Dr.T.S.Poonacha , Kodagu V. Deputy Commissioner of Income Tax Circle-1 , Hassan

ITA 2160/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2388 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 10-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K Y NINGOJI RAO
• Keywords: Business income; Additional evidence; Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN , JUDICIAL MEMBER ITA NO. 2160/BANG/2018 ASSESSMENT YEAR : 2013 - 14 DR. T.S. POONACHA, PROP. M/S. ATHREYA DRUG HOUSE, S.S. RAMA MURTHY ROAD, VIRAJPET 571 218. KODAGU DISTRICT. PAN: ADNPP 7355D VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, HASSAN. APP ELLANT RESPONDENT APP ELLANT BY : SHRI K.Y. NINGOJI RAO, CA RESPONDENT BY : SHRI RAJENDRA CHANDEKAR, JT.CIT(DR)(ITAT), BENGALURU. D ATE OF HEARING : 20 .0 8 .2018 DATE OF PRONOUNCEMENT : 31 . 08 . 2018 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 31.10.2017 OF THE CIT(APPEALS), MYSORE RELATING T O ASSESSMENT YEAR 2013-14. 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL BY THE ASSESSEE IS WITH REGARD TO THE CORRECTNESS OF AN AD DITION OF RS.7,50,000/- MADE TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO, WHICH WAS CONFIRMED BY THE CIT(APPEALS). 3. THE ASSESSEE IS AN INDIVIDUAL, WHO IS A DOCTOR B Y PROFESSION. FOR AY 2013-14, THE ASSESSEE FILED A RETURN OF INCOME DECL ARING TOTAL INCOME OF RS.18,85,060 AND AGRICULTURAL INCOME OF RS.20,00,82 7. THE BREAK-UP OF THE ITA NO. 2160/BANG/2018 PAGE 2 OF 5 INCOME DECLARED BY THE ASSESSEE OF RS.18,85,056 IS INCOME FROM ATHREYA DRUG HOUSE, WHICH A PHARMACEUTICAL SHOP RUN BY THE ASSESSEE OF RS.4,64,445 AND INCOME FROM OTHER SOURCES OF RS.15, 20,611. THE ASSESSEE CLAIMED DEDUCTION UNDER CHAPTER VIA OF RS. 1 LAKH AND ARRIVED AT THE TOTAL INCOME OF RS.18,85,056. IN THE ORDER OF ASSESSMENT THE AO HAS OBSERVED AS FOLLOWS FOR MAKING AN ADDITION OF RS.7, 50,000 TO THE TOTAL INCOME OF THE ASSESSEE:- ON VERIFICATION OF THE BOOKS PRODUCED AND DETAIL S FILED, IT IS OBSERVED THAT THE ASSESSEE HAS DERIVED AGRICULTU RAL INCOME OF RS.20,00,827/- WHICH IS DEPOSITED INTO HIS BANK ACC OUNT. HE HAS EXPLAINED THE LARGE AGRICULTURAL INCOME AND THE DEP OSIT OF THE SAME INTO BANK A/C. HOWEVER, HE ADMITTED THAT THER E IS LIKELY TO BE OMISSION AND COMMISSIONS IN BUSINESS IN VIEW OF UNQUALIFIED STAFF FOR HANDLING THE ACCOUNTS OF THE BUSINESS. T HEREFORE, IT WAS PROPOSED TO MAKE AN ADDITION OF RS.7,50,000/- TO HI S BUSINESS INCOME. THE ASSESSEE HAS AGREED FOR ADDING ADDITIO NAL INCOME OF RS.7,50,000/- WHICH IS TO BE ADDED TO HIS INCOME RE TURNED. 4. BEFORE THE CIT(APPEALS), THE ASSESSEE CHALLENGED THE ADDITION OF RS.7,50,000. BEFORE THE CIT(APPEALS), IT WAS SUBMI TTED THAT THE ADMISSION MADE BEFORE THE AO WAS ERRONEOUS AND THAT THERE WER E NO OMISSIONS AND COMMISSIONS IN THE MATTER OF MAINTENANCE OF BOOKS O F ACCOUNTS BY THE ASSESSEE IN RESPECT OF HIS BUSINESS OF RUNNING A PH ARMACY AND THAT THERE WERE QUALIFIED STAFF FOR HANDLING THE ACCOUNTS OF H IS BUSINESS. THE ASSESSEE SUBMITTED THAT PROPER BOOKS OF ACCOUNT WER E PRODUCED FOR VERIFICATION. THE CIT(APPEALS) DID NOT AGREE WITH T HE SUBMISSION OF THE ASSESSEE. THE CIT(APPEALS) PROCEEDED ON THE BASIS THAT THE ASSESSEE HIMSELF HAS AGREED TO THE ADDITION, HE CANNOT BE AL LOWED TO CHALLENGE THE ORDER OF AO. 5. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASSE SSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. ITA NO. 2160/BANG/2018 PAGE 3 OF 5 6. THE LD. COUNSEL FOR THE ASSESSEE FILED BEFORE U S A SWORN AFFIDAVIT OF THE ASSESSEE EXPLAINING AS TO HOW THE AFFAIRS OF TH E ASSESSEE HAVE NOT BEEN PROPERLY HANDLED BY THE AR BOTH BEFORE THE AO AND THE CIT(APPEALS). IN PARTICULAR, IT WAS POINTED OUT THAT IN THIS YEAR NO INCOME HAS BEEN DECLARED FROM MEDICAL PRACTICE, WHEREAS IN AY 2012- 13 AND 2014-15, INCOME FROM MEDICAL PRACTICE HAS BEEN DECLARED AT R S.3,60,500 AND RS.2,50,300 RESPECTIVELY. THIS ITSELF, ACCORDING T O THE ASSESSEE, SHOWS THE ERRONEOUS MANNER IN WHICH THE ARS HAVE HANDLED THE CASE. IN THE AFFIDAVIT, THE ASSESSEE HAS ALSO POINTED OUT THAT H E HAD INCOME FROM MEDICAL PRACTICE AND HE HAS NO OBJECTION TO ADDITIO N OF A SUM OF RS.3,50,000 TO THE TOTAL INCOME ON ACCOUNT OF INCOM E FROM MEDICAL PRACTICE. THE AFFIDAVIT IS SOUGHT TO BE ADMITTED A S ADDITIONAL EVIDENCE BEFORE THE TRIBUNAL UNDER RULE 29 OF THE INCOME-TAX APPELLATE TRIBUNAL RULES, 1963. THE FOLLOWING ADDITIONAL EVIDENCE WAS ALSO SOUGHT TO BE FILED BEFORE US:- (I) AFFIDAVIT DULY SWORN IN BY THE APPELLANT (II) COPY OF THE ITR-V OF THE APPELLANT'S RETURN OF INCO ME FOR THE A.Y.2012-13. (III) COPY OF THE RETURN OF INCOME FILED BY THE AP PELLANT FOR THE A.Y.2012-13. (IV) COPY OF THE ITR-V OF THE APPELLANT'S RETURN OF INCOME FOR THE A.Y.2013-14. (V) COPY OF THE RETURN OF INCOME FILED BY THE APPE LLANT FOR THE A.Y.2013-14. (VI) COPY OF THE ITR-V OF THE APPELLANT'S RETURN O F INCOME FOR THE A.Y.2014-15. (VII) COPY OF THE RETURN OF INCOME FILED BY THE AP PELLANT FOR THE A.Y.2014-15. ITA NO. 2160/BANG/2018 PAGE 4 OF 5 7. THE AFFIDAVIT AS WELL AS OTHER ADDITIONAL EVIDEN CE ARE REQUIRED FOR PROPER ADJUDICATION OF THE ASSESSEES APPEAL AND AR E THEREFORE ADMITTED AS ADDITIONAL EVIDENCE. 8. I HAVE CAREFULLY GONE THROUGH THE RETURN OF INCO ME FILED BY THE ASSESSEE FOR THE AY 2012-13 & 2014-15. IT IS CLEAR FROM THOSE RETURNS OF INCOME THAT ASSESSEE DID HAVE INCOME FROM MEDICAL P RACTICE. NO INCOME HAS BEEN DECLARED FROM MEDICAL PRACTICE FOR AY 2013 -14. IN THE AFFIDAVIT IN PARA 12, THE ASSESSEE HAS MADE A PRAYER THAT TO OFF ER INCOME FROM MEDICAL PRACTICE OF RS.3,50,000 FOR THE AY 2013-14. I AM O F THE VIEW THAT THE PRAYER MADE BY THE ASSESSEE IS BONAFIDE AND REQUIRES TO BE ACCEPTED. I AM ALSO OF THE VIEW THAT THE AGREED ADDITION MADE I N THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IS ERRONEOUS AND CONTRARY TO THE FACTS ON RECORD. IT IS ALSO SEEN THAT IN THE ORDER OF ASSES SMENT THE AO HAS NOT SPELT OUT THE OMISSIONS & COMMISSIONS WHICH WARRANTED EST IMATION OF INCOME BY MAKING AN ADDITION OF RS.7,50,000. IN THESE CIRCUM STANCES, I AM OF THE VIEW THAT THE ADDITION OF RS.7,50,000 HAS TO BE DEL ETED AND A SUM OF RS.3,50,000 HAS TO BE TAXED AS INCOME FROM MEDICAL PRACTICE, IN ADDITION TO THE SUM OF RS.18,85,060 DECLARED IN THE RETURN OF I NCOME. I ORDER AND DIRECT ACCORDINGLY AND ALLOW THE APPEAL OF THE ASSE SSEE IN PART. 9. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2018. SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER BANGALORE, DATED, THE 31 ST AUGUST, 2018. / D ESAI S MURTHY / ITA NO. 2160/BANG/2018 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.