The DCIT, Circle-9, Ahmedabad V. Dr.Mahesh D.Mehta, Ahmedabad

ITA 1818/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6291 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Keywords: Unexplained expenditure; Business income; Depreciation; Bogus loan
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO. 1818/AHD/2014 (ASSESSMENT YEAR: 2005-06) DCIT, CIRCLE-9, AHMEDABAD APPELLANT VS. DR. MAHESH D. MEHTA C/O. MAYUR SHAH & ASSOCIATES, 21, KAJAL KIRAN, 11-B, SHRIMALI SOCIETY, NAVRANGPURA, AHMEDABAD 380 009 RESPONDENT PAN: AEQPM8480E /BY REVENUE : SHRI ANTONY PARIATH, SR. D.R. /BY ASSESSEE : NONE /DATE OF HEARING : 15.01.2018 /DATE OF PRONOUNCEMENT : 18.01.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2005-06 A RISES AGAINST THE CIT(A)-XV, AHMEDABADS ORDER DATED 22.03.2014 IN CA SE NO. CIT(A) XV/DCIT/CIR.9/207/12-13, RESTRICTING ASSESSING OFFI CERS ACTION MAKING SECTION 69 ADDITION OF UNEXPLAINED EXPENDITURE FROM RS.29,9 4,254/- TO RS.63,169/- ONLY, IN PROCEEDINGS U/S. 143(3) R.W.S. 147 OF THE INCOME TA X ACT, 1961; IN SHORT THE ACT. ITA NO. 1818/AHD/14 [DCIT VS. DR. MAHESH D. MEHTA] A.Y. 2005-06 - 2 - 2. CASE CALLED TWICE. NONE APPEARS AT ASSESSEES B EHEST DESPITE THE FACT THAT THE ASSESSING OFFICER HAS SUCCESSFULLY GOT SERVED T HE RELEVANT HEARING NOTICE ON 06.12.2017. HE IS ACCORDINGLY PROCEEDED EX PARTE. 3. WE NOTICE AT THE OUTSET THAT THE ASSESSING OFFIC ER HAD MADE IMPUGNED UNEXPLAINED EXPENSES ADDITION ON ACCOUNT OF ASSESSE ES FAILURE IN PRODUCING THE RELEVANT SUPPORTIVE EVIDENCE REFLECTING CORRESPONDI NG ENTRIES IN THE BOOKS OF ACCOUNT. THE CIT(A) THEREAFTER ACCEPTS ASSESSEES RECONCILIATION AS UNDER: 5. I HAVE PERUSED THE FACTS OF THE CASE. I HAVE PE RUSED THE SUBMISSION OF APPELLANT AND CASE LAWS RELIED ON. AFTER CAREFUL CO NSIDERATION OF FACTS, SUBMISSION AND CONTENTIONS OF BOTH A.O. AS WELL AS WISE ADJUDI CATION IS AS FOLLOWS: 5.1. IT IS UNDISPUTED THAT THE CASE OF THE APPELLAN T ACCOUNT OF SURVEY PROCEEDINGS ON THE BUSINESS PREMISES OF THE APPELLA NT AT MUMBAI WHERE SOME INCRIMINATING MATERIAL (PAPERS AND FACTS) WERE FOUN D ABOUT UNRECORDED RECEIPTS FROM APPELLANTS, PROFESSION OF MEDICINE I.E. HE IS AN AYURVEDIC DOCTOR WHO SUPPLY AYURVEDIC MEDICINES ALSO. AS MENTIONED IN THE IMPU GNED ASSESSMENT ORDER, AFTER THE SURVEY, THE ITO(INV) UNIT-V MUMBAI, PREPARED A CHART TO REFLECT THE CASH FLOW STATEMENT SHOWING EXCESS UNACCOUNTED PAYMENT MADE B Y THE APPELLANT DURING THE PERIOD 2001-2002 TO 2008-09 IN THE FORM OF ANNEX F , A COPY OF THE SAME IS ATTACHED HEREWITH FOR YOUR READY REFERENCE. THE APP ELLANT BEFORE THE A.O. SUBMITTED THE RECONCILIATION CHART AND COPY OF THE SAME IS ALSO ATTACHED HEREWITH AS ANNEX X-1 (PG. 1 TO 2). THE APPELLANT HAS NOT OBJECTED THE REOPENING PROCEEDINGS. 5.2. NOW COMING TO THE ADJUDICATING OF APPEAL AS FO LLOWS: A. GROUND NO. 1 IS AGAINST THE ADDITION OF RS.29,94 ,252/- IN RESPECT OF UNEXPLAINED EXPENDITURE. THE APPELLANT CONTENDED TH AT SUCH ADDITION WAS MADE BLINDLY BY THE A.O FOLLOWING THE WORKING OF SUCH EX CESS PAYMENT AS PER ANNEXF' (AS PREPARED BY THE ITO (INV) UNIT-V MUMBAI) REJECT ING ALL THE FACTS AND EXPLANATION IN THIS REGARD. THE APPELLANT CONTENDED THAT BOOKS OF ACCOUNTS, BILLS, VOUCHERS ARE PROPERTY MAINTAINED BY THE APPELLANT A ND SAME WHERE SUBJECTED TO SCRUTINY BY THE DEPARTMENT AND WERE MADE BY THE A.O . IN THE ORIGINAL ASSESSMENT ORDER U/S. 143(3) DTD 24-12-2007 WHICH HAD TRAVELLE D TO THE HON'BLE ITAT. I AM INCLINED WITH CONTENTION OF THE APPELLANT THAT A.O HAS NOT CONSIDERED PROPERLY THE EXPLANATION GIVEN BY THE APPELLANT, DETAILS AND EXP LANATION FROM BOOKS OF ACCOUNTS WHICH ARE REGULARLY MAINTAINED AND VERIFIED BY THE DEPARTMENT AND THE CASH FLOW EXPLANATION BY THE APPELLANT'S AUTHORISED REPRESENT ATIVE BEFORE MAKING SUCH ADDITION. AS EVIDENT FROM THE ANNEXF THAT WHILE COMPUTING SUCH EXCESS PAYMENT, BUSINESS INCOME AS REFLECTED BY APPELLANT IS TAKEN THOUGH THE CASH FLOW FROM BUSINESS WILL INCLUDE THE DEPRECIATION CLAIM F OR PREVIOUS YEAR BEING NOTIONAL DEDUCTION AND ALSO THE INTEREST COMPONENT ON THE PR EMIUM PAID FOR LOAN TAKEN FOR PREMISES VEHICLES. SIMILARLY AT THE PLACE OF INCO ME FROM HOUSE PROPERTY TOTAL RECEIPT OF RENT WHICH DOES NOT INCLUDE THE STATUTOR Y DEDUCTION U/S. 240F THE ACT ITA NO. 1818/AHD/14 [DCIT VS. DR. MAHESH D. MEHTA] A.Y. 2005-06 - 3 - REQUIRED TO BE TAKEN. THIS CASH FLOW DOES NOT INCL UDE THE AVAILABILITY OF CASH ON HAND IN THE OPENING BALANCE AS REFLECTED IN CASH BO OK IF MORE THAN CLOSING BALANCE AND ALSO VARIOUS LOANS ACCEPTED BY THE APPELLANT DU RING THE PREVIOUS YEAR. ON THE OTHER SIDE OF EXPENSES THIS CHART DOES NOT INCLUDE THE WITHDRAWAL BY THE APPELLANT ON HOUSE HOLD PURPOSE AND PAYMENT OF ANY EXPENSES I F MET BY ANY OTHER MEMBER OF THE FAMILY. IT IS, THEREFORE, APPELLANT'S EXPLANATI ON WAS CONSIDERED AND STATEMENT OF CASH IN FLOW AND OUT FLOW IS PREPARED AS FOLLOWS: THE CASH IN FLOW IS WORKED OUT AS FOLLOWS: A) PROFIT SHOWN IN P&L A/C. RS.2,29,058/- B) CLAIM OF DEPRECIATION IN P&L A/C RS.9,43,129/ - C) AMOUNT RECEIVED ON SALE OF CAR (THE APPELLANT LOSS ON SALE OF CAR WAS DISALLOWED IN ORIGINAL ASSESSMENT) RS.1,77,136/- D) LOAN TAKEN BY APPELLANT (IN ORIGINAL ASSESSMENT THE ADDITION WAS MADE AND HONBLE ITAT RESTRICTED THE DISALLOWANCES U/S.68 OUT OF RS.7,51,876/- TO THE E XTENT OF RS.3,00,000/-) RS.7,51,876/- E) RECEIPT OF RENT FROM BOTAD HOUSE (APPELLANT REFLECTED INCOME FROM HOUSE PROPERTY AT RS.42000) RS. 60,000/- F) AGRICULTURAL INCOME RS.1,72,548/- G) CASH DIFFERENCE (OPENING BALANCE WITH BANK ACCOUNT) RS. 4,85,781 LESS: CLOSING BALANCE RS. 2,06,723 RS. 2,79,058 ADD: CASH IN OPENING BALANCE RS. 20,934 RS. 2,99,992 LESS: CLOSING BALANCE RS. 1,03,461 RS. 1,96,531/ - H) LOAN RECEIVED BACK RS. 1,00,000/- TOTAL CASH AVAILABLE RS.26,30,278/- THE EXPENDITURE SIDE (CASH OUT FLOW) A) INVESTMENT FOR THE CLAIM U/S.80C (AS PER ANNEXF) RS. 59,537/- B) OTHER INVESTMENT (AS PER ANNEXF) RS. 51,000/ - C) MARGIN PAYMENT/DOWN PAYMENT FOR PARLE CLINIC RS.18,93,717 (THE TOTAL AMOUNT PAID FOR PARLE CLINIC OF RS.5393770/- PAID THROUGH LIC HOUSING FINANCE LOAN) LESS: ADVANCES PAID IN EARLIER YEAR AS PER SCHEDULE D OF BALANCE SHEET AS ON 31-03-05) RS. 5,00,000 RS.13,93,717/- D) LOAN RE PAYMENT RS.11,01,866 (AS PER ANEX F) LESS: INT. OUT OF PREMIUM PAID AND CLAIMED IN P&LA/C RS.2,86,086 RS.8,15,780 RS.8,15,780/- E) QUAILS REPAYMENT LOAN (AS PER ANNEX F) RS. 3,35,041 ITA NO. 1818/AHD/14 [DCIT VS. DR. MAHESH D. MEHTA] A.Y. 2005-06 - 4 - LESS: INTEREST COMPONENT OUT OF PREMIUM CLAIMED IN P&LA/C. RS. 32,434 LESS: AMOUNT PAID IN EARLIER YEAR FOR QUAILS DOWN PAYMENT RS. 96,817 RS.2.05. 790/- F) HOUSE HOLD EXPS RS. 2,91,303/- RS.28,17,127/- LESS: EXPENDITURE MET OUT OF ABOVE BY (SHRI RS. 1 ,23,680/- DEVANG MEHTA SON OF APPELLANT) TOTAL EXPENDITURE RS.26,93,447/- =========== IT IS THEREFORE, THERE IS DIFFERENCE IN THE FORM O F UN-EXPLAINED EXCESS EXPENDITURE OF RS.63,169/- (RS.26,93,447-RS.26,30,2 78). THE ADDITION SO MADE BY A.O. OF RS.29,94,252/- ARE THEREFORE UPHELD AND CON FIRMED TO THE EXTENT OF RS.63,169/-. THE A.O. IS DIRECTED TO DELETE THE BA LANCE AMOUNT OF RS.29,31,083/- (RS. 29,94,252-RS.63129). THE APPELLANT GETS PART RELIEF. THIS GROUND IS PARTLY ALLOWED. 4. LEARNED DEPARTMENTAL REPRESENTATIVE REITERATES T HE REVENUES PLEADINGS THAT THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT S IN ACCEPTING UNACCOUNTED LOANS ADDED IN EARLIER ASSESSMENT, CREDIT ON ACCOUNT OF INTEREST REGARDING PREMIUM PAID OF RS.2,86,086/- AS AGAINST ACTUAL FIGURE OF RS.1,8 5,213/-, CREDITING OF RS.1LAC IN THE NATURE OF LOAN RECEIVED BACK NOT RECORDED IN CASH B OOK, UNACCOUNTED EXPENSES OF RS.5LACS UNDER THE HEAD MARGIN PAYMENT AS ADVANCE D IN EARLIER YEARS DEDUCTION OF UNACCOUNTED EXPENSES ON ACCOUNT OF ADVANCED PAYM ENT IN EARLIER YEARS, ACCEPTING SOURCE OF EXPENDITURE AMOUNTING TO RS.1,2 3,680/- BY ASSESSEES SON SHRI DEVANG MEHTA AS WELL AS IN ADOPTING CASH DIFFERENCE BY DIFFERENCE OPENING AND CLOSING BALANCE IN BANK ACCOUNT; RESPECTIVELY. WE SEE NO REASON TO ACCEPT EITHER OF THE ABOVE ARGUMENTS. WE NOTICE THAT THE INSTANT AP PEAL CAME TO BE FILED WAY BACK IN THE YEAR 2014. FOUR YEARS TIME SPAN HAS ELAPSE D THEREAFTER. THERE IS NOT EVEN A SINGLE DOCUMENT IN THE INSTANT CASE FILE WHICH COUL D REBUT THE ABOVE EXTRACTED CONCILIATION SUBMITTED AT THE ASSESSEES BEHEST DUR ING THE COURSE OF LOWER APPELLATE PROCEEDINGS. LEARNED DEPARTMENTAL REPRESENTATIVES ARGUMENT THAT THE CIT(A) HAS ERRED IN ADOPTING ASSESSEES STAND REGARDING VARIOU S ISSUES BASED ON THE RELEVANT FIGURES IN PRECEDING ASSESSMENT YEARS IS ALSO LIABL E TO BE REJECTED AS THE ISSUE HAS ATTAINED FINALITY IN SUCH EARLIER ASSESSMENT YEAR O R IN FORMER ROUND OF ASSESSMENT; HAS TO BE GIVEN CREDIT. WE THEREFORE AFFIRM THE CI T(A)S FINDINGS ITA NO. 1818/AHD/14 [DCIT VS. DR. MAHESH D. MEHTA] A.Y. 2005-06 - 5 - UNDER CHALLENGE AS THE REVENUE HAS NOT BEEN ABLE TO CONTROVERT THE SAME BY FILING THE RELEVANT EVIDENCE ON RECORD. 5. THIS REVENUES APPEAL IS THEREFORE DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 18 TH DAY OF JANUARY, 2018.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 18/01/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0