Vera Innovatives, CHENNAI V. ACIT, CHENNAI

ITA 1367/CHNY/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7675 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 24-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-06-2015
• Court: TRIBUNAL
• Department Lawyers: N RENGARAJ
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 1 367/MDS/2015 / ASSESSMENT YEAR :20 1 0 - 1 1 M/S. VERA INNOVATIVES, NO. 145, OTRAI VADAI, PUZHAL, JAIN TEMPLE, CHENNAI 600 066. [PAN:A AHFV3229R ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , BUSINESS CIRCLE XV, CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR, C.A. / RESPONDENT BY : SHRI N. RENGARAJ , CIT / DATE OF HEARING : 0 1 . 1 2 .201 6 / DATE OF P RONOUNCEMENT : 28 .02 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 12 , C HENNAI , DATED 0 5 .0 3 .2015 RELEVANT TO THE ASSESSMENT YEAR 20 1 0 - 1 1 . THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS: (I) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF .2,47,50,000/ - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT. (II) THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF .5,25,000/ - INCURRED TOWARDS BUSINESS PROMOTION. I.T.A. NO . 1367 /M/ 15 2 (III) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF .6,00,00,000/ - MADE BY WAY OF VALUE OF BENEFIT DERIVED UNDER SECTION 28(IV) OF THE ACT. 2. AT THE TIME OF HEAR ING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO CONFIRMATION OF DISALLOWANCE OF .5,25,000/ - IS NOT PRESSED AND ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 3 . WITH REGARD TO FIRST GROUND RAISED IN THE GROUNDS OF APPEAL OF THE ASSESSEE IN RESPECT OF CONFIRMATION OF ADDITION OF .2,47,50,000/ - , THE B RIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER HAS OBSERVED FROM THE LEDGER COPY OF VASAN EYE CARE HOSPITAL MAI NTAINED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS FOR THE RECEIPTS FROM M/S VASAN HEALTHCARE PRIVATE LIMITED THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF .2,47,50,000/ - ON 31.03.2010 THROUGH ANDHRA BANK ACCOUNT NO. 335. HOWEVER, ON VERIFICATION OF THE LED GER COPY OF THE ASSESSEE MAINTAINED BY M/S. VASAN HEALTHCARE PRIVATE LIMITED, THE ASSESSING OFFICER FOUND THAT M/S. VASAN HEALTHCARE PRIVATE LIMITED HAS NOT GIVEN ANY PAYMENT OF .2,47,50,000/ - TO THE ASSESSEE. ON VERIFICATION OF BANK STATEMENT OF ANDHRA B ANK UNDER SECTION 133(6) OF THE ACT, THE ABOVE AMOUNT WAS CREDITED THROUGH SB 12301 0100021213 OF MS. BHARGAVI NOMITHA P. WHEN SHOW - CAUSED, THE ASSESSEE HAS SUBMITTED AS UNDER: THIS AMOUNT WAS RECEIVED AS A SHORT TERM LOAN TO EXECUTE THE HUGE ORDER, THE ASSESSEE RECEIVED FROM M/S. VASAN EYE CARE. BUT THIS WAS WRONGLY I.T.A. NO . 1367 /M/ 15 3 ACCOUNTED AS ADVANCE FROM CUSTOMER. ONCE THE ORDER WAS CANCELLED DUE TO THE UNEXECUTABLE COMPLETION DATE, THIS ADVANCE WAS RETURNED ON 03.04.10 AND 12.04.10 TOTALLY. SINCE IN THE ACCOUNTING Y EAR 2009 - 10 IT WAS ACCOUNTED AS CUSTOMER ADVANCE THE LOAN RETURN ALSO WAS ACCOUNTED AS RETURN TO THE CUSTOMER. THE RETURN IS ALSO THROUGH THE BANK. IT IS ONLY A LOAN AND NOT INCOME AND CERTAINLY NOT UNEXPLAINED CREDIT. 4. FROM THE ABOVE, THE ASSESSEE HA S EXPLAINED THE PURPOSE I.E., TO EXECUTE THE HUGE ORDER, FOR WHICH THE AMOUNT WAS RECEIVED, BUT THE ASSESSEE WAS VERY MUCH SILENT ON THE SOURCE FROM WHERE IT HAS BEEN RECEIVED. THOUGH THE ASSESSEE ACCOUNTS AS AN ADVANCE FROM CUSTOMER I.E., M/S. VASAN EYE C ARE, IT WAS NOT GIVEN OR PAID BY M/S. VASAN EYE CARE AS IT CAN BE SEEN FROM THE LEDGER COPY OF THE ASSESSEE MAINTAINED BY M/S. VASAN HEALTHCARE PVT. LTD. AND FROM THE BANK STATEMENT OF THE ASSESSEE. SINCE THE ASSESSEE WAS NOT ABLE TO ESTABLISH THE IDENTITY OF THE PERSON CREDITING THE SAID AMOUNT, GENUINENESS OF THE SAID TRANSACTION, CREDITWORTHINESS OF THE PERSON CREDITING THE SAID AMOUNT AND NATURE OF THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE CREDITOR, THE ASSESSING OFFICER HAS TREATED THE SAME AS UNEX PLAINED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT AND BROUGHT TO TAX. 5. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). THE OBSERVATIONS OF THE LD. CIT(A) ARE REPRODUCED AS UNDER: 7. GROUND NOS.3 TO 6: DISALLOWANCE OF UNEXP LAINED CASH CREDIT: RS.2,47,50,000/ - : IN THE GROUNDS, THE APPELLANT SUBMITTED THAT THE AMOUNT RECEIVED WAS IN THE NATURE OF SHORT TERM LOAN AND WRONGLY ACCOUNTED AS ADVANCES RECEIVED FROM CUSTOMER. THE AMOUNT WAS RECEIVED TO EXECUTE THE ORDER AND RETURNED BY THE APPELLANT WHEN THE ORDER DID NOT MATERIALIZE. I.T.A. NO . 1367 /M/ 15 4 7.1 DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT'S AR WAS DIRECTED TO FURNISH PROOF FOR THIS TRANSACTION DETAILED IN THE WRITTEN SUBMISSION, FOR WHICH THEY SOUGHT ADJOURNMENT FOR ABOUT 2 WE EKS. THE AR CAME BACK ON 17.02.2015 AND SUBMITTED THAT AT THIS POINT OF TIME THEY ARE NOT ABLE TO SUBSTANTIATE THE CLAIM AS PROOF / DETAILS COULD NOT BE OBTAINED AND RELIED ON THE WRITTEN SUBMISSIONS. 7.2 THE ENTIRE ISSUE CAME UP BECAUSE OF DEPOSITS IN THE BANK ACCOUNT OF THE APPELLANT, SHOW - CAUSE NOTICE WAS ISSUED BY THE AO, IN RESPONSE TO WHICH THE APPELLANT EXPLAINED THE PURPOSE BUT NOT THE SOURCE FOR DEPOSITS. THE APPELLANT WAS NOT ABLE TO ESTABLISH THE IDENTITY OF THE PERSON CREDITING THE SAID AMOUN T, GENUINENESS OF THE TRANSACTION. EVEN DURING THE COURSE OF APPEAL PROCEEDINGS, THE AR AS MENTIONED ABOVE, SOUGHT TIME TO FURNISH THE DETAILS BUT SUBMITTED THAT AT THIS POINT OF TIME, NO DETAILS AVAILABLE AS THE ONUS OF SUBSTANTIATING THE GROUNDS TAKEN IS NOT DISCHARGED. HENCE, THE ADDITION MADE BY THE AO IS UPHELD AND THE GROUNDS DISMISSED . 6. WITH REGARD TO THE NEXT ISSUE OF DISALLOWANCE OF .6,00,00,000/ - , THE ASSESSING OFFICER HAS OBSERVED FROM THE DETAILS OF THE ASSESSEE THAT THE ASSESSEE HAS RECEI VED AN AMOUNT OF .6 CRORES AS ADVANCE FROM M/S. VASAN EYE CARE, BUT THE PURPOSE OF THE RECEIPT WAS NOT EXPLAINED BY THE ASSESSEE IN ITS REPLY TO THE SHOW - CAUSE NOTICE SERVED BY THE ASSESSING OFFICER. THE ASSESSEE HAS NOT TREATED IT AS A CONTRACT RECEIPT, BUT THE ASSESSEE HAD RECEIVED THE SUM OF .6 CRORES DURING THE COURSE OF BUSINESS TRANSACTIONS BETWEEN THE ASSESSEE AND M/S. VASAN HEALTHCARE PVT. LTD. AS PER THE SUBMISSIONS OF THE ASSESSEE TO THE SHOW - CAUSE NOTICE, THE ASSESSEE HAD NOT RETURNED BACK .6 CRORES TO M/S. VASAN HEALTHCARE PVT. LTD. SINCE ANY BENEFIT OR PERQUISITE, ARISING FROM BUSINESS, RECEIVED BY THE ASSESSEE IS TAXABLE UNDER SECTION 28(IV) OF THE ACT, THE RECEIPT OF .6 CRORES WAS BROUGHT TO TAX. I.T.A. NO . 1367 /M/ 15 5 7. BEFORE THE LD. CIT(A), THE AR OF THE ASSESSEE HAS STATED THAT THE TRANSACTION WAS GENUINE, BUT NO PROOF HAS BEEN GIVEN AS TO WHY THE SAID AMOUNTS WERE RECEIVED AS DEPOSITS AND FURTHER CLAIMED THAT THE SAME WERE RETURNED TO DIFFERENT PARTIES, AS PER THE DIRECTIONS OF THE PARTY FROM WHOM THE M ONEY WAS RECEIVED. THE LD. CIT(A) HAS OBSERVED THAT IF THE CONTENTION OF THE ASSESSEE IS TO BE ACCEPTED, IT IS BEYOND REASON AS TO WHY SOMEBODY GIVES MONEY TO THE ASSESSEE AND DIRECTS THE ASSESSEE TO PAY THOSE MONIES TO SOME OTHER PARTIES WHICH COULD HAVE BEEN DONE BY THE PERSON GIVING THE MONEY ITSELF. IN THE ABSENCE OF ANY EVIDENCE/PROOF HAVING FURNISHED BY THE ASSESSEE, THE LD. CIT(A) UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 8. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIB UNAL AND CHALLENGED WITH REGARD TO BOTH THE DISALLOWANCES CONFIRMED BY THE LD. CIT(A). 9. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. BOTH THE ISSUES RAISED BY THE ASSESSEE ARE IN TERLINKED AND THEREFORE, ADJUDICATED IN THIS PARA. WITH REGARD TO THE DISALLOWANCE OF .2,47,50,000/ - , THE ASSESSING OFFICER HAS NOT DISPUTED THE PURPOSE FOR WHICH THE AMOUNT WAS RECEIVED. SINCE THE I.T.A. NO . 1367 /M/ 15 6 ASSESSEE WAS NOT ABLE TO ESTABLISH THE IDENTITY OF THE PE RSON CREDITING THE SAID AMOUNT, GENUINENESS OF THE SAID TRANSACTION, CREDITWORTHINESS OF THE PERSON CREDITING THE SAID AMOUNT AND NATURE OF THE RELATION BETWEEN THE ASSESSEE AND THE CREDITOR, THE ASSESSING OFFICER MADE THE DISALLOWANCE , WHICH WAS CONFIRMED BY THE LD. CIT(A) FOR THE REASONS STATED BY THE ASSESSING OFFICER. WITH REGARD TO THE DISALLOWANCE OF .6 CRORES, SINCE THE ASSESSEE COULD NOT EXPLAIN THE PURPOSE OF THE RECEIPTS, THE SAME WERE BROUGHT TO TAX. BEFORE US, THE ASSESSEE FILED WRITTEN SUBMISSIONS ALONG WITH RELEVANT EXTRACTS OF THE BANK STATEMENTS FOR THE PERIOD 01.04.2009 TO 31.03.2010, LEDG ER ACCOUNT EXTRACT OF VASAN EYE CARE HOSPITAL IN THE BOOKS OF THE ASSESSEE AS WELL AS REPLY TO NOTICE UNDER SECTION 133(6) FOR THE ASSESSMENT YEAR 2010 - 11 FROM VASAN MEDICAL CENTRE (INDIA) PVT. LTD. TO THE ACIT DATED 03.03.2013. SINCE THE RELEVANT DETAILS WERE NOT FILED BY THE ASSESSEE BEFORE THE LD. CIT(A), THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE CONFIRMED. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE REMIT BOTH THE ISSUES BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO (I) VERIFY THE DETAILS FILED BEFORE THE TRIBUNAL WITH REGARD TO THE SOURCE FOR DEPOSITS OF .2,47,50,000/ - ; (II) THE ASSESSEE SHOULD ESTABLISH THE IDENTITY OF THE PERSON CREDITING THE SAID AMOUNT, GENUINENESS OF THE TRANSACTION, CREDITWORTHINESS OF THE CREDITOR; (II I) THE ASSESSEE SHOULD ESTABLISH BEFORE THE ASSESSING OFFICER THAT VASAN MEDICAL CENTRE (INDIA) PVT. LTD. HAS GIVEN INSTRUCTION TO THE LENDER FOR PAYMENT OF THE AMOUNT TO THE ASSESSEE AND THE I.T.A. NO . 1367 /M/ 15 7 ASSESSING OFFICER IS REQUIRED TO VERIFY AS TO HOW VASAN MEDICAL CENTRE (INDIA) PVT. LTD. HAS RECORDED THE PAYMENT OF .2,47,50,000/ - BY DEBITING THE ASSESSEE S ACCOUNT IN ITS BOOKS, AND THE RECIPIENTS ARE THE CREDITORS OF VASAN MEDICAL CENTRE (INDIA) PVT. LTD. WHEN IT WAS INCORPORATED ONLY ON 31.03.2010; (IV) WITH REGARD TO THE ADDITION OF .6 CRORES, THE ASSESSEE SHOULD FILE ALL RELEVANT CORRESPONDENCE BETWEEN THE ASSESSEE AND THE VASAN MEDICAL CENTRE (INDIA) PVT. LTD. AND VASAN EYE CARE HOSPITAL WITH REGARD TO PAYMENT OF AMOUNT AND CONFIRMATION LETTERS ESTABLISHING THAT THE CREDITORS OF THE VASAN MEDICAL CENTRE (INDIA) PVT. LTD. WHEN IT WAS INCORPORATED ONLY ON 31.03.2010 (V) THE ASSESSEE IS DIRECTED TO FILE EVIDENCE OF AGREEMENT OF CONTRACT BETWEEN THE ASSESSEE AND VASAN EYE CARE HOSPITAL FOR EXECUTING THE CONTRACT FOR .6 CRORES AND UNDER WHAT CIRCUMSTANCES, THE SAID CONTRACT DID NOT MATERIALIZE; (VI) THE ASSESSEE IS FURTHER DIRECTED TO PRODUCE THE EVIDENCE TO SHOW THAT VASAN EYE CARE HOSPITAL HAS GIVEN DIRECTION TO THE ASSESSEE TO REPAY THE SAID AMOUNT OF .6 CRORES T O THE CREDITORS OF VASAN MEDICAL CENTRE (INDIA) PVT. LTD. AND CONFIRMATION LETTERS FROM THE CREDITORS OF VASAN MEDICAL CENTRE (INDIA) PVT. LTD. WHEN IT WAS NOT EXISTED AND INCORPORATED ONLY ON 31.03.2010. AFTER EXAMINING THE DETAILS AS MAY BE FILED BY THE ASSESSEE , THE ASSESSING OFFICER IS DIRECTED TO DECIDE BOTH THE ISSUES AFRESH AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. I.T.A. NO . 1367 /M/ 15 8 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 28 TH FEBRUARY , 201 7 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 28 . 0 2 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.