Om ENT Hospital And Research Centre Private Limited, Ghaziabad V. Pr,CIT, Ghaziabad

ITA 1090/DEL/2022

AI Insights

The case involves Om ENT Hospital and Research Centre Private Ltd, which appealed against the order of the Pr. CIT, Ghaziabad, setting aside the assessment order passed by the AO. The Pr. CIT had directed the AO to re-compute the tax on income of Rs. 80 lakhs surrendered during a survey under section 133A of the Income Tax Act, 1961, and included as 'other income' in the profit and loss account. The Tribunal examined whether the income should be taxed under section 115BBE, as argued by the Pr. CIT, or under normal provisions, as assessed by the AO. The Tribunal concluded that the AO had correctly assessed the income, and the Pr. CIT's order was not justified.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 131218 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 11-12-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 18-05-2022
• Other Referred Cases: Dharti Estate Vs. Pr. CIT, Abdul Hamid vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AKHILSH KUMAR; EFILLING ITS RETURN OF INCOME; FILING OF ITS RETURN OF INCOME ALSO
• Keywords: Unexplained expenditure; Revision of order; Set aside
• Section: 68; 56; 263; 143(3); 133A; 143(2); 69A

Judgement Text

Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E”: NEW DELHI BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI N. K. CHOUDHRY, JUDICIAL MEMBER ITA No. 1090/Del/2022 (Assessment Year: 2017-18) Om ENT Hospital and Research Centre Private Ltd, C/o. Akhilesh Kumar, Adv, 206-207, Ansal Satyam, RDC, Ghaziabad Vs. Pr. CIT, Ghaziabad (Appellant) (Respondent) PAN: AAACO6671B Assessee by : Shri Akhilsh Kumar, Adv Revenue by: Ms. Sarita Kumari, CIT DR Date of Hearing 12/12/2022 Date of pronouncement 28/12/2022 O R D E R PER N.K. CHOUDHRY, J. M.: 1. This appeal has been preferred by the Assessee against the order dated 29.03.2022 impugned herein passed u/s 263 of the Income Tax Act, 1961 (in short „the Act‟) by the pr. CIT, Ghaziabad (in short „Pr. CIT), whereby the ld Pr. CIT set aside the assessment order dated 13.11.2019 passed by the ld AO u/s 143(3) of the Act with a direction to re-compute the tax as per the provision of section 115BBE of the Act on income of Rs. 80 lakh surrendered Page | 2 during the survey conducted u/s 133A of the Act on 20.09.2016 and shown as other income in the profit and loss account. 2. Brief facts of the case relevant for adjudication of the instant case are that a survey operation u/s 133A was conducted on the director of M/s. Om ENT Hospital and Research Centre Pvt. Ltd on 20.09.2016. Thereafter the Assessee by e-filling its return of income on 30.03.2017 declared total income of Rs. 1,00,58,322/-. The Assessee‟s case was selected under compulsory manual scrutiny and notices u/s 143(2) of the Act were issued on 26.09.2018 and 19.08.2019 respectively. 2.1 In response to the notices, the Assessee filed its reply along with documents, where from it was gathered by the ld. AO the Assessee company being engaged in running clinic for treatment of “ENT” related disease by its promoters/directors, had shown total turnover of Rs. 1,37,23,242/-. 2.2 The ld AO examined the material impounded during the survey proceedings and statement recorded and after examination and verification of documents furnished by the Assessee completed the assessment u/s 143(3) of the Act, whereby the ld AO assessed the income of the assessee to the tune of Rs. 1,00,58,322/-. 2.3 Later on the ld Pr. CIT has taken into consideration the case of the Assessee and reopened the case u/s 263 of the Act by issuing a show cause notice dated 12.03.2022 u/s 263 of the Act which reproduced here in below:- Page | 3 “2. From perusal of assessment record, for the year under consideration, following discrepancies/errors have been noticed:- 2.1. It is observed that the a survey u/s. 133A was conducted in this case on 20-09- 2016 and the assessee had surrendered a sum of Rs. 80,00,000/- and included the same in P&L A/c, which was accepted by the AO in passing assessment order. As source ~of this credit recorded in the books of account remained unexplained, the same required to be charged to tax as per the provisions of section 115BBE of the Income Tax Act, 1961. Revenue loss of Rs. 48,18,760/- occurred on this account. Further, it is also observed from the records that no enquiry has been made by the A.O. with regard to source of credit of Rs. 80,00,000/- in the books of account and included in the profit and loss account apparently against income surrendered during survey u/s. 133A. 3. In view of the above, the assessment order passed by the AO, Circle-2(2)(1), Ghaziabad is erroneous and prejudicial to the interest of revenue and may be cancelled or modified by invoking the provisions of section 263 of the Income Tax Act, 1961.” 3. The Assessee vide reply dated 12.03.2022 filed during the course of revisionary proceedings on 26.03.2022, claimed as under: “That the provisions of section 115BBE are applicable to the income assessed under the provision of section 68 or 69, 69A to 69D of the Act. Further, the amount of Rs. 80 lakhs offered for taxation does not represent any specific cash credits, other assets, unaccounted expenditure other assets, Page | 4 unexplained investment or outcome of any other incriminating documents found during the survey proceedings. The assessee company is engaged only in providing medical services and has no other source of income since inception. The above income of Rs. 80 lakh represents only the additional business income offered as per mutual agreement between assessee and survey officials. Therefore, section 68 and 69 cannot be invoked in such case and resultantly section 115BR has not applicability in the present case. Further, even during the survey, the survey tem further agreed and took assurance that the assessee company will pay advance tax for Assessment Year 2017-18 on the total income of Rs. 100 lakcs which was shown as income for AY 2017-18 including the above mentioned declared additional income of Rs. 80 lakhs. 4. The ld. Pr. CIT though considered the claim and contention of the Assessee but found not acceptable mainly on the grounds that the said surrender has been made through statement on oath of Shri Om Veer Singh, one of the director of the Assessee company as recorded on 20.09.2016 during the survey proceedings and from the said statement, it is clearly indicated that the surrendered income pertains to undisclosed money received from the patients. The ld. Pr. CIT also quoted the statement of Shri Om Veer Singh for reference. 4.1 Further, the ld. Pr. CIT also mentioned that statement of Shri Awadhesh Kumar Sharma, an employee of the Assessee company, further proves that the income surrendered by the Assessee pertains to undisclosed money of the Assessee company. 4.2 With regard to non-application of section 115BBE of the Act the ld Pr. CIT held that section 115BBE has given an inclusive Page | 5 definition both under clause (a) and (b). Further section 2 clearly mentions that no deduction in respect of any expenditure or allowance will be allowed against such income. This is applicable in the case of the Assessee as admittedly the Assessee Company has shown the surrendered value of Rs. 80 lakhs as other income without claiming any deduction in profit and loss account. 4.3 The Id. Commissioner further held that in the Answer to Q No. 13 of Sh. Om Veer Singh, the director of the Assessee Company mentioned that because of the discrepancies and irregularities found during the course of survey and to buy peace of mind, the income of Rs. 80 lacs is being offered for taxation for FY 2016-17. This proves that the surrender was made to cover up the deficiencies in the books of accounts and subsequently the Assessee had also shown this amount as 'other income'. Further, the ld. Pr. CIT held that it is seen that Assessee filed its return of income with audited accounts much after the survey was carried out. In the return the Assessee has offered the income u/s 56 as 'income from other sources' and auditor has endorsed it. Further, no names of persons or details of this income have been specifically disclosed by tax payer either during the assessment proceedings or during revisionary proceedings. Thus, the Assessee failed to give a satisfactory explanation to this income. Further, on throughout reading of section 14, 56(1) and section 65, it is clear that 'other income' should have been taxed u/s 69A and as per 115BBE of the Act. Page | 6 4.4 The Id. Pr. CIT further held that in view of the above facts, it is clear that the source of income of Rs. 80 lacs as surrendered by the Assessee during survey was unexplained. Hence, the Id. AO was required to charge the said income as per the provision of section 115BBE of the Act. For this reason the order passed by the Id. AO is erroneous as well as prejudicial to the interest of the revenue, as the ld. AO passed the assessment order without enquiry, verification in this regard ; which should have been made by him before passing the assessment order. 5. The Assessee being aggrieved is in appeal before us. At the outset the ld. AR submitted that the section 115BBE of the Act is applicable only when income is assessed by invoking provision of section 68 or 69, 69A to 69D of the Act. Further, in support of this contention the Id AR also relied on the decision of the coordinate bench of Rajkot in the case of Dharti Estate Vs. Pr. CIT in ITA No. 92/Rjt/2020 dated 13.07.2022. It is admitted fact as it appears from the orders of the authorities below, the Assessee is not doing any other business except running “ENT” hospital and it is factually incorrect that the Assessee has shown other income u/s 56 of the Act. It is fact that the Assessee by filing of its return of income also disclosed Rs. 80 lacs in its computation of income as aforesaid as on 31.03.2017 which is part of the total revenue earned by the Page | 7 Assessee and therefore, it cannot be said that the order passed by the AO is erroneous and prejudicial to the interest of the revenue. 5.1 On the contrary the ld. DR relied upon the order passed by the ld Pr. CIT, specifically para 4 of the impugned order and further submitted that if the survey would not have done, the Assessee would not have shown the income of Rs. 80 lakhs. 6. Having heard the parties, perused the record and have given thoughtful consideration to the facts and circumstances of the case, we observe that in this case a search and survey operation was carried out u/s 133A of the Act on 20.09.2016 and thereafter the Assessee filed its return of income on 15.11.2017 for the Assessment Year under consideration. 6.1 From the balance sheet, it clearly appears that the Assessee has shown Rs. 80 lakhs in the column of “other income” and paid the relevant tax as well. There is nothing which suggests that the Assessee has carried any other business then running hospital. 6.2 Even otherwise the ld. Commissioner in para 4.2 of its order has also mentioned as under: “That above said surrender has been made on the statement of oath of Shri Om Veer Singh, one of the director of the Assessee company on 20.09.2016. During the survey Page | 8 proceedings and from the said statement “it is clearly indicated that surrender income pertains to undisclosed money received from the patients.” 6.3 We have considered the aforesaid factual aspects and therefore are of the considered opinion that since the Assessee has shown receipt of Rs. 80 lacs as surrender, during the survey u/s 133A of the Act as recorded on 20.09.2016 in its profit and loss account and paid the relevant taxes and the ld. AO has duly examined the profit and loss account, the computation of income, the material impounded during the survey proceedings and the statements recorded during the survey and consequently taken a conscious decision. Therefore in our considered view, once a definite decision has been taken consciously and based on the peculiar facts and circumstances of the case, by the AO, then it cannot be substituted by the Id. PCIT by its own opinion. 6.4 The Hon'ble Coordinate Bench in the case of Abdul Hamid vs. ITO (2020) 117 taxmann.com 986 (Gau-Trib) (ITA No. 46 & 47(Gau) of 2019) decided on 17.07.2020, has also clearly held "since the department itself accepted the undisclosed amount of Assessee in his bank account as undisclosed business receipt or turnover, therefore, the section 115BBE does not attract here". 6.5 In cumulative effects, the assessment order, which is set aside by the Id. PCIT does not appears as erroneous and prejudicial to the interests of the Revenue. Consequently, the impugned order is liable to be set aside. Page | 9 7. In the result appeal filed by the Assessee stands allowed. Order pronounced in the open court on 28/12/2022. -Sd/- -Sd/- (ANIL CHATURVEDI) (N.K. CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28/12/2022 Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi