ACIT, New Delhi V. M/s. Paras Healthcare Pvt. Ltd., Gurgaon

ITA 2207/DEL/2012

• Counselvise Citation: 220720114 RSA 2012
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 20-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Keywords: Unexplained cash credit; Depreciation; Revenue expenditure; Capital expenditure
• Section: 68; 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F , NEW DELHI BEFORE SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER I.T.A.NO. 2207 /DEL/20 12 A.Y. 20 07 - 08 ACIT, CC 15, ROOM NO.354 3 RD FLOOR, JHANDEWALAN EXTN NEW DELHI 110 055 VS. PARAS HEALTHCARE P.LTD. PARAS HOSPITAL C BLOCK SUSHANT LOK, PHASE I, SECTOR 43 GURGAON PAN: AADCP 0478 K (APPELLANT) (RESPONDENT) A PPELLANT BY : SH. VIKRAM SAHAY, SR.D.R. RESPONDENT BY : SH. M.P.RASTOGI, ADV. ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A), FARIDABAD DATED 26.12.2011 PERTAINING TO THE A.Y. 2007 - 08. 2. FACTS IN BRIEF : - THE FACTS OF THE CASE ARE BROUGHT OUT AT PARA 4 OF THE LD.CIT(A) S ORDER, WHICH IS EX TRACTED FOR READY REFERENCE. 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME DECLA R ING NIL INCOME WAS E - FILED BY THE ASSESSEE ON 07 . 1 1. 2007 . THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND A NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 29.09 . 2008 REQUIRING COMPL I ANCE ON 15 . 10 . 2008 . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ACQUIRING , ESTABLISHING , MAINTAINING , MANAGING AND RUNNING SPECIALITY HOSPITALS/NURSING HOMES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , T HE AO OBSERVED THAT T HE U NSECURED LOANS OF RS . 6 , 16 , 09 , 875/ - WERE OUTS T ANDING AS ON 31 . 03.2007 IN THE NAMES OF DIRECTORS SHOWING INCREASE OF RS . 56,25 , 000/ - OVER THE PRECEDING YEAR . THE AMOUN T OF RS.5 , 56 , 09 , 875/ - WAS OUTSTANDING IN THE NAME OF DR . DHARMINDER KUMAR NAGAR AND AN AMOUNT OF RS.60,00 , 000 / - WAS OUTSTANDING I N THE NAME OF SHRI RAJENDER SINGH. FROM THE STATEMENT OF 2 BANK ACCOUNT FILED IN THE CASE OF DR . DHARMINDER KUMAR NAGAR , THE AO NOTICED THAT THERE WERE SEVERAL LOAN ENTRIES IN HIS BANK ACCOUNT BEF ORE EXTENDING LOAN TO THE ASSESSEE COMPANY AND THE FUNDS WERE ACTUALLY ROUTED THROUGH VARIOUS GROUP COMPANIES AND THE RELATIVES OF THE DIRECTORS. BASED ON THESE OBSERVATIONS , T HE AO , VIDE ORDER SHEET ENTRY DATED 30 . 12 . 2009 , ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE INCREASE I N UNSECURED LOANS SHOULD NOT BE TREAT E D AS BOGUS AND ADDITION MADE ON THAT G R OUND . SINCE TH E ASSESSEE WAS NOT ABL E TO FURNISH ANY R E PLY , THE AO HAS M A D E ADDI TI O N O F RS . 56 , 25 , 000 / - AS BO GU S UNSE C UR E D LOANS . IN T HE B A LAN CE SHEE T , T HE ASS E SSE E HAD SHO WN O U T STANDING PA TIENTS A D VANC ES OF RS . 1 7 , 22 , 979 / - AS LI ABILI T Y , W HICH WAS INCLUDED UND ER T H E HEAD SUNDR Y CREDITORS. T HE AO ASKED FOR TH E D ET AILS OF NAM E S O F PATI EN T S AND CERTAIN OTHER DETAILS I N COMPLIANCE TO WHICH THE ASSESSEE EX PRESSED ITS INABILIT Y CONTENDING THAT SUCH TYPE OF DETAILS WERE NO T AVAILABLE . CONSEQUENTLY , THE AO HAS MADE ADDITION OF RS.17 , 22 , 979/ - ON ACCOUNT O F UNE X P L A I NED ADVANCES R ECEIVED FROM PATIENTS . IN RESPE CT OF SUNDR Y CRED I TORS OUTSTANDING AT RS . 1 , 88 , 14 , 222 / - , THE AO HAS ALSO MADE ADD I T I ON IN ABSENCE OF CONF I RMATIONS . THE IPD BILLING REGIS T ER C HECKED B Y T H E AO REVEALED T HAT CERTAIN B I LLS WERE NOT REFLECTED I N T HE BILLING REGISTE R LEADING TO INFERENCE T HAT THE RECEIPTS WERE NOT INCLUDED IN THE BOOKS OF ACCOUNT. TO PROTECT THE INTEREST OF REVENUE , AN ADHOC DISALLOWANCE OF RS.1 , 00 , 000/ - HAS BEEN MADE . WHILE EXAMINING THE BOOKS OF ACCOUNTS IN CD FORM , THE AO NOTICED THAT AS PER JOURNAL VOUCHER NO . 828 DATED 31 . 03.2007, THE IPD RECEIPTS OF RS.78 , 87,060/ - WER E DEBITED IN THE RECEIPT ACCOUNT INSTEAD OF BEING CREDITED . THE AO HAS , T HEREFORE , MADE ADDITION OF RS.1 , 55 , 74 , 120/ - BEING TWICE T HE AMOUN T OF RS.78 , 87 , 060 / - . 3. WE HAVE HEARD SH.VIKRAM SAHAY, LD.SR.D.R. ON BEHALF OF THE REVENUE AND SHRI MP RASTOGI, LD.COUNSEL FOR THE ASSESSEE. 4 . ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ON PERUSAL OF ORDERS OF LOWER AUTHORITIES, MATERIAL PLACED ON RECORD, WE HOLD AS FOLLOWS. 5. GROUND NO.1 READS AS FOLLOWS. 1. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.56,25,000/ - MADE BY THE AO U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 5.1 . THE FACTS RELATING TO THIS GROUND ARE AS UNDER. 5.2. THE ASSESSEE IS MANAGING AND RUNNING A HOSPITAL IN GURGAON. FOR THE YEAR UNDER APPEAL, AFTER THE CLAIM OF DEPRECIATION ETC., THE INCOME - TAX RETURN WAS FILED DECLARING INCOME AT NIL. DURING THE COURSE OF ASSESSMENT 3 PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT UNSECURED LOANS OF RS .6,16,09,875/ - WERE OUTSTANDING AS ON 31ST MARCH 2007 , IN THE NAME OF DIRECTORS , SHOWING INCREASE OF RS.56,25,000/ - , OVER THE PRECEDING YEAR. THE AMOUNT OF RS.5,56,09,875/ - WAS OUTSTANDING IN THE NAME OF MR.DHARMENDRA KUMAR NAGAR AND AN AMOUNT OF RS.60, 00,000/ - WAS OUTSTANDING IN' THE NAME OF MR. RAJENDRA SINGH. THE ASSESSEE HAD FILED A STATEMENT OF ACCOUNT , OF BOTH THE DIRECTORS . C ITIBANK STATEMENTS WHERE FROM THE AMOUNT WAS ADVANCED, COPY OF THEIR PERSONAL BALANCE SHEET AND COPY OF INCOME - TAX RETURN , THE PA N DETAILS OF DIRECTORS WERE ALSO FURNISHED. FROM THE BANK STATEMENT OF ONE DIRECTOR MR. DHARMENDRA KUMAR NAGAR, THE ASSESSING OFFICER NOTICED THAT THERE WERE SEVERAL LOAN ENTRIES IN HIS BANK ACCOUNT , BEFORE EXTENDING LOAN TO THE ASSESSEE - COMPANY AND THE FUNDS WERE ACTUALLY ROUTED THROUGH , VARIOUS GROUP COMPANIES AND THE RELATIVES OF THE DIRECTOR. BASED ON THESE OBSERVATIONS, THE ASSESSING OFFICER VIDE ORDER SHEET ENTRY DATED 30TH DECEMBER 2009 ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY , THE INCR EASE IN UNSECURED LOAN AMOUNT SHOULD NOT BE TREATED AS BOGUS . HE MADE AN ADDITION OF RS.56,25,000/ - ON THAT GROUND. BEFORE THE CIT(APPEALS), THE ASSESSEE EXPLAINED THE DETAILS OF UNSECURED LOANS AND ITS INCREASE AS UNDER: NAME BALANCE AS ON 31 ST MARCH, 2006 BALANCE AS ON 31 ST MARCH, 2007 DR.DHARMENDRA KUMAR NAGAR RS.5,59,84,875.30 RS.5,56,09,875.30 MR.RAJENDRA SINGH NIL RS.60,00,000.00 RS.5,59,84,875.30 RS.6,16,09,875.30 INCREASE = RS.56,25,000.00 T HE ASSESSEE EXPLAINED THAT BOTH THE DIRECTORS ARE INCOME - TAX ASSESSES SINCE LAST SO MANY YEARS . M R. DHARMENDRA KUMAR NAGAR HAS PAN NO. ADGPN5145E AND MR. RAJENDRA SINGH HAS PA N NO. AAVPN4992R. BOTH THE DIRECTORS ARE DULY ASSESSED TO TAX WITH ASSESSING OFFICER, BULANDSHAHR. THE ASSESSEE STATED THAT THE STATEMENT OF ACCOUNT OF DIRECTORS , IN THE BOOKS OF THE ASSESSEE , ALONG WITH THE COPIES OF THEIR RESPECTIVE BANK STATEMENT W ITH CITY BANK, GURGAON WHERE FROM , THE AMOUNT WAS TRANSFERRED TO THE ASSESSEE'S ACCOUNT , WERE FILED BEFORE THE ASSESSING OFFICER. ON THE EVENING OF 30 TH DECEMBER 2009, I.E. THE DAY BEFORE THE COMPLETION OF ASSESSMENT, THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO JUSTIFY THE DEPOSITS MADE BY THE ASSESSEE - COMPANY AND IN RESPONSE THERETO THE ASSESSEE HAD FILED COPIES OF THEIR RESPECTIVE ITRS AND THE PERSONAL BALANCE SHEET OF BOTH THE DIRECTORS AS WERE IMMEDIATELY AVAILABLE WITH THE ASSESSEE TO PROVE T HEIR CREDITWORTHINESS AND THE IDENTITY THEREOF. IT WAS FURTHER EXPLAINED THAT , IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS JUSTIFIED THE ADDITIONS BASED ON CERTAIN ADDITIONS IN THE BANK ACCOUNT OF MR. DHARMENDRA KUMAR NAGAR AND STATED THAT CERTAIN AMOUNTS HAVE BEEN TRANSFERRED FROM THE ACCOUNT OF DR. GURDEEP KAUR NAGAR, WIFE OF MR. DHARMENDRA KUMAR NAGAR, WHO IS A NON - RESIDENT. IT WAS EXPLAINED BEFORE THE CIT (APPEALS) THAT THE ENTRIES MADE IN THE ACCOUNT OF MR. DHARMENDRA KUMAR NAGAR, AS POINTED OUT AND MENTIONED IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER, ARE NOT IN FACT RELATED TO UNSECURED LOANS BUT ARE RELATED TO THE SHARE APPLICATION MONEY PROVIDED TO THE ASSESSEE - COMPANY , FOR WHICH THERE IS NO DISPUTE AT ALL , BECAUSE THE SAME HAS BEE N ACCEPTED BY THE ASSESSING OFFICER WHILE SCRUTINIZING , THE SUBSCRIPTION OF SHARE CAPITALS. THE INCREASE IN UNSECURED LOAN WAS BASICALLY ON ACCOUNT OF THE DEPOSITS MADE BY MR.RAJENDRA SINGH. THE ASSESSEE EXPLAINED BEFORE THE CIT (APPEALS) THAT ALL THE DEP OSITS IN THE ACCOUNT OF MR. RAJENDRA SINGH HAVE BEEN MADE OUT OF THE AMOUNT TRANSFERRED FROM HIS SAVING BANK ACCOUNT MAINTAINED WITH CITIBANK. HOWEVER, IN 5 ORDER TO CLARIFY THE AVAILABILITY OF FUNDS WITH MR.RAJENDRA SINGH, THE ASSESSEE FURTHER EXPLAINED THE SOURCE OF CREDITS AS MADE IN THE ACCOUNT OF MR. RAJENDRA SINGH WITH CITIBANK AS UNDER: 16 MAY, 2006 : - THE AMOUNT OF RS.8 LAKHS IN THE BANK ACCOUNT OF MR. RAJENDRA SINGH HAS BEEN GOT TRANSFERRED FROM THE HUF ACCOUNT OF M/S VED RAM & SONS (HUF), OF WHICH MR.RAJENDRA SINGH IS THE KARTA. M/S VED RAM & SONS HAD TRANSFERRED THIS AMOUNT FROM THE ACCOUNT MAINTAINED IN THE FIRM M/S VED RAM & SONS (REGISTERED FIRM) OF WHICH IT WAS A PARTNER. AFTER CREDITING THE SAID FUND IN THE ACCOUNT OF MR. RAJENDRA SINGH, THE CHEQUE, AS DEPOSITED ON 16TH MAY 2006 WITH THE APPELLANT - COMPANY, HAS BEEN GOT CLEARED FROM THE ACCOUNT OF MR. RAJENDRA SINGH ON 18TH MAY 2006. THE STATEMENT OF ACCOUNT OF VED RAM & SONS (HUF) IN THE BOOKS OF PARTNERSHIP FIRM M/S VED RAM & SONS ARE ENCLOSE D HEREWITH. VED RAM & SONS (HUF) IS ASSESSED TO TAX BY PA NO. AADHV7767C AND VED RAM & SONS (REGD FIRM) IS ASSESSED TO TAX VIDE PA NO. AABFV9507G AND IS ASSESSED TO TAX BY ADDITIONAL COMMISSIONER, GHAZIABAD. 02 ND JUNE, 2006 : THE AMOUNT OF RS.5,00,OOO/ - WAS TRANSFERRED FROM THE HUF OF M/S VED RAM & SONS OUT OF WITHDRAWAL FROM THE FIRM M/S VED RAM & SONS (REGISTERED FIRM) UNDER DEBIT TO THE HUF ACCOUNT ON 1ST JUNE 2006. THIS CHEQUE WAS CREDITED TO THE ACCOUNT OF MR. RAJENDRA SINGH IN CITIBANK ON 3RD JU NE 2006 WHEREVER THE CHEQUE ISSUED BY MR. RAJENDRA SINGH TO THE APPELLANT - COMPANY WAS GOT CLEARED ON 5TH JUNE 2006. 31 ST MARCH, 2007 : THE AMOUNT OF RS.60,00,000/ - WAS DEPOSITED BY MR. RAJENDRA SINGH WITH THE APPELLANT - COMPANY VIDE CHEQUE NO. 011477. THI S CHEQUE WAS CLEARED FROM THE AMOUNT OF MR. RAJENDRA SINGH MAINTAINED WITH CITIBANK ON 16TH APRIL 2007 .. PRIOR TO THE CLEARANCE OF THIS CHEQUE FROM THE ACCOUNT OF MR. RAJENDRA SINGH, THERE IS A DEPOSIT OF RS.60 LAKHS IN THE ACCOUNT OF MR. RAJENDRA SINGH I N CITIBANK ON 13TH APRIL 2007. THE CREDIT IN THE CITIBANK ACCOUNT OF MR. RAJENDRA SINGH ON 13TH APRIL 2007 WAS MADE OUT OF THE AMOUNT TRANSFERRED FROM THE ACCOUNT OF MR. GAJENDRA KUMAR, REAL BROTHER OF MR. RAJENDRA SINGH. TO PROVE THIS FACT, A PHOTOCOPY OF THE ACCOUNT OF MR. GAJENDRA KUMAR IN CITIBANK IS ALSO ENCLOSED, WHICH IS SELF - EXPLANATORY. THE CONFIRMATION OF MR. GAJENDRA KUMAR IS ALSO ENCLOSED. 6 MR. GAJENDRA KUMAR IS ASSESSED TO TAX VIDE PA N NO. ABBPKO 131E AT GHAZIABAD. THE ABOVE SUBMISSION OF T HE ASSESSEE WAS FORWARDED TO THE ASSESSING OFFICER BY THE CIT (APPEALS) FOR FURTHER CLARIFICATION . I T WAS CLAIMED BY THE ASSESSEE THAT IN THE REMAND PROCEEDINGS , THE ASSESSING OFFICER HAD VERIFIED THESE AMOUNTS, BUT IN THE REMAND, THE CIT (APPEALS) NOTIC ED THAT INSTEAD OF REPORTING THE OUTCOME OF THE ENQUIRIES MADE IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER SIMPLY TRIED TO JUSTIFY THE ADDITIONS , AS MADE BY THE ASSESSING OFFICER , IN HIS ORDER, TO WHICH THE ASSESSEE HIGHLY OBJECTED. HOWEVER, TH E CIT (APPEALS), ON VERIFICATION OF THE EVIDENCES AS AVAILABLE ON RECORD AND FILED BEFORE HIM, ACCEPTED THE EXPLANATION OF THE ASSESSEE, THE REASONS WHEREOF HAVE BEEN EXPLAINED IN DETAIL BY THE CIT (APPEALS) IN HIS ORDER IN PARAGRAPHS 6 TO 6.2 . HE DELETE D THE ADDITIONS. IN HIS ORDER, THE CIT (APPEALS) NOTICED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER ON THE BASIS OF TRANSACTIONS IN THE BANK ACCOUNT OF MR. DHARMENDRA KUMAR NAGAR HAS NO RELEVANCE AT ALL BECAUSE THE SAME RELATE TO THE SHARE CAPITAL WH ICH HAS ALREADY BEEN ACCEPTED AND THE ACTUAL INCREASE IN UNSECURED LOANS IS ATTRIBUTED TO THE AMOUNT ADVANCED BY MR. RAJENDRA SINGH. HENCE, THE GENUINENESS OF UNSECURED LOANS IS REQUIRED TO BE EXAMINED ONLY IN THE CASE OF MR. RAJENDRA SINGH WHO ADVANCED LO AN OF RS.60 LAKHS. THE CIT (APPEALS) NOTICED THAT MR. RAJENDRA SINGH IS AN OLD INCOME - TAX ASSESSEE AND THAT THE ENTIRE AMOUNT HAS BEEN ADVANCED THROUGH BANKING CHANNELS AND FOR THAT PURPOSE MR. RAJENDRA SINGH HAD NOT ONLY FILED A PERSONAL BALANCE SHEET B UT HAD ALSO FILED COPY OF THE SAVING BANK ACCOUNT MAINTAINED WITH CITY BANK AND HAD FURTHER EXPLAINED THE SOURCE OF THE FUNDS SO ADVANCED. THEREFORE, THE IDENTITY, SOURCE , CAPACITY AND GENUINENESS OF THE TRANSACTIONS AS REQUIRED FOR SECTION 68 OF THE ACT HAS BEEN PRIMA FACIE ESTABLISHED. THE LEARNED DR COULD NOT CONTROVERT THE FINDING OF CIT (APPEALS). HE SIMPLY RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 5.3. UNDER THE ABOVE CIRCUMSTANCES, WE UPHOLD THESE FACTUAL FINDINGS OF THE LD.CIT(A) AND DISMISS THIS GROUND OF REVENUE. 7 6. GROUND NO.2 READS AS UNDER. 2. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.17,22,979/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED ADVANCES RECEIVED FROM PATIENTS. 6.1. THE FACTS RELATING TO GROUND NO.2 OF THE REVENUE ARE AS UNDER. 6.2. THE ASSESSEE RUNS A HOSPITAL AND HAS IPD AND OPD DIVISIONS. IN IPD, AS AND WHEN A PATIENT IS ADMITTED IN THE HOSPITAL FOR TREATMENT, THE ATTENDANTS O F THE PATIENT ARE ASKED TO DEPOSIT SOME AMOUNT TO COVER UP THE INTENDED COST OF TREATMENT. THE AMOUNT DEPOSITED BY THE PATIENT FROM TIME TO TIME IS CREDITED IN THE PATIENT'S ADVANCE ACCOUNT. AT THE TIME OF DISCHARGE OF PATIENT, THE FINAL BILL IS PREPARED A ND THE ADVANCE SO RECEIVED FROM THE PATIENT FROM TIME TO TIME IS ADJUSTED AND IS OFFERED FOR TAXATION IN THE YEAR IN WHICH THE FINAL BILL IS CRYSTALISED. THIS SYSTEM OF ACCOUNTING IS BEING FOLLOWED BY THE APPELLANT SINCE ITS INCEPTION. THE PATIENT ADVANCE AS ON 31ST MARCH 2007 REPRESENTS THE AMOUNT RECEIVED FROM THE PATIENTS FROM TIME TO TIME , WHO ARE YET TO BE DISCHARGED. THE PATIENT ADVANCE WHICH WAS OUTSTANDING ON 31ST MARCH , 2007 HAS BEEN ADJUSTED AGAINST THE FINAL BILLS OF PATIENTS RAISED AT THE TIME O F DISCHARGE, WHICH HAS BEEN MADE IN SUBSEQUENT YEARS AND ALMOST ALL THE PATIENT ADVANCE HAS BEEN ADJUSTED AGAINST THE FINAL BILLS RAISED AT THE TIME OF DISCHARGE AND OFFERED FOR TAXATION IN SUBSEQUENT YEAR. BEFORE THE CIT (APPEALS), THE ASSESSEE HAD FILED NAME - WISE DETAILS OF THE PATIENTS' ADVANCE OUTSTANDING AS ON 31ST MARCH 2007 AND HAD ALSO FILED COPIES OF BILLS RAISED IN SUBSEQUENT YEARS. ALL SUCH SUBMISSIONS AND DETAILS WERE FORWARDED BY THE CIT(APPEALS) TO THE ASSESSING OFFICER FOR VERIFICATION AND CO MMENTS. IT WAS NOTICED BY THE CIT (APPEALS), THAT IN THE REMAND PROCEEDINGS, THE A.O. HAD EXAMINED THE DETAILS AND MADE VERIFICATIONS BUT HE HAS NOT MADE ANY COMMENTS ABOUT THE OUTCOME OF ENQUIRY SO MADE. IN THE REMAND ORDER, THE A.O. SIMPLY REITERATED THE STAND AS TAKEN BY HIM IN ASSESSMENT ORDER. THE LD. CIT (APPEALS) , AFTER EXAMINING AND VERIFYING THE DETAILS , AGREED WITH THE ASSESSEE'S CONTENTION. THE CIT (APPEALS) OBSERVED THAT IT IS COMMON PRACTICE THAT , WHEN A PATIENT IS ADMITTED IN THE HOSPITA L 8 FOR THE TREATMENT IN IPD, THE ATTENDANTS OF THE PATIENT ARE ASKED TO DEPOSIT SOME AMOUNT TO COVER UP THE INTENDED COST. OF TREATMENT. THE AMOUNT DEPOSITED BY THE PATIENT FROM TIME TO TIME IS CREDITED IN THE PATIENT'S ADVANCE ACCOUNT. AT THE TIME OF DISC HARGE OF PATIENT, THE FINAL BILL IS PREPARED AND THE ADVANCE SO RECEIVED FROM THE PATIENT IS ADJUSTED AGAINST THE FINAL BILL AND THIS SYSTEM OF ACCOUNTING IS BEING FOLLOWED NOT ONLY BY THE ASSESSEE BUT ALL THE HOSPITALS. THEREFORE, IT CANNOT BE SAID THAT T HE DETAILS OF RECEIPTS ISSUED BY THE ASSESSEE WERE NOT REFLECTED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT . HE DELETED THE ADDITION OF RS.17,22,989/ - . BY MAKING THE ADDITION OF RS.17,22,989/ - IN THE YEAR UNDER CONSIDERATION, NO FRUITFUL PURPOSE SHALL SERV E TO THE REVENUE BECAUSE IF THE PATIENT'S ADVANCE IS SUSTAINED DURING THE YEAR UNDER CONSIDERATION, THEN THE CONSEQUENTIAL EFFECT HAS TO BE GIVEN IN SUBSEQUENT YEARS BY WAY OF REDUCING THE SIMILAR AMOUNT OUT OF INCOME OFFERED IN SUBSEQUENT YEAR . O THERWISE IT WILL AMOUNT TO DOUBLE ASSESSMENT. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE PATIENTS' ADVANCE HAS NOT BEEN OFFERED FOR TAXATION AT ALL IN SUBSEQUENT YEAR. THE LEARNED DR COULD NOT CONTROVERT THE FINDING OF CIT (APPEALS). HE SIMPLY RELIED UP ON THE ORDER OF ASSESSING OFFICER. 6.3. IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE FACTUAL FINDINGS OF THE LD.CIT(A), AND DISMISS GROUND NO.2 OF THE REVENUE. 7. GROUND NO.3 READS AS UNDER. 3. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 1,88,14,222/ - MADE BY THE AO AS THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF CREDITORS. 7.1. THE FACTS PERTAINING TO THE ABOVE GROUND ARE AS UNDER. 7.2. THE DE TAILS OF SUNDRY CREDITORS AMOUNTING TO RS.1,88,14,222/ - OUTSTANDING AS ON 31ST MARCH 2007 AS FILED BEFORE THE ASSESSING OFFICER AND CIT (APPEALS) ARE AS UNDER: (I) SUNDRY CREDITORS FOR EQUIPMENT RS.29,01,028/ - (II) SUNDRY CREDITORS FOR PROJECTS - R S.74,15,739/ - (III) SUNDRY CREDITORS FOR EXPENSES - RS.84,97,455/ - ---------------------------- RS. 1,88,14,222/ - =============== TOTAL = RS.1,88,14,222/ - 9 AS FAR AS ITEM NO. (I) IS CONCERNED, IT IS STATED THAT , THE ASSESSEE HAD NOT CLAIMED ANY REVENUE EXPENDITURE AGAINST THE PURCHASES SO MADE FOR EQUIPMENT AGAINST WHICH SUCH SUNDRY CREDITORS ARE OUTSTANDING, BUT IT HAS BEEN CAPITALIZED UNDER THE FIXED ASSETS AND THE ASSESSING OFFICER, AFTER VERIFICATION THEREO F, HAS ALLOWED THE DEPRECIATION THEREON. ITEM NO. (II) REPRESENTS THE SUNDRY CREDITORS FOR PROJECTS SHOWN AT RS.74, 15,739/ - AND THE SAME HAS ALSO NOT BEEN CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE AGAINST WHICH SUCH SUNDRY CREDITORS ARE OUTSTANDIN G. IN FACT, THEY RELATE TO THE EXPANSION OF THE PROJECT AND THE PURCHASES SO MADE AGAINST THEM HAVE BEEN CAPITALIZED AND IN SUBSEQUENT YEARS , THE ASSESSING OFFICER AFTER VERIFICATION , HAS ALLOWED THE DEPRECIATION ON THE COST OF COMPLETED PROJECTS. ITEM NO. (III) REPRESENTS THE SUNDRY CREDITORS FOR EXPENSES CLAIMED AT RS.84,97,455/ - AND RELATES TO THE EXPENSES INCURRED BY THE ASSESSEE FROM TIME TO TIME AND CLAIMED AS REVENUE EXPENDITURE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R HAD REQUIRED TO FILE THE CONFIRMATION OF SUCH SUNDRY CREDITORS HAVING BALANCE OF MORE THAN RS. ONE LAKH . T HE ASSESSING OFFICER THEREAFTER REQUIRED THE ASSESSEE TO PRODUCE THE STATEMENT OF ACCOUNT OF SUCH PERSONS IN SUBSEQUENT YEARS AND HAS ALSO REQUIRED THE ASSESSEE TO PRODUCE THE BANK STATEMENTS OF SUBSEQUENT YEARS , EVIDENCING THE PAYMENTS TO SUCH SUNDRY CREDITORS HAVE ACTUALLY BEEN EFFECTED. TO PROVE THIS FACT, THE ASSESSEE HAD FILED , NOT ONLY THE LEDGER ACCOUNT OF SUBSEQUENT YEARS OF SUCH PARTIES , BUT ALSO PRODUCED THE BANK STATEMENT EVIDENCING THAT THE PAYMENTS TO SUCH SUNDRY CREDITORS HAVE ALSO BEEN MADE. IN SPITE OF SUCH EVIDENCES, THE ASSESSING OFFICER HAD MADE THE ADDITIONS OF THE CONSOLIDATE FIGURE OF RS. 1,88,14,222/ - MERELY ON THE GROUND THAT , IN THE ABSENCE OF CONFIRMATION, THE CREDITORS CANNOT BE ASCERTAINED TO BE GENUINE. BEFORE THE CIT (APPEALS), THE ASSESSEE AGAIN REITERATED ITS STAND AS WAS MADE BEFORE THE ASSESSING OFFICER. THE CIT (APPEALS) FORWARDED THE SUBMISSIONS OF THE ASSES SEE TO THE ASSESSING OFFICER FOR VERIFICATION AND COMMENTS. AS PER THE ASSESSEE, IN REMAND PROCEEDINGS , THE ASSESSING OFFICER NOT ONLY VERIFIED THE GENUINENESS OF PAYMENTS FROM THE ACCOUNTS AND BANK STATEMENTS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATI ON AND SUBSEQUENT YEARS BUT EVEN THE CONFIRMATION FROM THE PARTIES , AS REQUIRED , WERE ALSO FILED BEFORE THE ASSESSING OFFICER. THE COPIES OF THE ACCOUNTS OF THE 10 PARTIES FOR THE YEAR UNDER CONSIDERATION AND SUBSEQUENT YEARS ALONG WITH THE COPIES OF THE BA NK STATEMENTS OF BOTH THE YEARS AND THE CONFIRMATIONS AS FILED BEFORE THE ASSESSING OFFICER IN REMAND PROCEEDINGS HAVE ALSO BEEN FILED BEFORE THE CIT (APPEALS). THE ASSESSING OFFICER, IN SPITE OF SUCH EXERCISES OF VERIFICATION, HAS NOT MADE ANY ADVERSE C OMMENT ON ANY OF THE ACCOUNT BUT CONTRARY TO THAT HAS SIMPLY TRIED TO REITERATE THE STAND OF THE THEN ASSESSING OFFICER MADE IN ASSESSMENT ORDER. THE CIT (APPEALS), AFTER CONSIDERING THE EVIDENCE, HELD THAT AS FAR AS THE SUNDRY CREDITORS FOR EQUIPMENT AM OUNTING TO RS.29,01,028/ - AND SUNDRY CREDITORS FOR PROJECTS OUTSTANDING AT RS.74,15,739/ - , THE ASSESSEE HAD NOT CLAIMED ANY REVENUE EXPENDITURE AGAINST THE PURCHASES SO MADE FOR EQUIPMENTS AND CAPITAL EXPENDITURE FOR PROJECTS. THEREFORE, IN RESPECT OF SUND RY CREDITORS OUTSTANDING AND CORRESPONDING TO PURCHASE OF ASSETS, NEITHER ANY ADDITION CAN BE MADE U/S 37 OR 41(1) OF THE ACT AND AT THE BEST THE ISSUE COULD BE LOOKED INTO FROM THE ANGLE OF MISAPPROPRIATION OF FUNDS OF COMPANY IN THE WAKE OF BOGUS CAPITAL EXPENDITURE, BUT THAT IS NOT THE CASE OF THE ASSESSING OFFICER SO MUCH SO THE DEPRECIATION HAS BEEN ALLOWED BY THE ASSESSING OFFICER ON ACQUISITION OF ASSETS. THE CIT (APPEALS), AFTER RELYING UPON THE JUDGMENT OF THE DELHI TRIBUNAL IN THE CASE OF YFC PR OJECTS PVT. LTD. VS. DCIT IN 134 TTJ 167 HELD THAT MERELY DUE TO NON - FILING OF THE CONFIRMATION OF THE SUPPLIER, IT CANNOT BE HELD THAT THE CREDIT BALANCES IN THE SHAPE OF SUNDRY CREDITORS APPEARING IN THE BOOKS OF ACCOUNT ARE UNACCOUNTED MONEY OF THE ASSE SSEE WHEN' THERE IS AN EVIDENCE THAT THE CHEQUES ISSUED BY THE ASSESSEE HAVE BEEN CLEARED FROM THE BANK IN SUBSEQUENT YEARS AND THEN DELETED THE WHOLE AMOUNT OF RS.L,88, 14,222/ - . 7.3. HE RELIED ON THE JUDGEMENT OF THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. PANCHANAN DAS JAIN IN 205 CTR 444 AND HELD THAT , IF THE PURCHASES ARE MADE ON CREDITS, THEN NO ADDITION CAN BE MADE. 7.4. THE ASSESSING OFFICER, THOUGH HAD NOT MENTIONED UNDER WHICH PROVISION THE ADDITIONS ARE BEING MADE . IT APPEARS THAT THE SAID ADDITIONS HAVE BEEN MADE U/S 68 OF THE ACT BECAUSE IT IS THE ONLY SECTION UNDER WHICH ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT CAN BE ADDED BACK. IN THE CASE OF JATIA INVESTMENT CO. IN 206 ITR 718 AT PAGE 725, IT IS HELD THAT IN 11 CASE NO CASH HAS BEEN RECEIVED BY THE ASSESSEE, THEN NO ADDITION CAN BE MADE U/S 68 OF THE ACT. SIMILARLY, THE PUNE BENCH OF THE TRIBUNAL ALSO HELD SO IN THE CASE OF KANTI LAL & BROS. VS. ACIT IN 52 ITD 412. 7.5. IN THE INSTANT CASE, THE ASSESSEE HAD NOT RECEIVED ANY AMOUNT IN THE FORM OF CASH FROM THE SUNDRY CREDITORS. IN FACT, THEY REPRESENTED THE OUTSTANDING BALANCE AMOUNT AGAINST THE PURCHASES WHICH HAS BEEN DULY VERIFIED BY THE ASSESSING OFFICER AND FOUND GENUINE. 7.6. THE LEARNED DR COULD NOT POINT OUT ANY FAULT OF FACTUAL INACCURACY IN THE ORDER OF CIT(APPEALS) NOR HAS BROUGHT ANY CONTRARY ARGUMENTS EVIDENCE AGAINST THE OBSERVATION OF CIT (APPEALS). 7. 7 . IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE FACTUAL FINDINGS OF THE LD.CIT(A), AND DISMISS GROUND NO.3 OF THE REVENUE. 8. GROUND NO.4 IS GENERAL IN NATURE. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER , 2015. SD/ - SD/ - [ I.C.SUDHIR ] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DT. THE 16 TH SEPTEMBER, 2015 MANGA 12 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES