M/s. Patidar Hospital & Research Centre, Ujjain V. THE ITO 2(1), Ujjain

ITA 1008/IND/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3567 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 26-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: N D PATWA A RS
• Keywords: Opportunity of being heard; Retrospective amendment; Reasonable cause; Onus to prove
• Section: 43B; 143(3); 133A; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCHE, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1007, 1008 & 1541/IND/2016 ASSESSMENT YEAR: 2010-11,2012-13&2010-11 / VS. M/S . PATIDAR HOSPITAL & RESEARCH CENTRE 12-13,KSHAPNAK MARK, FREEGANJ UJJAIN (M.P.) (APPELLANT) ITO - 2(1), UJJAIN (M.P.) (REVENUE ) P.A. NO. AAJFP1661R APPELLANT BY SHRI ASHISH GOYAL & SHRI N.D. PATWA, A.RS RESPONDENT BY SHRI R.P. MOURYA, DR DATE OF HEARING: 26.07.2018 DATE OF PRONOUNCEMENT: 21.08.2018 / O R D E R PER KUL BHARAT, J.M: THESE THREE APPEALS BY THE ASSESSEE PERTAINING TO THE ASSESSMENT YEARS 2010-11 & 2012-13 AGAINST THE ORDERS 2 DATED 22.6.2016, 2.11.2016 & 23.6.2016 OF THE LD. CI T(A), UJJAIN. ALL THE APPEALS WERE TAKEN UP TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER . FIRST WE TAKE UP THE APPEALS PERTAINING TO THE ASSESSMENT YEAR 2010-11 I.E. ITA 1007/IND/2016. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE ASSESSMENT ORDER IS INVALID, BARRED BY LIMIT ATION, ILLEGAL, BAD IN LAW, VOID-AB-INITIO AND THEREFORE LIABLE TO BE QUASHED. 2. THE LD. CIT(A) ERRED IN SUSTAINING THE ASSESSMEN T ORDER WHICH IS INVALID, BARRED BY LIMITATION, ILLEGAL, BAD IN LAW, VOID-AB- INITIO AND THEREFORE LIABLE TO BE QUASHED. 3. THE LD. CIT(A) ERRED IN MAKING ENHANCEMENT INCOM E OF RS.10,00,000/- ON ACCOUNT OF INVESTMENT IN BUILDING BY NOT ALLOWING D EDUCTION U/S 80IB(11C) ON SAID AMOUNT OFFERED IN SURVEY. 4. THE LD. CIT(A) ERRED IN MAKING ENHANCEMENT INCOM E OF RS.15,01,852/- IN EXCESS CASH BY NOT ALLOWING DEDUCTION U/S 80IB(11C) ON SAID AMOUNT OFFERED IN SURVEY. 5. THE LD. CIT(A) ERRED IN CONFIRMING IN ADDITION O F RS.1,52,588/- FOR NON DEDUCTION OF TDS ON SECURITIES CHARGES. 6. THE LD. CIT(A) ERRED IN CONFIRMING IN ADDITION O F RS.55,000/- FOR NON DEDUCTION OF TDS ON AMC CHARGES PAID TO SIEMEN LTD. 7. THE LD. CIT(A) ERRED IN CONFIRMING IN ADDITION O F RS.1,42,361/- FOR NON DEDUCTION OF TDS ON MEDICAL AND SURGICAL EXPENDITUR E. PAID TO HOSWIN INCINERATOR PVT. LTD. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS FRAMED VIDE ORDER DATED 3 23.3.2013. THE A.O. WHILE FRAMING ASSESSMENT MADE ADDITION BY INVOKING THE PROVISIONS OF SECTION 40(A)( IA) OF THE ACT. IT IS ALSO PERTINENT TO NOTE THAT A SURVEY AC TION WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E FIRM ON 21.8.2009. THE ASSESSEE MADE TWO DISCLOSURES OF INCOME IN RESPECT OF INVESTMENTS MADE IN BUILDING OF RS.10 LAKHS AND EXCESS CASH FOUND OF RS.15,01,852/-. THESE AMOUNTS WERE DISCLOSED IN THE RETURN AS THE INCOME FR OM HOSPITAL. ON THESE AMOUNTS THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(11C) OF THE ACT. THIS DEDUCTION WAS DISALLOWED BY THE A.O. HOWEVER, AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND MATERIAL ON RECORD, SUSTAINED THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT AND ALSO ENHANCED THE RETURNED INCOME BY DISALLOWING THE DEDUCTION U/S 80IB(11C) OF THE ACT ON THE AMOUNT SURRENDERED DURING THE SURVEY. AGAINST THIS ORDER O F THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRI BUNAL. 3. GROUND NOS.1 & 2 ARE AGAINST THE LEGALITY OF THE ORD ER. IN RESPECT OF THESE GROUNDS, THE LD. COUNSEL FOR TH E ASSESSEE HAS NOT MADE ANY SUBMISSIONS AND SUBMITTED THAT THESE GROUNDS ARE GENERAL IN NATURE, THEREFORE TH ESE 4 GROUNDS NEEDS NO SEPARATE ADJUDICATION. WE HOLD ACCORDINGLY. HENCE, GROUND NUMBERS 1 & 2 ARE DISMISS ED. 4. GROUND NOS.3 & 4 ARE IN RESPECT OF DISALLOWING THE DEDUCTION CLAIMED IN RESPECT OF THE AMOUNT SURRENDERE D DURING THE SURVEY. LD. COUNSEL FOR THE ASSESSEE REI TERATED THE SUBMISSIONS MADE IN THE WRITTEN SUBMISSIONS. TH E SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER: SUBMISSIONS THE APPELLANT IS CHALLENGING THE DISALLOWANCE ON TW O COUNTS: I. POWER OF ENHANCEMENT II. DISALLOWANCE ON MERITS I. ENHANCEMENT IS NOT VALID 1. IT IS A SETTLED LAW THAT THE POWERS OF LD CIT(A) AR E WIDE. U/S. 251(1)(A), LD CIT(A) HAS THE POWER TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. FURTHER, U/S. 251(2), AN OPPORTUNITY OF BEING HEARD SHALL BE PROVIDED BEFORE ENHANCEMENT OF ASSESSMENT. ALSO, UNDER EXPLANATION TO SECTION 251, IT HAS BEEN CLARIFIED THAT IN DISPOSING OF AN APPEAL, THE CIT(A ) MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER A PPEALED AGAINST WAS PASSED, NOTWITHSTANDING THAT SUCH MATTER WAS NOT RAISED BEF ORE THE COMMISSIONER (APPEALS) BY THE APPELLANT. THERE IS NO DOUBT THAT THE CIT(A) CAN 'ENHANCE THE ASSESSMENT'. IT IS UNDISPUTED THAT WITHIN THE FOUR CORNERS OF THE SOURCES PROCESS ED BY THE AO, THE CIT(A) CAN ENHANCE THE ASSESSMENT. THIS POWER MUST, AT LEAST, FALL WIT HIN THE WORDS 'ENHANCE THE ASSESSMENT', IF THEY ARE NOT TO BE RENDERED WHOLLY NUGATORY. 2. THE POWER OF ENHANCEMENT HAS BEEN A MATTER OF JUDIC IAL CONSIDERATION. IT HAS BEEN SETTLED BY THE VARIOUS COURTS THAT THE POWERS OF EN HANCEMENT ARE WIDE, BUT THEY ARE NOT UNFETTERED. LD CIT(A) CAN DO ENHANCEMENT OF ASSESSMENT. SO HE CAN DO ENHANCEMENT ONLY ON POINTS WHICH WERE SUBJECT MATTER OF ASSESSMENT. 3. THE APPELLANT RELIES ON THE FOLLOWING CASES: 5 A. CIT V. SHAPOORJI PALLONJI MISTRY [1962] 44 ITR 891 (SC) , WHEREIN IT WAS HELD THAT IT WAS HELD INTER ALIA THAT IN AN APPEAL FILED BY THE ASSESSEE, THE AAC H AS NO POWER TO ENHANCE THE ASSESSMENT BY DISCOVERING A NEW SOUR CE OF INCOME NOT CONSIDERED BY THE ITO IN THE ORDER APPEALED AGAINST. B. CIT V. RAI BAHADUR HARDUTROY MOTILAL CHAMARIA [1967] 66 ITR 443 (SC) IT WAS HELD THAT THE POWER OF ENHANCEMENT UNDER SEC TION 31(3) WAS RESTRICTED TO THE SUBJECT MATTER OF ASSESSMENT OR THE SOURCE OF I NCOME, WHICH HAD BEEN CONSIDERED EXPRESSLY OR BY CLEAR IMPLICATION BY THE ASSESSING OFFICER FROM THE POINT OF VIEW OF TAXABILITY AND THAT THE AAC HAD NO POWER TO ASSESS THE SOURCE OF INCOME, WHICH HAD NOT BEEN TAKEN INTO CONSIDERATION BY THE ASSESSING OFFI CER. C. CIT VS SARDARI LAL & CO. 251 ITR 595 (DEL.)(FB) .THE INEVITABLE CONCLUSION IS THAT WHENEVER THE Q UESTION OF TAXABILITY OF INCOME FROM A NEW SOURCE OF INCOME IS CONCERNED, WH ICH HAD NOT BEEN CONSIDERED BY THE ASSESSING OFFICER, THE JURISDICTION TO DEAL WIT H THE SAME IN APPROPRIATE CASES MAY BE DEALT WITH UNDER SECTION 147/148 AND SECTION 263, I F REQUISITE CONDITIONS ARE FULFILLED. IT IS INCONCEIVABLE THAT IN THE PRESENCE OF SUCH SPECI FIC PROVISIONS, A SIMILAR POWER IS AVAILABLE TO THE FIRST APPELLATE AUTHORITY. THAT BE ING THE POSITION, DECISION IN UNION TYRES' CASE ( SUPRA ) OF THIS COURT EXPRESSES THE CORRECT VIEW AND DOES NOT NEED RE- CONSIDERATION. THIS REFERENCE IS ACCORDINGLY DISPOS ED OF. D. CIT VS B.P. SHERAFUDIN 399 ITR 524 (KER.) IN A VERY RECENT DECISION, THE KERALA HIGH COURT AF TER CONSIDERING THE ENTIRE LAW ON THE SUBJECT HELD THAT THE POWERS OF LD CIT(A) AR E WIDE ENOUGH BUT THEY DO NOT GO TO THE EXTENT OF DISPLACING THE POWERS U/S. 147/ 148 O R U/S. 263. E. BIKRAM SINGH (2017) 82 TAXMANN.COM 230 (DEL. TRIB) THE ASSESSEE PURCHASED AND SOLD CERTAIN LAND DURING RELEVANT YEAR AND ALSO EARNED AGRICULTURAL INCOME. THE ASSESSING OFFICER D ISALLOWED BROKERAGE CLAIMED BY THE ASSESSEE IN RESPECT OF LAND TRANSACTION. THE COMMIS SIONER (APPEALS) HOWEVER DIRECTED THE ASSESSING OFFICER TO TAX CAPITAL GAIN ON SALE O F LAND. HELD THAT THE COMMISSIONER (APPEALS) ACTED BEYOND ITS PO WER BY DIRECTING THE ASSESSING OFFICER TO TAX THE CAPITAL GAINS IN RESPE CT OF SALE OF LAND THOUGH THERE WAS NO ADDITION MADE BY THE ASSESSING OFFICER IN THE ASSES SMENT ORDER TO THAT RESPECT OF CAPITAL GAIN IS AN INDEPENDENT AND DIFFERENT SOURCE OF INCOME AND WAS NOT THE SUBJECT MATTER OF APPEAL BEFORE HIM NOR WAS THE ISSUE CONSI DERED BY THE ASSESSING OFFICER BY FRAMING AN ASSESSMENT ORDER. INSTEAD THE ASSESSING OFFICER TERMED THE SAME AS COMMISSION ON THE SALE OF LAND. THUS, ORDER OF THE COMMISSIONER (APPEALS) COULD NOT BE SUSTAINED. THE COMMISSIONER (APPEALS) CANNOT TOUCH UPON AN ISS UE WHICH DOES NOT ARISE FROM THE ORDER OF ASSESSMENT AND WAS OUTSIDE THE SC OPE OF THE ORDER OF ASSESSMENT. 6 IN THE PRESENT CASE, THE ISSUE REGARDING DEDUCTION U/S. 80IB(11C) WAS NOT BEFORE THE LD CIT(A) NOR DID IT ARISE OUT OF THE ORDER OF ASSESSMENT. THE ONLY ADDITION WHICH WAS CHALLENGED BEFORE THE LD CIT(A) WAS DISALLOWANCE U/ S. 40(A)(IA). THE APPELLANT THEREFORE CLAIMS THAT THE LD CIT(A) E XCEEDED HIS JURISDICTION IN MAKING AN ENHANCEMENT IN THE GIVEN CASE. THE ADDITI ON IS THEREFORE UNJUSTIFIED AND UNCALLED FOR. II. DEDUCTION U/S. 80IB(11C) ON SURRENDER DURING SURV EY U/S. 133A A SURVEY U/S. 133A WAS CONDUCTED AT THE BUSINESS PR EMISES OF THE ASSESSEE FIRM. THE SURRENDER DURING SURVEY WAS ON ACCOUNT OF UNACC OUNTED CASH AND INVESTMENT IN BUILDING. THE VERY IMPORTANT FACT AS QUOTED BY LD ASSESSING O FFICER IS AS UNDER (AT PG. 2 PARA 2): 2. THE ASSESSEE FIRM IS RUNNING HOSPITAL & RESEAR CH CENTER. THE ASSESSEE HAS SHOWN GROSS RECEIPTS TO THE TUNE OF RS. 2,55,89,106 AS AGAINST RS. 78,72,081 SHOWN IN THE IMMEDIATELY PRECEDING YEAR. THE DISCLOSURES OF RS. 10,00,000/- ON ACCOUNT OF INVESTMENT IN BUILDING AND EXCESS CASH OF RS. 15,01,852 MADE DURI NG THE COURSE OF SURVEY PROCEEDINGS U/S. 133A CONDUCTED ON 21/08/2009 WERE DULY OFFERED FOR TAXATION IN PROFIT AND LOSS ACCOUNT AS INCOME FROM HOSPITAL. THUS, THE SAME WAS SHOWN AS INCOME FROM HOSPITAL AN D SAME FACT WAS NOT DENIED BY THE LD CIT(A). NO OTHER SOURCE FROM WHERE THE SA ME COULD HAVE BEEN EARNED WAS POINTED BY THE LD CIT(A). THE APPELLANT RELIES ON CIT VS ALLIED INDUSTRIES 229 CTR 462 (H.P.) , WHERE IT WAS HELD AS UNDER: THE ASSESSEE-FIRM HAD OFFERED A SUM OF RS. 2,50,000 FOR TAXATION TO COVER UP ALL TYPES OF DISCREPANCIES. IT WAS NOWHERE THE CASE OF THE ASSES SEE OR THE REVENUE THAT THIS WAS INCOME DERIVED FROM UNDISCLOSED SOURCES. THE ADDITION OF RS. 2,50, 000 WAS MADE TO THE INCOME OF THE BUSINESS ITSELF. THEREFORE, IT WOULD HAVE TO BE DEEMED TO BE INCOME FROM THE BUSINESS OF THE COMPANY. IF IT WAS INCOME DERIVED FROM THE BUSINESS THEN SUCH INCO ME WAS TO BE CONSIDERED WHILE WORKING OUT THE DEDUCTION ALLOWABLE UNDER SECTION 80-IB. SINCE THE ENTIRE PROFITS OF THE BUSINESS WERE ENTITLED FOR 100 PER CENT DEDUCTION, THE ADDITION ON ACCOUNT OF SUCH DISCREPANCY WOULD ONLY RESULT IN THE ENHANCEMENT OF THE INCOME OF THE BUSINESS AND WOULD BE ENTITLED FOR SUCH DEDUCTION. IN THE INSTANCE CASE, THE DECLARATION WAS OFFERED I N THE REGULAR RETURN FILED AND OFFERED FOR TAXATION IN PROFIT & LOSS ACCOUNT INCOME FROM HOSPITAL. THUS, THE SOURCE WAS ESTABLISHED AND THUS IS ELIGIBLE INCOME U/S 80IB(11C). 7 GROUND NO 5 TO 7: DISALLOWANCE U/S 40(A)(IA) FACTS 1. THE APPELLANT- FIRM HAS MADE THE FOLLOWING PAYMENTS WITHOUT DEDUCTING TDS ON FOLLOWING:- GRO UND NO. PARTICULARS AMOUNT (RS.) 5 FOR SECURITY CHARGES 1,52,588 6 FOR AMC CHARGES 55,000 7 FOR MEDICAL AND SURGICAL EXPENSES 1,42,361 TOTAL 3,49,949 2. AS PER THE PROVISIONS OF SECTION 40(A)(IA), THE AMO UNT FROM WHICH TAX IS BOUND TO BE DEDUCTED AND NOT DEDUCTED FROM PAYMENT OF CHARGEABL E INCOME TO A RESIDENT ARE NOT ALLOWED AS DEDUCTION. THUS, THE LD ASSESSING OFFICE R REFERRING TO THE ABOVE PROVISIONS DISALLOWED THE TOTAL AMOUNT OF RS.3,49,949/- 3. THE APPELLANT SUBMITTED THAT ITS INCOME IS ELIGIBLE FOR DEDUCTION U/S 80IB(11C), SO ANY DISALLOWANCE U/S 40(A)(IA) WHICH WILL BE ADDED AS ELIGIBLE INCOME OF THE ASSESSEE; ON WHICH ASSESSEE WOULD GET DEDUCTION U/S 80IB(11C). 4. THE LD CIT(A), CONFIRMED THE DISALLOWANCE. SUBMISSIONS THE SUBMISSIONS OF THE APPELLANT ARE TWO FOLD: I. IN ANY CASE, DEDUCTION IS ADMISSIBLE FOR DISALL OWANCE U/S. 40(A)(IA) II. DISALLOWANCE U/S. 40(A)(IA) IS NOT CALLED FOR. I. CHAPTER VI-A IS ADMISSIBLE ON THE PROFIT SO ENHANCE D BY THE DISALLOWANCE IN ANY CASE, AND WITHOUT PREJUDICE, IF THE PROFIT I S ENHANCED U/S. 40(A)(IA), THE EFFECT OF SAME WOULD BE THAT THE ELIGIBLE INCOME FROM B USINESS OR PROFESSION SHALL BE ENHANCED FROM THE HOSPITAL BUSINESS. THE SAME WOULD QUALIFY FOR DEDUCTION U/S. 80IB(11C). 1. THE SAME HAS BEEN ACCEPTED BY CBDT IN ITS CIRCULAR NO 37/2016 DATED 02.11.2016 WHERE THE BOARD HAS ACCEPTED THE SETTLED POSITION T HAT THE DISALLOWANCE MADE UNDER SECTION 32, 40(A)(IA),40A(3), 43B ETC OF THE ACT AND OTHER SPECIFIED DISALLOWANCES, RELATED TO THE BUSINESS ACTIVITY AGA INST WHICH THE CHAPTER VI-A IS ADMISSIBLE ON THE PROFIT SO ENHANCED BY THE DISALLO WANCE. 2. FURTHER RELIANCE IS PLACED ON THE FOLLOWING JUDGMEN TS A. KEWAL CONSTRUCTION [2013] 354 ITR 13 (GUJARAT) EVEN IF A CERTAIN EXPENDITURE WHICH WAS INCURRED BY THE ASSESSEE FOR THE PURPOSE OF DEVELOPING HOUSING PROJECT WAS NOT A LLOWABLE BY VIRTUE OF SECTION 40(A)(IA) OF THE ACT, SINCE THE ASSESSEE HA D NOT DEDUCTED THE TAX AT SOURCE AS REQUIRED UNDER LAW, IT CANNOT BE DENIED T HAT SUCH DISALLOWANCE 8 WOULD ULTIMATELY GO TO INCREASE THE ASSESSEE'S PROF IT FROM THE BUSINESS OF DEVELOPING HOUSING PROJECT. WHATEVER BE THE ULTIMAT E PROFIT OF ASSESSEE AS COMPUTED EVEN AFTER MAKING DISALLOWANCE UNDER SECTI ON 40(A)(IA) OF THE ACT, WOULD QUALIFY FOR DEDUCTION AS PROVIDED UNDER THE L AW. B. CIT-IV, NAGPUR V.SUNIL VISHWAMBHARNATH TIWARI 290 C TR 234 (BOMBAY) DISALLOWANCE UNDER SECTION 40[A][IA] CANNOT BE TRE ATED SEPARATELY AND IT GETS ADDED BACK TO THE GROSS TOTAL INCOME OF THE ASSESSEE. SECTION 40 ITSELF POINTS OUT THAT DUE TO ERROR OF ASSESSEE, SU CH EXPENDITURE CANNOT BE DEDUCTED WHILE COMPUTING INCOME CHARGEABLE UNDER TH E HEAD 'PROFIT AND GAINS OF BUSINESS OR PROFESSION' . II. DISALLOWANCE U/S. 40(A)(IA) IS NOT CALLED FOR THE ORIGINAL OBLIGATION TO PAY THE TAX IS OF THE PA YEE. OUR OBLIGATION AS THE PAYER IS TO DEDUCT THE TAX AND DEPOSIT THE SAME. IF THE TAX IS PAID BY THE PAYEE; THE OBLIGATION OF THE DEDUCTOR ENDS AND THE DEDUCTOR SHALL NOT BE PENALIZ ED. THE LEGISLATURE, CONSIDERING THE SAME, BROUGHT A CLARIFICATORY AMENDMENT IN FORM OF SECOND PROVISO TO SECTION 40(A)(IA) AS UNDER: PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DE DUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTE R XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT S HALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE O F FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO THE ABOVE PROVISO IS ALSO APPLICABLE IN OUR CASE AS THE PAN NUMBERS OF THE PARTIES ARE PROVIDED ON PB 13-14: A. HOSWIN INCINERATOR PVT LTD PAN AACCH1534K B. SIEMENS LTD PAN AAACS0764L DISALLOWANCE IN OUR CASE, WOULD BE TRIGGERED, ONLY WHEN THE DEDUCTEES FAILED TO PAY THEIR TAXES DIRECTLY TO THE GOVERNMENT. THE DEPARTM ENT OUGHT TO HAVE VERIFIED THAT THE DEDUCTEES HAD PAID THE TAX DIRECTLY OR NOT. THE SAME IS SUPPORTED BY : A. ANSAL LAND MARK TOWNSHIP (P.) LTD 377 ITR 635 SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE AND IT HAS RETROSPECTIVE EFFECT FROM 1-4-2005. THUS IT IS APPL ICABLE FOR OUR APPEAL WHICH IS FOR A.Y. 2010-11. B. MALWA EDUCATION [ITA NO. 917/ IND/ 2016 ORDER DT. 1 0.01.2018] FOLLOWING THE JUDGMENT OF DELHI HIGH COURT IN ANSAL LAND MARK (SUPRA), THE MATTER WAS REMANDED TO THE LD ASSESSING OFFICER TO EXAMINE WHETHER THE DEDUCTEE HAS PAID THE TAXES DIRECTLY OR NOT. 9 THUS, IN LIGHT OF THE ABOVE SUBMISSIONS, IT IS PRAY ED THAT THE ADDITION ON ACCOUNT OF SEC 40(A)(IA) AMOUNTING TO RS. 3,49,949/- MAY KINDLY BE DELETED OR IN ALTERNATE THE MATTER MAY BE REMANDED BACK TO LD ASSESSING OFFICER FOR EXAMINATI ON AS TO WHETHER DEDUCTEE HAS PAID TAXES DIRECTLY OR NOT. 5. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSIO NS AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. H E SUBMITTED THAT THERE IS NO EVIDENCE SUGGESTING THAT T HE AMOUNT SO SURRENDERED DURING THE COURSE OF SURVEY WAS RELATED TO THE RECEIPTS FROM HOSPITAL. IN REJOINDER, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE H AS NOT BROUGHT ANY MATERIAL SUGGESTING THAT THE ASSESSEE WAS HAVING ANY OTHER SOURCE OF INCOME WHEREBY HE COULD HAV E EARNED SUCH INCOME. HE SUBMITTED THERE THAT THE LD. CIT(A) ERRED IN REJECTING THE CLAIM OF DEDUCTION ON THIS AMOUNT AND SECONDLY ENHANCING THE INCOME WITHOUT GIVIN G OPPORTUNITY TO THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER S OF THE AUTHORITIES BELOW. THE LD. CIT(A) DISALLOWED THE DEDUCTION ON THIS AMOUNT RELYING ON THE PROVISIONS O F SECTION 69A OF THE ACT. FOR THE SAKE OF CLARITY, SEC TION 69A OF THE ACT IS REPRODUCED HEREUNDER: WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE AND SUCH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN TH E BOOKS OF ACCOUNT, IF ANY, 10 MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISIT ION OF THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, OR THE EXPLANA TION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, T HE MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR.] 7. ADMITTEDLY, THE AMOUNT SURRENDERED DURING THE COU RSE OF SURVEY WAS NOT FOUND TO BE RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE CONTENTION OF THE ASSES SEE IS THAT THE REVENUE HAS NOT BROUGHT ON RECORD ANY OTHER SOURCE OF INCOME. THEREFORE, THESE INVESTMENTS WER E OUT OF THE RECEIPTS OF THE HOSPITAL. WE FAILED TO UNDERSTAND THE LOGIC OF THE ASSESSEE FOR NOT RECORDING SUCH RECEIPT S IF THEY ARE EARNED FROM THE HOSPITAL AS THE ASSESSEE WAS ENTITLED FOR DEDUCTION U/S 80IB(11C) OF THE ACT. MERELY STAT ING THAT THIS AMOUNT PERTAINS TO THE RECEIPTS FROM HOSPITAL WOU LD NOT ABSOLVE THE ASSESSEE FROM THE BURDEN TO PROVE TH AT THESE AMOUNTS WERE PART OF THE RECEIPTS FROM THE HOSP ITAL. THE ASSESSEE HAS NOT PLACED ANY SECOND MATERIAL SUGGESTING THAT THE AMOUNT PERTAINED TO THE RECEIPTS F ROM HOSPITAL. THEREFORE, WE DO NOT SEE ANY REASON TO INTE RFERE INTO THE DECISION OF THE LD. CIT(A). FURTHER, THE CONTENTION THAT THE LD. CIT(A) WAS NOT EMPOWERED FOR ENHANCEMENT AS THIS WAS NOT SUBJECT MATTER OF THE ASSESSMENT. THIS AVERMENT OF THE ASSESSEE IS CONTRARY TO THE RECORD. T HE 11 ASSESSEE ITSELF HAD CLAIMED DEDUCTION ON THIS AMOUNT U/S 80IB(11C) OF THE ACT. THEREFORE, THE CONTENTION IS DEVOID OF ANY MERIT, HENCE REJECTED. GROUND NOS.3 & 4 OF THE ASSESSEE ARE DISMISSED. 8. GROUND NOS.5 TO 7 RELATES TO THE ADDITION MADE BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT F OR NON- DEDUCTION OF TDS ON SECURITY CHARGES. LD. COUNSEL F OR THE ASSESSEE REITERATED THE SUBMISSIONS MADE IN THE WRITT EN SUBMISSIONS. 9. LD. D.R. OPPOSED THESE SUBMISSIONS. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE SUBMISSION OF THE ASSE SSEE IS THAT THESE AMOUNTS HAVE BEEN DULY DECLARED BY THE PAYEE . WE FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE DISALLOWANCE CANNOT BE MADE WHERE THE DEDUCTEE HAVE DISCLOSED THE AMOUNT IN THEIR RESPECTIVE RETURNS. THEREFORE, WE DIRECT THE A.O. TO DELETE THIS AMOUNT. GROUND NOS.5 TO 7 ARE PARTLY ALLOWED. APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 12 ITA NO.1541/IND/2016: 11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED IN LEVYING THE PENALTY OF RS.7,73,073/- U/S 271(1)(C). 12. THE ONLY EFFECTIVE GROUND IS AGAINST IMPOSITION O F PENALTY BY THE LD. CIT(A) U/S 271(1)(C) OF THE ACT. THE FACTS IN BRIEF ARE THAT IN QUANTUM PROCEEDINGS DURING THE APPELLATE PROCEEDINGS, LD. CIT(A) DISALLOWED DEDUCTION IN RESPECT OF THE AMOUNT DISCLOSED DURING THE COURSE OF SURVEY AND ALSO INITIATED PENALTY ON THIS DISALLOWANCE AND SUBSEQUENTLY IMPOSED THE IMPUGNED PENALTY. LD. COUNS EL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE I N THE WRITTEN SYNOPSIS. 13. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSI ONS. 14. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERI AL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY CONTENTION OF THE ASSESS EE AGAINST THE PENALTY PROCEEDINGS IS THAT THE NOTICE ISSU ED U/S 274 R.W.S. 271 OF THE ACT IS DEFECTIVE. THE LD . COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE PAPER B OOK PAGE NO.15, WHEREIN THIS NOTICE IS ENCLOSED. FOR TH E SAKE OF CLARITY, THIS NOTICE IS REPRODUCED AS UNDER: 13 NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961 NO.CIT(A)/UJN/2016-17/3026 OFFICE OF THE PAN:AAJFP1661P COMMISSIONER OF INCOME TAX (A) UJJAIN, DATED 22.6.2016 TO M/S. PATIDAR HOSPITAL & RESEARCH CENTRE, 12-13, KSHAPNAK MARG, FREEGANJ, UJJAIN (M.P.) WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2010-11 IT APPEARS TO ME THAT YOU:- *HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH M E RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVE N UNDER SECTION 22(1)/22(2)/34 OF THE INDIA INCOME TAX ACT, 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) OR BY A NOTICE GIVEN U NDER SECTION 139(2)/148 OF THE INCOME TAX ACT, 1961, NO._________ DATED _________ OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND THE MANNER REQUIRED BY THE SAID SECTION 139(1) OR BY SUCH NOTICE. *HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WI TH A NOTICE UNDER SECTION 22(4)/23(2) OF THE INDIAN INCOME TAX ACT, 1 922 OR UNDER SECTION 142(1)/143(2) OF THE INCOME TAX ACT, 1961 NO.______ HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR _ _________FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11 .00A.M. ON 08.07.2016 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON Y OU SHOULD NOT BE MADE UNDER SECTION 271 OF THE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERS ON OR THROUGH AUTHORISED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UN DER SECTION 271. YOURS FAITHFULLY, SD/- (H.P. MEENA) *DELETE INAPPROPRIATE WORDS AND PARAGRAPHS COMMISSIONER OF INCOME TAX (APPEALS) 14 15. LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE JUDGEMENT OF THE HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. MANJUNATH COTTON MILLS 359 ITR 565 AND ALSO THE JUDGEMENT OF THE HON'BLE SUPREME COURT I N THE CASE OF CIT VS., RELIANCE PAPER PRODUCTS 322 ITR 158. FROM THE ABOVE NOTICE ISSUED BY LD. CIT(A), IT IS CL EAR THAT THE LD. CIT(A) FAILED TO STRIKE OFF ONE OF THE CHARGE , THEREFORE, RESPECTFULLY FOLLOWING THE HON'BLE KARNATAK A HIGH COURT DECISION IN THE CASE OF CIT VS. MANJUNATH COTTON MILLS (SUPRA), WE HEREBY DELETE THE PENALTY. THIS APPEAL OF THE ASSESSEE IS ALLOWED. ITA 1008/IND/2016: 16. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE ASSESSMENT ORDER IS INVALID, BARRED BY LIMIT ATION, ILLEGAL, BAD IN LAW, VOID-AB-INITIO AND THEREFORE LIABLE TO BE QUAS HED. 2. THE LD. CIT(A) ERRED IN SUSTAINING THE ASSESSMEN T ORDER WHICH IS INVALID, BARRED BY LIMITATION, ILLEGAL, BAD IN LAW, VOID-AB-INITIO AND THEREFORE, LIABLE TO BE QUASHED. 3. LD. CIT(A) ERRED IN CONFIRMING ADDITION OF RS.1, 55,778/- FOR NON DEDUCTING OF TDS ON PAYMENT MADE TO M/S. HOSWIN INC INERATOR PVT. LTD., INDORE. 17. GROUND NOS.1 & 2 ARE GENERAL IN NATURE AND HENCE NO SEPARATE ADJUDICATION IS REQUIRED. HENCE, GROUND NUMBERS 1 & 2 ARE DISMISSED. 15 18. THE ONLY EFFECTIVE GROUND IS GROUND NO.3, WHICH IS AGAINST CONFIRMING THE ADDITION OF RS.1,55,778/- FOR N OT DEDUCTING TAX ON PAYMENT MADE TO M/S. HOSWIN INCINERATOR PVT. LTD. THE SUBMISSION OF THE ASSESSEE IS THAT THIS AMOUNT HAS BEEN DULY DECLARED BY THE PAYEE. WE FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE DISALLOWANCE CANNOT BE MADE WHERE THE DEDUCTEE HAVE DISCLOSED THE AMOUNT IN THEIR RESPECTIVE RETURNS. THEREFORE, WE DIRECT THE A.O. TO DELETE THIS AMOUNT. GROUND NOS.3 IS ALLOWED. 19. IN THE RESULT, ITA NO.1007/IND/2016 IS PARTLY ALL OWED, ITA NO.1541/IND/2016 IS ALLOWED AND ITA NO1008/IND/2016 IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21.08.2 018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 21/ 08/2018 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER SR. PRIVATE SECRETARY, INDORE