DCIT, New Delhi V. M/s Excella Life Sciences (P) Ltd., New Delhi

ITA 5691/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53013 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 15-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.5691/DEL/2010 ASSESSMENT YEAR : 2007-08 DCIT, CIRCLE 11 (1), NEW DELHI. VS. M/S EXCELLA LIFE SCIENCES (P) LTD., 135-B, 1 ST FLOOR, GAUTAM NAGAR, NEW DELHI. PAN : AABCE4639H (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI ROHIT GARG, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 11 TH OCTOBER, 2010 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL READ AS UNDER:- 1. THE ORDER OF THE LEARNED CIT (A) IS WRONG, ILLEG AL AND AGAINST THE PROVISIONS OF LAW, LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.30,14 ,000/- MADE BY THE A.O. ON ACCOUNT UNSECURED LOAN AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.39 ,000/- ON ACCOUNT OF CASH LOAN RECEIVED FROM SHRI UMESH KAUL. 4. THE APPELLANT CRAVES LEAVE TO ALTER OR AMEND ANY GR OUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. ITA NO.5691/DEL/2010 2 2. NOTICE OF HEARING WAS SENT TO THE ASSESSEE WHICH HAS BE EN SERVED AS PER ACKNOWLEDGEMENT PLACED ON RECORD. HOWE VER, AT THE TIME OF HEARING NONE WAS PRESENT ON BEHALF OF THE ASSESSE E. THEREFORE, WE PROCEEDED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DR AND AFTER CONSIDERING THE MATERIAL AV AILABLE ON OUR RECORD. 3. THE RETURN OF INCOME WAS FILED ON 11 TH NOVEMBER, 2007 AT A LOSS OF ` 16,12,011/-. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THERE WERE CASH CR EDITS IN THE BOOKS OF THE ASSESSEE AGGREGATING TO ` 30,14,000/- THE D ETAILS OF WHICH IS AS FOLLOWS:- SL.NO . NAME OF THE PARTY AMOUNT (`) 1. M/S AARK PHARMACEUTICALS 15,75,000/- 2. HEALTH N CARE (AGRESEN) 2,60,000/- 3. HEALTH N CARE (RML) CAR LOAN 9,79,000/- 4. SOUTH DELHI PHARMA LOAN 2,00,000/- 4. THE ASSESSEE DID NOT FURNISH CONFIRMATION FROM M/S AAR K PHARMACEUTICALS EXCEPT COPY OF INCOME-TAX RETURN FIL ED. IN RESPECT OF OTHER LOANS ALSO IN THE ABSENCE OF CONFIRMATIONS AND DE TAILS THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COULD NOT EXPLAIN THE CASH CREDIT, THEREFORE, THE AMOUNT OF ` 30,14,000/- WAS A DDED TO THE INCOME OF THE ASSESSEE U/S 68 ON ACCOUNT OF UNEXPLAINED CREDITS AND INCOME OF THE ASSESSEE WAS ASSESSED AT ` 14,02,000/- AFTER GIVING SET O FF OF RETURNED LOSS OF ` 16,12,011/-. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 5. AMONGST VARIOUS SUBMISSIONS MADE BY THE ASSESSEE BEFORE TH E CIT (A) ONE CONTENTION WAS THAT THE AFOREMENTIONED C REDITS MAINLY REPRESENT OLD BALANCES THE DETAILS OF WHICH ARE AS UNDE R:- ITA NO.5691/DEL/2010 3 I) M/S AARK PHARMACEUTICALS 5,70,000/- II) HEALTH N CARE (AGRESEN) 2,60,000/- III) SOUTH DELHI PHARMA LOAN 2,00,000/- 6. THE ABOVE FACTUAL ASPECT WAS FOUND TO BE CORRECT B Y THE LEARNED CIT (A) AND IT HAS BEEN FOUND THAT THE AFOREMENTIONE D BALANCES ARE OLD BALANCES, HENCE, THEY WERE DELETED ON THE GROUND THA T THESE ARE OLD BALANCES AND CANNOT BE ADDED IN THE YEAR UNDER CONSID ERATION. 7. SO FAR AS IT RELATES TO BALANCE AMOUNT OF ` 10,05, 000/- IN THE NAME OF AARK PHARMACEUTICALS A FINDING HAS BEEN RECOR DED BY THE LEARNED CIT (A) THAT SO AS IT RELATES TO OPENING BALAN CE OF ` 5,70,000/-, THE CREDIT WAS ACCEPTED BY THE ASSESSING OFFICER IN EARL IER YEAR IN THE ASSESSMENT ORDER DATED 21.11.2008 PASSED U/S 143 (3) OF TH E ACT, THEREFORE, IDENTITY OF THAT PARTY WAS ESTABLISHED. TH E CREDITS FOR THE YEAR UNDER CONSIDERATION WERE RECEIVED THROUGH CHEQU ES. THE ASSESSEE HAD FILED COPY OF BANK ACCOUNT OF UNION BANK O F INDIA FROM WHERE IT WAS FOUND THAT THE ENTRIES RECEIVED BY THE A SSESSEE WAS TALLYING. COPY OF THE INCOME-TAX RETURN WAS ALSO FIL ED WITH PAN, ALONG WITH COPY OF CONFIRMATION THAT CLOSING BALANCE IN TH EIR BOOKS OF ACCOUNT AS ON 31 ST MARCH, 2007 IS ` 21,45,000/-. ON THESE FATS, LEARNED CIT (A) HAS DELETED THE ADDITION. 8. NOW, COMING TO THE ADDITIONS OF ` 9,79,000/-, LEA RNED CIT (A) DIRECTED THE ASSESSEE TO FILE COPY OF CAR AGREEMENT BET WEEN HEALTH N CARE SITUATED NEAR RML HOSPITAL AND THE ASSESSEE WHICH IS DATED 26 TH FEBRUARY, 2007 AND FROM THAT AGREEMENT HE FOUND THA T IT IS A HIRE PURCHASE AGREEMENT BETWEEN THE TWO PARTIES. M/S HEALT H N CARE WOULD BE THE OWNER OF HONDA CIVIC VEHICLE NO. DL 4C AH 1671 AND THE ASSESSEE AND THE ASSESSEE WOULD GIVE A MONTHLY INSTALLMENT O F ` 31,666/- ON OR BEFORE 7 TH DAY OF EACH ENGLISH CALENDAR MONTH TO HEALTH N CARE (RML). DURING THE PERIOD OF HIRE PURCHASE AG REEMENT THE ITA NO.5691/DEL/2010 4 ASSESSEE WOULD CARRY OUT ALL THE LOSSES/DAMAGES RELATING TO THE SAID VEHICLE AND ON COMPLETION OF INSTALLMENTS OF ABOVE VE HICLES, THE SAID VEHICLE SHALL BE REGISTERED IN THE NAME OF RAKESH KOUL , OPERATION HEAD OF THE ASSESSEE COMPANY AS COMPANY VEHICLE. HE ALSO FOUND THAT A COPY OF AUTO LOAN SANCTION LETTER DATED 5 TH MARCH, 2007 FOR ` 9,79,000/- WHICH WAS ISSUED BY HDFC BANK, THE EMI OF WHICH WAS TO START FROM 2 ND MARCH, 2007 AT A SUM OF ` 31,666/- AND IT WAS SUBMITTE D BY THE ASSESSEE, IT IS ON ACCOUNT OF SUCH VEHICLE HEALTH N CARE CAR LOAN OF ` 9,79,000/- IS SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSE E. HE FOUND THAT THE ASSESSEE HAS CLAIMED THE DEPRECIATION ON THIS VE HICLE AND VEHICLE FORMS PART OF THE ASSESSEES DEPRECIATION SCHEDULE IN THE BALANCE SHEET FOR AN AMOUNT OF ` 11,89,415/- AS THE D IFFERENCE BETWEEN ` 11,89,415/- AND ` 9,79,000/- COMES TO ` 2, 10,415/- WHICH WAS PAID THROUGH CHEQUE BY THE ASSESSEE TO HEALTH N CARE DURING THE FINANCIAL YEAR 2006-07. LEARNED CIT (A) HAS FURTHER FOUND THAT THESE PAYMENTS HAVE BEEN CROSS VERIFIED FROM THE BANK ACCOUN T. THE ASSESSEE WAS ALSO DIRECTED TO FILE CONFIRMATION FROM HEAL TH N CARE TO THE INTENT THAT THE SAID CONCERN HAS NOT CLAIMED ANY DEPRECIATION ON THE AFOREMENTIONED CAR WHICH WAS ALSO FILED ON 28 TH SEPTEMBER, 2008 ALONG WITH COPY OF BALANCE SHEET OF HEALTH N CARE FO R FINANCIAL YEAR 2006-07 ALONG WITH THE SCHEDULE OF FIXED ASSETS WAS FILE D FROM WHERE IT WAS OBSERVED THAT AS AGAINST MOTOR CAR THEY HAVE A BALA NCE OF ONLY ` 2,54,718/- AS ON 31 ST MARCH, 2007 AND THERE IS NO ADDITION OF MOTOR CAR IN THE CASE OF M/S HEALTH N CARE FOR FINANCIAL YEAR 2 006-07. IT IS IN THESE CIRCUMSTANCES, LEARNED CIT (A) HAS ACCEPTED THE G ENUINENESS OF ` 9,79,000/- OUTSTANDING IN THE NAME OF M/S HEALTH N CARE CAR LOAN ACCOUNT. THE REVENUE IS AGGRIEVED, HENCE, IN APPEAL . 9. WE HAVE HEARD LD. DR ON THIS ISSUE AND HAVE CAREFUL LY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE ORDER PASSED B Y THE CIT (A). THE LEARNED DR RELYING UPON THE OBSERVATIONS O F THE ASSESSING ITA NO.5691/DEL/2010 5 OFFICER SUBMITTED THAT THE ASSESSEE DID NOT FURNISH PROPE R DETAILS BEFORE THE ASSESSING OFFICER, THEREFORE, THE ASSESSING OFFI CER WAS RIGHT IN ADDING THE AFOREMENTIONED AMOUNTS. THEREFORE, RE LYING UPON THE ORDER OF THE ASSESSING OFFICER, IT IS THE CASE OF THE LEA RNED DR THAT THE ADDITION HAS WRONGLY BEEN DELETED APROPOS GROUND NO.2 AND THE ORDER OF LEARNED CIT (A) SHOULD BE SET ASIDE AND THAT OF ASSE SSING OFFICER BE RESTORED. WE HAVE ALREADY DESCRIBED THAT OUT OF TOTA L ADDITION OF ` 30,14,000/-, A SUM OF ` 10,30,000/- REPRESENTED OLD B ALANCES WHICH COULD NOT BE CONSIDERED TO BE THE CREDITS IN THE CURR ENT FINANCIAL YEAR, THEREFORE, THE ADDITION TO THAT EXTENT HAS RIGHTLY B EEN DELETED BY THE LEARNED CIT (A). NOW, COMING TO THE BALANCE AMOUNT I.E., A SUM OF ` 10,05,000/- IN THE NAME OF AARK PHARMACEUTICALS, A F INDING OF FACT HAS BEEN RECORDED BY THE LEARNED CIT (A) THAT THE EXISTE NCE OF THE CREDITOR WAS ACCEPTED BY THE ASSESSING OFFICER HIMSELF IN THE IMME DIATE PRECEDING FINANCIAL YEAR WHERE THE CREDIT IN THE NA ME OF THE CREDITOR AMOUNTING TO ` 5,70,000/- WAS ACCEPTED BY WAY OF AN ORDER PASSED U/S 143 (3) OF THE ACT. COPY OF INCOME-TAX RETURN OF T HE CREDITOR ALONG WITH PAN WAS ALSO FILED. CONFIRMATION WAS ALSO FILED AND E NTRIES WERE TALLIED FROM THE BANK ACCOUNT. THESE FACTS HAVE NOT BEEN CON TROVERTED BY THE LEARNED DR BY BRINGING ANY MATERIAL ON RECORD TO SHO W THAT THESE FINDINGS OF FACTS ARE INCORRECT. IN THE ABSENCE OF AN Y SUCH MATERIAL, WE DECLINE TO INTERFERE IN THE DELETION MADE BY THE CI T (A). 10. NOW, COMING TO THE ADDITION OF ` 9,79,000/- AS C AR LOAN, ALL THE DOCUMENTARY EVIDENCE WERE FILED ON THE BASIS OF WHICH LEARNED CIT (A) HAS HELD THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE COR RECTNESS OF THE CREDIT. SUCH POSITION HAS BEEN DISCUSSED IN THE EAR LIER PART OF THIS ORDER. IN THE ABSENCE OF ANY MATERIAL BEING BROUGHT ON RECORD TO CONTROVERT SUCH FACTUAL FINDINGS RECORDED BY THE LEAR NED CIT (A), WE DECLINE TO INTERFERE IN SUCH DELETION. ITA NO.5691/DEL/2010 6 11. IN VIEW OF THE ABOVE DISCUSSION, WE FIND THAT ADDI TION OF ` 30,14,000/- HAS RIGHTLY BEEN DELETED BY LEARNED CIT (A). THEREFORE, GROUND NO.2 OF THE REVENUES APPEAL IS DISMISSED. 12. NOW, COMING TO GROUND NO.3, IT WAS FOUND THAT NO ADDITION OF ` 39,000/- HAS BEEN MADE BY THE ASSESSING OFFICER. IT IS A LSO FOUND FROM THE ORDER OF THE CIT (A) THAT NO SUCH ADDITION HAS BE EN DELETED BY LEARNED CIT (A). THE CONTENTION OF THE ASSESSEE BEFORE CIT (A) WAS ONLY THAT THE SAID CREDIT OF ` 39,000/- WAS NOT IN VI OLATION OF PROVISIONS OF SECTION 269-SS, THEREFORE, PENALTY PROCEEDINGS U/ S 271D COULD NOT BE INITIATED AND ON THESE GROUNDS LEARNED CIT (A) HAS HELD THAT THE INITIATION OF PENALTY PROCEEDING IS A SEPARATE PROCEE DING AND AS NO CAUSE OF ACTION HAS ARISEN, THEREFORE, THE SAID GROUND IS PREMATURE AND IS NOT REQUIRED TO BE ADJUDICATED UPON. AS NO ADDITI ON OF RS.39,000/- HAS EITHER BEEN MADE BY THE ASSESSING OFFICER OR UPHELD BY THE CIT (A), THIS GROUND DOES NOT ARISE OUT OF ORDER OF CIT (A ), THEREFORE, DISMISSED. 13. GROUND NOS.1 AND 4 ARE GENERAL GROUNDS WHICH NEED NO ADJUDICATION. 14. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.10.201 1. SD/- SD/- [SHAMIM YAHYA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 21.10.2011. DK ITA NO.5691/DEL/2010 7 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES