Dr (Mrs) Sooriyakala Sreekumar, CHENNAI V. ACIT, CHENNAI

ITA 1143/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0822 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-02-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: G ANIL
• Keywords: Depreciation
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 1143/MDS/2012 (ASSESSMENT YEAR : 2008-09) DR. (MRS.) SOORIYAKALA SREEKUMAR, NO.115, JANAKI NAGAR, VALASARAWAKKAM, CHENNAI - 600 087. PAN : AWRPS 4778 E (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE V, CHENNAI - 600 034. (RESPONDENT) APPELLANT BY : SHRI G. ANIL, CA RESPONDENT BY : DR. S. MOHARANA, CIT DATE OF HEARING : 05.02.2013 DATE OF PRONOUNCEMENT : 05.02.2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVAN CE IS THAT CIT(APPEALS) SUSTAINED AN ADDITION OF ` 18,05,759/- OUT OF TOTAL ` 26,43,128/- MADE BY THE ASSESSING OFFICER. AS PER ASSESSEE, PROVISIONS OF SECTION 68 OF INCOME-TAX ACT, 1961 (I N SHORT 'THE ACT') COULD NOT HAVE BEEN INVOKED SINCE THERE WERE NO CAS H CREDITS AND I.T.A. NO. 1143/MDS/12 2 CASH ACCRUALS. AS PER THE ASSESSEE, SHE HAD ENOUGH SOURCE IN THE LAST THREE YEARS, THAT WAS SUFFICIENT ENOUGH TO JUS TIFY THE INTRODUCTION. ASSESSEE HAS ALSO RAISED A GRIEVANCE THAT A DISALLO WANCE OF ` 45,000/- OUT OF ` 45,180/- CLAIMED AS CONSULTANCY CHARGES, WAS SUSTAINED BY THE CIT(APPEALS). 2. FACTS APROPOS ARE THAT ASSESSEE, ENGAGED IN MEDI CAL PROFESSION, HAD FILED HER RETURN DECLARING AN INCOM E OF ` 10,27,999/- FOR THE IMPUGNED ASSESSMENT YEAR. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE ASSESSING OFFICER THAT ASSESSEE HAD INTRODUCED A SUM OF ` 26,43,128/- AS CAPITAL IN HER PROPRITRIX CONCERN IN THE RELEVANT PREVIOUS YEAR. ASSESSEE WAS REQUIR ED TO FURNISH SOURCE FOR THE ADDITIONAL CAPITAL INTRODUCED. AS P ER THE A.O., ASSESSEE DID NOT PROVIDE ANY SUFFICIENT EVIDENCE FO R THE SOURCE OF THE FUNDS INTRODUCED. SHE, THEREFORE, MADE AN ADDITION OF ` 26,43,128/- RELYING ON SECTION 68 OF THE ACT. 3. ASSESSEE HAD ALSO CLAIMED A SUM OF ` 45,000/- AS CONSULTANCY EXPENSES. ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE BUSINESS PURPOSE BEHIND SUCH EXPENDITURE. IT SEEMS NO EXPLANATION WAS FURNISHED BY THE ASSESSEE. THEREFORE, AN ADDIT ION OF ` 45,000/- WAS ALSO MADE. I.T.A. NO. 1143/MDS/12 3 4. AN APPEAL WAS FILED BEFORE CIT(APPEALS) ON BOTH THE ABOVE ADDITIONS. ARGUMENT OF THE ASSESSEE WAS THAT SUFFI CIENT OPPORTUNITY WAS NOT GIVEN BY THE ASSESSING OFFICER FOR PROVING THE SOURCE OF THE CAPITAL INTRODUCED. AS PER ASSESSEE, A SUM OF ` 8,37,969/- WAS INHERITED FROM HER MOTHER AND A SUM OF ` 15,51,936/- HAD ACCRUED TO HER ALONG WITH HER OTHER INCOME DURING THE RELEVANT PREVIOUS YEAR. AS PER ASSESSEE, THERE WAS NO CASH ENTRIES IN HER BOOK S WHICH SHOWED ANY CREDIT OF ` 26,43,128/-. ARGUMENT OF THE ASSESSEE WAS THAT SECTION 68 DID NOT APPLY IN SUCH A SITUATION. ASSE SSEE ALSO SUBMITTED THAT NET PROFIT AND DEPRECIATION EARNED FOR THE PRE CEDING THREE YEARS, INCLUDING RELEVANT PREVIOUS YEAR, WAS A GOOD ENOUGH SOURCE TO EXPLAIN ` 15,51,936/-. AS PER THE ASSESSEE, HER INCOME FROM OTHER SOURCES OF ` 4,24,292/- WAS IGNORED. LD. CIT(APPEALS) WAS OF T HE OPINION THAT ASSESSEES EXPLANATION WITH REGARD TO SUM OF ` 8,37,969/- INHERITED FROM HER MOTHER ALONE COULD BE ACCEPTED. IN THIS VIEW OF THE MATTER, OUT OF THE ADDITION OF ` 26,43,128/- MADE BY THE ASSESSING OFFICER, LD. CIT(APPEALS) SUSTAINED AN AD DITION OF ` 18,05,759/-. 5. VIS--VIS THE CLAIM OF CONSULTANCY CHARGES, ARGU MENT OF THE ASSESSEE WAS THAT THE ACTUAL AMOUNT OF PROFESSIONAL CHARGES I.T.A. NO. 1143/MDS/12 4 INCURRED WAS ` 45,180/-. HOWEVER, ASSESSEE DID NOT PRODUCE ANY DETAILS BEFORE THE CIT(APPEALS) ALSO. HENCE, THE A DDITION OF ` 45,000/- WAS ALSO SUSTAINED BY THE CIT(APPEALS). 6. NOW BEFORE US, LEARNED A.R., STRONGLY ASSAILING THE ORDERS OF AUTHORITIES BELOW, SUBMITTED THAT SECTION 68 DID NO T APPLY AT ALL. AS PER LEARNED A.R., THERE WAS NO ENTRY IN THE BOOKS O F THE ASSESSEE FOR ATTRACTING SECTION 68 OF THE ACT. THERE WAS NO FIN DING BY THE CIT(APPEALS) THAT ANY CASH WAS CREDITED IN THE ACCO UNT OF THE ASSESSEE IN HER BOOKS. FURTHER AS PER LEARNED A.R. , ASSESSEE HAD FOLLOWING NET PROFIT AND DEPRECIATION RESULTING IN CASH ACCRUAL OF ` 15,51,926/-:- ASST. YEAR NET PROFIT ` DEPRECIATION ` TOTAL CASH ACCRUED ` 2006 - 07 16,39,685/ - 1,86,110/ - 18,25,795/ - 2007 - 08 12,75,727/ - 1,11,666/ - 13,87,393/ - 2008 - 09 9,63,537/ - 5,88,389/ - 15,51,926/ - IN ADDITION, ASSESSEE HAD OTHER INCOME OF ` 4,24,292/- ALSO FOR THE IMPUGNED ASSESSMENT YEAR. THUS, SHE HAD A SOURCE M ORE THAN SUFFICIENT TO EXPLAIN THE AMOUNT OF ` 18,05,759/-, SUSTAINED BY THE CIT(APPEALS). IN ANY CASE, ACCORDING TO LEARNED A. R., NO OPPORTUNITY WAS GIVEN TO SUBSTANTIATE THE SOURCE AND ADDITION W AS MADE ON I.T.A. NO. 1143/MDS/12 5 INCORRECT APPRECIATION OF FACTS. ACCORDING TO LEAR NED A.R., ADDITION OF ` 45,000/- BY DISALLOWING THE CONSULTANCY CHARGES, W AS ALSO UNCALLED FOR. 7. PER CONTRA, LEARNED D.R. SUPPORTED THE ORDER OF LD. CIT(APPEALS). 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. IT IS NOT DISPUTED THAT THE ASSESSEE HAD INTRODUCED A SUM OF ` 26,43,128/- AS CAPITAL IN HER PROPRITRIX CONCERN DU RING THE RELEVANT PREVIOUS YEAR. OUT OF THE SAID SUM, EXPLANATION OF THE ASSESSEE WITH REGARD TO ` 8,37,969/- WAS ACCEPTED BY THE CIT(APPEALS), SINCE THIS SUM WAS INHERITED BY HER FROM HER MOTHER. NOW THE CLAIM OF THE ASSESSEE IS THAT AN ADDITION UNDER SECTION 68 ITSEL F COULD NOT HAVE BEEN MADE SINCE THERE WERE NO ENTRIES IN THE BOOKS MAINTAINED BY THE ASSESSEE. ACCORDING TO LEARNED A.R., UNLESS A SUM WAS CREDITED TO THE BOOKS MAINTAINED, AN ADDITION UNDER SECTION 68 COULD NOT BE MADE. HOWEVER, IT IS NOT DISPUTED THAT THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2008 REFLECTED AN ADDITIONAL CA PITAL OF ` 26,43,128/-. THERE IS NO CASE FOR THE ASSESSEE THA T THE SAID BALANCE SHEET WAS NOT PREPARED BASED ON ANY ACCOUNTS MAINTA INED BY HER. SINCE ASSESSEE HAS FILED PROFIT & LOSS ACCOUNT AND BALANCE SHEET, IT I.T.A. NO. 1143/MDS/12 6 CANNOT BE SAID THAT SUMS MENTIONED IN SUCH BALANCE SHEET WERE NOT AS PER THE BOOKS. FOR APPLICATION OF SECTION 68 WH AT IS REQUIRED IS A CREDIT IN THE BOOKS OF THE ASSESSEE. CAPITAL, WHIC H IS APPEARING IN THE LIABILITY SIDE, IS A CREDIT BALANCE. UNLESS EN TRIES WERE THERE IN THE BOOKS, THERE WOULD HAVE BEEN NO CAPITAL BALANCE AVA ILABLE TO BE REFLECTED IN THE BALANCE SHEET. THEREFORE, WE ARE OF THE OPINION THAT ARGUMENT OF THE ASSESSEE THAT SECTION 68 WOULD NOT APPLY, CANNOT BE ACCEPTED. 9. COMING TO THE NEXT ARGUMENT OF THE ASSESSEE THAT SHE HAD NET PROFITS FOR IMPUGNED ASSESSMENT YEAR AND PRECEDING TWO ASSESSMENT YEARS WHICH ALONG WITH DEPRECIATION, TOTALED TO ` 15,51,926/-, EXPLAINING THE SOURCE OF INTRODUCTION OF ADDITIONAL CAPITAL, WE ARE OF THE OPINION THAT IT IS A FALLACIOUS PLEA. IN THE F IRST PLACE, NET PROFITS ARE NOT ALWAYS CASH ACCRUALS. HAD THE NET PROFIT RESUL TED IN EQUAL CASH ACCRUALS, THEN IT WOULD HAVE RESULTED IN CASH BALAN CE GETTING INCREASED BY SUCH AN EQUAL AMOUNT. ONCE CASH BALAN CE INCREASED, IT CANNOT BE CLAIMED THAT THE SAME WAS USED FOR INTROD UCING ADDITIONAL CAPITAL, UNLESS THE CASH WAS WITHDRAWN EARLIER. CU RRENT ASSETS OF THE ASSESSEE, AS REFLECTED IN HER BALANCE SHEET, SHOWS THE CASH-IN-HAND ` 3,600/- AND CASH AT SBI ` 21,65,404/-. HENCE, PROFITS OF THE I.T.A. NO. 1143/MDS/12 7 ASSESSEE FOR THE EARLIER YEARS, EVEN IF RECEIVED IN CASH, ARE CLEARLY REFLECTED IN THE BANK ACCOUNT ITSELF. HENCE, CLAIM OF THE ASSESSEE THAT SAME AMOUNTS WERE INTRODUCED AS CAPITAL IS NOT TRUE. THE FACT OF THE MATTER IS THAT ASSESSEE WAS UNABLE TO SHOW SOUR CE FOR CREDITS AND THE ADDITIONS WERE RIGHTLY MADE. CIT(APPEALS) WAS MORE THAN FAIR IN GIVING A RELIEF OF ` 8,37,969/- ACCEPTING THE CLAIM OF THE ASSESSEE THAT THE SAID AMOUNT WAS INHERITED FROM HE R MOTHER. 10. VIS--VIS CONSULTANCY CHARGES, IT WAS CLEARLY F OUND BY THE AUTHORITIES BELOW THAT ASSESSEE HAD NOT PRODUCED AN Y EVIDENCE IN SUPPORT OF HER CLAIM. THIS WAS THEREFORE RIGHTLY D ISALLOWED. WE THUS DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(APPEALS). 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER WAS PRONOUNCED IN THE COURT ON TUESDAY, THE 5 TH OF FEBRUARY, 2013, AT CHENNAI. SD/- SD/- (V.DURGA RAO) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 5 TH FEBRUARY, 2013. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-VIII, CHENNAI / CIT-VI, CHENNAI-34/D.R./GUARD FILE