M/s Orthonova Hospital, Jalandhar V. The Dy. Commissioner of Income Tax, Jalandhar

ITA 514/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8792 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Amritsar
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Keywords: Unexplained cash credit
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: (CIRCUIT BENCH AT JALANDHAR) BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO. 514/ASR/2016 (ASSESSMENT YEAR-2010-11) M/S ORTHONOVA HOSPITAL, NAKODAR ROAD, JALANDHAR. PAN NO.AAAFO7491B (ASSESSEE) VS .. DCIT, CENTRAL CIRCLE-II, JALANDHAR. (REVENUE) ASSESSEE BY SHRI . SURINDER MAHAJAN, AR. REVENUE BY SHRI BHAWANI SHANKAR,DR. ORDER PER, A. D. JAIN, JUDICIAL MEMBER: THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010- 11, TAKING THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5 LUDHIANA [C IT(A)], HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS.7,97 ,906/- MADE BY THE ASSESSING OFFICER BY HOLDING THE FOLLOWING S UNDRY CREDITORS OF EARLIER YEARS AS UNVERIFIED AND UNCONF IRMED CASH CREDITS: DATE OF HEARING 16.01.2017 DATE OF PRONOUNCEMENT 25.01.2017 I.T.A NO. 514/ASR/2016 2 SR. NO. NAME OF THE CREDITOR AMOUNT (RS.) 1. STRYKER INDIA PVT. LTD. 6,00,000/- 2. B.BRAUN MEDICAL INDIA PVT. LTD. 29,601/- 3. B.M.W.T. PLANT PVT. LTD. 3,070/- 4. PUNJABI ENTERTAINERS 35,704/- 5. MEDITECH INTERNATIONAL 21,000/- 6. SHARE PUNJAB STEEL FURNITURE 1,08,531/- TOTAL 7,97,906/- 2. THAT ADDITION OF RS.7,97,906/- CONFIRMED BY THE LEARNED CIT(A) IS BAD IN LAW SINCE THESE CREDITORS ARE OF E ARLIER YEARS. 3. THAT OBSERVATIONS OF THE LEARNED CIT(A) WHILE CO NFIRMING ADDITION THAT IN RESPECT OF ONE PARTY NAMELY M/S ST RYKER INDIA (P) LTD., ASSESSEE HAS HIMSELF OFFERED THE AMOUNT T O TAX SUBJECT TO NO PENALTY AND IN RESPECT OF OTHER PARTIES FINDI NGS OF ASSESSING OFFICER HAVE NOT BEEN REBUTTED DO NOT HOL D GOOD SINCE IN RESPECT OF M/S STRYKER INDIA (P) LTD., OFFER WAS NOT ACCEPTED IN TOTO AND AS SUCH IT WAS NO OFFER IN THE EYES OF LAW. 2. THE AO OBSERVED THAT IN ITS BALANCE SHEET P& L A /C , THE ASSESSEE HAD SUNDRY CREDITORS TO THE TUNE OF RS.78,82,619/-. ON QUERY, THE ASSESSEE SUBMITTED THAT THE AMOUNT OF 6 LACS OUTSTANDING TO M/S STRYKER INDIA ( P.) LTD., WAS ON ACCOUNT OF THE I.T.A NO. 514/ASR/2016 3 FACT THAT SUPPLY OF A DIGITAL SCANNING MACHINE HAD GOT STRUCK UP DUE TO A DISPUTE ON THE AFTER SALES SERVICE OF THE MACHINE, THE PAYM ENT BEING WITHHELD, SEEKING REPLACEMENT OR REPAIR AND THAT AS SUCH, THE ASSESSE E WAS FINDING IT DIFFICULT TO GET THE ACCOUNT CONFIRMED FROM THE SUPPLIER; AND THAT H OWEVER, TO AVOID ANY DISPUTE, THIS AMOUNT OF RS.6 LACS WAS BEING OFFERED TO TAX, SUBJECT THAT IT WOULD SAVE THE ASSESSEE FROM CONCEALMENT PENALTY. 3. THE AO OBSERVED THAT WITH REGARD TO THE FOLLOWIN G PARTIES, THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS OF ESTABLISHING THE ID ENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AND AS SUCH, THE SAM E WERE BEING TREATED AS UNVERIFIED AND UNEXPLAINED CASH CREDITS IN THE ASSE SSEES BOOKS AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE: SR. NO. NAME OF THE CREDITOR AMOUNT (RS.) 1. STRYKER INDIA PVT. LTD. 6,00,000/- 2. B.BRAUN MEDICAL INDIA PVT. LTD. 29,601/- 3. B.M.W.T. PLANT PVT. LTD. 3,070/- 4. PUNJABI ENTERTAINERS 35,704/- 5. MEDITECH INTERNATIONAL 21,000/- 6. SHARE PUNJAB STEEL FURNITURE 1,08,531/- TOTAL 7,97,906/- I.T.A NO. 514/ASR/2016 4 4. THE LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY T HE AO. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THE AO DID NOT ACCEPT THE OFFER OF THE ASSESSEE, OF ADDITION OF RS.6 LACS , BEING AMOUNT DUE TO M/S STRYKER INDIA (P.) LTD., SUBJECT TO NO PENAL ACTION AND MAD E THE ADDITION AS WELL AS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT; THAT THE OFFER WAS MADE BY THE ASSESSEE TO AVOID ANY DISPUTE WITH THE DEPARTMENT, BUT THE DEPARTMENT DID NOT ALLOW THE ASSESSEE TO BUY PEACE OF MIND, SINCE THE ADDITION WAS MADE AS WELL AS PENALTY PROCEEDING WERE INITIATED AGAINST THE SURRE NDER OF RS.6 LACS, SUBJECT TO NO PENAL ACTION; THAT IT IS WELL ESTABLISHED THAT UNLE SS A STATEMENT OF SURRENDER IS ACCEPTED IN TOTO, IT AMOUNTS TO NO SURRENDER; THAT STATEMENTS OR ADMISSION OR AGREEMENTS MADE CANNOT FORM THE FOUNDATION FOR ASSE SSMENT; THAT THE ASSESSEE CAN ALWAYS SHOW THAT THE ADMISSION MADE BY HIM WAS INCO RRECT; THAT THE REST OF THE PARTIES, I.E., I) B. BRAUN MEDICAL INDIA PVT. LTD., II) B.M.W.T. PLANT PVT. LTD., III) PUNJABI ENTERTAINERS, IV) MEDITECH INTERNATIONAL AN D V) SHARE PUNJAB STEEL FURNITURE ARE CREDITORS OF THE ASSESSEE FROM EARLIE R YEARS, COPIES OF WHOSE ACCOUNTS, ON THE ASKING OF THE BENCH, STAND FILED. 6. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. I.T.A NO. 514/ASR/2016 5 7. HAVING HEARD, THE PARTIES IN THE LIGHT OF THE MA TERIAL PLACED ON RECORD, IT IS SEEN THAT THE LD. CIT(A), WHILE CONFIRMING THE ADDI TIONS MADE, HAS OBSERVED AS FOLLOWED: 3.1 GROUNDS OF APPEAL NOS. 1 & 2 PERTAINS TO THE A DDITION OF RS.7,97,906/-. THE AO HAS MENTIONED THE FACTS RELAT ING TO THE ISSUE IN PARA-3 OF THE ASSESSMENT ORDER. THAT AO ME NTIONS THAT THE ASSESSEE WAS REQUIRED TO GIVE COMPLETE ADDRESS OF VARIOUS PARTIES SHOWN AS SUNDRY CREDITORS AMOUNTING TO RS.7 8,82,619/- THE AO NOTED THAT FACT THAT WITH REGARD TO M/S STRY KER INDIA PVT. LTD., THE ASSESSEE OFFERED THE AMOUNT OF RS.7 LACS TO TAX SUBJECT TO NO PENALTY. THE AO FURTHER MENTIONED THA T WITH RESPECT TO THE OTHER PARTIES NAMELY M/S BRAUN MEDIC AL INDIA (P) LTD. (RS.29,601/-), BMWT PLANT (P) LTD. (RS.307 0), PUNJABI ENTERTAINERS (RS.,35,704/-), MEDITECH INTERNATIONAL (RS.21,000/-), SHERE PUNJAB STEEL FURNITURE (RS.1,0 8,531/-) THE ASSESSEE FAILED TO DISCHARGE THE ONUS OF ESTABLISHI NG THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THUS A TOTAL ADDITION OF RS.7,97,906/- WAS MADE. THE FACTS OF THE CASE, THE ORDER PASSED BY THE AO A ND THE SUBMISSIONS OF THE ASSESSEE DURING APPELLATE PROCEE DINGS HAVE BEEN CONSIDERED. THE ADDITION WAS MADE BY THE AO BE CAUSE THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF CERTAIN AMOUNTS OUTSTANDING AS SUNDRY CREDITORS. IN RESPECT OF ONE PARTY NAMELY M/S STRYKER INDIA PVT. LTD., THE ASSESSEE HAS HIMSE LF OFFERED THE AMOUNT TO TAX SUBJECT TO NO PENALTY IN RESPECT OF T HE OTHER I.T.A NO. 514/ASR/2016 6 PARTIES THE AR HAS NOT BEEN ABLE TO REBUT THE FINDI NG OF THE AO EVEN DURING THE APPELLATE PROCEEDINGS. THEREFORE, I N THE ABSENCE OF THE ASSESSEE TO PROVE THE IDENTITY AND G ENUINENESS OF THE TRANSACTIONS ETC. THE ADDITION MADE BY THE AO I S FOUND AS PER LAW AND HENCE SUSTAINED. 8. IT IS SEEN THAT AS OBSERVED BY BOTH THE TAXING A UTHORITIES, THE AMOUNT OF RS. 6 LACS PERTAINING TO M/S STRYKER INDIA (P.) LTD., WAS OFFERED TO TAX BY THE ASSESSEE HIMSELF. THIS OFFER HAS NOT BEEN REJECTED. STILL, T HE AMOUNT OF RS.6 LACS HAS BEEN ADDED. IN CIT VS. SMT. SUDARSHAN GUPTA, THROUGH L/ H, 10 DTR 184 (P & H) IT HAS BEEN HELD THAT A STATEMENT OF SURRENDER HAS TO BE ACCEPTED IN TOTO AND IF NOT, IT HAS TO BE IGNORED; AND THAT IF SURRENDER IS NOT ACC EPTED IN TOTO, IT AMOUNTS TO NO SURRENDER. 9. IN THE FOLLOWING DECISIONS IT HAS BEEN HELD THAT STATEMENTS/ADMISSIONS/AGREEMENTS MADE CANNOT FORM T HE FOUNDATION FOR ASSESSMENT; AND THAT THE ASSESSEE CAN ALWAYS SHOW T HAT THE ADMISSION MADE BY HIM WAS INCORRECT: I) KRISHANLAL SHIVCHAND RAI VS. CIT, 88 ITR 293 ( P & H). II) GREENVIEW RESTAURANT VS. ACIT, 263 ITR 169 (G AUHATI). III) ACIT VS. ANOOP KUMAR, 94 TTJ (ASR) 288. 10. THE AGREEMENT OF THE ASSESSEE, THAT SINCE THE A SSESSEE HAD ITSELF OFFERED THE AMOUNT OF RS.6 LACS CONCERNING M/S STRYKER INDIA PV T. LTD., SUBJECT TO NO PENALTY, I.T.A NO. 514/ASR/2016 7 HOWEVER, DOES NOT WEIGH WITH US. THIS PLEA, IF AT A LL, MIGHT BE AVAILABLE TO THE ASSESSEE IN PENALTY PROCEEDINGS AND IT WOULD BE DEA LT WITH IN SUCH PROCEEDINGS, AT THE APPROPRIATE STAGE, BY THE RELEVANT AUTHORITY/AU THORITIES, IN ACCORDANCE WITH LAW, IF NEED ARISES. IN THE PRESENT PROCEEDINGS, ON THE OTHER HAND, THIS ARGUMENT IS OF NO AVAIL TO THE ASSESSEE AND IT DOES NOT AID THE ASSES SEE TO BUTTRESS ITS CASE FOR DELETION OF THE ADDITION OF RS.6 LACS. AS SUCH, THIS ARGUMEN T IS REJECTED. 11. APROPOS STRYKER AND THE REMAINING PARTIES, AS A BOVE, THE ASSESSEE HAS CONTENDED THAT THESE PARTIES ARE CREDITORS OF THE A SSESSEE OF EARLIER YEARS AND THAT NO ADDITION IN SUCH CREDITORS OR EARLIER YEARS CAN BE MADE IN VIEW OF THE FOLLOWING DECISIONS: A) CIT VS. G P INTERNATIONAL LTD., 325 ITR 25 (P & H)., B) CIT VS. SOUTHERN ROADWAYS LTD., 282 ITR 379 (MAD)., C) CIT VS. JAI N EXPORTS PVT. LTD. 89 DTR (DEL) 265 AND D) MODERN DISTRIBUTORS VS. ITO, RENDE RED BY THE AMRITSAR BENCH, OF THE TRIBUNAL (SMC), VIDE ORDER DATED 12.04.2016, FO R A.Y. 2010-11, IN ITA NO.341/ASR/2015. COPIES OF THESE DECISIONS HAVE BEE N PLACED ON RECORD. THE COPIES OF ACCOUNTS OF ALL THE PARTIES, STATED TO BE CREDITORS OF THE EARLIER YEARS, ON OUR ASKING, HAVE BEEN PLACED ON RECORD. 12. IT IS SEEN THAT THE TAXING AUTHORITIES HAVE CON CURRENTLY HELD THAT THE ASSESSEE WAS NOT ABLE TO PROVE EITHER THE IDENTITY, OR THE C REDITWORTHINESS OF THE PARTIES, OR EVEN THE GENUINENESS OF THE TRANSACTIONS. IN VIEW O F THE ACCOUNTS OF THESE PARTIES I.T.A NO. 514/ASR/2016 8 FILED BEFORE US, HOWEVER, WE DEEM IT APPROPRIATE TO REMIT THIS APPEAL TO THE FILE OF THE AO, TO DECIDE THE SAME AFRESH IN ACCORDANCE WIT H LAW ON AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND EXAMININ G THE CORRECTNESS OR OTHERWISE OF THE CLAIM OF THE ASSESSEE THAT ALL THESE PARTIES ARE CREDITORS OF THE EARLIER YEARS. THE ASSESSEE, NO DOUBT, SHALL CO-OPERATE IN THE FRE SH PROCEEDINGS BEFORE THE AO. 13. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/01/2017. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUTANT MEMBER JUDICIAL MEMBER DATED 25 /01/2017 *AKV* ON TOUR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT BY ORDER AR/SR.P.S./P.S.