M/s. P K Shah Hospital & Diagnostic Centre Pvt.Ltd, Kanpur V. Asstt.Commissiner of Income Tax , Kanpur

ITA 277/LKW/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9084 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 14-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K GARG SHRI P K KAPOOR
• Assessee Lawyers: ASSESS MENT YEAR; THERE ARE TWO CROSS APPEALS OF
• Keywords: Business income; Depreciation; Principle of natural justice

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.277 & 278/LKW/2012 A. YRS.:2004 - 05 & 2005 - 06 M/S RKSHAH HOSPITAL & DIAGNOSTIC CENTRE PVT. LTD., 240A - 1, HARJINDER NAGAR, KANPUR. PAN:AACCR6427R VS A.C.I.T., CENTRAL CIRCLE - 5, KANPUR. (APPELLANT) (RESPONDENT) ITA NOS.407 & 429/LKW/2012 A. YRS.:2005 - 06 & 2006 - 07 A.C.I.T., CENTRAL CIRCLE - 5, KANPUR. VS M/S RKSHAH HOSPITAL & DIAGNOSTIC CENTRE PVT. LTD., 240A - 1, HARJINDER NAGAR, KANPUR. PAN:AACCR6427R (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. OUT OF THIS BUNCH OF FOUR APPEALS, THERE IS ONE APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 2004 - 05 AND THERE ARE TWO CROSS APPEALS OF THE ASSESSEE AND REVENUE FOR ASSESSMENT YEAR 2005 - 06 AND THERE IS ONE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2006 - 07. ALL THE APPEALS WERE ASSESSEE BY SHRI S. K. GARG, ADVOCATE SHRI P. K. KAPOOR, C.A. REVENUE BY SHRI ANAND KUMAR AGARWAL, C.I.T., D. R. DATE OF HEARING 25/02/2015 DATE OF PRONOUNCEMENT 2 3 /03/2015 2 HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2004 - 05 I.E. I.T.A. NO.277/LKW/2012. IN THIS APPEAL , THE ASSESSEE HA S RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT ( A) WAS WRONG IN LAW & ON FACTS IN NOT DECIDING THE ADDITIONAL GROUND IN FAVOUR OF THE APPELLANT. 2. THE LEARNED CIT(A) WAS WRONG IN LAW & ON FACTS IN COMPUTING THE INCOME OF THE APPELLANT AT RS.6,03,27 7/ - AS AGAINST THE RETURNED INCOME OF RS.42,720/ - BY ESTIMATING THE TURNOVER AT RS.40 LACS AND APPLYING THE NET PROFIT RATE AT 20%. 3. THE LEARNED CIT ( A) WAS WRONG IN LAW & ON FACTS IN HOLDING THAT THE BANK ACCOUNT NO.12050 & 7968 PERTAINED TO THE APPELL ANT COMPANY. 4. IN ANY CASE & WITHOUT PREJUDICE TO THE ABOVE GROUNDS, INCOME OF RS.6,03,277/ - COMPUTED BY LEARNED CIT(A) IS VERY HIGH & EXCESSIVE. 5. THE ORDER OF LEARNED CIT(A) IS AGAINST LAW, FACTS & PRINCIPLES OF NATURAL JUSTICE. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT GROUND NO. 1 IS NOT PRESSED AND ACCORDINGLY , THIS GROUND IS REJECTED A S NOT PRESSED. 4. REGARDING REMAINING GROUNDS, IT WAS SUBMITTED BY HIM THAT THE ONLY ISSUE INVOLVED IS REGARDING ESTIMATING THE INCOME OF THE ASSES SEE AT RS.8 LAC BY ESTIMATING THE TURNOVER AT RS.40 LAC AND APPLYING 20% NET PROFIT RATE ON THIS ESTIMATED TURNOVER. HE FURTHER SUBMITTED THAT AGAINST THIS ESTIMATED INCOME OF RS.8 LACS, DEDUCTION WAS ALLOWED ON ACCOUNT OF DEPRECIATION TO THE EXTENT OF RS .2,10,593/ - AND IN THIS MANNER, THE INCOME WAS ESTIMATED AT RS.5,89,407/ - . HE SUBMITTED THAT THE BANK ACCOUNT NO. 3 12505 AND 7968 DO NOT BELONG TO THE ASSESSEE COMPANY AND THEREFORE, THIS ADDITION IS NOT JUSTIFIED AND REGARDING ESTIMATION OF TURNOVER AT RS .40 LAC AND APPLYING GROSS PROFIT RATE OF 20%, HE SUBMITTED THAT THIS IS EXCESSIVE AND SHOULD BE REASONABLE. 5. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARDING THIS CONTENTION THAT THESE TWO BANK ACCOUNT NO. 12505 AND 7968 DO NOT BELONG TO THE ASSESSEE COMPANY, WE FIND THAT IN PARA 7.2 OF HIS ORDER , THIS FINDING HAS BEEN GIVEN BY LEARNED CIT(A) REGARDING BANK A CCOUNT NO. 12050 THAT THIS CLAIM IS NOT ACCEPTABLE THAT THIS ACCOUNT IS BELONGING TO SHRI UMA SHANKER SHAH AND NOT TO THE ASSESSEE. HE HAS NOTED THAT HE HAS HELD IN THE CASE OF SHRI UMA SHANKER SHAH THAT THE TRANSACTIONS OF THIS ACCOUNT DO NOT PERTAIN TO SHRI UMA SHANKER SHAH BUT BELONG TO THE ASSESSEE COMPANY. HE HAS ALSO GIVEN A FINDING THAT THIS FINDING IS SUPPORTED BY THE AVERMENTS MADE BY DR. A. K. SHAH IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH CONDUCTED ON 28/03/2006 AND BY SHRI UMA SHAN KER SHAH IN THE STATEMENT RECORDED IN POST SEARCH PROCEEDINGS. SIMILARLY, REGARDING BANK ACCOUNT N O . 7968 ALSO, IT IS NOTED BY CIT(A) IN PARA 7.2.1 OF HIS ORDER THAT THIS BANK ACCOUNT IS IN THE NAME OF SHRI TANMAY TEWARI WITH BANK OF INDIA, WHICH WAS OPEN ED IN THE FINANCIAL YEAR 2003 - 04 AND WAS RELEVANT FOR ASSESSMENT YEAR 2004 - 05 AND THEREAFTER , I N PARA 7.2.2 OF HIS ORDER, THIS FINDING IS GIVEN BY CIT(A) THAT DR. A. K. SHAH HAD ADMITTED IN HIS STATEMENT THAT ENTRIES IN THE BANK ACCOUNT REPRESENTED THE UND ISCLOSED RECEIPTS OF THE ASSESSEE COMPANY. WHEN DR. A. K. SHAH, M.D. OF THE ASSESSEE COMPANY HAS ADMITTED IN THE STATEMENT RECORDED DURING SEARCH THAT THE BANK ACCOUNTS ARE BELONGING TO THE ASSESSEE COMPANY, SIMPLY BECAUSE THE ACCOUNTS ARE IN TWO DIFFEREN T NAMES, IT CANNOT BE ACCEPTED THAT THE 4 TRANSACTIONS IN THESE BANK ACCOUNTS DO NOT BELONG TO THE ASSESSEE COMPANY. THESE FINDINGS OF THE LEARNED CIT (A) COULD NOT BE CONTROVERTED BY THE LEARNED AR OF THE ASSESSEE. HENCE, ON THIS ASPECT, WE DO NOT FIND ANY REASON TO INTERFER E IN THE ORDER OF CIT(A). 7. REGARDING THE ESTIMATION OF INCOME BY ESTIMATING GROSS RECEIPTS AT RS.40 LACS AND APPLYING NET PROFIT RATE AT 20%, WE FIND THAT IT IS NOTED BY CIT(A) IN PARA 7.2.5 OF HIS ORDER THAT THE RECEIPTS AS PER BOOK S OF ACCOUNT ARE AT RS.26,29,965/ - AND THERE IS TOTAL CREDITS IN BANK ACCOUNT NOS. 12050 & 796 8 TO THE EXTENT OF RS.12,44,000/ - . TOTAL OF THESE TWO AMOUNTS HAS BEEN ARRIVED AT RS.38,73,965/ - AND UNDER THESE FACTS, THE TURNOVER WAS ESTIMATED AT RS.40 LACS. IN OUR CONSIDERED OPINION, IN THE FACTS OF THE PRESENT CASE, WHEN THESE TWO BANK ACCOUNTS ARE BELONGING TO THE ASSESSEE COMPANY AND RECEIPT S AS PER THESE TWO BANK ACCOUNTS WERE NOT ACCOUNTED FOR IN REGULAR BOOKS , THE RECEIPT S AS PER THESE TWO BANK ACCOUNTS AND AS PER BOOKS OF ACCOUNT HA VE TO BE ADDED TO ESTIMATE THE GROSS RECEIPT OF THE ASSESSEE COMPANY AND THEREFORE, ESTIMATION OF GROSS RECEIPTS AT RS.40 LACS IS PROPER AND REASONABLE . 8. REGARDING APPLYING NET PROFIT RATE OF 20% ON THE SAID ESTIMATED GROSS RECEIPTS OF RS.40 LACS, WE FIND THAT AGAINST RECEIPT IN THE BOOKS OF ACCOUNT OF RS.26.30 LACS, THE ASSESSEE HAS DECLARED PROFIT BEFORE DEPRECIATION OF RS.2.53 LAC, WHICH WORKED OUT TO 9.62%. HENCE, WE FIND FORCE IN THE SUBMISSION OF LEARNED A.R. OF THE ASSESSEE THAT APPLYING NET PROFIT RATE @20% IS EXCESSIVE IN THE FACTS OF THE PRESENT CASE. WE, THEREFORE, HOLD THAT APPLYING NET PROFIT RATE OF 1 0 % WILL MEET THE ENDS OF JUSTICE AND HENCE, WE DIRECT THE ASSESSING OFFICER TO APPLY NE T PROFIT RATE OF 10% ON ESTIMATED GROSS RECEIPT OF RS.40 LAC AND IN THIS MANNER, THE ASSESSEE GETS PART RELIEF OF RS.4 LAC. THESE GROUNDS ARE PARTLY ALLOWED. 5 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. 10. NOW WE TAKE UP THE APP EAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2005 - 06 I.E. I.T.A. NO.278/LKW/2012. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT (A) WAS WRONG IN LAW & ON FACTS IN NOT DECIDING THE ADDITIONAL GROUND IN FAVOUR OF THE APPELLA NT. 2. THE LEARNED CIT(A) WAS WRONG IN LAW AND FACTS IN COMPUTING THE INCOME OF THE APPELLANT AT RS.10,51,176/ - AS AGAINST THE RETURNED INCOME OF RS.1,54,490/ - BY ESTIMATING THE TURNOVER AT RS. 55 LACS AND APPLYING THE NET PROFIT RATE @25%. 3. THE LEARNE D CIT(A) WAS WRONG IN LAW & ON FACTS IN HOLDING THAT THE BANK ACCOUNT NO 12050 & 7968 PERTAINED TO THE APPELLANT COMPANY. 4. IN ANY CASE & WITHOUT PREJUDICE TO THE ABOVE GROUNDS, INCOME OF RS.10,51,176/ - COMPUTED BY LEARNED CIT(A) IS VERY HIGH & EXCESSIVE . 5. THE ORDER OF THE LEARNED CIT(A) IS AGAINST LAW, FACTS & PRINCIPLES OF NATURAL JUSTICE. 11. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE ISSUES RAISED BY THE ASSESSEE IN THIS YEAR ARE SIMILAR TO THE ISSUE RAISED IN ASSESSMENT YEAR 2004 - 05. 12. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN THIS YEAR ALSO, IT IS NOTED BY CIT(A) THAT RECEIPTS AS PER BOOKS OF ACCOUNT WAS RS.32.57 LACS AND TOTAL CREDITS IN BANK ACCOUNT NOS. 12050 & 7968 WAS TO THE EXTENT OF RS.21.10 LAC. TOTAL OF THESE WERE WORKED OUT AT RS.53.67 LACS AGAINST WHICH THE RECEIPTS WERE ESTIMATED AT RS.55 LACS AND CONSIDERING 6 THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT ON THIS ASPECT, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) IN THIS YEAR ALSO . IN THIS YEA R, AS PER PROFIT & LOSS ACCOUNT OF THE ASSESSEE COMPANY, NET PROFIT RATE DECLARED BY THE ASSESSEE BEFORE DEPRECIATION WAS 16.09%. HENCE, IN THIS YEAR, WE FEEL THAT APPLYING NET PROFIT RATE OF 17% WILL MEET THE ENDS OF JUSTICE AS AGAINST 2 5% APPLIED BY CIT ( A). WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. THE ASSESSEE GETS RELIEF OF RS.4.40 LAC BEING 8% OF RS.55 LAC. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. 15. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 200 5 - 06 I.E. I.T.A. NO.407/LKW/2012. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.20,00,000 / - MADE ON ACCOUNT OF UNDISCLOSED INCOME, WITHOUT APPRECIATING THE F ACT THAT DR. A.K. SHAH HAS SURRENDERED AN AMOUNT OF RS.20,00,000 / - DURING THE COURSE OF SEARCH AS PER HIS STATEMENT IN THE CASE OF THE ASSESSEE COMPANY. HOWEVER, SUCH INCOME WAS NEVER DISCLOSED AT THE TIME OF FILING OF THE RETURN. ACCORDINGLY, SINCE THE RE TURN OF INCOME WAS FILED AT RS.1,54,960 / - WITHOUT INCLUDING THE SURRENDERED AMOUNT OF RS.20,00,000 / - , THE A.O. WAS JUSTIFIED IN MAKING SUCH ADDITION. 2. THAT LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO APPLY NET PROFIT RATE OF 25% E VEN ON UNACCOUNTED OR UNDISCLOSED CREDIT OF RS.21 , 10,000 / - IN TWO BANK ACCOUNTS MAINTAINED IN THE NAME OF SHRI TANMAY TEWARI, IGNORING THE FACT THAT THE CREDITS IN THESE TWO BANK ACCOUNTS REPRESENTED NET UNDISCLOSED INCOME OF THE ASSESSEE. 3. THAT LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONSIDERING AND ALLOWING THE SURRENDERED AMOUNT OF RS.40,00,000 / - TO BE BIFURCATED IN THE RATIO OF RS.8,96,686 / - AND RS.31,03,314 / - RESPECTIVELY FOR THE ASSESSMENT YEARS 2005 - 06 AND 2006 - 07, WITHOUT 7 APPRECIATING THE FAC T THAT THE SURRENDERED AMOUNT OF RS.40,00,000 / - MADE DURING THE COURSE OF SEARCH IN RESPECT OF A.YRS. 2005 - 06 AND 2006 - 07 WAS TO BE CONSIDERED EQUALLY IN RESPECT OF BOTH THE ASSESSMENT YEARS. 4. THAT THE ORDER OF THE LD. CIT (A) DESERVES TO BE VACATED AND THE ASSESSMENT ORDER PASSED BY THE A.O. BE RESTORE D . 16. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE GROUNDS OF THE REVENUE, TWO ISSUE S ARE INVOLVED. ONE ISSUE IS AS TO WHETHER THE TOTAL UNACCOUNTED RECEIPTS AS PER TOTAL CREDITS IN TWO BANK ACCOUNTS SHOULD BE ADDED IN FULL OR ONLY NET PRO FIT RATE SHOULD BE APPLIED ON THESE RECEIPTS. IN OUR CONSIDERED OPINION, WHEN THE RECEIPTS IN QUESTION IS UNACCOUNTED BUSINESS RECEIPTS, THE ENTIRE RECEIPTS CANNOT BE ASSESSED AS INCOME AND ONLY NET PROFIT OUT OF SUCH RECEIPTS SHOULD BE BROUGHT TO TAX. H ENCE, ON THIS ASPECT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). REGARDING THE RATE OF NET PROFIT, WE HAVE ALREADY DECIDED WHILE DECIDING THE APPEAL OF THE ASSESSEE THAT INSTEAD OF 25% RATE OF NET PROFIT, IT SHOULD BE APPLIED AT 17%. APART FROM THIS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ASPECT. 18. THE SECOND ISSUE IS AS TO WHETHER CIT(A) WAS JUSTIFIED IN HOLDING THAT OUT OF TOTAL SURRENDER MADE BY THE ASSESSEE OF RS.40 LAC, WHETHER CIT(A) WAS JUSTIFIED IN HOLDIN G THAT SUCH SURRENDER SHOULD BE BIFURCATED IN TWO YEARS I.E. RS. 8,96,686/ - IN THE PRESENT YEAR AND BALANCE AMOUNT OF RS.31,03,314/ - IN ASSESSMENT YEAR 2006 - 07 WHEREAS IT WAS HELD BY ASSESSING OFFICER THAT SUCH SURRENDER SHOULD BE DIVIDED IN THESE TWO YEARS 8 EQUALLY I.E. RS.20 LAC IN EACH YEAR. IN THIS REGARD, WE FIND THAT IN PARA 7.5 OF HIS ORDER, THIS FINDING HAS BEEN GIVEN BY CIT(A) THAT IN THE COMPOSITE DISCLOSURE OF RS.40 LACS MADE BY THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY, THE MANAGING DIRECTOR HAS NOT GIVEN ANY BIFURCATION OF TH IS UNDISCLOSED INCOME BETWEEN TWO ASSESSMENT YEAR S 2005 - 06 AND 2006 - 07. 19. LEARNED D.R. OF THE REVENUE COULD NOT CONTROVERT THIS SPECIFIC FINDING OF CIT(A). IT IS ALSO HELD THAT ON THE BASIS OF SURRENDER ALONE, INCOME CANNOT BE ASSESSED IN THE ABSENCE OF ANY CORROBORATING MATERIAL AND EVEN ON THE BASIS OF CORROBORATING MATERIAL, IF THE INCOME LIABLE TO BE TAXED IS LESS THAN THE SURRENDERED AMOUNT, THEN ONLY SUCH INCOME CAN BE TAXED, WHICH IS PROPER ON THE BASIS OF CORROBORATING MATERIAL. AS PER THE MATERIAL FOUND IN COURSE OF SEARCH, THERE WERE TWO BANK ACCOUNTS BELONGING TO THE ASSESSEE COMPANY, RECEIPTS OF WHICH WERE NOT INCLUDED IN THE RECEIPTS AS PER BOOKS OF ACCOUNT. WE HAVE ALREADY HELD THAT ON SUCH UNACCOUNTED RECEIPTS, PROFIT @17% OF GROSS RECEIPTS HAS TO BE TAXED IN THE PRESENT YEAR. THE INCOME WAS WORKED OUT BY CIT(A) AT RS.10,51,176/ - AS AGAINST THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AT RS.1,54,956/ - . IN THIS MANNER, CIT(A) HAS CONFIRMED AN ADDITION OF RS.8,96,686/ - . WHILE DECIDING THE APPEAL OF THE ASSESSEE, WE HAVE REDUCED THIS ADDITION BY RS. 4.40 LAC BECAUSE WE HAVE DIRECTED THE ASSESSING OFFICER TO ADOPT NET PROFIT OF 17% AS AGAINST 25%. HENCE, THE ADDITIONAL INCOME TO BE TAXED IN THE PRESENT YEAR REMAINS ONLY RS.4,56,686/ - AND THEREFORE, THE AMOUNT TO BE CONSIDERED IN ASSESSMENT YEAR 2006 - 0 7 SHOULD BE RS.35,43,314/ - BEING DIFFERENCE OF RS.40 LAC AND RS.4,56,686/ - . EXCEPT THIS MODIFICATION, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 20. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 9 21. NOW WE TAKE UP THE APPEAL OF THE REV ENUE FOR ASSESSMENT YEAR 2006 - 07 I.E. I.T.A. NO.429/LKW/2012. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.46,96,440 / - MADE ON ACCOUNT OF DEPOSITS IN THE BENAMI ACCOUNT IN VARIOUS NAMES, WITHOUT APPRECIATING THE FACT THAT DR. A.K. SHAH (MD OF THE ASSESSEE COMPANY) HAD ADMITTED IN HIS STATEMENT DURING THE COURSE OF SEARCH THAT THE DEPOSITS FOUND IN THESE ACCOUNTS WERE THE INCOME OF THE ASSESSEE COMPANY M/S R .K. SHAH HOSPITAL & DIAGNOSTIC CENTRE (P) LTD. 2. THA T L D. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.13,27,417/ - MADE BEING CREDIT BALANCES FOUND IN THE BANK ACCOUNT NOS . 12050 & 79683 IN THE NAMES OF SRI TANMAY TEWARI AND SRI UMA SHANKER RESPECTIVELY, IGNORING THE FACT THAT THE ASSESSEE COULD NOT FURNISH ANY SATISFACTORY EXPLANATION AND EVIDENCE BEFORE THE A.O. 3. THAT LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE AD DITION OF RS.20,00,000 / - ON ACCOUNT OF SURRENDER NOT DISCLOSED IN THE RETURN, IGNORING THE FACT THAT THE AMOUNT OF RS.20,00 000 / - WAS RI G HTLY ADDED BY THE A.O. ON THE BASIS OF THE STATEMENT OF DR. A.K. SHAH RECORDED DURING THE COURSE OF SEARCH IN WHICH HE HAD CATEGORICALLY STATED THAT THE AMOUNT OF RS.40,00,000/ - PERTAINS TO ASSESSMENT YEAR 2005 - 06 AND 2006 - 07 IN THE CASE OF THE ASSESSEE COMPANY. 4. THAT THE ORDER OF THE LEARNED CIT(A) DESERVES TO BE VACATED AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER BE RESTORED. 22. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 10 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 8.2.2 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 8.2.2 PROFITS OF BUSINESS/PROFESSION IS EMBEDDED IN THE TURNOVE R OF THE BUSINESS. IN THIS CASE, TOTAL TURNOVER OF THE BUSINESS AS PER THE AUDITED ACCOUNTS IS TOTAL OF ALL THE RECEIPTS (WHETHER ACCOUNTED OR UNACCOUNTED AT THE TIME OF THE SEARCH PROCEEDINGS). THE NET PROFIT SHOWN IS RS.47,15,484/ - . THE A.O. HAS NOT POI NTED OUT ANY DISCREPANCIES OR INFLATION OF EXPENDITURE IN THE ACCOUNTS. AS PER THE INDICATION GIVEN BY THE ADVANCE TAX PAID BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND ALSO THE PATTERN OF INCOME OFFERED TO TAX IN EARLIER YEARS, COUPLED WITH THE F ACT THAT THE ASSESSEE HAD NOT ENTERED RECEIPTS TOTALING TO RS.58,69,252 / - IN ITS COMPUTER AT THE TIME OF SEARCH, IT CAN BE SAFELY ASSUMED THAT THE INCOME THAT WOULD HAVE BEEN OFFERED TO TAX, (IF THE SEARCH HAD NOT TAKEN PLACE), WOULD HAVE BEEN IN THE VICIN ITY OF RS. 3 - 5 LAKHS. THE ASSESSEE, AFTER INCORPORATING ALL THE UNACCOUNTED RECEIPTS, HAS OFFERED A TAXABLE INCOME OF RS.44,04,380/ - . ACCORDINGLY, HE HAS DULY COMPLIED WITH HIS STATEMENT WHEREIN HE HAD SURRENDERED AN AMOUNT OF RS. 40 LAKHS. FURTHER, THE S AID SURRENDER WAS A COMPOSITE AMOUNT FOR 2 YEARS. FOR THE A.Y. 2005 - 06, I HAVE HELD (IN THE APPELLATE ORDER) THAT OUT OF RS. 40 LAKHS, (SURRENDERED AMOUNT), A SUM OF RS.8,96,686 / - WOULD BE CONSIDERED FOR THE AY. 2005 - 06 AND THE BALANCE RS. 31,03,314 / - WOULD BE CONSIDERED FOR THE A.Y. 2006 - 07. THE INCOME RETURNED BY THE ASSESSEE FOR THIS ASSTT. YEAR AT RS.44,04,380 / - IS MUCH MORE THAN RS . 31,03,314 / - (SUPRA). THE AO HAS NOT BROUGHT ANYTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAD EARNED ANY INCOME BEYOND WHAT HAS BEEN DISCLOSED IN ITS RETURN OF INCOME. IN THIS VIEW OF THE MATTER, THERE WAS NO OCCASION FOR THE A.O. TO ONCE AGAIN ADD RS. 20,00,000 / - TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF THE SURRENDER MADE. HENCE THE ADDITION OF RS.2000000 / - IS HEREBY DE LETED. 23.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY HIM THAT AS PER THE FACTS OF THE PRESENT CASE, THE INCOME THAT WOULD HAVE BEEN OFFERED TO TAX ( IF THE SEARCH HAD NOT TAKEN PLACE), WOULD HAVE BEEN IN THE VICINITY OF RS. 3 - 5 LAKHS. HE HAS FURTHER 11 GIVEN A FINDING THAT T HE ASSESSEE, AFTER INCORPORATING ALL THE UNACCOUNTED RECEIPTS, HAS OFFERED A TAXABLE INCOME OF RS.44,04,380/ - . BASED ON THESE FACTS, HE HAS GIVEN A FINDING THAT THE ASSESSEE HAS DULY COMPLIE D WITH HIS STATEMENT WHEREIN HE HAD SURRENDERED AN AMOUNT OF RS. 40 LAKHS. HE HAS ALSO GIVEN A FINDING THAT THIS SURRENDER WAS A COMPOSITE AMOUNT FOR 2 YEARS. FOR ASSESSMENT YEAR 2005 - 06, CIT(A) HAS STATED THAT HE HAS CONFIRMED ADDITION OF RS.8,96,686/ - , WHICH HAS BEEN REDUCED BY US TO RS.4,86,686/ - AND THEREFORE, THE BALANCE AMOUNT TO BE CONSIDERED IN THIS YEAR AFTER GIVING EFFECT OF OUR ORDER IN ASSESSMENT YEAR 2005 - 06 IS TO THE EXTENT OF RS.35,43,314/ - . THE AMOUNT OF INCOME AS PER THE RETURN OF INCOM E FILED BY THE ASSESSEE IS MORE THAN THE COMPOSITE AMOUNT OF INCOME WITHOUT CONSIDERING THE SURRENDER IN THE VICINITY OF RS.3 - 5 LACS AND SUCH ADDITIONAL INCOME ON ACCOUNT OF SURRENDER OF RS.35.43 LAC AND THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THIS ISSUE. 24. REGARDING GROUND NO. 1, WE FIND THAT AS PER THIS GROUND, STAND OF THE REVENUE IS THAT TOTAL DEPOSIT IN BENAMI ACCOUNT SHOULD BE CONSIDERED AS INCOME OF THE ASSESSEE COMPANY. SINCE ADMITTEDLY, SUCH RECEIPTS BEING BENAMI BANK ACCOUNT WERE BUSINESS TRANSACTIONS OF THE ASSESSEE COMPANY, ONLY NET PROFIT OUT OF SUCH UNACCOUNTED RECEIPT SHOULD BE TAXED AND NOT THE GROSS RECEIPT. THE AMOUNT BEING TAXED OUT OF SUCH GROSS RECEIPTS OF RS.64.69 LAC IS MORE THAN NORMAL INCOME OUT OF SUCH GROSS RECEIPT AND THEREFORE, THERE IS NO MERIT IN THIS GROUND OF THE REVENUE. 25. REGARDING GROUND NO. 2, BEING DELETI ON OF ADDITION OF RS.13,27,417/ , MADE BY THE ASSESSING OFFICER BEING CREDIT BALANCES FOUND IN THE BANK ACCOUNT NOS. 12050 AND 7968 ALSO , WE DO NOT FIND ANY MERIT BECAUSE WHEN THE ASSESSEE IS SURRENDERING EXTRA INCOME IN THE PRESENT YEAR, SUCH EXTRA INCOME IS THE SOURCE OF CREDIT BALANCE FOUND IN THESE TWO BANK ACCOUNTS AND THEREFORE, NO DOUBLE ADDITION CAN BE MADE. 12 26. REGARDING GROUND N O. 3, WE HAVE SEEN THAT THE INCOME DISCLOSED BY THE ASSESSEE IS MORE THAN THE SURRENDER MADE BY THE ASSESSEE OF RS.40 LAC BEING COMPOSITE SURRENDER FOR ASSESSMENT YEAR 200 5 - 0 6 AND 200 6 - 0 7 AND THEREFORE, THERE IS NO MERIT. 27. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 28. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED WHEREAS BOTH APPEALS OF THE REVENUE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 /03/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR