Sh. Krishan Gopal Singla, Sangrur V. Pr.CIT, Patiala

ITA 59/CHANDI/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4069 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-08-2021
• Assessment Year: 2017-2018
• Appeal Filed On: 30-04-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C CHANDRAKANTA
• Keywords: Business income; Revision of order; Set aside
• Section: 143(3); 133A; 69A; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A, CHANDIGARH , ! ' # $ %! , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.59/CHD/2021 / ASSESSMENT YEAR : 2017-18 SH.KRISHAN GOPAL SINGLA PROP. M/S SINGLA SURGICAL HOSPITAL, MEHAL MUBARK, SANGRUR . THE PR. COMMISSIONER OF INCOME TAX, PATIALA. ./PAN NO: ABNPS5996D /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADV. ! / REVENUE BY : SMT.C.CHANDRAKANTA, CIT ' # $ /DATE OF HEARING : 26.08.2021 %&'( $ /DATE OF PRONOUNCEMENT : 04.10.2021 (HEARING THROUGH WEBEX) /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE LEARNED PRINCIPAL COMMISSI ONER OF INCOME TAX, PATIALA [(IN SHORT THE LD. PR. CIT DAT ED 31.03.2021 RELATING TO ASSESSMENT YEAR 2017-18, PAS SED IN EXERCISE OF HIS REVISIONARY JURISDICTION U/S 263 OF THE OF THE ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 2 OF 12 INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS A CT). 2. THE BRIEF FACTS RELATING TO THE CASE ARE THAT TH E ASSESSEE IS A DOCTOR BY PROFESSION. THAT DURING THE IMPUGNED ASSESSMENT YEAR A SURVEY U/S 133A OF THE A CT WAS CONDUCTED ON HIS BUSINESS PREMISES ON 30.08.2016. I N CONSEQUENCE TO THE DISCREPANCIES FOUND BY THE SURVE Y TEAM THE ASSESSEE SURRENDERED A TOTAL AMOUNT OF RS.50LAC S AS UNDER: UNEXPLAINED ADVANCES MADE = RS.40,55,000/- UNEXPLAINED CASH IN HAND = RS. 9,45,000/- TOTAL = RS.50,00,000/- 3. THE SAID AMOUNT WAS INCLUDED AS SURRENDERED INCO ME IN THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE FOR T HE YEAR AND RETURNED TO TAX UNDER THE HEAD INCOME FROM BUS INESS AND PROFESSION, PAYING TAXES AT THE NORMAL RATE AP PLICABLE TO BUSINESS INCOME. THE AO, IN SCRUTINY ASSESSMENT DONE U/S 143(3) OF THE ACT, ACCEPTED THE SAME MAKING ONL Y AN ADDITION OF RS.5,100/- TO THE RETURNED INCOME. 4. THE LD. PR. CIT, ON PERUSING THE ASSESSMENT RE CORD WAS OF THE VIEW THAT THE SURRENDERED INCOME BEING UNEXPLAINED, OUGHT TO HAVE BEEN TAXED AT THE HIGHER TAX RATE ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 3 OF 12 OF 77.25% AS PRESCRIBED U/S 115BBE OF THE ACT FOR UNEXPLAINED INCOMES. HE, THEREFORE, ISSUED A SHOW C AUSE NOTICE U/S 263 OF THE ACT TO THE ASSESSEE AS TO WHY THE ASSESSMENT ORDER BE NOT HELD ERRONEOUS AND CAUSING PREJUDICE TO THE REVENUE, FOR HAVING TAXED THE SURR ENDERED INCOME AT THE NORMAL RATE AS AGAINST THE HIGHER RAT E APPLICABLE AS PRESCRIBED BY SECTION 115BBE OF THE A CT. DUE REPLY WAS FILED BY THE ASSESSEE AND AFTER AFFORDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE THE LD. PR. CIT HELD THAT THE AO HAVING NOT MADE NECESSARY ENQUIRIES ABO UT THE SURRENDERED INCOME BEFORE DETERMINING ITS TAXABILIT Y, THE ORDER PASSED WAS ERRONEOUS AS WELL AS PREJUDICIAL T O THE INTEREST OF THE REVENUE. HE ACCORDINGLY SET ASIDE T HE ORDER TO THE FILE OF THE AO FOR PASSING AFRESH ORDER IN A CCORDANCE WITH LAW IN RESPECT OF THE IMPUGNED ISSUE. 5. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US CHALLENGING THE ORDER OF THE LD.PR .CIT ON THE FOLLOWING GROUNDS: 1. THAT THE WORTHY PCIT, PATIALA HAS ERRED IN ASS UMING THE JURISDICTION U/S 263(1) OF THE INCOME TAX ACT, 1961, AND, THEREBY, SETTING ASIDE THE ASSESSMENT ALREADY FRAMED U/S 143(3) VIDE ORDER DATED 29 TH MARCH, 2019 TO THE FILE OF THE ASSESSING OFFICER. 2. THAT THE WORTHY PCIT, PATIALA HAS FAILED TO APPR ECIATE ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 4 OF 12 THAT THE ASSESSMENT WAS COMPLETED AFTER DUE APPLICATION OF MIND BY THE CONCERNED AO AND, THEREFORE, THE PROVISION OF SECTION 263 ARE NOT APPLICABLE. 3. THAT THE FINDING OF THE PCIT, ABOUT THE SUM OF R S. 50 LACS TO THE ASSESSED U/S 69A R.W.S. 115BBE AND TO BE CHARGED TO A SPECIAL RATE OF TAX IS WHOLLY MISCONCEIVED AND AGAINST THE FACTS AND CIRCUMSTANCE S OF THE CASE. 4. THAT THE CASE LAWS WHICH HAVE BEEN CITED BY THE PCIT, PATIALA ARE NOT APPLICABLE TO THE FACTS OF TH E CASE. 5. THAT THE WORTHY PCIT, PATIALA HAS ERRED IN APPLY ING THE (EXPLANATION 2) TO SECTION 263 INSERTED W.E.F 01.06.2015 AS THE CONCERNED ASSESSING OFFICER HAD DULY MADE APPROPRIATE ENQUIRIES AND APPLIED HIS MIN D AND ASSESSED THE INCOME OFFERED DURING SURVEY AS BUSINESS INCOME. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, A ND ALTER ANY OF THE GROUNDS OF APPEAL OR TO TAKE ANY ADDITIO NAL GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY DISP OSED OFF. 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO GON E THROUGH THE BRIEF SYNOPSIS FILED BY THE LD.COUNSEL FOR THE ASSESSEE IN WRITING BEFORE US DATED 26.08.2021 AND THE DOCUMENTS REFERRED TO BEFORE US. 7. THE LD.PR CIT HAS HELD THE ASSESSMENT ORDER PASS ED BY THE AO IN THE IMPUGNED CASE U/S 143(3) OF THE ACT A S ERRONEOUS AND CAUSING PREJUDICE TO THE REVENUE FOR HAVING ACCEPTED THE SURRENDERED INCOME OF RS.40,55,000/- A S BUSINESS INCOME, AS RETURNED BY THE ASSESSEE, AND F OR HAVING ACCEPTED CONSEQUENTLY TAXES PAID THEREON A T NORMAL ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 5 OF 12 RATES, WHEN THERE WAS NOTHING ON RECORD EXPLAINING THEIR SOURCE AND WITHOUT CONDUCTING ANY INQUIRY REGARDI NG THEIR SOURCE, WHICH THEREFORE, AS PER THE LD.PR.CIT OUGH T TO HAVE RESULTED IN THE SURRENDERED INCOME BEING TREATED A S FROM UNEXPLAINED SOURCES AND TAXED AT HIGHER RATES OF 77 .25%, AS PROVIDED U/S 115BBE OF THE ACT. 8. THERE IS NO DISPUTE VIS A VIS THE POSITION OF LA W THAT INCOME/INVESTMENTS FROM UNEXPLAINED SOURCES ARE TA XED AT A MUCH HIGHER RATE AS PRESCRIBED UNDER SECTION 115B BE OF THE ACT. 9. THE PRIMARY CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE WHILE CHALLENGING THE FINDINGS OF THE LD.P R.CIT, WAS THAT THE DOCUMENTS AND MATERIAL FOUND DURING SURVEY REVEALED THE SOURCE OF THE SURRENDER MADE AS BEING FROM THE MEDICAL PROFESSION OF THE ASSESSEE ITSELF AND THE A O HAVING APPLIED HIS MIND TO IT AND ALSO TO THE SUBMISSIONS OF THE ASSESSEE BEFORE HIM, HAD RIGHTLY FORMED THE VIEW TH AT THE SURRENDERED INCOME RELATED TO THE PROFESSION OF THE ASSESSEE AND ASSESSED IT AS SUCH. THAT THE AO HAD ALSO NOTED THAT THE ASSESSEE HAD PAID ADVANCE TAX AT NORMAL TAX RAT ES. THAT THEREFORE THE ORDER OF THE AO WAS NOT ERRONEOUS ON ACCOUNT OF HAVING ACCEPTED THE TREATMENT OF THE SURRENDERE D INCOME ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 6 OF 12 AS BUSINESS INCOME OF THE ASSESSEE PAYING THEREFORE TAXES ON THE SAME AT NORMAL RATES APPLICABLE. 10. WE HAVE CAREFULLY GONE THROUGH ALL THE DOCUMENT S AND EVEN THE CASE LAWS REFERRED TO BY THE LD.COUNSEL FO R THE ASSESSEE AND AFTER GOING THROUGH THE SAME WE ARE UN ABLE TO AGREE WITH THE LD.COUNSEL FOR THE ASSESSEE THAT THE SOURCE OF THE SURRENDERED INCOME, AS BEING FROM THE ASSESS EES PROFESSION OF MEDICAL PRACTITIONER, STOOD DISCLOSED TO THE AO. FOR THAT MATTER, WE FIND THAT THE SOURCE HAS NO T BEEN DISCLOSED SATISFACTORILY TO THE LD. PR.CIT ALSO DUR ING REVISIONARY PROCEEDINGS. 11. THE DOCUMENTS REFERRED TO BY THE LD.COUNSEL FO R THE ASSESSEE WERE FILED BEFORE US PAPER BOOK PAGE NOS.4 7 TO 53 AND ON GOING THROUGH THE SAME WE FIND THAT THE CONT ENTION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE SAID D OCUMENTS, FOUND DURING SURVEY ,THEMSELVES REVEALED THE SOURCE OF THE SURRENDER MADE AS BEING ON ACCOUNT OF THE MEDICAL PROFESSION CARRIED OUT BY THE ASSESSEE, FALLS FLAT. A PERUSAL OF THESE DOCUMENTS REVEALS THAT PAGE NOS.47 TO 49 C ONTAINS NAMES OF PERSONS WITH THE AMOUNTS NOTED AGAINST THE M TOTALING IN ALL TO RS.40,55,000/- WHICH THE ASSESSE E HAD SURRENDERED AS UNACCOUNTED ADVANCES. THE CONTENTS O F THE ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 7 OF 12 PAGES ARE AS UNDER: PAGE NO.47) RAJESH KUMAR = RS.12.01 L PAGE NO.48) BALJINDER SINGH = RS.9,50,000/- PAGE NO 49) VISHAL GUPTA = RS.8,40,000/- PAGE NO 49) SAHIL JINDAL = RS.10,64,000/- TOTAL = RS.40,55,00,000/- 12. THE REST OF THE PAGES FROM 51 TO 53 LIST CERTAI N CARD NUMBERS WITH NAMES OF PERSONS. THE LD.COUNSEL FOR T HE ASSESSEE HAS STATED ON THE BASIS OF THESE DOCUMENTS THAT THE AMOUNT OF RS.40,55,000/-SURRENDERED, RELATES TO NAMES OF PATIENTS MENTIONED AGAINST THEIR CARD NUMBERS AT PAGES 51 TO 53. HE HAS REPEATEDLY ASSERTED THERE BEING CO RRELATION BETWEEN THIS ALLEGED LIST OF PATIENTS AND THE AMOUN T OF RS.40,55,000/- AS MENTIONED ABOVE. BUT THERE IS NOT HING TO SUGGEST EVEN THE SLIGHTEST OF INTERCONNECTION OR IN TERRELATION BETWEEN THE TWO. THE DOCUMENTS ALLEGEDLY LISTING T HE CARD NUMBERS AND NAMES OF PATIENTS HAS NO FIGURES OR AMO UNTS MENTIONED TO SUGGEST ANY AMOUNT HAVING BEEN COLLECT ED FROM THEM, WHAT TO SAY OF RS.40,55,000/- THEY APPEAR TO BE JUST TWO DIFFERENT SETS OF DOCUMENTS, ONE ADMITTEDLY LI STING THE ADVANCES GIVEN BY THE ASSESSEE TO VARIOUS PERSONS A ND THE OTHER BEING ONLY A LIST OF PATIENTS WITH THEIR CARD NUMBERS. THERE IS NOTHING TO SUGGEST ANY AMOUNT ALLEGEDLY C OLLECTED FROM THE PATIENTS SO LISTED IN THE DOCUMENTS WHAT T O SAY OF ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 8 OF 12 RS.40.55LACS COLLECTED. THE VIEW OF THE AO FORMED F ROM THESE DOCUMENTS THAT THE SURRENDER RELATED TO THE BUSINES S OR PROFESSION OF THE ASSESSEE, AS ARGUED BY THE LD.COU NSEL FOR THE ASSESSEE, WE HOLD CANNOT BE A PLAUSIBLE VIEW. THE AO COULD NOT HAVE FORMED SUCH VIEW IN THE FACTS AND CIRCUMSTANCES AS WERE THERE BEFORE HIM. 13. MOREOVER, WE FIND THAT BEFORE THE AO THE ASSESS EE HAD NOT OFFERED ANY SUCH EXPLANATION, NOR DID HE OFFER ANY SUCH EXPLANATION BEFORE THE LD. PR.CIT. IT IS ONLY BEFOR E US THAT THE LD.COUNSEL FOR THE ASSESSEE HAS OFFERED THIS EX PLANATION THAT TOO, WHICH WE HAVE FOUND TO BE DEVOID OF ANY SUBSTANCE/MERITS. THEREFORE, THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE DOCUMENTS/MATE RIAL FOUND DURING SURVEY ITSELF REVEALED THE SOURCE OF T HE INCOME AND THE AO HAD ACCORDINGLY FORMED A PLAUSIBLE VIEW TO TAX THE SAME AS BUSINESS INCOME OF THE ASSESSEE, IS WE HOLD NOT ACCEPTABLE AND IS ACCORDINGLY REJECTED. 14. THE LD.COUNSEL FOR THE ASSESSEE HAS ALSO RELIED UPON THE STATEMENT MADE BY THE ASSESSEE DURING SURVEY TO CONTEND THAT THE SOURCE OF THE SURRENDERED INCOME S TOOD EXPLAINED AS BEING FROM HIS BUSINESS/PROFESSION. TH E STATEMENT WAS PLACED BEFORE US AT PAPER BOOK PAGE NO.20 AS UN DER: ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 9 OF 12 ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 10 OF 12 15. THE LD.COUNSEL FOR THE ASSESSEE HAS TRIED TO DR IVE HOME HIS ARGUMENTS FROM THE REPLY OF THE ASSESSEE T O THE QUESTION ASKED AS ABOVE TO HIM TO EXPLAIN THE AMOUN T OF RS.40,55,000/- NOTED IN A NOTEBOOK FOUND DURING SUR VEY ,AS BEING SURRENDERED AS ADDITIONAL INCOME OF THE ASSES SEE, AS A POINTER TO THE FACT THAT IT HAD BEEN SURRENDERED AS A BUSINESS INCOME. 16. WE ARE NOT CONVINCED WITH THE SAME. WHAT TRANSP IRES FROM A BARE READING OF THE STATEMENT OF THE ASSESSE E IS THAT HE HAD MERELY MADE A SURRENDER OF RS.40,55,000/- OV ER AND ABOVE HIS NORMAL INCOME FOR THE YEAR. NOTHING MORE CAN BE READ INTO THE STATEMENT MORE PARTICULARLY TO THE EF FECT, AS CANVASSED BY THE LD.COUNSEL FOR THE ASSESSEE, THAT THE SURRENDER SPECIFICALLY WAS STATED TO BE ON ACCOUNT OF HIS BUSINESS OR PROFESSION. FURTHER FOR THE SAKE OF ARG UMENTS, EVEN IF IT IS ACCEPTED SO, THE ASSESSEE CANNOT DERI VE ANY BENEFIT FROM A MERE ORAL SUBMISSION/STATEMENT MADE BY HIM AS THE SAME IS NOT SUFFICIENT TO EXPLAIN THE SOURCE OF ADVANCE. THEREFORE, THIS CONTENTION OF THE LD.COUNS EL FOR THE ASSESSEE IS ALSO REJECTED. ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 11 OF 12 17. THE OTHER CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAD PAID ADVANCE TAXES ON THE SURRENDERED INCOME AT THE NORMAL RATE IS ALSO OF NO RELEVANCE, IN OUR VIEW, SINCE MERELY PAYING TAXES A T THE NORMAL RATES ON A PARTICULAR INCOME WILL NOT DETERM INE ITS CHARACTER AS BEING FROM EXPLAINED SOURCES. 18. IN VIEW OF THE ABOVE, WE ARE IN AGREEMENT WITH THE LD. PR.CIT THAT THE AO HAD ACCEPTED THE SURRENDERED INC OME OF THE ASSESSEE AS BEING FROM THE BUSINESS OR PROFESSI ON WITHOUT MAKING ANY ENQUIRIES REGARDING THE SAME DES PITE THE FACT THAT THE DOCUMENTS/MATERIAL FOUND DURING S EARCH DID NOT REVEAL THE NATURE OF THE INCOME AT ALL AND NO EXPLANATION WAS OFFERED BY THE ASSESSEE DURING ASSE SSMENT PROCEEDINGS, NOR IN THE STATEMENT RECORDED DURING S EARCH. EVEN BEFORE THE LD. PR.CIT DURING REVISIONARY PROCE EDINGS WHEN ASKED TO EXPLAIN THE SOURCE THE ASSESSEE, WE F IND, WAS UNABLE TO PROVE THE SOURCE AS BEING BUSINESS AND PROFESSION. THEREFORE, THE FINDINGS OF THE LD. PR.C IT THAT THE ORDER PASSED BY THE AO IN THE LIGHT OF THE ABOVE FA CTS AND CIRCUMSTANCES WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, WE HOLD IS CORRECT. THE ORDER OF TH E LD. PR.CIT PASSED U/S 263 OF THE ACT IS, THEREFORE, UPH ELD. ITA NO.59/CHD/2021 A.Y. 2 017-18 PAGE 12 OF 12 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON 4 TH OCTOBER, 2021. SD/- SD/- ' # $ %! (SANJAY GARG) (ANNAPURNA GUPTA) /JUDICIAL MEMBER &' /ACCOUNTANT MEMBER )' /DATED: 4 TH OCTOBER, 2021 * ! * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35# / GUARD FILE &) ' / BY ORDER, / ASSISTANT REGISTRAR