M/s Tovinakeri Jayaraju Brahmaraju , Bangalore V. The Income Tax Officer Ward-3(3)(5), Bangalore

ITA 2299/BANG/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0696 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 01-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SUKU MAR BENGALURU
• Section: 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN , JUDICIAL MEMBER ITA NO S . 2298 TO 2300/BANG/2018 ASSESSMENT YEAR S : 2008 - 09 TO 2010 - 11 TOVINAKERI JAYARAJU BRAHMARAJU, NO.80, MANVI REFLEX HOUSING SOCIETY, OPP. CAF COFFEE DAY, DR. VISHNUVARDHAN ROAD, MYLASANDRA, BANGALORE 560 059. PAN: AKMPB 6523G VS. THE INCOME TAX OFFICER, WARD 3(3)(5), BANGALORE. APP ELLANT RESPONDENT APP ELLANT BY : SHRI GURUSWAMY, H., ADVOCATE RESPONDENT BY : SH RI N. SUKUMAR, ADDL .CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 2 8 .0 8 .2018 DATE OF PRONOUNCEMENT : 03.10 . 2018 O R D E R THESE ARE APPEALS BY THE ASSESSEE AGAINST THE TH REE ORDERS, ALL DATED 30.5.2018 OF THE CITA III BANGALORE RELATING TO ASSESSMENT YEARS 2008-09, 2009-10 & 2010-11. THE DISPUTED ADDITIONS WHICH ARE CHALLENGED IN THESE APPEALS ARE IDENTICAL IN ALL THE THREE ASS ESSMENT YEARS AND ARISE OUT OF THE SAME FACTS AND CIRCUMSTANCES. I DEEM IT FIT TO PASS A CONSOLIDATED ORDER. 2. THE ASSESSEE IS AN INDIVIDUAL. HE IS A DOCTOR B Y PROFESSION. HE WORKED AS AN EMPLOYEE OF RED CRESCENT HOSPITAL, FER OKE, KOZHIKODE, STATE OF KERALA, WHICH IS MANAGED BY AL IRSHAD CHAR ITABLE SOCIETY. THE ASSESSEE DERIVES INCOME UNDER THE HEAD SALARY. THE RE IS NO DISPUTE THAT ITA NOS.2298 TO 2300/BANG/2018 PAGE 2 OF 6 INCOME UNDER THE HEAD SALARY RECEIVED FROM EMPLOYER WAS OFFERED TO TAX BY THE ASSESSEE. IT APPEARS THAT THERE WAS A SURVEY C ARRIED OUT BY THE REVENUE U/S. 133A OF THE INCOME-TAX ACT, 1961 [THE ACT] ON 28.10.2013 IN THE CASE OF RED CRESCENT HOSPITAL. IT APPEARS THAT IN THE COURSE OF SUCH SURVEY, IT WAS STATED BY RED CRESCENT HOSPITAL THAT THE ASSESSEE OVER AND ABOVE THE INCOME IN THE FORM OF SALARY WAS ALSO IN RECEIPT OF PROFESSIONAL INCOME FOR ALL THE THREE ASSESSMENT YEARS. THE ASSE SSEE HAD NOT DECLARED PROFESSIONAL INCOME IN THE RETURNS OF INCOME FILED FOR ALL THE THREE ASSESSMENT YEARS AND THEREFORE PROCEEDINGS U/S. 148 OF THE ACT WAS INITIATED BY THE AO. IT APPEARS THAT IN SUCH ASSES SMENT, THE PROFESSIONAL RECEIPTS AS PER STATEMENT GIVEN AT THE TIME OF SURV EY IN THE CASE OF RED CRESCENT HOSPITAL AS RECEIVED BY THE ASSESSEE FROM THEM WAS BROUGHT TO TAX. 3. BEFORE THE CIT(APPEALS) THE ASSESSEE SUBMITTED T HAT HE WAS ENTITLED TO CLAIM EXPENSES INCURRED IN EARNING THE PROFESSIONAL INCOME. THE ASSESSEE QUANTIFIED THE EXPENSES FOR 3 ASSESSMENT Y EARS AS FOLLOWS:- ITA NOS.2298 TO 2300/BANG/2018 PAGE 3 OF 6 4. THE PLEA OF THE ASSESSEE WAS NOT ACCEPTED BY THE CIT(APPEALS) FOR THE REASON THAT THE ASSESSEE DID NOT FILE ANY DOCUM ENTARY EVIDENCE EITHER BEFORE THE AO OR BEFORE HIM THAT EXPENSES WERE INCU RRED FOR THE PURPOSE OF EARNING PROFESSIONAL INCOME. THE CIT(APPEALS) ALSO OBSERVED THAT THE APPELLANT WAS USING FACILITIES PROVIDED BY THE HOSP ITAL AND APART FROM SERVING THE HOSPITAL AS ITS EMPLOYEE, WAS ALSO EARN ING PROFESSIONAL INCOME AND THEREFORE THERE COULD NOT HAVE BEEN THE POSSIBI LITY OF ANY EXPENSES HAVING BEEN INCURRED BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF CITA, THE ASSESSEE HAS PREFERRED THE PRESENT APPEALS BEFORE T HE TRIBUNAL. 5. THE ASSESSEE HAS FILED APPLICATION UNDER RULE 11 OF THE ITAT RULES, 1963 SEEKING TO RAISE THE FOLLOWING ADDITIONAL GROU NDS:- (A) THE LD. AUTHORITIES BELOW HAVE ERRED IN NOT PR OVIDING THE RELEVANT MATERIALS SAID TO HAVE BEEN GATHERED IN TH E COURSE OF THE SURVEY CONDUCTED U/S. 133A OF THE ACT BY ACIT CIRCL E - 2(1), KOZHIKODE IN THE CASE OF M/S. RED CRESCENT HOSPITAL , KOZHIKODE, RELATING TO THE PAYMENT OF PROFESSIONAL CHARGES. (B) THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE AP PELLANT HAD NEVER SOUGHT AN OPPORTUNITY OF CROSS-EXAMINATION BE FORE THE AO ON THE GROUND THAT THE DETAILS WERE PROVIDED TO THE APPELLANT REGARDING HIS UNDISCLOSED PROFESSIONAL RECEIPT FROM THE TRUST AND THE SAME WAS ACCEPTED AND CLAIMED EXPENDITURE IN RE LATION TO SUCH UNDISCLOSED PROFESSIONAL RECEIPTS.' 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE ISSUE IS A LEGAL ISSUE, THE ADDITIONAL GROUND SHOULD BE ADMITT ED FOR ADJUDICATION. I AM OF THE VIEW THAT THE ADDITIONAL GROUND BEING PURELY A LEGAL GROUND, WHICH CAN BE DECIDED ON THE BASIS OF FACTS AVAILABLE ON R ECORD SHOULD BE ADMITTED, KEEPING IN MIND THE RULING OF HON'BLE SUP REME COURT IN THE CASE OF NTPC (229 ITR 283)(SC). ACCORDINGLY, THE ADDITIONAL GROUNDS ARE ADMITTED FOR ADJUDICATION. ITA NOS.2298 TO 2300/BANG/2018 PAGE 4 OF 6 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT STATEMENT RECORDED DURING THE SURVEY CANNOT BE THE BASIS TO MAKE ANY A DDITION AND IN THIS REGARD RELIED ON THE DECISION OF THE HON'BLE SUPREM E COURT IN THE CASE OF CIT V. S. KHADER KHAN SON , 352 ITR 480 (SC) AND THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES V. CCE, CIVIL APPEAL NO.4228/2006, JUDGMENT DATED 2.9.2015. IN THE FIRST DECISION CITED BY THE LD. COUNSEL FOR THE ASSESSEE, IT HAS B EEN HELD THAT STATEMENT RECORDED AT THE TIME OF SURVEY U/S. 133A OF THE ACT CANNOT BE THE SOLE BASIS TO MAKE AN ADDITION IN AN ASSESSMENT. IN THE DECISI ON SECOND CITED, IT HAS BEEN HELD THAT THE STATEMENT NOT TESTED BY CROSS-EX AMINATION CANNOT BE THE BASIS FOR MAKING ANY ASSESSMENT UNDER THE CENTRAL E XCISE ACT. 8. I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUN SEL FOR THE ASSESSEE AND THE DECISIONS ON WHICH HE HAS PLACED RELIANCE A ND ARE OF THE VIEW THAT IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE PLEA OF THE ASSESSEE CANNOT BE ACCEPTED. IT HAS NOT BEEN DENIE D BY THE ASSESSEE THAT HE WAS IN RECEIPT OF PROFESSIONAL INCOME. THIS ADMI SSION WAS SUFFICIENT TO MAKE THE ASSESSMENT IN THE HANDS OF ASSESSEE. IN O THER WORDS, IF THE ASSESSEE HAD DISPUTED THE RECEIPT OF PROFESSIONAL I NCOME, THEN THE ONUS WOULD HAVE BEEN ON THE DEPARTMENT TO SHOW THAT ASSE SSEE RECEIVED PROFESSIONAL INCOME AND IN DOING SO, THE ASSESSEE C AN MAKE A STATEMENT THAT STATEMENT RECORDED AT THE TIME OF SURVEY U/S. 133A OF THE ACT WHICH HAS NOT BEEN SUBJECTED TO CROSS-EXAMINATION, CANNOT BE THE BASIS TO COME TO THE CONCLUSION THAT ASSESSEE HAD EARNED PROFESSI ONAL INCOME. SINCE THE ASSESSEE ADMITTED RECEIPT OF PROFESSIONAL INCOM E, THERE IS NO MERIT IN THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE AND H ENCE THE SAME ARE DISMISSED. 9. THE ONLY OTHER ARGUMENT ADVANCED BY THE LD. COUN SEL FOR THE ASSESSEE WAS THAT DEDUCTION HAS TO BE ALLOWED ON AC COUNT OF EXPENSES INCURRED IN EARNING THE PROFESSIONAL INCOME. HE PL ACED RELIANCE ON THE ITA NOS.2298 TO 2300/BANG/2018 PAGE 5 OF 6 PROVISIONS OF SECTION 44ADA OF THE ACT WHICH LAYS D OWN A PRESUMPTIVE RATE OF INCOME FOR PROFESSIONALS. THOUGH THESE PROVISIO NS WERE INSERTED BY THE FINANCE ACT, 2016 W.E.F. 1.4.2017, THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE ABOVE PROVISIONS TO SUBMIT THAT 50% OF THE GROSS RECEIPTS FROM PROFESSIONAL ALONE, HAS TO BE TAXED. IN OTHER WORDS, 50% IS REGARDED AS EXPENSES FOR EARNING THE PROFESSIONAL INCOME. A CCORDING TO HIM, THEREFORE, THE LEGISLATURE ITSELF HAS LAID DOWN SUC H CONDITION AND THERE IS NO REASON WHY ADOPTING THE SAME PRINCIPLE, DEDUCTION O F EXPENSES SHOULD NOT BE ALLOWED TO THE ASSESSEE. 10. THE LD. DR RELIED ON THE ORDER OF CIT(APPEALS). 11. I AM OF THE VIEW THAT THERE IS FORCE IN THE ARG UMENT ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE. I AM ALSO OF THE VIEW THAT 50% OF THE GROSS RECEIPTS CANNOT BE ALLOWED ON THE EXPENSES IN VIEW OF THE SPECIFIC OBSERVATIONS OF THE CITA THAT RED CROSS HOSPITAL PR OVIDED ALL THE INFRASTRUCTURE TO THE ASSESSEE TO CARRY ON PROFESSI ONAL PRACTICE BY THE ASSESSEE. KEEPING IN MIND ALL THE CIRCUMSTANCES, I AM OF THE VIEW THAT 25% OF THE GROSS RECEIPTS CAN BE ALLOWED AS EXPENSE S. I HOLD AND DIRECT ACCORDINGLY. 12. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 3 RD OCTOBER, 2018. SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER BANGALORE, DATED, THE 3 RD OCTOBER, 2018. / D ESAI S MURTHY / ITA NOS.2298 TO 2300/BANG/2018 PAGE 6 OF 6 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.