Arcom Medical Devices (P) Ltd., Hyderabad V. Dy. Commissioner of Income Tax, Hyderabad

ITA 1276/HYD/2013

• Counselvise Citation: 127622514 RSA 2013
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 19-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDYCIT
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Source of fund; Deemed dividend
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1276, 1277, 1278 & 1279/HYD/2013 ASSESSMENT YEAR 2005-06, 2006-07, 2007-08 & 2008-09 ARCOM MEDICAL DEVICES (P) LTD. HYDERABAD-001 PAN AABCA7185L VS. DCIT, CENTRAL CIRCLE 2 HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. KC DEVDAS FOR REVENUE : MR. P. SOMASEKHAR REDDY,CIT DATE OF HEARING : 06.01.2014 DATE OF PRONOUNCEMENT : 05.02.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE FOUR APPEALS ARE BY ASSESSEE AGAINST THE COMMON ORDER OF THE CIT(A)-I, HYDERABAD DATED 05.08.2013. SINCE ISSUE INVOLVED IN ALL THESE APPEALS WAS COMMON, THESE APPEALS ARE HEARD TOGETHER AND DECIDED BY THIS ORDER. 2. BRIEFLY STATED, ASSESSEE IS IN THE BUSINESS OF SUPPLY OF LIFE SAVING DEVICES AND HAS BEEN FILING RE TURNS REGULARLY. CONSEQUENT TO THE SEARCH AND SEIZURE OPERATI ONS UNDER SECTION 132 OF THE I.T. ACT CONDUCTED ON 12.08.20 09, PROCEEDINGS UNDER SECTION 153A WERE INITIATED. ASSESSE E FILED ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. RETURNS ADMITTING HIGHER INCOMES FOR ALL THE IMPUGNED ASSESSMENT YEARS AND ALSO FOR ASSESSMENT YEAR 2009-2 010 WHICH IS NOT BEFORE US IN APPEAL. IN THE COURSE OF SE ARCH PROCEEDINGS, CERTAIN BANK ACCOUNTS HAVE BEEN IDENTIFIED ALONG WITH EXCESS STOCK. THE FOUR BANK ACCOUNTS, TWO IN SYNDICAT E BANK AND TWO IN HDFC BANK IN THE NAME OF DIRECTORS HAVE CREDITS IN VARIOUS A.YS RUNNING TO A TOTAL OF RS.1,88,6 8,647/- INCLUDING INTEREST CREDITS. THESE CREDITS IN THE BANK ACCOUNTS HAVE BEEN ACCEPTED BY ASSESSEE COMPANY AND ALSO BY THE DEPARTMENT AS ARISING FROM THE REGULAR BOOKS OF ASSESSEE COMPANY. THERE ARE VARIOUS DEBITS IN THE BANK ACCOUNTS. THE ASSESSEE HAS FILED STATEMENT WITH THE INVESTIGATING AUTHORITIES ADMITTING TRANSACTIONS AND EXPLAINING HOW THE CREDITS IN THE BANK ACCOUNTS HAVE FLOWN INTO INVESTMENTS. IT WAS SUBMI TTED THAT AN AMOUNT OF RS.1,19,85,401/- WAS INVESTED IN STOCK-IN- TRADE. AN AMOUNT OF RS.30,00,000/-WAS AVAILABLE AS FIXE D DEPOSIT WITH SYNDICATE BANK. FUNDS HELD FROM WITHDRAWALS IN CASH WAS TO THE TUNE OF RS.19,00,000/- AND BALANCE A VAILABLE IN THE BANK ACCOUNTS WERE TO THE TUNE OF RS.19,83,246/- . INCLUDING AN AMOUNT OF RS. 60,00,000/- AS DEEMED DIV IDEND, ASSESSEE DECLARED TOTAL AMOUNT OF RS.2,49,00,000/- IN ALL THE YEARS CONSEQUENT TO THE SEARCH AND FILED AFFIDAVITS ADM ITTING ADDITIONAL INCOME ON ACCOUNT OF SUCH TRANSACTIONS. THE ASSESSEE, WHILE FILING THE RETURNS OF INCOME IN RESPEC TIVE ASSESSMENT YEARS, TOOK THE DEPOSITS IN THE BANK ACCOUNT FOR DECLARING INCOME IN THE YEAR BUT EXCLUDED THE AMOUNTS WITHDRAWN FROM THE BANK DURING THE YEAR, STATING THAT T HEY WERE FOR THE PURPOSE OF INVESTMENT IN THE STOCK AND DEC LARED THE NET CREDITS IN THE RESPECTIVE YEARS. THE STATEME NT OF THE ASSESSEES DECLARATION RELEVANT FOR THESE YEARS WAS AS UN DER : ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. ARCOM MEDICAL DEVICES PVT. LTD. : INCOME TO BE DECLARED & INCOME TAX THEREON A.Y. 2005-06 A.Y. 2006-07 A.Y. 2007-08 A.Y. 2008-09 TOTAL GROSS AMOUNT DEPOSITED IN BANK 9,02,000 2,17,435 72,23,236 42,46,852 1,25,89,523 AMOUNT WITHDRAWN FROM BANK 1,80,076 95,000 25,65,170 56,24,278 84,64,524 INCOME TO BE OFFERED IN EACH YEAR 7,21,923 1,22,435 46,58,066 0.00 55,2,425 CORRECTION IN STOCK -- -- -- -- -- 3. IT WAS THE ASSESSEES EXPLANATION THAT AMOUNTS WITHDRAWN IN THE RESPECTIVE YEARS HAVE BEEN INVESTED I N STOCK AND THE CUMULATIVE AMOUNT OF STOCK AT RS.1,19,85,401/ - WAS OFFERED IN A.Y. 2009-2010. STATEMENT WAS GIVEN BEFORE THE DDI AND ASSESSEE FOLLOWED IT WITH FILING THE RETURNS IN TH E RESPECTIVE ASSESSMENT YEARS ACCORDINGLY. EVEN THOUGH A.O. EXTRACTED DETAILS OF BANK ACCOUNTS, AMOUNTS CREDITED IN RESPECTIVE BANK ACCOUNTS AND CORRESPONDING INVESTMENTS MADE AND EXPLANATION GIVEN BY THE ASSESSEE, IN THE ORDER IN PAGES 2 AND 3, HE, HOWEVER, DID NOT AGREE WITH THE EXPLA NATION THAT AMOUNT WITHDRAWN WAS USED FOR THE PURPOSE OF INVESTMENT IN STOCKS. AO MADE THE ADDITION OF WITHDRAWN AMOUNTS BY STATING AS UNDER IN ALL THE YEARS, EXCEPT A.Y. 2008-09. FOR EXAMPLE, THE ORDER IN A.Y. 2005-06 ON THIS ISSUE IS AS UNDER : THE ASSESSEE HAS ADMITTED THE GROSS CREDITS IN THE S AID BANK ACCOUNTS PERTAINING TO THE PREVIOUS YEAR 2004- 05 ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. RELEVANT TO A.Y. 2005-06 AS ADDITIONAL INCOME AND HA S DEDUCTED THE COMPONENT OF INVESTMENT IN STOCK STATE D TO HAVE BEEN MET OUT OF WITHDRAWALS AMOUNTING TO RS.1,80,076/-. THIS METHOD OF ADMISSION OF ADDITIONA L INCOME IS CLEARLY NOT INTELLIGIBLE. IT IS FURTHER TO BE NOTED THAT THE ASSESSEE CONTENDS THAT THE SUM OF RS.1,19,85,401/- HAS BEEN ADMITTED AS PART OF CLOSIN G STOCK IN THE A.Y. 2009-10 SINCE SEARCH HAS TAKEN PL ACE IN THE PREVIOUS YEAR RELEVANT TO THAT ASSESSMENT YEAR. THIS IS CLEARLY NOT ACCEPTABLE. IF THE ASSESSEE HAS WITHD RAWN A SUM OF RS.1,80,076/- AND INVESTED IN STOCKS IT SHOU LD BE FORMING PART OF STOCKS OF THE CURRENT A.Y. I.E., 200 5-06. SINCE IT HAS NOT FORMED PART OF CLOSING STOCK IN THE CURRENT YEAR, THE DEDUCTION FOR THE SAME IS NOT ALLOWABLE. TH E SAME IS ADDED BACK TO INCOME RETURNED. 4. THUS A.O. HAS NOT ACCEPTED THE AMOUNT OF WITHDRAWAL OF RS.1,80,076/- IN A.Y. 2005-06, AN AMOUNT OF RS.95,000/- IN A.Y. 2006-07, AN AMOUNT OF RS.25,65,1 70/- IN A.Y. 2007-08. HOWEVER, IN A.Y. 2008-09 SINCE THE AMOU NT WITHDRAWN WAS MORE THAN THE CREDITS INTO THE ACCOUNT, A .O. DID NOT MAKE THE ADDITION ON THE REASON OF INVESTMENT I N STOCK, BUT MADE THE ADDITION FOR THE DEPOSITS IN THE B ANK ACCOUNT STATING AS UNDER: THE ASSESSEE STATED THAT THE GROSS CREDITS PERTAINI NG TO THE PREVIOUS YEAR 2007-08 RELEVANT TO A.Y. 2008-09 O F RS.42,46,853/- HAVE BEEN INVESTED IN PURCHASE OF ST OCKS WHICH HAS BEEN DISCLOSED AS ADDITIONAL INCOME IN A.Y. 2009-10. THE WITHDRAWALS MADE DURING THE YEAR ARE RS.56,24,279/- EXCEED THE DEPOSITS TRANSFERRED INTO THE ACCOUNTS OF THE DIRECTORS. THE ASSESSEE HAS NOT ADMI TTED ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. ANY ADDITIONAL INCOME. IT IS FURTHER TO BE NOTED TH AT THE ASSESSEE CONTENDS THAT THE SUM OF RS.1,19,85,401/- HAS BEEN ADMITTED AS PART OF CLOSING STOCK IN THE A.Y. 2 009-10 SINCE SEARCH HAS TAKEN PLACE IN THE PREVIOUS YEAR R ELEVANT TO THAT ASSESSMENT YEAR. THIS IS CLEARLY NOT ACCEPTA BLE. IT IS FOR THE ASSESSEE TO PROVE THAT THE WITHDRAWALS H AVE BEEN INVESTED IN STOCKS. IF THE ASSESSEE HAS WITHDR AWN THE DEPOSITS IN THE CURRENT YEAR, THEY SHOULD BE FO RMING PART OF STOCKS IN THE CURRENT YEAR. SINCE IT HAS NO T FORMED PART OF CLOSING STOCK IN THE CURRENT YEAR, THE DEDUC TION FOR THE SAME IS NOT ALLOWABLE. IN THE CURRENT YEAR THE WITHDRAWALS ARE MORE THAN THE DEPOSITS. THE ASSESSEE HAS ADMITTED THE DEPOSITS AS ADDITIONAL INCOME IN TH E YEAR IN WHICH THEY WERE MADE BY WITHDRAWING FROM THE BOOKS OF ARCOM MEDICAL DEVICES (P) LTD. IN VIEW OF TH E SAME THE DEPOSITS OF THE CURRENT YEAR OF RS.42,46,8 53/-. ( ORDER WAS INCOMPLETE, WITHOUT ANY OBSERVATION OF ADDITION ) 5. THUS, IN THREE ASSESSMENT YEARS, A.O. MADE ADDITION OF WITHDRAWALS AS STOCK, WHEREAS, IN A.Y. 20 08-09 HE MADE THE ADDITION OF THE DEPOSITS IN THE BANK ACCOUNT, WITHOUT CONSIDERING THE WITHDRAWALS FROM THE BANK ACCOUNT . 6. BEFORE THE CIT(A), THE ASSESSEE EXPLAINED THE ENTIRE SEQUENCE OF EVENTS AND SUBMITTED THAT THE AMOU NTS WITHDRAWN AND INVESTED IN STOCK HAS BEEN ULTIMATELY DISCLOSED IN A.Y. 2009-2010 AND SO THE ADDITIONS IN RESPECTIVE ASSESSMENT YEARS BECOMES DOUBLE ADDITION. ALTERNATIVELY, ASSESSEE ASKED FOR EXCLUSION OF THE ABOVE AMOUNTS FROM A .Y. 2009-2010. AFTER CONSIDERING THE SUBMISSIONS, LEARNED C IT(A) VIDE COMMON ORDER FOR ALL THE YEARS, REJECTED THE ASSESSEES ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. CONTENTION THEREBY, CONFIRMING THE AMOUNTS. THE ORDER IN PARA 6.3 OF THE CIT(A) IS AS UNDER : 06.3 . THE CONTENTION THAT THE SAME INCOME CANNOT BE TAXED TWICE IS CORRECT BUT IN THIS CASE THERE WAS A SEARCH AND SEIZURE OPERATION AND THE ASSESSEE STATED THAT THE AMOUNTS WERE WITHDRAWN FROM THE BOOKS OF THE COMPANY AND DEPOSITED IN THE DIRECTORS' BANK ACCOUNTS AND THE SAME WERE UTILIZED FOR THE PURCHASE OF STOCK BUT THIS CONTENTION HAS NOT BEEN ESTABLISHED WITH ANY SATISFACTORY EVIDENCE AND AS STATED EARLIER IT COULD HAVE BEEN USED FOR. ANY PURPOSE OTHER THAN PURCHASE OF STOCK. HENCE, THE LINK BETWEEN THE WITHDRAWAL OF FUNDS FROM THE COMPANY AND THE INVESTMENT OUT OF THE FUNDS IN STOCK WAS NOT ESTABLISHED AND THEREFORE, THE ENTIRE CREDITS IN BANK ACCOUNTS OF THE DIRECTORS WHICH WERE THE DIVERSION OF FUNDS FROM THE COMPANY NEED TO BE TAXED IN THE HANDS OF COMPANY THEMSELVES HAVE ADMITTED THAT THERE WAS DIVERSION OF FUNDS FROM THE COMPANY INTO THE BANK ACCOUNTS OF THE DIRECTORS OVE R THE PERIOD, ASSUMING BUT NOT ADMITTING THAT EVEN IF THE MONIES WERE INVESTED ONLY IN THE SO CALLED STOCKS, IT IS NOT UNDERSTOOD AS TO HOW IT COULD BE OFFERED IN THE AY 2009-10 AND NOT IN THE RESPECTIVE YEARS AS THE UNDISCLOSED INCOME OF THOSE YEARS. THE APPELLANT'S CONTENTION THAT SINCE IT HAS OFFERED RS.1,19,85,401 /- AS UNACCOUNTED ACCUMULATED STOCK U/S.132( 4) OF THE I.T. ACT IN THE RETURN FILED U/S.153A OF I.T. ACT, TH E UNACCOUNTED STOCK IN THE EARLIER ASSESSMENT YEARS CANNOT BE ADDED BECAUSE IT AMOUNTS TO DOUBLE ADDITION HAS NO MERIT. SINCE I HAVE HELD AS ABOVE T HAT THERE IS NO LINK BETWEEN THE WITHDRAWALS FROM THE BOOKS OF THE COMPANY AND THE INVESTMENT OUT OF THE WITHDRAWALS IN STOCK BY THE DIRECTORS, THE ASSESSIN G OFFICER IS JUSTIFIED IN MAKING THE ADDITION ON ACCO UNT OF THE UNDISCLOSED STOCK IN THE RESPECTIVE ASSESSMENT YEAR. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSI NG OFFICER AMOUNTING TO RS.1,80,076/-, RS.95,000/-, RS.25,65,170/- AND RS.42,46,853/- AS INVESTMENT MADE IN 'UNACCOUNTED STOCK IN TRADE' IN THE ASSESSMENT YEARS 2005-06, 2006-07, 2007-08 AND 2008-09 RESPECTIVELY IS HEREBY CONFIRMED AND THE GROUND RAISED IN THIS REGARD IS DECIDED AGAINST THE APPELLANT. REGARDING THE CONTENTION THAT SINCE IT HAS ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. OFFERED RS.1,19,85,401/- ON ACCOUNT OF STOCK AND OFFERED TO TAX U/S.132(4) OF I.T. ACT, THE ADDITION O N ACCOUNT OF STOCK IN THE EARLIER YEARS AMOUNTS TO TA XING THE SAME AMOUNT TWICE IS NOT ACCEPTED. IT MAY BE NOTED THAT THE ASSESSEE ITSELF HAS OFFERED THE AMOU NT OF RS.1,19,85,401/- AS UNACCOUNTED STOCK IN THE RET URN FILED FOR ASST. YEAR 2009-10 AND FOR THE REASONS DISCUSSED ELABORATELY IN PARAS-6.2 & 6.3 ABOVE, THE CONTENTION OF THE APPELLANT THAT THE AMOUNT OF RS.1,19,85,401/- BE DELETED IS REJECTED. 7. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), ASSESSEE IS IN APPEAL AND HAS RAISED COMMON GROUNDS FOR A LL THE YEARS. FOR THE SAKE OF REFERENCE, THE GROUNDS IN A .Y. 2005- 06 ARE REPRODUCED AS UNDER : 1. THE ORDER OF THE CIT(A)-I, HYDERABAD (CIT), IN CONFIRMING THE ADDITION OF RS.1,80,076/- AS INVESTMENT MADE IN UNACCOUNTED STOCK IN TRADE. 2. THE LEARNED CIT FAILED TO NOTE THAT THE ENTIRE INCREASE IN STOCK AT RS.1,19,85,401/- WAS OFFERED TO TAX U/S. 132(4) OF THE I.T. ACT, 1961 ON 12.08.2008 FOR THE ASSESSMENT YEAR 2009-10 WHERE THE SEARCH TOOK PLACE WHICH INCLUDED THE SUM OF RS.1,80,076/- ADDED FOR THE ASSESSMENT YEAR 2005-2006 AND THEREFORE THE CIT ERRED IN CONFIRMING THE ADDITION OF RS.1,80,076/- WHICH AMOUNT TO DOUBLE ADDITION OF THE SAME SOURCE. 3. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIME OF HEARING. 8. LEARNED COUNSEL REFERRING TO THE STATEMENTS PLACED IN THE PAPER BOOK AND THE TABLE INDICATING TH E AMOUNTS WITHDRAWN AND INVESTED, SUBMITTED THAT ASSESSEE HAS DECLARED THE AMOUNT IN THE YEAR 2009-2010 WHEN THE STOCK WAS FOUND. HIS CONTENTION WAS THAT THERE IS NO BASIS FOR MAKING THE ADDITION AS UNACCOUNTED STOCK IN RESPECTIVE ASSESSM ENT YEARS WHEN THERE IS NO EVIDENCE WITH THE DEPARTMENT, EXCEPT T HE STATEMENT GIVEN BY THE ASSESSEE. ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. 9. WITH REFERENCE TO THE CREDITS IN THE BANK ACCOU NT, HE REFERRED TO THE FINDINGS OF THE A.O. THAT THESE AMOU NTS HAVE FLOWN FROM THE ACCOUNTS OF THE COMPANY. THEREFORE, THEY CANNOT BE TREATED AS UNACCOUNTED CREDITS IN RESPECTIVE B ANK ACCOUNTS. EVEN OTHERWISE, IT WAS SUBMITTED THAT THE BAN K ACCOUNTS ARE IN THE NAME OF THE DIRECTORS AND NOT IN TH E NAME OF THE COMPANY AND COMPANY OWNED UP AMOUNTS AS FUNDS HAVE FLOWN FROM COMPANY. HE REFERRED TO THE CONSOLIDATED STATEMENT AND AFFIDAVITS FILED BEFORE THE INVESTIGATI ON AUTHORITIES AND HOW THE AMOUNTS HAVE BEEN DISCLOSED. 10. LEARNED DR, HOWEVER, RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND LEARNED CIT(A) TO SUPPORT THE ADDI TIONS MADE IN RESPECTIVE ASSESSMENT YEARS. 11. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES. WE ARE UNABLE TO UNDERSTAND THE ADDITIONS MADE BY THE A.O. IN THE FIRST INSTANCE, IT WAS THE ASSESSEES EXPLANATION THAT THE C REDITS IN THE BANK ACCOUNTS WHICH WERE IN THE NAME OF THE VARIOU S DIRECTORS IN FOUR BANK ACCOUNTS HAVE BEEN FLOWN FROM THE COMPANYS BOOKS. THIS CONTENTION OF THE ASSESSEE HAS B EEN ACCEPTED. THEREFORE, THE CREDITS IN THE BANK ACCOUNTS CA NNOT BE BROUGHT TO TAX AS UNACCOUNTED INCOME IN RESPECTIVE DIRECTORS HANDS. HOWEVER, THE COMPANY IN ITS WISDOM, ACCEPTED THAT THE AMOUNTS HAVE BEEN FLOWN FROM THE COMPANYS BOOKS OF ACCOUNTS AND ADMITTED AS INCOME, NET DEPOSITS IN RESPECTIVE YEARS AND BALANCE IN AY 2009-10 . THE FLOW OF FUNDS FROM THE COMPANY HAS NOT AT ALL BEEN EXAMI NED AND THERE SEEMS TO BE NO INVESTIGATION, EXCEPT THE AFF IDAVIT FILED BY THE ASSESSEE ACCEPTING THE CREDITS AS INCOME . THERE IS NO DISPUTE WITH REFERENCE TO THE TOTAL AMOUNT OF CREDIT S, BEING ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. ONE RS. 1.89 CRORES APPROXIMATELY AND ALONG WITH DEEMED DIVIDEND OF RS. 60,00,000/- THE TOTAL AMOUNT DISCLOS ED BY THE ASSESSEE IN RESPECTIVE ASSESSMENT YEARS, TOTALS TO R S. 2.49 CRORES, ON WHICH THERE IS NO DISPUTE AT ALL. 12. AS SEEN FROM THE ORDERS, IT INDICATES THAT ASSES SEE HAD UNEXPLAINED STOCK WHICH WAS FOUND IN THE COURSE OF SEARCH AND QUANTIFIED THE SAME AT RS.1,19,85,401/-. THIS STOCK WAS IDENTIFIED IN A.Y. 2009-2010. THE ASSESSEE HAS ACCEPTED THE SAME AND EXPLAINED THAT THE FUNDS WITHDR AWN OUT OF DEPOSITS IN DIRECTORS BANK ACCOUNTS WERE THE SOURC E FOR INVESTMENT IN STOCK-IN-TRADE. ACCORDINGLY, SINCE THE ST OCK-IN- TRADE WAS IDENTIFIED IN A.Y. 2009-2010, AMOUNT WAS DEC LARED IN THAT YEAR, ALONG WITH THE BALANCE AVAILABLE IN THE BANK ACCOUNTS, FIXED DEPOSITS MADE OUT OF THESE FUNDS WITH SYNDICATE BANK AS INCOME. THEREFORE, EXCEPT THE STATEME NT OF ASSESSEE OWNING UP FLOW OF FUNDS AND RESPECTIVE INVESTM ENTS, THERE IS NOTHING ON RECORD TO INDICATE THE CONTRARY. 12.1. TO CONSIDER THE ADDITION OF RESPECTIVE AMOUNTS WITHDRAWN AS STOCK IN RESPECTIVE ASSESSMENT YEARS 200 5-06, 2006-07 AND 2007-08, EXCEPT THE STATEMENT BY THE ASS ESSEE THAT THE FUNDS HAVE BEEN UTILIZED IN INVESTMENT IN STOCK-IN- TRADE, THERE IS NO EVIDENCE THAT ASSESSEE HAD UNACCOUN TED STOCK AT THE END OF THE RESPECTIVE ASSESSMENT YEARS. T HEREFORE, ON THAT COUNT, THE ADDITION AS UNDISCLOSED INVESTMENT I N STOCK CANNOT BE BROUGHT TO TAX. THERE IS NO PROVISION TO TAX WITHDRAWALS FROM A BANK ACCOUNT AS UNEXPLAINED. ONLY SO URCE OF FUNDS CAN BE EXAMINED AND IF UNEXPLAINED, THE CREDI TS IN BANK ACCOUNT CAN BE BROUGHT TO TAX AS PER THE PROVISIONS OF IT ACT. THEREFORE, WE ARE UNABLE TO UNDERSTAND THE ACTION TAKEN BY THE A.O. IN ASSESSING SO-CALLED WITHDRAWALS, AS INV ESTMENT ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. IN STOCK WITHOUT ANY EVIDENCE AND IN A.Y. 2008-2009 A S UNEXPLAINED CREDITS IN THE BANK ACCOUNT, WHEN THE CRED ITS WERE EXPLAINED AS SOURCE FROM THE COMPANYS ACCOUNTS ITSEL F. THEREFORE, LOOKING AT ANY ANGLE, THE ADDITIONS MADE BY THE A.O. CANNOT BE SUSTAINED. 12.2. THE AO COULD HAVE EXAMINED THE NATURE OF FUND S FLOW FROM COMPANY. IF IT IS APPROPRIATION OF PROFITS BY WAY OF ADVANCES IT DOES NOT EFFECT P&L ACCOUNT. IN CASE THER E IS BOGUS EXPENDITURE CLAIMS AND DIVERSION OF FUNDS, THEN TO THA T EXTENT, THERE COULD BE ADDITION IN RESPECTIVE YEARS. NOTHING WA S EXAMINED /ESTABLISHED BY AO. SINCE ADMISSION BY ASS ESEE WAS ACCEPTED AND NO ADDITION WAS MADE IN DIRECTORS HAND IN WHOSE ACCOUNTS THE CREDITS WERE FOUND, THE STATEMENT B Y ASSESSEE ADMITTING INCOMES AND ACCEPTED BY INVESTIGA TION AUTHORITIES HAS TO BE ACCEPTED IN FULL. THE BASIS FOR D ECLARATION SEEMS TO BE NET ASSETS FOUND IN THE SEARCH. ASSESSEE ADMITTED THE NET DEPOSITS IN RESPECTIVE YEARS AND ENTIRE BALAN CE AMOUNT IN THE YEAR OF STOCK FOUND, ALONG WITH DEPOSITS AND CASH HELD. THERE IS ALSO NO DISCUSSION BY AO ABOUT TURNOVER OUTSIDE BOOKS OF ACCOUNT. IT IS NOT EXPLAINED HOW THERE CAN BE INVESTMENT IN STOCK WITHOUT SALES OUTSIDE BOOKS OF ACC OUNT. NOT ONLY THAT AO ALSO DID NOT GIVE ANY CREDIT TO ADDI TION MADE IN FIRST YEAR AS INVESTMENT IN STOCK AS OPENING BENEF IT IN LATER YEAR. THE VERY APPROACH OF AO IN MAKING THE ADDITION IS F AULTY. 13. WE ARE ALSO SURPRISED TO NOTE THAT LEARNED CIT(A) WHILE ACCEPTING THAT SAME INCOME CANNOT BE TAXED TWICE, REJECTED THE ASSESSEES CONTENTION STATING THAT LINK BETWEEN WITHDRAWALS OF FUNDS FROM THE COMPANY AND INVESTMENT OU T OF THE FUNDS IN STOCK WAS NOT ESTABLISHED BY THE ASSESSE E. THERE IS NOTHING ON RECORD EVEN TO CONSIDER THAT WITHDRAWALS FLOW ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. INTO STOCK, EXCEPT STATEMENT BY ASSESSEE ADMITTING TH E SAME. SINCE ASSESSEE ADMITTED IN LATER YEAR, IT IS THE DUTY OF AO TO PROVE THAT THE STATEMENT WAS NOT ACCEPTABLE. THE ONUS I S ON REVENUE TO REBUT THE ASSESSEE CONTENTIONS. THERE IS NO EVIDENCE WHATSOEVER THAT ASSESSEE HAS INVESTED IN STOC K IN RESPECTIVE YEARS, EXCEPT ASSESSEES CLAIMING TELESCOPI NG BENEFIT FOR THE INVESTMENT IN STOCKS AVAILABLE ON THE DATE OF SE ARCH. SINCE ASSESSEES FUNDS WERE FLOWN FROM THE COMPANY S TANDS EXPLAINED AND THE RESPECTIVE INVESTMENTS OUT OF THE FU NDS ALONG WITH THE DEEMED DIVIDEND WAS DISCLOSED BY THE AS SESSEE BY LINKING UP THE SOURCE OF FUNDS WITH THE INVESTMENT S, NATURALLY THE EXPLANATION OF THE ASSESSEE HAS TO BE ACC EPTED. SINCE, THERE IS NO EVIDENCE, IN SPITE OF SEARCH, THAT A SSESSEE HAD STOCKS AVAILABLE AT THE END OF RESPECTIVE ASSESSM ENT YEARS, THE ADDITIONS SUSTAINED BY THE LEARNED CIT(A) AS UNA CCOUNTED STOCK-IN-TRADE IN THOSE YEARS CANNOT BE ACCEPTED. 14. LEARNED CIT(A) ALSO HAS NOT NOTICED THAT THE ADDITION IN A.Y. 2008-09 IS NOT INVESTMENT IN STOCK BUT THE DEPOSITS IN BANK ACCOUNTS WHICH WERE BROUGHT TO TAX BY THE A.O. IN THAT YEAR, DIFFERENTLY FROM OTHER THREE ASSES SMENT YEARS. SINCE THE SOURCE OF FUNDS HAS ALREADY BEEN EXPLA INED, ADDITION UNDER SECTION 69B CANNOT BE MADE ON THAT ACC OUNT AT ALL. WE ARE UNABLE TO UPHOLD THE ORDER OF THE A.O. AND CIT(A). SINCE ASSESSEE HAS ACCEPTED THE ENTIRE INVESTMENT I N STOCK IN A.Y. 2009-2010, BRINGING IT TO TAX IN RESPECTIVE ASSESS MENT YEARS IS CERTAINLY TAXING THE SAME INCOME TWICE. 15. THERE IS ALSO JUSTIFICATION IN ASSESSEE CLAIM OF GIVING BENEFIT OF ADDITION IN THE RESPECTIVE YEARS F ROM AMOUNT THAT WAS DISCLOSED IN. AY 2009-10. IN CASE AO MADE ADDITION OF DEPOSITS IN BANKS IN RESPECTIVE YEARS UNIFORMLY, THEN ITA.NO.1276, TO 1279/HYD/2013 ARCOM MEDICAL DEVICES (P) LTD. HYD. TELESCOPING BENEFIT IN AY 2009-10 COULD HAVE BEEN EXAM INED. BUT AS STATED, AO TOOK DIFFERENT STAND IN THESE ASSE SSMENTS. THE TOTAL UNACCOUNTED INCOME AT RS.2.49 CRORES WAS DISCLOS ED BY ASSESSEE IN VARIOUS ASSESSMENT YEARS. FOR THESE REAS ONS, WE UPHOLD ASSESSEES GROUNDS IN ALL THE ASSESSMENT YEARS AND DELETE THE ADDITIONS SO MADE BY THE ASSESSING OFFICER. ACCORDINGLY, GROUNDS OF THE ASSESSEE ARE ALLOWED. 16. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.0 2.2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATE 05 TH FEBRUARY, 2014 VBP/- COPY TO : 1. ARCOM MEDICAL DEVICES (P) LTD. 5-8-105/CIT(A), BE HIND KAMAT HOTEL, NAMPALLY STATION ROAD, HYDERABAD-500 001 . 2. DCIT, CENTRAL CIRCLE-2, HYDERABAD. 3. CIT(A)-I, HYDERABAD 4. CIT (CENTRAL), HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.