The Income Tax Officer, Amritsar. V. M/s Saini Hospital, Amritsar.

ITA 725/ASR/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2436 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 1996-1997
• Appeal Filed On: 04-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GHANSHAM SHARMA
• Assessee Lawyers: VINAMAR GUPTACA
• Keywords: Unexplained cash credit
• Section: 147; 148; 144; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.725(ASR)/2014 ASSESSMENT YEAR:1996-97 PAN: INCOME TAX OFFICER, VS. M/S. SAINI HOSPITAL, WARD-5(4), AMRITSAR. OPP. CHIEF KHALSA DEWAN, G.T.ROAD, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. GHANSHAM SHARMA, RESPONDENT BY:SH. VINAMAR GUPTA,CA DATE OF HEARING: 17/11/2015 DATE OF PRONOUNCEMENT: 08/01/2016 ORDER THIS IS THE DEPARTMENTS APPEAL FOR THE ASSESSMEN T YEAR 1996-97, AGAINST THE ACTION OF THE LD. CIT(A) IN DELETING A DDITION OF RS.12,44,000/- MADE BY THE AO ON ACCOUNT OF CASH CREDITS MADE IN T HE CAPITAL OF PARTNERS. 2. THE FACTS ARE THAT WHILE COMPLETING ASSESSMENT FOR AY 1998-99, THE AO NOTICED THAT THERE WERE CREDITS IN PARTNERS CAPITAL ACCOUNTS AS UNDER: NAME ASSESSMENT YEAR 96-97 ASSTT. YEAR 97-98 JAGDISH 1,00,000 JARNAIL SINGH S/O JAGDISH SINGH 4,53,000 SARWAN SINGH 3,75,000 SATNAM SINGH 3,16,000 1,70,000 NIRMAL SINGH 1,57,000 SAINI HOSPITAL 12,44,000 3,27,000 ITA NO.725(ASR)/2014 ASSESSMENT YEAR :1996-97 2 THE AO INITIATED ACTION U/S 148 AND COMPLETED THE A SSESSMENT U/S 144 R.W.S. 147 ON ACCOUNT OF FAILURE OF THE ASSESSEE TO COMPLY WITH SECTION 142(1). THE AO MADE THE ADDITION OF ABOVE AMOUNTS I N THE HANDS OF FIRM AS WELL AS PARTNERS. THE ASSESSEE EXPLAINED IN APPE AL BEFORE CIT(A) THAT ALL THE RELEVANT PAPERS WERE WITH PREVIOUS COUNSEL, WHO WAS INVOLVED IN FINANCIAL IRREGULARITIES. IT WAS ALSO STATED THAT F ATHER OF PARTNERS SH. JAGDISH SINGH HAD UNDERGONE BYE-PASS SURGERY AND TH EREFORE, THE ASSESSEE COULD NOT COMPLY WITH THE NOTICES ISSUED B Y THE AO. THE ASSESSEE SUBMITTED THE EVIDENCE OF CAPITAL INTRODUC TION IN M/S. SAINI HOSPITAL. THE CIT(A) REMANDED THE CASE BACK TO THE AO WHO SUBMITTED TWO REMAND REPORTS DATED 06.10.2004 AND 03.12.2004. THE CIT(A) DELETED THE ADDITION IN THE HANDS OF FIRM AND NIRMA L SINGH FOR AY 1997- 98 BUT UPHELD THE ADDITION IN THE HANDS OF SH. SATN AM SINGH FOR AY 1997-98. 2.1. THE DEPARTMENT AND THE ASSESSEE FILED APPEALS BEFORE THE ITAT. ITAT VIDE ORDER IN ITA NO.213/ASR/2005 DATED 10.02. 2005 UPHELD THE ORDER OF CIT(A) AND DELETED THE ADDITION IN THE HAN DS OF JAGDISH SINGH ON ACCOUNT OF OPENING CAPITAL ACCOUNT BALANCE OF SH.JA GDISH SINGH IN THE BOOKS OF JAGDISH TRADING COMPANY AT RS.2,09,207/- O N 01.04.1995 OUT OF WHICH HE MADE WITHDRAWALS OF RS.1,00,000/- ON DI FFERENT DATES. ALL OTHER CASES WERE SET ASIDE BY ITAT AS PER FOLLOWING DETAILS: NAME OF ASSESSEE ASSESSMENT YEAR SET ASIDE VIDE ITAT ORDER M/S. SAINI HOSPITAL, G.T.ROAD, ASR 1996-97 ITA NO.34/ASR/2006 DATED 11.7.2007 M/S. SAINI HOSPITAL, G.T.ROAD, ASR 1997-98 ITA NO.216/ASR/2005 DATED 01.05.2006 SATNAM SINGH,PARTNER, M/S. SAINI HOSPITAL, G.T.ROAD, ASR 1996-97 ITA NO.215/ASR/2005 DATED 01.05.2006 SATNAM SINGH, PARTNER M/S. SAINI HOSPITAL, G.T.ROAD, ASR 1997-98 ITA NO.180/ASR/2005 DATED 01.05.2006 ITA NO.725(ASR)/2014 ASSESSMENT YEAR :1996-97 3 SWARAN SINGH, PARTNER M/S. SAINI HOSPITAL, G.T.ROAD, ASR 1996-97 ITA NO.217/ASR/2005 DATED 29.5.2006 JARNAIL SINGH, PARTNER M/S. SAINI HOSPITAL, G.T.ROAD, ASR 1996-97 ITA NO.214/ASR/2005 DATED 29.05.2006 2.2. FURTHER, ITAT HAS MADE FOLLOWING OBSERVATIONS IN ITS ORDER: A) SALE DEEDS OF AGRICULTURAL LAND ARE IN NAME OF O THER CO- OWNERS AND ONE IS SALE AGAINST AFFIDAVIT. B) DISTRIBUTION OF SALE PROCEEDS AMONGST PARTNERS I S NOT EQUAL. C) THERE IS CONTRADICTION IN THE ORDER OF CIT(A) WH O HAS DELETED THE ADDITION IN THE HANDS OF FIRM ON GROUNDS OF DEP OSIT BEING EXPLAINED OUT OF AGRICULTURE INCOME BUT UPHELD THE ADDITION IN THE HANDS OF ONE OF PARTNERS SATNAM SINGH ON THE GROUND THAT CAPITAL ACCOUNT DOES NOT REFLECT THE DEPOSIT OF RS.1,70,000/-. 2.2. FURTHER, ITAT DIRECTED THAT WHILE DECIDING THE APPEALS AFRESH, THE CIT(A) SHALL TAKEN INTO ACCOUNT THE WRITTEN SUBMISS IONS FILED BEFORE THE TRIBUNAL AND DECIDE THE GROUNDS ON MERITS AND PASS A SPEAKING ORDER AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEAR D. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITIONS OF RS.12,44,000/- MADE BY THE AO ON ACCOU NT OF CASH CREDITS MADE IN THE CAPITAL ACCOUNTS OF THE PARTNERS OF THE ASSESSEE HOSPITAL. 4. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HA S ERRED IN DELETING THE ADDITION CORRECTLY MADE BY THE AO ON ACCOUNT OF CASH CREDITS MADE IN THE CAPITAL ACCOUNTS OF THE PARTNERS; AND THAT W HILE DOING SO, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD REMAINED UNABLE DURING THE ASSESSMENT PROCEEDINGS TO PROVE THE SOURCE OF T HE SAID CAPITAL. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. ITA NO.725(ASR)/2014 ASSESSMENT YEAR :1996-97 4 6. THE LD. CIT(A), WHILE DELETING THE ADDITIONS, HA S OBSERVED AS FOLLOWS: 7. I HAVE GONE THROUGH THE SUBMISSIONS OF THE COUN SEL AS WELL AS DOCUMENTS, EVIDENCE, ORDER OF CIT(A), ORDER OF HON BLE ITAT, SUBMISSIONS MADE BEFORE ITAT AND THE ORDER OF THE A O IN THE CASE OF ALL THESE ASSESSEE. IT IS EVIDENT FROM THE RECORD T HAT CAPITAL INTRODUCED BY THE PARTNERS HAVE BEEN ADDED BOTH IN THE HANDS OF PARTNERS AS WELL AS IN THE HAND OF FIRM. AS THE PAR TNERS HAVE ADMITTED TO HAVE INTRODUCED CAPITAL IN THE FIRM ADD ITION WILL BE CONFIRMED IN THE HAND OF ONLY ONE ENTITY EITHER PAR TNER OR FIRM. IN THE CASE OF PARTNER, ADDITION OF RS.1,00,000/- HAS ALRE ADY BEEN DELETED BY THE ITAT ON GROUND OF AVAILABILITY OF OPENING CA PITAL IN HANDS OF JAGDISH SINGH AND THIS ISSUE HAS SETTLED. IN VIEW O F ABOVE, THE ADDITION TO THE EXTENT OF RS.1,00,000/- IS DELETED IN THE HAND OF FIRM ALSO IN ASSESSMENT YEAR 1996-97. IN THE CASE OF PARTNERS, THE COUNSEL HAS SUBSTANTIA TED THE CAPITAL INTRODUCTION WITH THE SUPPORT OF CASH PROCEEDS THRO UGH SALE DEEDS OF AGRICULTURE LAND WHICH HAD COME TO THE SHARE OF PAR TNERS DUE TO PARTITION DEEDS. THE PARTITION TOOK PLACE BETWEEN S ARDAR JAGDISH SINGH ONE OF PARTNER SAINI HOSPITAL AND HIS BROTHER S EARLIER. IT RESULTED IN ENTITLEMENT OF S. JAGDISH SINGH AND HIS FAMILY 58 KANAL AND 13 MARLAS OF LAND VILLAGE SATHIALI. THE ABOVE L AND WAS NOT IN THE NAME OF S.JAGDISH SINGH AND HIS FAMILY AND WHEN 48 KANAL OF SAID LAND WAS SOLD BY EXECUTING 3 DIFFERENT DEEDS BY CO-OWNERS OF THE SAID AGRICULTURE LAND, THE PROCEEDS WERE HANDED OVER TO THE FAMILY OF S. JAGDISH SINGH. THE AO HAS RECORDED STA TEMENT OF PATWARI ALSO AND THIS SUPPORTS CONTENTION OF THE AS SESSEE ALSO. THE AO HAS TAKEN COGNIZANCE OF THESE FACTS IN HIS REMAN D REPORT. AS PER STATEMENT OF PATWARI, S. JAGDISH SINGH AND HIS FAMI LY WAS ENTITLED TO 58 KANAL AND 13 MARLA OF LAND OUT OF WHICH ONLY 48 KANAS HAVE BEEN SOLD, THEREFORE, THERE WAS FURTHER UNDIVIDED P ROPERTY OF 52 KANAL AND 10 MARLA OF S. JAGDISH SINGH HAVING 1/4 TH SHARE IN IT, WHICH MEANS UNDIVIDED FAMILY OF S.JAGDISH SINGH WA S STILL HAVING MORE THAN 23 KANALS 5 MARLAS PROPERTY UNSOLD WITH T HEM. I AGREE WITH THE CONTENTION OF THE ASSESSEE IN THIS REGARD AS DISPOSAL OF PROPERTY WAS NOT COMPLETED ITS DISTRIBUTION WAS ALS O NOT COMPLETED. IN VIEW OF THE SAME, UNEQUAL MONEY WAS RECEIVED BY VARIOUS PARTNERS. THE AO HAS ALSO RECORDED STATEMENT OF COM MISSION AGENT TO WHOM AGRICULTURE PRODUCE WAS SOLD BY S.BAKSHISH SINGH AND MONEY WAS GIVEN TO PARTNERS OF SAINI HOSPITAL, SAM E WAS MENTIONED IN THE REMAND REPORT BY THE AO. THE COUNS EL OF THE ASSESSEE SUBMITTED CAPITAL ACCOUNT OF ALL THE PARTN ERS TO SHOW CASH FLOW AND AVAILABILITY OF CASH WITH THESE PARTNERS W HICH HAVE GONE IN THE CAPITAL ACCOUNT OF PARTNERS IN SAINI HOSPITAL. THE CAPITAL ACCOUNT ITA NO.725(ASR)/2014 ASSESSMENT YEAR :1996-97 5 OF SATNAM SINGH IN THE BOOKS OF HIS PROPRIETARY CON CERN S.S. TRADING COMPANY REFLECTS A DEPOSIT OF RS.2,49,000/- ON 12.0 7.1996 ( MADE OUT OF SALE PROCEEDS OF AGRICULTURE LAND SOLD FOR RS.4,98,000/-). OUT OF THES ERS.2,49,000/-, SH. SATNAMK SINGH HAS TRANS FERRED RS.1,70,000 TO M/S. SAINI HOSPITAL. THUS, COUNSEL O F THE ASSESSEE HAS EXPLAINED SOURCE OF CASH FLOW OF RS.4,53,000/-, RS. 3,75,000/-, AND RS.3,16,000/- IN THE HAND OF SH. JARNAIL SINGH, SH. SARVAN SINGH & SH. SATNAM SINGH FOR ASSESSMENT YEAR 1996-9 7. IN VIEW OF ABOVE, THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS.4,53,000/-, RS.3,75,000/- AND RS.3,16,000/- IN T HE HAND OF THESE PARTNERS SH. JARNAIL SINGH, SH. SARVAN SINGH & SH. SATNAM SINGH IS DELETED. CONSEQUENTLY, ADDITION MADE OF RS .11,44,000/- CONSISTING OF ABOVE 3 PARTNERS IS ALSO DELETED IN T HE HAND OF FIRMS AS ADDITION OF RS.1,00,000/- IN THE HANDS OF SH.JAGDIS H SINGH PARTNER HAD ALREADY BEEN DELETED BY HONBLE ITAT, TOTAL ADD ITION IN THE HAND OF FIRMS OF RS.11,44,000/- + RS.1,00,000/- IS DELETED. SIMILARLY, ON THE BASIS OF ABOVE CASH FLOW STATEMEN T, AGRICULTURE SALES DEED, STATEMENT OF PATWARI, REMAND REPORTS OF THE AO & CONSIDERING AVAILABILITY OF CASH ON ACCOUNT OF THE SE AGRICULTURE LAND SALES IN CAPITAL ACCOUNT OF PARTNERS ADDITION OF RS .1,70,000/- AND RS.1,57,000/- IN THE HANDS OF SH. SATNAM SINGH & SH . NIRMAL SINGH FOR ASSESSMENT YEAR 1997-98 IS ALSO DELETED. CONSEQ UENTLY, ADDITION MADE IN THE HAND OF FIRM OF RS.1,70,000 + 1,57,000 = RS.3,27,000 IS ALSO DELETED. 7. THE DEPARTMENT HAS REMAINED UNABLE TO REBUT THE ABOVE CATEGORICAL FINDINGS ON THE FACTS RECORDED BY THE LD. CIT(A). IT REMAINS UNDISPUTED THAT THE PARTNERS ADMITTED HAVING INTRO DUCED CAPITAL IN THE FIRM/HOSPITAL. SINCE IN THE CASE OF SH. JAGDISH SIN GH, PARTNER, ADDITION OF RS.1,00,000/- WAS FOUND TO BE AVAILABLE AS OPENI NG CAPITAL AND THE ADDITION IN THIS REGARD WAS DELETED, WHICH HAS NOT BEEN CHALLENGED, THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION O F RS.1,00,000/- IN THE HANDS OF THE FIRM ALSO, CANNOT BE FAULTED AND THIS DELETION IS CONFIRMED. 8. SO FAR AS REGARDS THE PARTNERS, IT WAS ESTABLISH ED ON RECORD THAT THE LAND WHICH CAME TO THE SHARE OF THE PARTNERS ON PARTITION, WAS SOLD AND THE MONEY RECEIVED IN CASH WAS INTRODUCED AS CA PITAL IN THE FIRM. AS PER THE PARTITION DEEDS, WHICH WERE PRODUCED, WERE ON RECORD, THE ITA NO.725(ASR)/2014 ASSESSMENT YEAR :1996-97 6 PARTITION RESULTED IN THE SALE OF THE LAND, WHICH S ALE WAS ENDORSED BY THE PATWARI, WHOSE STATEMENT WAS RECORDED BY THE AO. T HE REMAND REPORT OF THE AO ALSO NOTED THESE FACTS. IN THE REMAND REPORT , NOTE WAS ALSO TAKEN BY THE AO OF THE FACT THAT THERE WAS FURTHER UNDIVI DED PROPERTY OF 52 KANALS 10 MARLAS. JAGDISH SINGH HAD 1/4 TH SHARE THEREIN. AS PER THE PATWARI, SH. JAGDISH SINGH AND HIS FAMILY WAS ENTI TLED TO 58 KANALS AND 13 MARLAS OUT OF THIS, 48 KANALS HAVING BEEN SOLD, UNSOLD PROPERTY OF 10 KANALS AND 3 MARLAS REMAINED. HENCE, MORE THAN 23 KANALS 5 MARLAS REMAINED UNSOLD WITH SH. JAGDISH SINGH. 9. THE REMAND REPORT ALSO MADE MENTION OF THE STATE MENT OF THE COMMISSION AGENT TO WHOM SH. BAKSHISH SINGH HAD SOL D AGRICULTURE PRODUCE. THE MONEY RECEIVED FOR THIS SALE WAS GIVE N TO THE PARTNERS OF THE ASSESSEE. 10. THEN, AS PER THE CAPITAL ACCOUNT OF SH. SATNAM SINGH IN THE BOOKS HIS PROPRIETORY CONCERN M/S. S.S. TRADING COMPANY, AN AMOUNT OF RS.2,49,000/- STOOD DEPOSITED ON 12.07.1996. THIS D EPOSIT WAS OUT OF SALE PROCEEDS OF AGRICULTURE LAND, WHICH WAS SOLD F OR RS.4,98,000/-. FROM OUT OF THE DEPOSIT OF RS.2,49,000/-, RS.1,70,0 00/- WAS TRANSFERRED TO THE ASSESSEE. IN THIS MANNER, THE SOURCE OF CAS H FLOW OF RS.4,53,000/- IN THE HANDS OF SH.JARNAIL SINGH, RS.3,75,000/- IN THE HANDS OF SH. SARWAN SINGH AND RS.3,16,000/- IN THE HANDS OF SH. SATNAM SINGH STOOD EXPLAINED FOR THE YEAR UNDER CONSIDERATION. I T WAS ON THIS BASIS THAT THESE ADDITIONS AMOUNTING TO RS.11,44,000/- WE RE DELETED BY THE LD. CIT(A). BESIDES, AS NOTED HEREINABOVE, THE ADDITION OF RS.1,00,000/- IN THE HANDS OF SH. JAGDISH SINGH ALREADY STOOD DELETE D BY THE ITAT AND THE ADDITION TO THE EXTENT OF RS.1,00,000/- IN THE HANDS OF THE FIRM WAS ALSO CORRECTLY DELETED BY THE LD. CIT(A). ITA NO.725(ASR)/2014 ASSESSMENT YEAR :1996-97 7 11. THE DEPARTMENT HAS NOT BEEN ABLE TO SHOW AS TO HOW THE LD. CIT(A) HAS COMMITTED ANY ERROR IN DELETING THE ABOVE ADDIT IONS. THE DETAILED FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) REMAIN UNHINGED. THEREFORE, THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS FOUND TO HAVE NO LEGS TO STAND ON. THE SAME IS HEREBY REJECTED. THE ORDER UNDER APPEAL IS CONFIRMED. 12. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/01/2016 SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 08/01/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SAINI HOSPITAL, G.T.ROAD, AMRI TSAR. 2. THE ITO, WARD 5(4), AMRITSAR. 3. THE CIT(A), AMRITSAR. 4. THE CIT, AMRITSAR. 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.