOTAL Doctors 0 6,45,96,307 18,18,90,729 6,45,48,691 31,10,35,727 Staff Salary 0 32,45,089 7,11,85,286 7,83,02,211 15,27,32,586 Advertisement 1,99,25,000 18,60,00,000 31,20,00,000 3,17,50,000 54,96,75,000 Lease Rent 0 0 0 23,93,14,125 23,93,14,125 Administrative Expenses 0 1,44,36, 687 0 0 1,44,36,687 Doctors Incentive 68,38,874 7,08,82,862 4,68,60,883 33,20,250 12,79,02,879 TOTAL 2,67,63,874 33,96,60,945 61,19,36,898 41,72,35,287 139,50,97,004 Printed from counselvise.com - 31 - ITA Nos.830 to 835/CHNY/2022 In this regard, list of payments made were furnished during the earlier remand report proceedings (124 pages 8009 entries). These entries were verified with bank statements and found tallying. The payments have been made through the banking channels. However, no separate ledger accounts were maintained. From the trial balance furnished by the assessee, these expenses have not been claimed by the assessee in the P&L a/c. For these payments the details of TDS deduction claimed were verified with TDS challans furnished, the results of which are tabulated in Para C of this report. The TDS challans furnished pertain not just to the above expenditure (of Rs.139.50 Cr) but pertains to expenditure claimed originally in the returns of income filed also. [UNQUOTE] 6.8 Written submissions of LH dt. 27.07.2021 Out of the above said amount of Rs.292,63,16,901/-, Rs.139,50,97,004/- was debited to the Project Cost account and credited to Bank account towards payment of Rs.31,10,35,727/- towards Doctors salary, Rs.15,27,32,586/- towards Staff salary, Rs.54,96,75,000/- towards Advertisement expenses, Rs.23,93,14,125/- towards Rental payments, Rs.1,44,36,687/- towards Administrative expenses and Rs.12,79,02,879/- towards Doctors incentives. All the above said payments were made through the Bank and were accounted in the books of accounts of M/s. Vasan Healthcare Pvt Ltd (VHCPL). Out of the above said amount of Rs.292,63,16,901/-, an Rs.153,07,25,000/- was transferred by VHCPL to M/s. Vasan Medical Centre India Private Limited (VMCPL) through Bank and the same was debited to the account of VMCPL and credited to Bank account in the books of accounts of VHCPL. Further, the above said amount was used by VMCPL Rs.10,83,10,000/- towards Advertisement expenses of VHCPL, Rs.45,48,71,750/- towards Intra acular lens purchases for VHCPL and Rs.96,75,43,250/- towards repayment of short term loans by VHCPL through Bank and the same was accounted as stated above in the books of accounts of VMCPL. The ACIT himself has stated in his Remand Report in the case of Dr.A.M.Arun dated 12.02.2019 that \"all these expenses (Rs.139,50,97,004/-) has been incurred through bank accounts\" and also confirmed by the said observation that the said amount of Rs.139,50,97,004/- was not received by Dr.A.M Arun and with respect to the amount of Rs.153,07,25,000/-, that \"considering the consolidated Ledger account of VMCIPL in the books of VHCPL, shows all the payments made through bank account\". This has also been confirmed by the Remand Report dated 11.11.2020 given by the DCIT in the case of VHCPL by stating that: \"verified and found tallying\" and \"For these payments TDS deductions were verified with TDS Challans\". The details furnished during the proceedings of both the Remand Reports dated 12.02.2019 and 11.11.2020 show that the funds diverted on account of excess capitalisation of assets was either used for revenue expenditure of VHCPL or for Printed from counselvise.com - 32 - ITA Nos.830 to 835/CHNY/2022 repayment of loans through associate concerns. It's proved beyond any doubt that Dr.A.M.Arun had not received even One Rupee out of the above stated Rs.292.63 Crores. This clearly proves that the addition of Rs.292,63,16,851 on account of excess Capitalisation of assets made by the AO in the assessments of Dr.A.M.Arun during the AY 2010-1l to 2015-16 has to be deleted by the CIT(Appeals)-18, Chennai.” 6.9 Written submissions filed by AR on 21.12.2021 Out of the above said amount of Rs.292,63,16,901/-, an amount of Rs.139,50,97,004/- was debited to the Project Cash account and similar accounts and credited to Bank account towards payment of the following Revenue expenditure of VHCPL which were made through the Bank, TDS was deducted where ever it weas applicable and were accounted in the books of accounts of M/s. Vasan Healthcare Pvt Ltd (VHCPL). The amounts spent towards Revenue Expenses of VHCPL through Project Cash and similar accounts are as follows: Type of payment AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 Total Doctors Salary 0 6,45,96,307 18,18,90,729 6,45,48,691 31,10,35,727 Staff Salary 0 32,45,089 7,11,85,286 7,83,02,211 15,27,32, 586 Advertisement 1,99,25,000 18,60,00,000 31,20,00,000 3,17,50, 000 54,96,75,000 Lease Rent 0 0 0 23,93,14,125 23,93,14,125 Administrative Expenses 0 1,44,36,687 0 0 1,44,36,687 Doctors Incentive 68,38,874 7,08,82,862 4,68,60,883 33,20,250 12,79,02,879 Total 2,67,63,874 33,96,60,945 61,19,36,898 41,72,35,287 139,50,97,004 Further, out of the above said amount of Rs.292,63,16,901/-, an amount of Rs.153,07,25,000/- was transferred by VHCPL to M/s.Vasan Medical Centre India Private Limited (VMCPL) through Bank and the same was debited to the account of VMCPL and credited to Bank account in the books of accounts of VHCPL. Further, out of the above said amount of Rs.153,07,25,000/- an amount of Rs.56,31,81,750/- was used by VMCPL towards payment of the following Revenue expenditure of VHCPL : Printed from counselvise.com - 33 - ITA Nos.830 to 835/CHNY/2022 Type of payment AY 2010- 11 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 Total Advertisement Expenses paid Through 0 3,13,85,000 7,69,25,000 0 0 0 10,83,10,000 Intraocular Lens Purchases through VMCPL 0 3,84,70,000 4,01,42,500 17,07,99,250 11,81,52,000 8,73,08,000 45,48,71,750 Total 0 6,98,55,000 11,70,67,500 17,07,99,250 11,81,52,000 8,73,08,000 56,31,81,750 and the balance amount of Rs. 96,75,43,250/- (Rs.153,07,25,000 less Rs.56,31,81,750/-) was received by VMCPL towards repayment of short term loans taken by VHCPL through Bank and the same was accounted as stated above in the books of accounts of VMCPL as detailed here below : AY 2010-11 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 Total 8,17,00,000 13,16,45,000 52,20,82,500 19,92,00,750 6,22,23,000 (2,93,08,000) 96,75,43,250 For the Revenue expenses of VHCPL amounting to Rs. 56,31,81,750/- met by VMCPL paymentwise break-up were already available with the Ld. AO along with bank statements. During the time of submitting a Remand Report dated 12.02.2019 in the case of Dr.A.M.Arun and the Remand Report dated 11.11.2020 in the case of VHCPL, the payment details were checked with bank statement and found matching. Partywise details for the entire Rs.56,31,81,750/- was given as detailed here below: S.No . Party Name Amount (in Rs.) Advertisement payment made by VMC India Pvt Ltd AC films 40,00,000 Astraa Communications 3,25,00,000 Maitri Print and Production 1,49,65,000 Market Level Advertising and Promotions 4,48,45,000 Shree Ambica Agencies 1,20,00,000 TOTAL (A) 10,83,10,000 IOL Payments made by VMC India Pvt Ltd Abbot Medical Optics Pvt. Ltd. 9,56,44,000 Bausch and Lomb Eyecare India Pvt Ltd 7,71,11,000 Printed from counselvise.com - 34 - ITA Nos.830 to 835/CHNY/2022 Delhi Hospital Supply Pvt Ltd 24,00,000 Nova Medical Distributors 1,77,72,000 Optho Equip Inc 32,32,000 Parekh Integrated Services Pvt Ltd 24,30,79,750 Raj Meditech 48,25,000 SVS Eye Needs 85,92,000 Udhayam Enterprises 22,16,000 TOTAL (B) 45,48,71,750 TOTAL(A)+ (B) 56,31,81,750 Hence, it is very clear from the seized material that an amount of Rs.195,82,78,754/- (Rs.139,50,97,004/- in the Books of accounts of VHCPL and Rs. 56,31,81,750/- in the Books of accounts of VMCPL) was spent towards Revenue Expenditure of VHCPL out of the total amount on account of Excess Capitalisation of Assets of Rs.292,63,16,901/- and the balance amount of Rs.96,75,43,250/- was paid to VMCPL towards repayment of short term loans taken by VHCPL from VMCPL. All the payments were made through Bank, no cash is involved and TDS is paid where ever it was applicable. Further, it is true that Dr.A.M.Arun has stated in Ans. No.3 in his sworn statement dated 06.05.2016 that out of the amount of Rs.131,66,08,515/- wrongly booked under the head Citadel Interior Pvt Ltd for excess capitalization of assets, an amount of Rs.42,52,00,00/- was paid to Vaasan Medical Centre India Pvt Ltd through banking channels and Rs.10,18,00,000/- was paid to Dr.A.M.Arun (Rs.1,65,00,000/- in the AY 2014-15 and Rs.8,53,00,000/- In AY 2015-16) through banking channels. It is also to bring to your attention that Ans. No.6 in the same sworn statement dated 06.05.2016 Dr.A.M Arun stated that the withdrawal of Rs.10,18,00,000/- is out of his Current Account with the company which includes his infusion of capital funds into the company. This clearly shows that he had never received any amount out of excess capitalization of assets amounting to Rs.131,66,08,515/- on account of Citadel Interior Pvt Ltd more specifically during the AY 2010-11, the assessment year under subject. With respect to Question No. I0, in the same sworn statement dated 06.05.20l6 Dr.A.M.Arun Stated that an amount of Rs.36,70,00,000/- was paid towards repayment of cash loans taken from Mr.J Dinakaran by Vasan Health Care Pvt Ltd routed through the Current Account of Dr.A.M.Arun during the Assessment Years 2014-15 and 2015-16. Also, Ans.No.8 of the Sworn statement dated 29.04.2016 given Mr.T.Thangavel, Manager-Accounts of VHCPL clearly stated that, out of the amount of accounted wrongly in the name of Citadel Interior Pvt Ltd, only an amount of Printed from counselvise.com - 35 - ITA Nos.830 to 835/CHNY/2022 Rs.10,18,00,000/- (Rs.1,65,00,000/- during the AY 2014-15 and Rs.8,53,00,000/- during AY 2015-16) was paid to Dr.A.M.Arun. Further, in Ans.No.9 he stated about the payments made to Vaasan Medical Centre India Pvt Ltd as \"these are related party transaction, both are sister concern. The nature of payments is like advance given or repaid to Vaasan Medical Centre India Pvt Ltd\". In Ans.No.10, he had stated that out of Rs.10,18,00,000/- an amount of Rs.5,25,00,000/- was paid to Mr.J.Dinakaran. I submit sir that the Penalty Orders under Section 271E of Income Tax Act 1961 were passed for both the Assessment years 2014-15 and 2015-16 on 30.01.2018 in the case of VHCPL towards cash paid for the repayment of total loan dispersed by Shri J.Dinakaran to Vasan. This clearly shows that the amount was Health Care Pvt Ltd through Dr.A.M.Arun borrowed by Vasan Health Care Pvt Lid for its business purpose from Shri.J.Dinakaran and part of the amount was repaid in cash during the Assessment years 2014-15 and 2015-16 and surely not in the AY 2010-11, the assessment year under subject. Hence, the statement of the Ld. AO in Point No. () in Page No.5 of his Assessment Order dated 29.12.2017 that \"repayment of cash loans of Shri J Dinakaran taken by Dr.A.M.Arun\" is not correct. I1 s proved beyond any doubt that as the company cannot borrow any loans from the Third Parties, the funds borrowed from Mr.J Dinakaran were routed through the Current Account of the Company's Managing Director Dr.A.M Arun. The Hon'ble ITAT also held that the cash received from Mr.J.Dinakaran as loans by VHG and cash paid towards repayment of the same was routed through the Current Account of Dr.A.M.Arun with VHCPL and hence, the Penalty orders passed U/s.271D and 271E were quashed in the case of Dr.A.M Arun since penalty cannot be levied in two hands for the single transaction. Hence, I submit sir that the amount of Rs. 292,63,16,901/- shown as spent towards excess capitalization of assets was used by Vasan Health Care Pvt Ltd either for its own revenue expenses or for repayment of loans borrowed from J.Dinakaran and Vaasan Medical Centre India Pvt Lid but no amount was received by Dr.A.M.Arun. Neither it was admitted by Dr.A.M.Arun in his sworn statement dated 06.05.2016 and by Shri. Thangavelu, Manager, Accounts of Vasan Health Care Pvt Ltd in his sworn statement dated 29.04.2016 nor the seized material evidence receipt of any amount by Dr.A.M. Arun for his personal use out of the said amount of Rs. 292,63,16,901/- booked on account of excess capitalization of assets. Enclosed please find a copy of sworn statement of Dr.A.M.Arun dated 06.05.2016 and sworn statement of Shri Thangavelu dated 29.04.2016 highlighting my above submission. Also enclosed please find copies of Penalty Orders under Section 27IE of the Income Tax Act 1961 for the Assessment years 2014-15 and 2015-16 passed by the Additional Printed from counselvise.com - 36 - ITA Nos.830 to 835/CHNY/2022 Commissioner of Income Tax, Central Range-2 in the case of Vasan Health Care Pvt Ltd. The Ld. AO (then ACIT) himself has stated in his Remand Report in the case of Dr.A.M.Arun dated 12.02.2019 that \"all these expenses (Rs.139,50,97,004/-) has been incurred through bank accounts \" and also confirmed by the said observation that the said amount of Rs.139,50,97,004/- was not received by Dr.A M.Arun and with respect to the amount of Rs.153,07,25,000/-, that \"considering the consolidated Ledger account of VMCIPL in the books of VHCPL, shows all the payments made through bank account\". This has also been confirmed by the Remand Report dated 11.11.2020 given by the Ld. AO (present DCIT) in the case of VHCPL by stating that: \"verified and found tallying\", \"For these payments TDS deductions were verified with TDS Challans\" and \"in this regard, list of payments made were furnished during the earlier remand report proceedings (124 pages 8009 entries). These entries were verified with bank statements and found tallying. The payments have been made through the banking channels. However, no separate ledger accounts were maintained. From the trial balance furnished by the assessee, these expenses have not been claimed by the assessee in the P&L alc. For these payments the details of TDS deduction claimed were verified with TDS challans furnished, the results of which are tabulated in Para C of this report. The TDS challans furnished pertain not just to the above expenditure (of Rs. 139.50 Cr) but pertains to expenditure claimed originally in the returns of income filed also’’. The sworn statement of Dr.A.M.Arun dated 06.05.2016 and sworn statement of Shri Thangavelu, Manager Accounts of VHCPL dated 29.04.2016 and the details furnished during the proceedings of both the Remand Reports dated 12.02.2019 and 11.11.2020 show that the funds diverted on account of excess capitalisation of assets were either used for revenue expenditure of VHCPL or for repayment of loans through associate concerns. It's proved beyond any doubt that Dr.A.M.Arun had not received even One Rupee out of the above stated Rs. 292.63 Crores. This clearly proves that the addition of Rs.292,63,16,851 on account of excess Capitalisation of assets made by the AO in the assessments of Dr.A.M.Arun during the AY 2010-11 to 2015-16 has to be deleted by the CIT(Appeals)- 18, Chennai. 6.10 Further Written submissions filed by AR/LH on 31.12.2021 Total amount added by the Ld.AO to the returned income from AY 2010-11 to 2015-16 is Rs. 292,63,16,901/- towards \"Funds received from Vasan Health Care Private Limited on account of Excess Capitalisation of Assets\" as detailed here below in a tabular form: Printed from counselvise.com - 37 - ITA Nos.830 to 835/CHNY/2022 TABLE “A\" Assessment Year Added on account of excess 2010-11 11,86,42,113 2011-12 24,37,69,421 2012-13 65,65,97,475 2013-14 71,48,72,841 2014-15 79,79,09,658 2015-16 39,45,25,393 TOTAL 292,63,16,901 The amount of Excess Capitalisation of Assets through the following Vendors as per the Swon Statements of Dr.A.M.Arun dated 06.05.2016 and Mr. T Thangavel dated 29.04.2016 is Rs. 3076149939 as detailed here below : “TABLE B\" AY 2010- 11 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 TOTAL Citadel Interiors Pvt Ltd Revenue Expenses 0 0 2475000 215991481 362000000 209042034 789508515 VMC India 0 0 124300000 89500000 153500000 58000000 425300000 Dr. A.M.Arun 0 0 0 0 16500000 85300000 101800000 TOTAL 0 0 126775000 305491481 532000000 352342034 1316608515 Anjanad ri Const Giriappa Associat es Revenue Expenses 0 0 7500000 59731468 15000000 0 82231468 Printed from counselvise.com - 38 - ITA Nos.830 to 835/CHNY/2022 VMC India 0 84000000 96701135 0 0 0 180701135 TOTAL 0 84000000 104201135 59731468 15000000 0 262932603 India Constructions Revenue Expenses 0 51248404 29015418 0 19651411 0 99915233 VMC India 0 39000000 42350000 50500000 0 0 131850000 TOTAL 0 90248404 71365418 50500000 19651411 0 231765233 T.Panne rselvam Revenue Expenses 16627200 0 3477267 33521062 15595976 69221505 VMC India 1400000 21866034 15000000 50866034 0 30627200 21866034 18477267 33521062 15595976 120087539 Project Cost Revenue Expenses 0 0 0 276660020 230673142 0 507333162 0 0 0 276660020 230673142 0 507333162 Vera Innovatives Revenue Expenses 0 0 4950000 0 0 0 4950000 VMC India 81700000 6830000 16650000 10000000 3059728787 0 632472887 81700000 6830000 16650000 10000000 3059728787 0 632472887 TOTAL 81700000 273175604 495657587 720860236 136818502 367938010 3076149939 Summarising Table \"B\", Excess Capitalisation of Assets through the following Vendors as per the Syorn Statements of Dr.A.M.Arun dated 06.05.2016 and Mr.T.Thangavel dated 29.04.2016 is as follows: Printed from counselvise.com - 39 - ITA Nos.830 to 835/CHNY/2022 TABLE “C” AY 2010- 11 AY 2011- 12 AY 2012- 13 AY 2013- 14 AY 2014-15 AY 2015- 16 TOTAL Citadel Interiors Pvt Ltd 0 0 126775000 305491481 532000000 352342034 1316608515 Anjanadri Const Giriappa Associates 0 84000000 104201135 59731468 15000000 0 262932603 India Constructions 0 90248404 71365418 50500000 19651411 0 231765233 T.Panner Selvam 0 30627200 21866034 18477267 33521062 15595976 120087539 Vera innovatives 81700000 68300000 171450000 10000000 305972887 0 637422887 Total 81700000 273175604 495657587 720860236 1136818502 367938010 3076149939 The amount added on account of Excess Capitalisation of Assets in the Assessment Orders, based on the seized material and the books of accounts of VHCPL and VMCPL, or the AY 2010-11 to 2015-16 is Rs.292,63,16,901/- as detailed in Table \"A\". Hence the difference between the Sworn statements and the Assessment orders is Rs.14,98,33,038/-. Break-up of Amount added on account of Excess Capitalisation of Assets in the Assessment Orders and the Break-up of the same being utilised for Revenue Expenses of VHCPL and Repayment of Short Term Loans to VMCPL is as follows : “TABLE D\" AY Added on account of excess of capitalization of Assets Revenue Expenses spent thorough PRJ Cash & similar Accounts in VHCPL Revenue Expenses of VHCPL spent through in VMPCL Loan repaid to VMCPL Total Amount transferred to VMCPL Total A B C D C+D = E B+E=F 2010-11 1,86,42,113 0 0 8,17,00,000 8,17,00,000 8,17,00,000 2011-12 24,37,69,421 0 6,98,55,000 13,16,45,000 20,15.00,000 20,15.00,000 2012-13 65,65,97,475 2,67,63,874 11,70,67,500 52,20,82,500 63,91,50,000 66,59,13,874 2013-14 71,48,72,841 33,91,60,945 17,07,99,250 19,92,00,750 37,00,00,000 70,96,60,945 2014-15 79,79,09,658 61,19,36,898 11,81,52,000 6,22,23,000 18,03,75,000 79,23,11,898 2015-16 39,45,25,393 41,72,35,287 8,73,08,000 (2,93,08,000) 5,80,00,000 47,52,35.287 Total 292,63,16,901 139,50,97,004 56,31,81,750 96,75,43,250 153,07,25,000 292,58,22,004 Printed from counselvise.com - 40 - ITA Nos.830 to 835/CHNY/2022 There is a difference of Rs.4,94,897/- between the Column \"A\" and Column \"F\" in Table D\" above was also pointed out in the Remand Report dated 11.11.2020 in case of VHCPL. Break-up of the Amount added on account of Excess Capitalisation of Assets to the Fixed Assets in the Balance Sheet of VHCPL is : “TABLE E” AY Added on account of excess of Cpitalisation of Assets Addition to Furniture & Fixtures in Balance Sheet Additions to Electrical Fittings in Balance Sheet Additions to Leasehold Improvements in Balnce Sheet Ttal additions in the Balance Sheet of VHCPL Actual Additions during the year for which Depreciation is allowed A B C D B+C+D=E E-A 2010-11 11,86,42,113 1,79,67,787 6,82,91,682 25,81,89,765 34,44,49,234 22,58,07,121 2011-12 24,37,69,421 15,71,86,218 12,39,58,495 41,76,22,351 69,87,67,064 45,49,97,643 2012-13 65,65,97,475 58,64,33,829 30,73,94,989 79,16,80,533 168,55,09,351 102,89,11,876 2013-14 71,48,72,841 105,00,65,975 31,14,22,302 57,66,17,648 193,81,05,925 122,32,33,084 2014-15 79,79,09,658 89,14,56,027 21,66,69,714 77,22,51,017 188,03,76,758 108,24,67,100 2015-16 39,45,25,393 42,62,97,072 30,92,42,894 47,05,95,183 120,61,35,149 81,16,09,756 Total 292,63,16,901 312,94,06,908 133,69,80,076 328,69,56,497 775,33,43,481 482,70,26,580 Out of the amount of Rs.139,50,97,004/-, mentioned in Table \"D\" above, spent towards Revenue Expenses of VHCPL through Project Cash, CWIP Project, New CIP 2012-13, PRJ Cash, Project Account, PRJ Cash-3 accounts is as follows : TABLE “F” Type of payment AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 Total Salary 0 6,45,96,307 18,18,90,729 6,45,48,691 31,10,35,727 Salary 0 32,45,089 7,11,85,286 7,83,02,211 15,27,32,586 Advertisement 1,99,25,000 18,60,00,000 31,20,00,000 3,17,50,000 54,96,75,000 Rent 0 0 0 23,93,14,125 23,93,14,125 Administrative Expenses 0 1,44,36,687 0 0 1,44,36,687 Incentive 68,38,874 7,08,82,862 4,68,60,833 33,20,250 12,79,02,879 Total 2,67,63,874 33,96,60,945 61,19,36,898 41,72,35,287 139,50,97,004 Printed from counselvise.com - 41 - ITA Nos.830 to 835/CHNY/2022 Out of the amount of Rs. 153,07,25,000/- mentioned in TABLE \"D\" above, an amount of Rs. 56,31,81,750/- was used by VMCPL towards payment of the following Revenue expenditure of VHCPL: TABLE “G\" Type of payment AY 2010- 11 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 Total Advertise- ment Expenses paid Through VMCPL 0 3,13,85,000 7,69,25,000 0 0 0 10,83,10,000 Intraocular Lens Purchases through VMCPL 0 3,84,70,000 4,01,42,500 17,07,99,250 11,81,52,000 8,73,08,000 45,48,71,750 Total 0 6,98,55,000 11.70,67,500 17,07,99,250 11,81,52,000 8,73,08,000 56,31,81,750 Out of the amount of Rs. 153,07,25,000/- mentioned in TABLE \"D\" above, an amount of Rs. 96,75,43,250/- was received by VMCPL towards repayment of short term loans taken by VHCPL through Bank as detailed here below: TABLE “H\" AY 2010-11 AY 2011-12 AY 2013-14 AY 2012-13 AY 2014-15 AY 2015-16 Total 8,17,00,000 13,16,45,000 52,20,82,500 19,92,00,750 6,22,23,000 (2,93,08,000) 96,75,43,250 It is very clear from the seized material that an amount of Rs.195,82,78,754/- (Rs.139,50,97,004/- in the Books of accounts of VHCPL and Rs. 56,31,81,750/- in the Books of accounts of VMCPL) was spent towards Revenue Expenditure of VHCPL out of the total amount on account of Excess Capitalisation of Assets of Rs.292,63,16,901/- and the balance amount of Rs. Rs. 96,75,43,250/- was paid to VMCPL towards repayment of short term loans taken by VHCPL from VMCPL. All the payments were made through Bank, no cash is involved and TDS is paid where ever it was applicable. Neither it was admitted by Dr.A.M.Arun in his sworn statement dated 06.05.2016 and by Shri. Thangavelu, Manager, Accounts of Vasan Health Care Pvt Lid in his Sworn statement dated 29.04.2016 nor the seized material evidence receipt of any amount by Dr.A.M.Arun for his personal use out of the said amount of Rs. 292,63,16,901/- booked on account of excess capilalization of assets excepting for Rs. 10,18,00,000/- admitted to Printed from counselvise.com - 42 - ITA Nos.830 to 835/CHNY/2022 have been received by Dr.A. M.Arun in Ans. No.3 of his Sworn statement dated 06.05.2016 Rs. 1,65,00,000/- in the AY 2014-15 and Rs.8,53,00,000/- in the AY 2015-16 out of which Rs.5,25,00,000/- was paid to Mr.J Dinakaran towards the loan of VHCPL as stated by Mr.T.Thangavelu in Ans. No. 10 of his Sworn statement dated 29.04.2021. In the Written Submissions of Dr A.M.Arun Dated 21. 12.2018 in Point No. 1.1, Point No.1.2 and Point No. 1.5 of Page Nos.5 & 6 and in the Written Submissions of VHCPL Dated 21.10.2020 in Page No.3. Point No. 1.1 and Point No.1.2 it was submitted that : 1.1 The appellant submits that few wrong entries were made through the books of accounts of the Vasan Group Companies to project a healthy financials for the company M/s Vasan Health Care Pyt. Ltd.( here in after referred to as VHCPL) to and also ensure progress and ensure continued loan patronage from banks expansion in business to create a goodwill in the market. The company VHCPL wanted to come out with an Initial Public Offering and in order to project availability fixed assets of substantive value, a portion of the revenue expenditure of VHCPL which was claimed to have been spent towards acquisition of fixed assets in the form of Interior Decoration, Furniture and Fittings, etc were actually diverted to M/s Vasan Medical Centre India Pvt. Ltd., (hereinafter referred to as VMCPL) and M/s Assured Best Care Hospital Pvt. Ltd (hereinafter referred to as ABCHPL)\". 1.2 These amounts which were diverted were limited to a few crores of rupees and the other three entities including the appellant acted as a conduit of these funds which were thereafter spent towards revenue expenditure of VHCPL. The purpose of the diversion is to create a strong asset base for VHCPL while at the same time settling the revenue expenditure due in the form of salaries and other costs through these three entities. Further, the total Revenue Expenses of Rs.195,82,78,754/- (Rs.139,50,97,004/- spent though the Project Cash and similar accounts in VHCPL pus Rs. 56,31,81,750/- spent by VMCPL for VHCPL) were neither booked as expenditure in the books of accounts of VHCPL nor charged to the Profit and Loss Account of VHCPL from the AY 20210-11 to 2015-16. If these revenue expenses were charged to Profit and Loss account the taxable profit must have been very less and would have resulted in refund of tax as detailed here below : TABLE “I\" AY It before Tax as per P&L Account A Capitalisation of Assets- Revenue Expenses not charged to L Account from Table “C” & “D” B Charging the Excess Capitalisation of Assets-Revenue Expenses Profit or Loss would have been A-B=C Taxes Paid Remarks Printed from counselvise.com - 43 - ITA Nos.830 to 835/CHNY/2022 2010-11 33,24,28,993 0 33,24,28,993 7,60,10,880 2011-12 60,02,93,362 6,98,55,000 53,04,38,362 22,54,39,024 Would have resulted lesser payment of tax by about Rs.2.50 Crores 2012-13 15,73,99,012 14,38,31,374 1,35,67,638 6,19,40,220 Would have resulted in lesser payment of tax by about RS.4.50 Crores 2013-14 9,77,86,564 51,04,60,195 (41,26,73,631) 6,48,54,499 Would have resulted in NIL tax 2014-15 (74,32,80,036) 73,00,88,898 (147,33,68,934) 0 2015-16 (140,59,04,663) 50,45,43,287 (191,04,47,950) 0 The Revenue Expenses spent for the business of the company HCPL amounting to Rs.193.05 Crores were routed through either the books of accounts of VHCPL or VMCPL as stated above and the same were not debited/charged to Profit and Loss Account of VHCPL for the AY 2010-11 to 2015-16 resulting in payment of excess Income Tax than the actual tax liable to be paid. The Revenue Expenses amounting to Rs.195,82,78,754/- were not charged to Profit and Loss Account because the Company wanted to have a healthy Financial statements showing more profit than the actual profit and showing more Asset base than the actuals to ensure continued loan patronage from banks, to ensure progress and expansion in business to create a goodwill in the market and to come out with an Initial Public Offering and in order to project availability of Fixed Assets of substantive value, a portion of the revenue expenditure of VHCPL which was claimed to have been spent towards acquisition of fixed assets in the form of Interior Decoration, Furniture and Fittings, etc. This fact was admitted by Dr.A.M.Arun both in the sworn statements and also in his Written submissions dated 21.12.2018 as mentioned in Page Nos.6 and 7 supra. The sworn statement of Dr.A.M.Arun dated 06.05.2016 and sworn statement of Shri Thangavelu, Manager Accounts of VHCPL dated 29.04.2016, the books of accounts of VHCPL and VMCPL forming part of the seized material and the details furnished during the proceedings of both the Remand Reports dated 12. 02.2019 and 11.I1,2020 show that the funds diverted on account of excess capilalisation of assets were either used for revenue expenditure of VHCPL or for repayment of loans through associate concerns. It's proved beyond any doubt that Dr.A.M.Arun had not received Printed from counselvise.com - 44 - ITA Nos.830 to 835/CHNY/2022 even One Rupee out of the above stated Rs.292.63 Crores and this fact was confirmed by the Ld.AO in his Remand Report dated 12.02.2019 in the case of Dr.A.M.Arun and Remand Report dated 11.11.2020 in the case of VHCPL. Under the above explained circumstances, the Appellant craves to submit that the unreasonable and unjust addition of Rs.292,63,16,851/- on account of \"Funds received From Ms. Vasan Healthcare Pvt Lid On account of excess Capitalisation of Assets \" for the AY 2010-11 to 2015-16 be deleted by the Honourable Appellate Commissioner and thus render Justice.” 5. The ld.CIT(A) having gone through the entire submissions made by the assessee along with the remand reports of the AO / Range head and the rejoinders by the assessee and his legal heirs decided the issues holding as under: “6.11 - Decision along with Reasons: 6.11.1 During the course of assessment proceedings, the AO observed that the assessee is shareholder and the director of Vasan Group of companies. A search u/s. 132 was conducted in the residential premises of the assessee and the business premises of M/s.Vasan Healthcare (P) Limited on 01/12/2015. During the course of search, it was found that the value of certain fixed assets of M/s.Vasan Health Care (P) Limited (VHCPL) were inflated and claimed excess depreciation on such inflated assets. It was seen that in order to inflate the fixed assets of VHCPL, the ledger accounts of vendors were debited on account of payments but the AO has stated in the assessment orders that the payments were made to either to his associate concerns or to himself. Such excess capitalization of assets was worked out by the AO at Rs.292.63 cr for the AYs 2010-11 to 2015-16 as follows and such proportionate addition was made in the respective assessment years in the hands of the assessee: Assessment Year Added on account of excess of Capitalisation of Assets 2010-11 11,86,42,113 2011-12 24,37,69,42 2012-13 65,65,97,475 2013-14 71,48,72,841 2014-15 79,79,09,658 2015-16 39,45,25,393 Total 292,63,16,901 Printed from counselvise.com - 45 - ITA Nos.830 to 835/CHNY/2022 6.11.2 In the grounds of appeal, the assessee contended that excess consider the fact that there is no (a) AO failed to capitalization involved and is a question of whether it is a capital expenditure or Revenue expenditure incurred towards interior office expenses and woodwork etc. and connected expenses at the time of opening of branches, as a project. (b) AO has come to a conclusion wrongly interpreting the sworn statement and is not correct in stating that the assessee and the accountant have accepted the excess capitalization. 6.11.3 In the written submission made on 21/12/2018, the AR contended that - (a) For all the AYs from 2010-11 to 2015-16, the additions to total income other than by way of diversion of expenditure towards capital costs oi M/s.Vasan Health care (P) Ltd are outside the purview of taxation u/s.153A, since addition u/s.2(22)(e), credits to the accounts of group companies and various other additions do not emanate from any incriminating materials. (b) Inter group transactions cannot be treated as income since no monetary benefit is derived by any of the concerns or persons who participated in the cyclic transactions. (c) The only component of income that was omitted to be offered to tax is the incorrect claim of depreciation on the assets wrongly capitalized which are not actually in existence in case of Vasan HealthCare (P) Ltd VHCPL). However, these funds have either been routed through M/s.Vasan Medical Center (P) Ltd (VMCPL) to address the various revenue expenditure of Vasan Healthcare (P) Ltd or for repayment of loan to VMCPL by VHCPL – all through banking channel. On the other hand, the AO instead of approaching the assessments in this group in a holistic manner had made assessments of excess capitalization amounts in the hands of the assessee which is utterly baseless. It was therefore pleaded that the additions undertaken in all the assessments that relate to inter- -group transactions of any form, be it deemed dividend or credits to capital account or debits to the companies account etc., need to be ignored as all such income gets converged into a solitary disallowance of depreciation on wrong capitalization of non-existing assets. (d) Additions which do not have any link to the contents of the seized material has to be deleted since the provisions of search assessment u/s.153A do not envisage a situation where the additions in respect of already completed assessments relating to issues which are not found in the seized material can be undertaken. Reliance was placed on the following Cases: Printed from counselvise.com - 46 - ITA Nos.830 to 835/CHNY/2022 (i) Pr.CIT Vs Meetha Gutgutia 395 ITR 526 (Del) (ii) CIT vs Harjeev Agarwal 70 Taxmann.com 95 Del (iii) CIT vs. Lancy constructions 236 Taxmann 728 (Kar) (iv) CIT Vs Contental Warehousing Corp (Nahava Sheva) Ltd 58 Taxmann.com 78 (v) CIT Vs. Kabul Chawla 380 ITR 573 (vi) Pr CIT Vs Kurele Paper Mills (P) Ltd 380 ITR 571 (Del) (vii) Mridul Commodities (P) Ltd Vs DCIT 78 Taxmann.com 357 (Kolkotta Tribunal) (vii) CIT Vs. Raj Kumar Arora 367 ITR 517 (All) (e) Few Wrong entries were made through the books of accounts of the Vasan Group Companies to project healthy financials for the company M/s.Vasan Healthcare (P) Ltd (VHCPL) to ensure continued loan patronage from banks and also ensure progress and expansion in business to create a goodwill in the market. It wanted to come out with an IPO and in order to project availability of Fixed assets of substantive value, a portion of the revenue expenditure which were claimed to have been spent towards acquisition of fixed assets in the form of interior decoration, Furniture and Fittings, etc were actually incurred for certain revenue expenses of VHCPL which were not debited in its profit and loss account and partly diverted to M/s. Vasan Medical Center India (P) Ltd (VMCIPL) for loan Repayment which VHCPL had borrowed from VMCIPL. (f) The purpose of the diversion is to create a strong asset base for Vasai Health Care (P) Ltd while at the same time settling the revenue expenditure due in the form of salaries and other costs through these entities. (g) The entries were cyclic involving a small portion of turnover and it the link between the source and expenditure were appreciated, it can be very well seen that the actual financials do not fit anywhere near in comparison to the phenomenal projections undertaken by the AO. (h) The discrepancies in the group companies were limited to the extent of wrong claim of depreciation on the fixed assets, the payment towards which were diverted to other group companies as stated above. (i) Except for giving a rosy picture to the company VHCPL by inflating its fixed assets and claiming depreciation on that, none of the members in the assessee group benefited in any way and there is no case of assessing them in the hands of the assessee as income. The excess depreciation has already been disallowed by the AO in the hands of VHCPL. (j) This contention is not an afterthought as in all the statements recorded at the time of search and post search, on 06/05/2016 and 18/05/2016, the same position was appreciated by the Search Team. Printed from counselvise.com - 47 - ITA Nos.830 to 835/CHNY/2022 (k) Not a single rupee was diverted for personal use or creation of any asset for the directors of the company. The funds have been totally utilised only for the purpose of business, though it would have violated certain provisions of law in treating Revenue expenses as capital expenditure. (l) It is not clear as to which provisions of law under the Income tax Statute or the Principle of Revenue Recognition, the AO made such a huge addition in the hands of the assessee. 6.11.4 The case was remanded to the AO for his report on 11/01/2019 and the AO vide his remand report submitted on 13/02/2019 relying on certain decisions, contended not to admit the additional evidence U/R.46(A) in view of the fact that the assessee has not produced/explained during the course of assessment proceedings, the details called for. Without prejudice, he contended: (a) On analysis of tally data and after cross examination of asset vendors, the quantum of excess capitalization of the assets was worked out at Rs.292,63,16,901/-. (b) Thus, the assessee was involved in capitalization of Fixed assets and Siphoning off the funds of the company M/s.VHCPL, either in his individual capacity or through other parties and further the assessee has withdrawn the funds for the personal benefits like investment in property, personal expenses and unaccounted expenses. Therefore, the funds so received by the assessee out of excess capitalization of assets in the hands of M/s.VHCPL are nothing but the unaccounted income of the assessee. (c) During the course of appellate proceedings, it was stated by the assessee's representative that an amount of Rs.139.50 cr was debited to the Fixed assets account and credited to the venders account by way of journal entry and by another journal entry the vendors account was debited with the same amount and credited the project cost account in the books of VHCPL. The amount so credited in the project cost account was subsequently utilised for making payments for various purposes was stated to have been made through banking channel as submitted by the AR in the written Submissions dated 10/01/2019. In this connection the AR has enclosed ledger extract which was part of the seized material. Further with regard to payment of Rs.153.07 cr, the authorized representative submitted that the said money was transferred by VHCPL to VMCIPL through bank and the said amount used by VMCIPL towards Ady. expenses of VHCPL amounting to Rs.10.83 cr, Rs.45.48 cr towards intraocular lenses purchases for VHCPL and Rs.96.75 cr towards repayment of short-term loans to VMCPL through bank by debiting the VHCPL account and crediting the bank account in the books of VMCPL. In this connection the authorized representative has given ledger extract which is stated to be part of the digital evidence that was seized by the department. During the remand proceedings the details Submitted like project ledger accounts, funds transferred from VHEPL to VMCIPL, copies of Printed from counselvise.com - 48 - ITA Nos.830 to 835/CHNY/2022 statements recorded during the course of search and post such enquiries discussing the nature of entries in project account and funds are transferred to VMCIPL, copies of bank statements submitted reflecting the payments made and evidence of TDS deducted on expenses incurred through projects account where examined and it was noted that the revenue expenditure debited in project account of excess capitalisation from vendor account under various heads is as under: Type of payment FY 11-12 FY 12-13 FY 13-14 FY14-15 Grand total Doctors salary 64596307 181890729 64548211 311035727 Staff salary 3245059 71185286 31750000 549675000 Lease Rental Payment 239314125 239314125 Administrative expenses 14436687 14436687 Doctors incentive 6838874 70882862 46860883 3320260 127902879 26763874 339160945 1395097004 417235287 1395097004 The loan repayment to related parties booked as expenses and other fixed assets or as under: Type of payment FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14 FY 14-15 Grand total Advertisement made through VMC India 31385000 76925000 108310000 Intra Ocular lenses purchase payment made through VMC India 3847000 40142500 170799250 118152000 87308000 54871750 Repayment towards short term loans 81700000 134645000 522082500 199200750 6223000 29308000 967543250 Total 81700000 201500000 639150000 37000000 180375000 58000000 1530725000 The amount debited under the excess capitalisation of assets against the above expenses are as under: Type of payments FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14 FY 14-15 Grand Total Excess capitalisation of assets 118642113 243769421 656597425 714872841 797909658 394525393 2926316851 (d) On verification of the ledger accounts, bank statements and other supporting evidences filed, it was noticed that all these expenses have been incurred through bank accounts which are not accounted in regular books of accounts. Further the statements recorded from the assessee and the Printed from counselvise.com - 49 - ITA Nos.830 to 835/CHNY/2022 account manager, during the course of search proceedings and during the post search enquiries also show that the funds of excess capitalization were used for incurring revenue expenditures and for repayment of inter group loans which has not been routed through the regular books of accounts. (e) As discussed above the details furnished during the remand proceedings shows that the funds diverted on account of excess capitalization of assets was either used for revenue expenditure or for repayment of loans through associate concerns since VHCPL has inflated its fixed assets by Rs.292 crores over the years, how the balance sheet of VHCPL got tallied as it is not explained what will be the corresponding liabilities. Further considering the consolidated ledger account of VMCIPL in the books of VHCPL shows all the payments made through bank account but the ledger account in the books of VHCIPL is not filed. Hence it cannot be ascertained how the funds are transferred from VHCPL are used by VMCIPL with respect to short-term loans. 6.11.5 Copy of this remand report of the AO has been furnished to the assessee for his submission: Assessee / AR's submissions vide reply dated 22/03/2019 is paraphrased as follows: (a) It is submitted that all the documents filed now either before the CIT(A) or the AO are not additional evidence but which are all forming part of the seized material. What is now given is only explanations or clarifications on the evidences which already form part of the records of the AO and therefore there is no additional evidences produced before the CIT(A). (b) With respect to the amount of Rs. 139.50 cr out of the total excess capitalization amount of Rs. 292.63 crores was spent for the revenue expenses of VHCPL through CWIP project, new CDCWIP project cost, PRJ- cash and PRJ-cash-1 and this is accounted very much in the regular books of accounts only and do not form part of the financial statements of VHCPL since the ledger accounts show a nil balance at the end of each financial year. Therefore, the remark of the AO that all these expenses have been incurred through bank accounts which were not accounted in the regular books of accounts is incorrect. (c) It was contended that the AO himself has stated in his remand report that all these expenses Rs.139.50 crores has been incurred through bank accounts and also confirmed by the AO that the said amount of Rs.139.50 crores was not received by the assessee. It is contended that if the said the expenses are not acceptable to the AO the same has to be dealt with in the assessments of VHOCPL but not in the hands of the assessee as he never received even a single rupee out of the said amount. (d) The AO has wrongly quoted as if we have stated that the above such payments were not routed through the regular books of accounts. At no point Printed from counselvise.com - 50 - ITA Nos.830 to 835/CHNY/2022 of time, we have admitted that the above said expenses were not booked in the regular books of accounts. (e) With respect to the amount of Rs. 153.07 cr out of the excess capitalisation of assets amounting to Rs.292.63 cr, it is submitted that the AO himself had agreed and confirmed in his remand report that considering the consolidated ledger account of VMCIPL in the books of VHCPL shows all the payments made through bank account. Further it is submitted that the ledger accounts in the books of VMCIPL submitted to the AO and before the CIT(A). This clearly proves beyond any doubt that the assessee did not receive even a single rupee out of the said amount of Rs. 153.07 cr. (f) It is submitted that the fact that the funds were diverted on account of excess capitalization of assets was either used for revenue expenditure or for repayment of loans through associate has been confirmed by the AO in his remand report. g) It is further submitted that the AO himself narrated in his remand report how the excess capitalization amount was routed through the books of accounts of VHCPL So that the same do not form part of the balance sheets since the balances in the vendors accounts and the project cost accounts are nil at the end of each financial year and how the double entry accounting system was used in reflecting the balance sheet. However, concluding by stating that the assessee has inflated the assets by Rs.292 crores over the years how the balance sheet of the assessee got tallied was not explained and what will be the corresponding liabilities, he contradicts himself at different stages in the remand report in this regard. h) The assessee has also furnished his comments on the endorsemnent remarks of the Addl CIT that – (i) Neither the assessee nor VHCPL ever stated that the amount has been spent outside the books of the company. They have been speaking right from the search proceedings that the amount does not form part of financial statements by the planned accounting entries in the books of accounts. (ii) That the excess capitalisation amount has been debited to fixed assets account and by a series of journal entries the corresponding credits have gone to bank account reducing the bank balance on the assets side of the balance sheet which has been categorically narrated by the AO in the 5th page of his remand report dated 11/02/2019. Therefore, it is submitted that the fixed assets are inflated by Rs.292Cr on account of excess capitalization of assets and to the same extent the bank balance has been reduced so that the balance got tallied every year. (iii) With regard to the remark that \"but the source for the same in their books or outside the books had not been explained by the assessce\", it is stated that all the payments are made through bank account of VHCPL which has Printed from counselvise.com - 51 - ITA Nos.830 to 835/CHNY/2022 been accepted by the AO in point number 1-3 in his remand report, and all the payments were recorded in the books of accounts of VHCPL. Therefore, the question of proving the source for the payment does not arise. (iv) With regard to the remark of the Additional CIT regarding transfer of Rs.153 crores by VHCPL to VMCIPL, it is stated that the ledger account of VHCPL in the books of VMCIPL was very much submitted to the AO and if at all any discrepancies are found in this regard the same have to be dealt with in the assessments of VHCPL and VMCIPL but not in the assessee's hands as it was proved beyond doubt that all the payments are made by the VHPCL to VMCIPL through bank only and assessee has not received even a single rupee out of the above stated Rs. 153 crores. 6.11.6 It is pertinent to mention that the issue of excess capitilisation was remanded back in the case of VHCPL to the AO on 29.10.2020 by forwarding copies of all the submissions of the ARs and specifically with a view to elucidating facts and position with reference to the claims and audited accounts, to furnish a report. The AO vide his report dated 11/11/2020 (in the case of VHCPL) stated as follows on the excess capitalization and consequent disallowance of depreciation: (a) The modus operandi has been- asset account debited credited vendor accounts (Journal entries) - vender account debited - total Rs.292.63 Cr. (b) Towards revenue expenditure of M/s.Vasan Healthcare Private Limited - Rs.139.51 cr (actual payments through banking channels). List of Payments available running into 124 pages 8009 entries. Verified and verified with found tallying. For these payments TDS deduction were TDS challans. Private Limited (c) Transferred to M/s.Vasan Medical Centre India Rs. 153,07,25,000 through banking channels checked with bank statements and found tallying, Utilization of Rs.153.07 cr received from Vasan Healthcare Private Limited by Vasan Medical Centre India Private Limited. (d) Regarding the receipt of Rs. 153.07 cr a current account of VHCPL was maintained in the books of VMCIPL. No separate ledger account was maintained by both the companies (VHCPL and VMCIPL). For making payments, this account was debited and bank account of VMCIPL was credited. From the bank accounts the parties were paid. However, printouts of the excel sheet with details of payments extracted from the VHCPL current account in the books of VMCIPL were furnished. These entries were cross- checked with the bank accounts and found tallied. It is further explained how the funds were transferred from Vasan Healthcare Private Limited to the bank accounts of Vasan Medical Centre India Private Limited. Both the bank accounts tallied. Out of this Rs.153.07 crores received by VMCIPL, an amount of Rs.56.32 crores have been spent towards the revenue expenses of VHCPL, which has not been debited in profit and loss account of both the Printed from counselvise.com - 52 - ITA Nos.830 to 835/CHNY/2022 companies and not claimed as expenses. Al these revenue expenses which have not been claimed have been verified by the AO and confirmed. 6.11.7 I have considered all the above explanations of both the AO and the assessee and also the remand reports submitted by the AOs and the rejoinders on the remand reports furnished by the assessee/ AR/ LH. 6.11.7.1 In the first remand report, the AO requested this office or not to admit the evidence produced by the assessee during the course of the appeal relying on certain case laws. However, I find that all the documents relating, to the excess capitalization of assets in VHCPL in which the assessee is having a substantial interest are all available in the seized documents / materials, which is the fulcrum of thin search, What the assessee has tried to do in the appeal proceedings is to explain certain things which were not done before the AO in respon8e to the notices u/s. 142(1). Further, it is the admitted legal position that if any new evidence or material produced before the CIT(A) it has to be considered by the CIT(A), after affording necessary opportunity to the AO, as they were not available before the AO at the time of making the assessment. However, as observed earlier, no new evidence or material produced by the assessee before the CIT(A) but only explanations with reference to the documents seized/found and on facts stated in the sworn statements were offered. In the given circumstances, the AO was given opportunities twice (once in this case and another in the case of VHCPL) on the issue of excess capitalization to go through the explanation and report on its authenticity and its acceptability of its nature and quantum. No fresh material evidence, that was not available to the AO during the assessment stage, has been brought on record but only some varied explanations have been offered during the appellate proceedings based on very seized documents/sworn statements. Therefore, there is no necessity to discuss the case laws relied on by the AO. 6.11.7.2 A meticulous analysis of the assessment orders, the assessee's explanations, and the remand reports, especially the second remand report dated 11/11/2020 and the rejoinders of the assessee/AR on the remand reports, it is seen that the chain of transactions leading to the method of operation done by the companies, in increasing the value of some of the fixed assets in VHCPL (by Rs. 292 crores), and using such funds towards revenue expenditures of VHCPL all through bank accounts (Rs. 139 crores) and to repay the loans taken by VHCPL to VMCIPL all through bank accounts (Rs. 153 crores), were verified and reported by the AO, as tallied by him (to the excess capitalization i.e. Rs.139 crores + Rs.153 crores = Rs.292 Crores) with the respective ledger accounts and bank statements. In other words, the evidences show that the fictitious entries created is used in the purpose of VHCPL and not in the case of the assessee. 6.11.7.3 For the sake of more clarity, the relevant paragraphs 11, 12 85 13 of the CIT(A) order in ITA No. 253/CIT(A)-18/17-18 dated 17.11.2020 in the case of VHCPL for the assessment year 2015-16 are reproduced below: Printed from counselvise.com - 53 - ITA Nos.830 to 835/CHNY/2022 \"11. The AO was asked, with the view to elucidating facts and position with reference to the claims and audited accounts, furnish a remand report vide this office letter dated 29.10.2020. In response thereto, the Assessing Officer vide his report dated 11.11.2020, duly endorsed by the Addl. CIT, Central Range-2, Chennai, submitted as under on this issue: [Quote] A Excessive Capitalisation and consequent disallowance of depreciation: 1. The modus operandi has been:- (a). Asset account debited (Journal entries) -> credited Vendor accounts (journal entries) (b). Vendor account debited (Journal entries) -> total Rs.292,63,16,901/- i) Credited Bank accounts of the vendors against actual billing towards addition towards assets. (actual payments-Rs.4,94,897/) (ii) Towards revenue expenditure of M/s. Vasan Health Care Pvt Ltd - Rs. 139,50,97,004/ (actual payments through banking channels). List of payments available running into 124 pages 8009 entries. Verified and found tallying. For these payments TDS deduction were verified with TDS challans. (iii) Transferred to Ms. Vasan Medical Centre India Pvt Ltd - Rs. 153,07,25,000/- through banking channels. Checked with bank statements and found tallying. Utilisation of Rs. I53, 07 Cr received from Ms. Vasan Health Care Pvt Ltd by Ms.Vasan Medical Centre India Pvt Ltd: 2. Regarding the receipt of Rs. 153.07 Cr a current account of VHCPL was maintained in the books of VMCIPL. No separate ledger account was maintained by both the assessees (VHCPL & VMCIPL), For making payments this account was debited and bank account of VMCIPL was credited. From the bank accounts the parties were paid. However, printouts of the excel sheet with details of payments extracted from the PHCPL current account in the books of VMCIPL were furnished. These entries were cross- checked with the bank accounts and found tallied. The Bank accounts of M/s. Vasan Health Care Pvt Ltd from which funds were transferred to the bank accounts of M/s. Vasan Medical Centre India Pvt Ltd:- S.No Bank and Branch Name Account Number Amount (in Rs) 1 City Union Bank, Trichy 93561 12,20,00,000 Printed from counselvise.com - 54 - ITA Nos.830 to 835/CHNY/2022 2 City Union Bank, Trichy CA 83406 46,68,75,000 3 HDFC, Indore 12400330000104 6,95,00,000 4 Indus Ind Bank, 0007 W11122050 1,20,00,000 5 Corporation Bank, Adyar, Chennai ECB CA/01/001900 20,00, 00 6 Corporation Bank, Adyar, Chennai ECC/01/120001 1,00,00,000 7 City Union Bank, Anna Nagar, Chennai CA 102342 60,00,000 8 City Union Bank, Trichy CA108257 84,23,50,000 Total 153,07,25,000 The Bank accounts of M/s. Vasan Medical Centre India Pvt Ltd in which funds were received from the bank accounts of M/s. Vasan Health Care Pvt Ltd:- S.No Bank and Branch Name Account Number Amount (în Rs) 1 City Union Bank, Trichy CA 108258 8,17,00,000 2 City Union Bank, Trichy CA 128567 144,90,25,000 Total 153,07,25,000 3. Out of the sum of Rs.153.07 Cr received by Ms. Vasan Medical Centre India Pvt Ltd, an amount of Rs.56,31,81,750/- has been claimed to have been spent towards the revenue expenses of Ms. Vasan Health Care Pvt Ltd. as below: Type of Payment AY 2010- 11 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15 AY 2015- 16 Total Advertisement expenses through VMCPL 0 3,13,85,000 7,69,25,000 0 0 0 10,83,10,000 Intraocular Lens Purchases through VMCPL 0 3,84,70,000 4,01,42,500 17,07,99,250 11,81,52,000 8,73,08,000 45,48,71,750 Total 0 6,98,55,000 1,70,67,500 17,07,99,250 11,81,52,000 8,73,08,000 56,31,81,750 (Total Revenue Expenditure of VHCPL Rs. 195,82,78,754/- (139,50,97,004+ 56,31,81,750)) Printed from counselvise.com - 55 - ITA Nos.830 to 835/CHNY/2022 For the Revenue expenses of VHCPL amounting to Rs.56,31,81,750/- payment wise break up were already available along with bank statements. The payment details were Checked with bank statements and found matching. Partywise details for the entire Rs. 56,31,8l,750/- was given. S.No Party Name Amount (in Rs) Advertisement payment made by VMC India Pvt Ltd (10,83,10,000) 1 AC Films 40,00,000 2 Astraa Communications 3,25,00,000 3 Maitri Print and Production 1,49,65,000 4 Market Level Advertising and Promotions 4,48,45,000 5 Shree Ambica Agencies 1,20,00, 000 IOL Payments made by VMC India Pvt Ltd (45,48,71,750) 6 Abbot Medical Optics Pvt Ltd 9,56,44,000 7 Bausch and Lomb Eyecare India Pvt Ltd 7,71,11, 000 8 Delhi Hospital Supply Pvt Ltd 24,00,000 9 Nova Medica Distributors 1,77,72,000 10 Optho Equip Inc 32,32,000 11 Parekh Integrated Services Pvt Ltd 24,30,79,750 12 Raj Meditech 48,25,000 13 SVS Eye Needs 85,92,000 14 Udhayam Enterprises 22,16,000 Out of this Party confirmation available for a sum of Rs.9,18,15,000/-For the balance No party confirmation or bills furnished. A verification of Ledger account copies along with trial balance of VMCIPL revealed that these were not claimed as expenditure in the hands of VMCIPL. These party names do not appear both in ledger accounts as well as in trial balance of M/s. VMCIPL. 4. Further, out of Rs. 153.07 Cr, Rs. 96.75 Cr was claimed to have been adjusted towards the loan given by VMCIPL to VHCPL. No separate Ledger accounts are available for the loan account. But all the transaction entries are made through a current account ledger of VHCPL in the books of VMCIPL. All transactions have been through banking channels only. (Details given during the earlier remand report proceedings). Receipt of money checked. No other documents were available in this regard. Revenue expenditure of VHCPL of Rs. 139,50,97,004/- out of Prj Cash & similar accounts: Printed from counselvise.com - 56 - ITA Nos.830 to 835/CHNY/2022 4. The assessee had claimed in its submission before the Ld CIT(A), a sum of Rs. 139,50,97,004/- towards revenue expenditure of VHCPL as below out of the PRJ cash and the like accounts: Type of Payment AY 2012-13 AY 2013-14 AY 2014-15 AY 2015-16 Total Doctors Salary 0 6,45,96,307 18, 18,90, 729 6,45,48,69 1 31,10,35, 727 Staff Salary 0 32,45,089 7,11,85,286 7,83,02,211 15,27,32,586 Advertisement 1,99,25, 000 18,60,00,000 31,20,00,000 3,17,50,000 54,96,75, 000 Lease Rent 0 0 0 23,93,14,125 23,93,14, 125 Administrative Expenses 0 1,44,36,687 0 0 1,44,36,687 Doctors Incentive 68,38,874 7,08,82, 862 4,68,60,883 33,20,250 12,79,02,879 Total 2,67,63,874 33,96,60,945 61,19,36,898 41,72,35,287 139,50,97,004 In this regard, list of payments made were furnished during the earlier remand report proceedings (124 pages 8009 entries). These entries were verified with bank statements and found tallying. The payments have been made through the banking channels. However, no separate ledger accounts were maintained. From the trial balance furnished by the assessee, these expenses have not been claimed by the assessee in the P&L a/c. For these payments the details of TDS deduction claimed were verified with TDS challans furnished, the results of which are tabulated in Para C of this report. The TDS challans furnished pertain not just to the above expenditure (of Rs. 139.50 Cr) but pertains to expenditure claimed originally in the returns of income filed also. The above expenditure (of Rs. 139.50 Cr) but pertains to expenditure claimed originally in the returns of income filed also. [Unquote] 12. A copy of the remand report was forwarded to the appellant seeking its rejoinder, if any. The appellant submitted its response vide letter dated 12.11.2020 as under: [Quote] 1. We have admitted in our Written Submissions that out of the excess capitalization of assets amounting to Rs.292,63,16,901/-, an amount of Rs. 139,50,97,004/- was spent towards revenue expenses of the Appellant Company through \"PRJ cash\" and such other accounts, the total expenditure was made through Banking chạnnels, TDS was de ducted and paid properly Printed from counselvise.com - 57 - ITA Nos.830 to 835/CHNY/2022 for the expenses and the same was not claimed as expenditure both in the Profit and Loss Accounts as well in the Returns of Income for the AY's 2010- 11 to 2015-16. This has been confirmed by the Remand Report under reference by stating that: \"verified and found tallying\". \"For these payments TDS deduction were verified with TDS Challans\" (Point No.A.1 (b) (ii) of the Remand Report). Hence, we request your goodself to allow Rs.139,50,97,004/-as deductible revenue expenditure U/s. 37(1) of the Income Tax Act, 1961 for the AY's 2012-13 to 2015-16 as detailed here below: 2. We have admitted in our Written submissions that an amount of Rs.153,07,25,000/- was transferred by the Appellant company to M/s.VAASAN MEDICAL CENTRE (INDIA) PVT LID (VMCPL) through Banking channels out of which an amount of Rs.96,75,43,250/- was transferred towards repayment of short-term loans taken by the Appellant company from VMCPL and the balance amount of Rs.56,31,81,750/- was spent by VMCPL towards the revenue expenditure of the Appellant company. We have also admitted that this amount of Rs.56,31,81,750/- was not claimed as expenditure by VMCPL in their Returns of income and sworn affidavits were filed along with Written submission in this regard. This has been confirmed by Point No.A. 2, 3, 4 and 5 of the Remand Report by stating that: \"checked with Bank statement and found tallying\". \"Payment extracted from VHCPL current account in the books of VMCPL were furnished. These entries were cross checked with the Bank accounts and tallied\". \"For the revenue expenses of VHCPL amounting to Rs.56,31,81,750/- payment wise breakup were already available along with Bank statements\". \"The payment details were checked with bank statement and found matching\". AY Amount 2012-13 2,67,63,874 2013-14 33,96,60,945 2014-15 61,19,36,898 2015-16 41,72,35,287 Total 139,50,97,004 Printed from counselvise.com - 58 - ITA Nos.830 to 835/CHNY/2022 \"A verification of ledger account of copies along with Trial Balance of VMCPL revealed that they were not claimed as expenditure in the hands of VMCPL\". “All the transaction entries are made through a current account ledger of VHCPL in the books of VMCPL. All transactions have been through Banking channels only. These expenses have been not claimed by the Assessee in the Profit and Loss Account. Hence, we request your goodself to allow Rs.56,31,81,750/- as deductible revenue expenditure U/s.37(1) of the Income Tax Act, 1961 for the AY's 2011- 12 to 2015-16 as detailed here below: AY Amount 2011-12 6,98,55,000 2012-13 11,70,67,500 2013-14 17,07,99,250 2014-15 11,81,52,000 2015-16 8,73,08,000 Total 56,31,81,750 [Unquote] Reasons for decision: 13. I have gone through the facts of the case and the materials available on record. The AO has referred to the recovery of evidence during the course of search proceedings u/s.132 of the Act in the group cases of the appellant that indicates that the appellant had not maintained proper accounts and debited the ledger of the respective \"Asset Vendors'\" such as \"M/s.Citadel Interiors Pvt Lid\" \"VeRa Innovatives\", T. Paneer Selvam\". \"Giriyappa Associates\" \"Anjanadri Constructions\", \"India Constructions\" \"CWIP Project\" \"New CWIP Project\" and credited the \"Fixed Asset\" accounts over and above the actual amounts. The AO has mentioned that Dr A. M.Arun had deposed that there was incorrect and false booking of asset accounts and corresponding accounts of the Vendors concerned. The AO has referred to the verification carried out by the Revenue during the search and post-search investigations with the vendors concerned who admitted that the amounts on account of excessive debit and Corresponding credits in the accounts of \"vendors \" and \"Fixed Assets\" were not received by them. The A0 has discussed these aspects elaborately in his assessment order. ...\" [UNQUOTE] More particularly, in paragraphs 13 & 14 of the order, the ld. CIT(A) has observed that, ... The AO has referred to the recovery of evidence during the Printed from counselvise.com - 59 - ITA Nos.830 to 835/CHNY/2022 course of search proceedings u/s 132 of the Act in the group cases of the appellant that indicates that the appellant had not maintained proper accounts and debited the ledger of the respective \"Asset Vendors\" such as M/s. Citadel Interiors Put Ltd\", \"VeRa Innovatives\", T. Paneer Selvam\", \"Giriyappa Associates\", \"Anjanadri Constructions\", \"India Constructions\", \"CWIP Project\", \"New CWIP Project\" and credited the \"Fixed Asset accounts Over and above the actual amounts. The AO has mentioned that Dr A.M. Arun deposed that there was incorrect and false booking of asset accounts and corresponding accounts of the Vendors concerned. The A0 has referred to the verification carried out by the Revenue during the search and post- search investigations with the vendors concerned who admitted that the amounts on account of excessive debit and corresponding credits in the accounts of \"vendors\" and \"Fixed Assets\" were not received by them. The AO has discussed these aspects elaborately in the assessment order. 14. The AO mentioned that such debits in the ledger accounts of Asset Vendor or CWP Projects and the credits to fixed assets, under the head Building Construction, Leasehold improvements, Furniture and Fixtures and Equipment have resulted into excess capitalization of fixed assets and excess claim of depreciation on such capitalization. The AO has discussed the impugned transactions in respect of each such vendors concerned in his assessment order extracted supra. The AO has referred to the incorrect maintenance of accounts that was brought to light and the admission by Dr.A.M. Arun, the then MD of the appellant company who admitted to the excessive bookings and has deposed that the excessive payments were not given to the vendors but were said to be utilized for repayment of loans of the appellant to VMCPL and for certain pre-opertive expenses.” Though the issue of excess capitalization in the case of VHCPL was discussed in connection with the claim of depreciation, the facts are quite applicable to assessee's case, as the alleged excess capitalization is claimed to be siphoned off by the assessee for his personal purposes. 6.11.7.4 The question that follow is whether there any income in such transactions accrued/arisen to the assessee within the meaning of various sections of the Income tax Act? 6.11.7.5 The word 'income' in the Act connotes a periodical monetary return 'coming in' with some sort of regularity, or expected regularity from definite sources. The source is not necessarily one which is expected to be continuously productive, but it must be one whose object is the production of a definite return, excluding anything in the nature of a windfall. These observations were made by the Privy Council in CIT v. Shaw Wallace & Co. AIR 1932 PC 138. Moreover, 'income' denotes real income and not fictional income or hypothetical income. It means income which has actually resulted. As pointed out by the Supreme Court in CIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144, mere book entry cannot become income unless income has actually resulted. Similarly, as explained by the Supreme Court in Printed from counselvise.com - 60 - ITA Nos.830 to 835/CHNY/2022 \"Dooars Tea Co. Ltd. v. CAIT(1962] 44 ITR 6,\" all receipts are not income, the concept of receipt being much wider than income. Only that receipt is income which has the characteristics of income. 6.11.7.6 The definition of the word \"Income\" in sec. 2 (24) of Income-tax Act, 1961, is an inclusive definition. Over a period of time, the concept of income for the purpose of income-tax has altered substantially and what was once defined as receipt of periodical mature from a definite source is now deemed to include as income receipts of varied kinds. But the situation has not reached a stage where, as stated earlier, anything that comes to a person is to be treated as income. If that interpretation is to prevail, there is no need to have a long inclusive definition in section 2(24). Only one Sentence - all that comes to a taxpayer shall constitute income in the hands of the recipient, would have been necessary. But it is not so. Income for tax purpose has to have a 'source'. A source has been described as the spring or found from which a clearly defined channel of income flows. Section 14 of the Act makes this clear when it enacts that \"all income shall, for the purposes of charge of income tax and computation of total income has to be classified under the heads mentioned in section 14. Hence, any income for being taxable, must fall under any one of the 5 heads of income enumerated in section 14 and of course the deemed incomes u/s.68, 69, 69A, 69B and 69c and gains from sale of assets etc. From the tendering of income into the above 5 heads, it can safely be inferred that, according to the scheme of the Act, income is linked up with 'source'. If income is not attributable at least to 'other sources' and is also not covered by any of the earlier 4 heads, it would not be income, which can be brought to tax. Section 5 of the Act, which too is a charging section, also lays emphasis on this aspect, and imposes charge on 'income', profits and gains from whatever sources derived'. Source, thus, is an originating cause. Source is not, in the context under discussion, a legal concept, but is something, which a practical man would regard as a real source of income to be ascertained as hard matter of fact. Hence, 'source' should be a thing having some width in point of duration and some of basic principle stands overruled in certain situations by legislation, as has been illustrated earlier in cases of lotteries, etc. However, in situations, where there has been no over-ruling by specific provisions of law of such rule, the basic concept that for a receipt, to be taxable, it must emanate from a source has to prevail and where there is no source for a receipt, it cannot be taxed unless specifically brought within the provisions of law. Income can be said to accrue only when the assessee acquires a right to receive that income [CIT V. Ashokbhai Chimanbhai [1965] 56 ITR 42 (SC.). The concept of real income, i.e., what is to be subjected to tax is only the real income and not income in the hypothetical sense, has been established for a long time. The expression, 'income ha s to be interpreted in its na tura l a nd proper sense'; it does not include notional income and tax is eligible only on income earned in reality - Poona Electric Supply Co. Ltd. v. CIT [1965] 57 ITR 521 (SC). In examining a transaction, the court would have more regard to the reality of the situation and lay greater emphasis on the business aspects of the matter when that can be done without disregarding the statutory language - H.M.Kashiparekh& Printed from counselvise.com - 61 - ITA Nos.830 to 835/CHNY/2022 Co. Ltd. v. CIT [1960] 39 ITR 706 (Bom.). However, the theory does not apply to certain artificial incomes which are deemed to be income under the provisions of the Income- ta x Act, 1961; it a lso does not a pply to income resulting from the disallowance of certain expenditure which may be genuine, and has been incurred for the purposes of business, but is restricted under the provisions of the Act. The concept of real income has also no application where there are special provisions for the computation of a particular type of income – LIC of India v. CIT (1979] 119 ITR 900 (Bom.). 6.11.7.7 In Commissioner of Income Tax v. Shoorji Vallabhdas and Co., [1962] 46 ITR 144 (SC) it was held as follows: \"Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substa nce of the ma tter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income', which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances. have been made in the books of account.\" It follows from these decisions that income accrues When it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount, the recipient has a right over that amount. Only then can it be said that for the purposes of taxability that the income is not hypothetical and it has really accrued to the assessee. 6.11.7.8 In the second remand report (in the case of VHCPL), the AO has clearly explained the modus operandi of the transactions involving the excess capitalisation of Rs.292 crores in the books of VHCPL. The modus operandi has been- asset account debited - credited vendor accounts (Journal entries) - vender account debited - total Rs.292.63 cr and credited bank accounts. Thus, to the extent of the excess fixed assets in each AY in the fixed assets of balance sheet, the bank account reduces and so the balance sheet tallies. The AO duly disallowed the depreciation on the excess fixed assets in the hands of VHCPL which has been confirmed by the CIT(A) also. The assessee states the reason for booking such excess fixed assets as to show rosy picture of the financials to banks and also for IPO purposes. From the bank account of VHCPL (as stated earlier, the vendor accounts debited of Rs.292 crores and bank accounts credited of same Rs.292 crores), to the extent of Rs. 139.51 crores was spent towards the revenue expenses of VHCPL (on which TDS also been duly deducted wherever applicable) which have not been claimed as expenses in the profit and loss account of VHCL, again claimed to have been done to show rosy picture to banks and also for IPO purposes; a nd the rema ining extent of Rs. 153.51 crores was transferred from the bank account of VHCPL to VMCIPL towards repayment of loans taken by VHCPL from VMCIPL. It is seen that the chain of transactions leading to the Printed from counselvise.com - 62 - ITA Nos.830 to 835/CHNY/2022 method of operation done by the companíes, in increasing the value of some of the fixed assets in VHCPL (by Rs.292 crores), and using such funds towards revenue expenditures of VHCPL all through bank accounts (Rs. 139 crores) and to repay the loans taken by VHCPL to VMCPL all through bank accounts (Rs.153 crores), were verified and reported by the AO, as tallied by him (to the excess capitalization i.e. Rs.139 crores + Rs.153 crores = Rs.292 crores) with the respective ledger accounts and bank statements. Thus, the remand report received from the AO clearly shows that no amount has gone to the assessee out of this excess capitalization of Rs.292 crores happened in VHCPL. When no amount has gone to the assessee out of this Rs.292 crores of excess capitalization as vouched by the AO in the remand report, treating any amount out of it as income of the assessee does not arise. 6.11.7.9 The transactions between the two companies promoted by him are quite relevant to the facts and circumstances especially when the AO himself in the remand report in the case of VHCPL had admitted routing of excess capitilasation exclusively for the purpose of VHCPL by the assessee. 6.11.7. 10 Therefore, taking all the above into account, in my considered view, no income has accrued or arisen in the hands of the assessee (in the said transaction of excess capitalisation happened in the hands of VHCPL) within the meaning of various sections of the income tax Act, let alone whether it is real income or not. The AO assessed such entries in the books of VHCPL (Rs.292 crores) as income of the assessee for different years, but he has not held that under which section of the Income tax Act is applicable to assess it as income of the assessee in his hands. Though opportunities have been given to the AO on the submissions of the assessee, even in the two remand reports, the AO was unable to state the section under which it was treated as income in the assessment orders of AYs 2010-11 to 2015-16. Further though the AO stated in his assessment orders that such amounts was used by the assessee for his unexplained expenditure and his unexplained expenditure and his unexplained assets vaguely, he has not shown what was the unexplained expenditure the assessee has incurred or the assets unearthed or the income assessed by him is available with the assessee in any specific form one property – which is dealt with separately in the respective assessment year – especially when it is a search assessment. This is more so, the AO himself in the remand report clearly observed that excess capitalization amounts of Rs.292 crores have gone to companies through banking channels only and used for their revenue expenditure (VHCPL) not claimed in their respective profit and loss accounts or for loan repayment (by VHCPL to VMCPL). No cash withdrawal by the assessee and utilization of the same for assessee’s unexplained expenditure or assessee’s unexplained assets has been established by the AO. 6.11.7.11 In the circumstances the income assessed in AYs 2010 – 11 to 2015 – 16 on account of excess capitalization of assets in the hands of the assessee as per the assessment orders are deleted and the appeals in this regard are allowed.” Printed from counselvise.com - 63 - ITA Nos.830 to 835/CHNY/2022 5. The ld.DR for the revenue supported the orders of the AO and pleaded for setting aside the order of the ld.CIT(A) for the A.Y.2010-11 to 2015-16 on account of capitalisation of assets deleted by the ld.CIT(A). 6. We have heard the ld.DR and gone through the orders of the lower authorities. None appeared for the assessee. Hence, the appeal of the revenue has been heard in the absence of the assessee, despite many notices issued from 25.01.2023 to the assessee. On perusal of the order of the ld.CIT(A), we find that the assessee had filed the entire details and explanations and evidence in support of the assessee’s appeal. Further, the remand reports from the AO have been called for by the ld.CIT(A) by forwarding the submissions made by the assessee by providing an opportunity to respond against the additional evidence filed. Accordingly, the AO filed a remand report and further rejoinder from the assessee also has been obtained by ld.CIT(A) before deciding the issue. 7. We find that the alleged excess capitalization of Rs.292.00 crores in VHCPL's books, though irregular and intended to present a stronger financial picture, did not result in any actual income accruing to the assessee. Further, we note that the investigations confirmed that the funds remained within corporate entities and were used for business purposes—either for revenue Printed from counselvise.com - 64 - ITA Nos.830 to 835/CHNY/2022 expenditure or loan repayment—through verifiable banking channels. It is also pertinent to observe that no personal gain, unexplained expenditure, or asset traceable to the assessee was established. In the present facts of the case, the AO failed to establish any direct benefit, cash withdrawal, or unexplained asset/expenditure attributable to the assessee. Further, no specific section of the Act was cited to support taxing this amount as the assessee's income. As such, the income addition in the assessee's hands for A.Ys. 2010–11 to 2015– 16 is unjustified and hence we do not find any infirmity in the order of the ld.CIT(A) in deleting the additions of capital expenditure in the hands of the assessee. Therefore, the grounds by the revenue are dismissed. ITA No.831/Chny/2022 - A.Y.2011-12: 8. The next ground of appeal raised by the revenue is in respect of the following for the A.Y.2011-12 in ITA No.831/Chny/2022: - Allotment of shares on transfer of Business of - Rs.2,16,30,000/- - Amount credited by way of transfer to Ledger Account – Rs. 2,70,00,000/- 9. The assessee submitted the following arguments before the ld.CIT(A) and pleaded for deletion of the above said additions made by the AO: “10.1 As regards the issue of amount credited on the allotment of shares on transfer of business, the AO held that the seized business transfer agreement dated 31/03/2010 shows that the partners of Vasan Medical Centre will be Printed from counselvise.com - 65 - ITA Nos.830 to 835/CHNY/2022 allotted equity shares worth Rs.2,70,00,000 in lieu of transfer of business of Vasan Medical Centre to Vasan Medical Centre India Private Limited. Vasan Medical Centre India Private Limited has allotted shares worth Rs.2,16,30,000 to the assessee on 1.4.2010. The AO added it as income of the assessee by the AO. During the course of appeal, it was submitted that as per the agreement dated 31/03/2010 which was already submitted the partners of Vasan Medical Centre shall be allotted equity shares worth Rs.2.70 cr in lieu of transfer of business of Vasan Medical Centre (Firm) to Vasan Medical Centre India Private Limited. It is further submitted that out of the said amount, a sum of Rs.2,16,30,000 cannot be brought to tax as income in the hands of the partner (assessee). Remaining amount of Rs.53,70,000 was allotted as shares to the other partner i.e. assessee's wife Ms.Meera Arun. Since the allotment is in the capital field and not in the revenue field, it cannot be assessed as income. Reliance was placed on the case of CIT versus Mahindra and Mahindra 93 taxmann.com 32 dated 24/04/2018 of the Supreme Court. Hence it was pleaded that the addition of Rs.2,16,30,000 as allotment of shares be deleted.” 10. After considering the submissions made by the assessee the ld.CIT(A) deleted the above additions by holding as under : “I have considered the above. I am of the view that the AO has not made out any case as to how and why it should be considered as income under what section. As the allotment of shares is in lieu of the partners' capital account, such allotment of shares on capital account cannot be assessed as income of the assessee. It may be noted that the share allotment of Rs.53,70,000 has not been treated as income in the hands of Ms. Meera Arun for the AY 2011-12. In view of the above reasons, the addition of Rs.2,16,30,000 is deleted. In addition, the AO again added Rs.2,70,00,000 as income of the assessee stating that VMCIPL has credited this amount in the assessee's ledger account. Here again, the AO has not made out any case as to how and why this amount is to be added under what section. Accordingly, this addition of Rs.2,70,00,000 also stands deleted.” 11. Aggrieved by the order of the ld.CIT(A), the revenue is before us. However, except relying on the AO's order the ld.DR did not add new to the AO’s order. Printed from counselvise.com - 66 - ITA Nos.830 to 835/CHNY/2022 12. We have gone through the orders of the lower authorities and perused the material available on record. On critical examination of the order of the ld.CIT(A), we are of the considered view that the assessee has established that the impugned additions of Rs.2,16,30,000/- on account allotment of shares and Rs.2,70,00,000/- on account of credit in the ledger account of the assessee are not part of his income and also the AO has not made out a case under which provisions of the Act the said amounts are taxable. Therefore, the ld.CIT(A) has rightly deleted the additions and hence we are not inclined to interfere in the impugned order on this matter. Hence, the corresponding grounds of appeal of the revenue are dismissed. ITA No.833/Chny/2022 - A.Y.2013-14: 13. The next ground of appeal raised by the revenue is in respect of the following for the A.Y.2013-14 in ITA No.833/Chny/2022: - Account with M/s.Vasan Healthcare Pvt. Ltd., credited by M/s.Vasan Medical Centre India Pvt. Ltd., - Rs.10,00,00,000/- - Account with M/s.Vasan Healthcare Pvt. LTd., credited by M/s.Vasan Medical Centre India Pvt. Ltd., by Credit Card – Rs.5,50,00,000/- 14. The assessee submitted the following arguments before the ld.CIT(A) and pleaded for deletion of an addition of Rs.10.00 crore on account of credit in the books of M/s.Vasan Health Care Pvt. Ltd. by M/s.Vasan Medical Centre India Pvt. Ltd. made by the AO: Printed from counselvise.com - 67 - ITA Nos.830 to 835/CHNY/2022 “12.6 The next addition is on account of credit of Rs. 10,00,00,000 in the books of Vasan Healthcare Private Limited by Vasan Medical Centre India Private Limited. The AO during the course of assessment hearing noted that this amount was not reflected in the books of Vasan Medical Centre India Private Limited. During the course of hearing of appeal, the assessee submitted that an amount of Rs.10 cr was received by VHCPL from VMCPL through bank on 28/03/2013. The AO himself states in page 10 of the assessment order that the said amount was credited by VMCPL but the same is not reflected in the books of VMCPL. It is submitted that the AO has failed to peruse the documents available properly and made addition in the hands of the assessee, whereas the assessee is nowhere connected with the said transaction, as the payment was received by VHCPL from VMCIPL through Bank, the fact was noted by the AO himself and secondly the appellant it is nowhere connected with this amount as the source is from VMCIPL which fact is recorded in the books of accounts of VMCIPL. The assessee furnished copy of the ledger account of VHCPL in the books VMCIPL and pleaded to delete the addition.” 15. After considering the submissions made by the assessee the ld.CIT(A) deleted the above addition of Rs.10.00 crore on account of credit in the books of M/s.Vasan Health Care Pvt. Ltd. by M/s.Vasan Medical Centre India Pvt. Ltd. made by the AO by holding as under: “I have considered the above. It is not known how the AO has taken the facts wrongly. Further as claimed by the assessee, the transactions are between two companies and has got nothing to do with the assessee. Therefore, the addition is deleted.” 16. The assessee submitted the following arguments before the ld.CIT(A) and pleaded for deletion of an addition of Rs.5.50 crore on account of credit in the books of M/s.Vasan Health Care Pvt. Ltd. by M/s.Vasan Medical Centre India Pvt. Ltd. by way of credit card made by the AO: “12.7 During the course of assessment the AO found that a sum of Rs.5.50 cr was credited on 28/03/2013 in VHCPL by VMCIPL by credit card. Stating Printed from counselvise.com - 68 - ITA Nos.830 to 835/CHNY/2022 that no response from the assessee, the AO added the same as unexplained credit. During the course of appeal hearing, the assessee submitted that an amount of Rs.5,50,00,000 was received by VHCPL from VMCIPL on 28/03/2013 by way of credit card. The AO himself states in page 11 of this order that the said amount was credited by VMCIPL. As assessee is not connected with this transaction it was pleaded to delete the addition.” 17. After considering the submissions made by the assessee the ld.CIT(A) deleted the above addition Rs.5.50 crore on account of credit in the books of M/s.Vasan Health Care Pvt. Ltd. by M/s.Vasan Medical Centre India Pvt. Ltd. by way of credit card made by the AO by holding as under: “I have considered the above. It is not known how the AO has taken the facts wrongly. Further as claimed by the assessee the transactions are between two companies and has got nothing to do with the assessee. Therefore, the addition is deleted.” 18. Aggrieved by the order of the ld.CIT(A), the revenue is before us on both issues. However, except relying on the AO's order the ld.DR did not add new to the AO’s order. 19. We have gone through the orders of the lower authorities and perused the material available on record. On critical examination of the order of the ld.CIT(A), we are of the considered view that the AO’s action of making addition in the hands of assessee (Individual) of the transactions recorded in the books of accounts of two different companies in the ledger accounts cannot be countenanced. Therefore, the findings of the ld.CIT(A) in deleting the both the additions of Rs.10.00 Crores and Rs.5.50 crores is justified and hence we affirm Printed from counselvise.com - 69 - ITA Nos.830 to 835/CHNY/2022 the same. Therefore, the corresponding grounds of appeal of the revenue are dismissed. 20. In the result, all the six appeals filed by the Revenue are dismissed. Order pronounced in the open court on 24th September, 2025 at Chennai. Sd/- Sd/- (मनु क ुमार िग\u0019र) (MANU KUMAR GIRI) ाियक सद\u001b/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखासद\u001b/Accountant Member चे\u0012ई/Chennai, िदनांक/Dated, the 24th September, 2025 SP आदेश की &ितिलिप अ,ेिषत/Copy to: 1. अपीलाथ%/Appellant 2. &'थ%/Respondent 3.आयकर आयु-/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय &ितिनिध/DR 5. गाड# फाईल/GF Printed from counselvise.com "