Krishna Hospital And Research Centre, Haldwani V. DCIT, Haldwani

ITA 3520/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4665 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: I P SINGH
• Keywords: Depreciation; Set aside
• Section: 133A

Judgement Text

ITA NO. 3520/D/2015 ASSESSMENT YEAR 2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 3520/DEL/2015 ASSESSMENT YEAR: 2010-11 KRISHNA HOSPITAL AND RESEARCH CENTRE, GURUNANAK PURA, HALDWANI. (PAN: AAHFK0230F) VS DCIT, HALDWANI. APPELLANT RESPONDENT ASSESSEE BY : SHRI I.P. SINGH, AD V. DEPARTMENT BY: MS ASHIMA NEB , SR. DR DATE OF HEARING : 27.05.2019 DATE OF PRONOUNCEMENT : 31.05.2019 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, DE HRADUN {CIT (A) } VIDE ORDER DATED 12.2.2015 PERTAINING TO ASSE SSMENT YEAR 2010-11. 2.0 BRIEF FACTS OF THE CASE ARE THAT SURVEY PROCEE DINGS U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLE D 'THE ACT') WERE CONDUCTED ON 15.09.2009 IN THE HOSPITAL PREMIS ES BEING ITA NO. 3520/D/2015 ASSESSMENT YEAR 2010-11 2 OPERATED BY THE ASSESSEE. BOOK OF ACCOUNTS LIKE RE CEIPT REGISTER, DAY BOOK REGISTER AND PRINTED SLIP REGISTER WERE IN VENTORIED. THE STATEMENT ON OATH OF DR. J.S. KHURANA, PARTNER OF THE FIRM, WAS ALSO RECORDED. IN THE SAID STATEMENT, THE SAID PARTNER AGREED TO DECLARE ADDITIONAL INCOME OF RS. 20 LAKH ON ACCO UNT OF UNDISCLOSED INVESTMENT ON PURCHASE OF ASSETS PRIOR TO THE DATE OF SURVEY WHICH WAS NOT SAID TO BE REFLECTED IN THE BO OKS OF ACCOUNTS AT THE TIME OF SURVEY. SUBSEQUENTLY, THE RETURN OF INCOME WAS FILED ON 13.10.2010 DECLARING A TOTAL INCOME OF RS. 18,95,580/. THE CASE WAS PICKED UP FOR SCRUTINY UNDER CASS. ON PERUSAL OF THE RETURN OF INCOME FILED, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD NOT SEPARATELY DECLAR ED ADDITIONAL INCOME OF RS. 20 LAKH WHICH THE PARTNER HAD AGREED TO SURRENDER AT THE TIME OF SURVEY. THE ASSESSING OFFICER WAS O F THE VIEW THAT THE PARTNER OF THE FIRM HAD SURRENDERED AN AMOUNT O F RS. 20 LAKH VOLUNTARILY ON ACCOUNT OF DISCREPANCIES POINTED OUT DURING THE COURSE OF SURVEY PROCEEDINGS AS WELL AS IN VIEW OF HIS INABILITY IN EXPLAINING THE INVESTMENTS MADE IN ACQUIRING THE AS SETS IN THE RELEVANT FINANCIAL YEAR. HE, THEREFORE, PROCEEDED TO ADD AN AMOUNT OF RS. 20 LAKH TO THE INCOME DECLARED BY THE ASSESSEE AND COMPLETED THE ASSESSMENT AT RS. 38,95,580/-. ITA NO. 3520/D/2015 ASSESSMENT YEAR 2010-11 3 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND CHALLENGED THE ADDITION. HOWEVER, THE ASSESSEES APPEAL WAS DISMI SSED AND NOW THE ASSESSEE IS BEFORE THIS TRIBUNAL (ITAT) AND HAS CHALLENGED THE UPHOLDING OF ADDITION BY THE LD. COMMISSIONER OF IN COME TAX (APPEALS). 3.0 THE LD. AUTHORISED REPRESENTATIVE (AR) SUBMITT ED THAT DURING THE COURSE OF SURVEY, NO DISCREPANCY WAS FOU ND IN THE BOOKS OF ACCOUNTS AND THAT THERE WAS NO SUCH ADVERS E INFERENCE IN THE ASSESSMENT ORDER REGARDING SUCH DISCREPANCY BEING PRESENT. IT WAS SUBMITTED THAT THE SURRENDER WAS M ADE ONLY BECAUSE PRESSURE HAD BEEN PUT DURING THE COURSE OF SURVEY FOR MAKING THE SAID SURRENDER. IT WAS ALSO SUBMITTED T HAT ALL THE SAME, TO HONOUR THE SURRENDER MADE, THE ASSESSEE HA D SHOWN THE GROSS RECEIPTS AT AN INCREASED FIGURE. HE DREW OUR ATTENTION TO A CHART WHEREIN IT WAS DEMONSTRATED THAT THE GROSS RE CEIPTS DURING THE YEAR UNDER CONSIDERATION WERE RS.43,281,430/- A S COMPARED TO RS. 33,122,988/- IN ASSESSMENT YEAR 2009-10 AND RS. 29,411,035/- IN ASSESSMENT YEAR 2008-09. IT WAS SU BMITTED THAT THE SURRENDERED AMOUNT HAD BEEN SUBSUMED IN THE GRO SS RECEIPTS. IT WAS ALSO FURTHER SUBMITTED THAT THE A SSESSEE HAD ITA NO. 3520/D/2015 ASSESSMENT YEAR 2010-11 4 SHOWN AN ADDITION OF RS. 22.87 LAKH IN THE BUILDING UNDER CONSTRUCTION AFTER THE DATE OF SURVEY WHICH WAS DON E SO AS TO SHOW THE SURRENDERED AMOUNT AS HAVING BEEN SPENT TO WARDS THE CONSTRUCTION OF THE BUILDING AND THIS AMOUNT REPRES ENTED THE DIFFERENCE IN THE VALUATION OF BUILDING UNDER CONST RUCTION AS PER THE ASSESSEES ADMISSION AND AS PER THE ESTIMATE BY THE DEPARTMENT. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT THE ASSESSING OFFICER HAD MADE THE IMPUGNED ADDITION ON THE PREMISE THAT THE PROFIT SHOWN BY THE ASSESSEE DURIN G THE YEAR WAS ONLY RS.18,95,850/- AND, THEREFORE, THIS COULD NOT HAVE INCLUDED THE SURRENDERED AMOUNT OF RS. 20 LAKH AND FURTHER THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD AL SO UPHELD THE ADDITION ON THIS LOGIC AND REASONING. IT WAS S UBMITTED THAT THIS REASONING AND LOGIC WERE INCORRECT INASMUCH AS THERE WAS A DECREASE IN THE NET PROFIT DUE TO DEPRECIATION AND INTEREST AND SALARY TO PARTNERS WHICH WERE DEBITED TO THE PROFIT AND LOSS ACCOUNT AS PER THE PROVISIONS OF THE INCOME TAX ACT AND THE PARTNERSHIP DEED. 3.1 AS AN ALTERNATE PLEA, THE LD. AR SUBMITTED THA T THE STATEMENT RECORDED DURING THE COURSE OF SURVEY PROC EEDINGS CANNOT BE THE SOLE BASIS FOR MAKING AN ADDITION UNL ESS IT IS ITA NO. 3520/D/2015 ASSESSMENT YEAR 2010-11 5 BACKED BY OTHER CORROBORATIVE EVIDENCE. 4.0 IN RESPONSE, THE LD. SR. DEPARTMENTAL REPRESEN TATIVE (DR) SUBMITTED THAT IT WAS EVIDENT FROM THE STATEME NT OF THE PARTNER OF THE FIRM, WHICH WAS DULY REPRODUCED IN T HE ASSESSMENT ORDER, THAT IT WAS A VOLUNTARY SURRENDER AND, THERE FORE, THE ASSESSING OFFICER WAS WITHIN HIS POWERS TO MAKE THE ADDITION. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD FAILED TO DEMONSTRATE BY LEADING CONCRETE EVIDENCE THAT THE S URRENDER MADE WAS SUBSUMED IN THE NET PROFIT BECAUSE ALTHOUG H THE GROSS RECEIPTS HAVE INCREASED, THE NET PROFIT HAS DECREAS ED AS COMPARED TO EARLIER ASSESSMENT YEARS. IT WAS ALSO SUBMITTED THAT THE ADDITIONS HAD BEEN MADE ON ACCOUNT OF DISCREPANCY O N THE DATE OF SURVEY I.E. 15.09.2009 AND NOT AFTER THE DATE OF SURVEY AND, THEREFORE, THE ADDITION TO BUILDING UNDER CONSTRUCT ION ACCOUNT CANNOT BE TAKEN AS PART OF SURRENDERED AMOUNT. 4.1 THE LD. SR. DR ALSO PLACED RELIANCE ON THE OBS ERVATIONS OF THE LD. COMMISSIONER OF INCOME TAX (A) AS CONTAI NED IN PAGE 4 SUB-PARA (IV) WHEREIN THE LD. COMMISSIONER OF INCOM E TAX (A) HAS OBSERVED THAT THE ASSESSEE HAD FAILED TO IDENTIFY T HE ENTRIES OR RECEIPTS IN THE GROSS RECEIPTS WHICH WERE CLAIMED T O HAVE BEEN ITA NO. 3520/D/2015 ASSESSMENT YEAR 2010-11 6 ENTERED IN THE BOOKS OF ACCOUNTS ON ACCOUNT OF SURR ENDERED INCOME. IT WAS POINTED OUT THAT THE LD. COMMISSION ER OF INCOME TAX (A) HAS OBSERVED THAT THE ASSESSEE HAD FAILED T O ESTABLISH THAT THE INCREASE IN GROSS RECEIPTS WAS ON ACCOUNT OF SU RRENDERED AMOUNT OF RS. 20 LAKH AND NOT ON ACCOUNT OF NATURAL COURSE OF BUSINESS. THE LD. SR. DR SUBMITTED THAT THE ASSESS EES APPEAL DESERVED TO BE DISMISSED. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. ALTHOUGH, IT IS THE OBSERVATION OF THE BOTH THE LOWER AUTHORITIES THAT THE ASSESSEE CO ULD NOT DEMONSTRATE THAT THE GROSS RECEIPTS INCLUDED THE SU RRENDERED AMOUNT, WE DO FIND THAT THE CLAIM OF THE ASSESSEE A PPEARS TO BE CORRECT IN THIS REGARD. THIS CAN BE EVIDENCED FROM THE FACT THAT THE DEPRECIATION FOR AY 2008-09 WAS RS. 23,51,596/- , RS. 24,46,122/- IN AY 2009-10 BUT IT ROSE TO RS. 37,19, 539/- IN THE YEAR UNDER CONSIDERATION. THUS, THERE IS AN INCREAS E IN THE DEPRECIATION CHARGE TO THE TUNE OF RS. 12,73,417/- IN THE YEAR UNDER CONSIDERATION AS COMPARED TO THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. SIMILARLY, THE SALARY TO PARTNERS ROSE FROM RS. 20,00,960/- IN AY 2009-10 TO RS. 30,68,370/- IN THE YEAR UNDER CONSIDERATION THUS RESULTING IN AN INCREASE OF RS. 10,67,410/- AS ITA NO. 3520/D/2015 ASSESSMENT YEAR 2010-11 7 COMPARED TO THE IMMEDIATELY PRECEDING YEAR. SIMILAR LY, THERE IS AN INCREASE IN THE INTEREST TO THE PARTNERS IN THE YEAR UNDER CONSIDERATION TO THE TUNE OF RS. 3,25,173/- AS COMP ARED TO THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THESE FIGURE S ARE UNDISPUTED AND HAVE ALSO BEEN RECORDED IN THE IMPUG NED ORDER. IT IS ALSO AN ACCEPTED FACT THAT THE GROSS RECEIPTS HAVE JUMPED FROM RS. 33,122,988/- IN AY 2009-10 TO RS. 43,581,4 30/- IN THE YEAR UNDER CONSIDERATION THUS SHOWING A SUBSTANTIAL INCREASE OF RS. 10,458,442/- AS COMPARED TO THE IMMEDIATELY PRE CEDING ASSESSMENT YEAR. ON SUCH FACTS, WE ARE OF THE CONSI DERED OPINION THAT THE CONTENTION OF THE LD. AR THAT THE SURRENDE RED AMOUNT IS SUBSUMED IN THE GROSS RECEIPTS IS TO BE AGREED TO. THE FALL IN THE NET PROFIT IS ALSO DULY EXPLAINED BY THE INCREASE I N DEPRECIATION, SALARY AND INTEREST TO PARTNERS WHICH WORKS OUT TO RS. 26,66,000/-. THEREFORE, WE ARE UNABLE TO CONCUR WIT H THE FINDINGS OF THE LOWER AUTHORITIES AND WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DIRECT THE AO TO DELETE THE ADDITION. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ITA NO. 3520/D/2015 ASSESSMENT YEAR 2010-11 8 ORDER PRONOUNCED IN THE OPEN COURT ON 31ST MAY, 20 19. SD/- SD/- (N.K. BILLAIYA) (SUDHANSHU SRI VASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST MAY ,2019 GS COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR TRUE COPY BY ORDER ASSTT. REGISTRAR DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER