Smt. Silambuchelvi.D, Coimbatore V. ITO, Coimbatore

ITA 776/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0848 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-02-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 12-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 32; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO.776/MDS/2012 ASSESSMENT YEAR : 2008-09 DR. D. SILAMBUCHELVI, 2/1, VELLAI THOTTAM, ANNAI SATHYA NAGAR, GANAPATHY, COIMBATORE-641 006. V. THE INCOME TAX OFFICER, WARD-II(2), COIMBATORE. (PAN : AREPS8179D) A N D ITA NO.991/MDS/2012 ASSESSMENT YEAR : 2008-09 THE INCOME TAX OFFICER, V. DR. D. S ILAMBUCHELVI, WARD-II(2), 2 /1, VELLAI THOTTAM, COIMBATORE. AN NAI SATHYA NAGAR, GANAPATHY, COIMBATORE-641 006. (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI G. BASKAR, ADVOCATE DEPARTMENT BY : DR. S. MOHARANA, CIT DATE OF HEARING : 04.0 2.2013 DATE OF PRONOUNCEMENT : 13.02.201 3 ITA NOS. 776 & 991/MDS /2012 : 2 : O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THESE CROSS APPEALS ARE FILED BY THE ASSESSEE AND THE REVENUE. THEY ARE DIRECTED AGAINST THE ORDER OF TH E CIT(APPEALS)-I, COIMBATORE DATED 13-02-2012 FOR THE ASSESSMENT YEAR 2008-09. 2. FACTS IN BRIEF ARE THAT A SURVEY UNDER SECTION 1 32 OF THE INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT) WAS CARR IED OUT IN THE CASE OF THE ASSESSEE AND HER HUSBAND, DR. S. PA RAMASIVAM WHO IS WORKING IN COIMBATORE MEDICAL COLLEGE AND AL SO DOING MEDICAL PRACTICE IN THE SAME HOSPITAL. DR. D. SILA MBUCHELVI ALSO RUNS A PHARMACY WITHIN THE HOSPITAL PREMISES. HER DAUGHTER, MISS S.P. AARTHY SUMALATHA, HOUSE SURGEON IS ALSO RUNNING SUMA DIAGNOSTICS IN THE SAME HOSPITAL. D R. SILAMBUCHELVI AND DR. PARAMASIVAM HAVE JOINTLY FLOA TED A NEW HOSPITAL IN THE NAME OF M/S. SHREE SHIVAA HOSPITAL (P) LTD. THE HOSPITAL BUILDING WAS UNDER CONSTRUCTION AT THE POINT OF SURVEY. DURING THE COURSE OF SURVEY THE ASSESSEE D ISCLOSED ADDITIONAL INCOME OF ` 1 CRORE TOWARDS INVESTMENT IN THE NEW HOSPITAL BUILDING BEING CONSTRUCTED IN THE NAME OF M/S. SHREE ITA NOS. 776 & 991/MDS /2012 : 3 : SHIVAA HOSPITAL (P) LTD. THIS INCOME WAS OFFERED I N THE HANDS OF DR. D. SILAMBUCHELVI AND DR. S. PARAMASIVAM. IN ADDITION TO THIS, SHE ALSO OFFERED ` 30 LAKHS TOWARDS ANOTHER HOSPITAL BUILDING CONSTRUCTED ON THE LAND PURCHASED IN THE N AME OF MISS S.P. AARTHI SUMALATHA. THIS INCOME WAS OFFERE D IN THE HANDS OF HER DAUGHTER, MISS S.P. AARTHI SUMALATHA. THUS THE TOTAL VOLUNTARY DISCLOSURE MADE BY THE ASSESSEE WAS ` 1.30 CRORES AT THE RESULT OF SURVEY. SUBSEQUENTLY, THE A SSESSEE FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 31-03- 2009 ADMITTING INCOME OF ` 37,58,240/- IN ADDITION TO THE INCOME OFFERED AT THE TIME OF SURVEY. SUBSEQUENTLY , THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS CO MPLETED. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER OBSERVED IN RESPECT OF INVESTMENT IN SHARE CAPITAL OF M/S. SHREE SHIVAA HOSPITAL (P) LTD. THAT THE ASSESSEE AT THE TIME OF SURVEY, WHILE GIVING DETAILS ABOUT I NVESTMENT IN M/S. SHREE SHIVAA HOSPITAL (P) LTD. BUILDING, HAD S TATED THAT THE BUILDING WAS BEING CONSTRUCTED WITH AN ESTIMATI ON OF ` 3.36 CRORES AND SPENT ABOUT ` 3 CRORES (AT THE TIME OF SURVEY). FURTHER, WITH REGARD TO THE SOURCES, SHE STATED THA T ` 2 CRORES WAS MADE OUT OF BANK BORROWING AND REMAINING ` 1 CRORE FROM ITA NOS. 776 & 991/MDS /2012 : 4 : THE PROFESSIONAL INCOME OF HER AS WELL AS HER HUSBA ND, DR. PARAMASIVAM FOR WHICH SHE OFFERED ADDITIONAL INCOME OF ` 1 CRORE. 3. ON PERUSAL OF THE BALANCE SHEET FOR THE FINANCIAL YEAR 2007-08 OF M/S. SHREE SHIVAA HOSPITAL (P) LTD. THE DISTRIBUTION OF SHARE CAPITAL SHOWN WAS AS UNDER : AUTHORISED SHARE CAPITAL EQUITY SHARE OF ` 100/- EACH 1,00,00,000/- ISSUED, SUBSCRIBED AND PAID 20,000 EQUITY SHAREI OF ` 100/- EACH 20,00,000/- SHARE CAPITAL ADVANCE 39,92,590/- ------------------- TOTAL 59,92,590/- ========== WHEN THE CORRESPONDING ENTRIES VERIFIED IN THE INDI VIDUAL RETURN OF DR. D. SILAMBUCHELVI AND DR. S. PARAMASIV AM, IT WAS FOUND THAT DR. SILAMBUCHELVI HAD ADMITTED ` 20 LAKHS TOWARDS SHARE CAPITAL, ARS 19,92,590/- TOWARDS SHARE ADVANC E AND DR. S. PARAMASIVAM DID NOT ADMIT ANY INVESTMENT IN THE COMPANY. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE ITA NOS. 776 & 991/MDS /2012 : 5 : BALANCE OF ` 20 LAKHS ( ` 39,92,590 ` 19,92,599/- ACCOUNTED AS SHARE ADVANCE. IT WAS EXPLAINED THAT ` 20 LAKHS WAS RECEIVED FROM VARIOUS PERSONS IN CASH TOWARDS SHARE CAPITAL AND ACCOUNTED AS SHARE ADVANCE SINCE THEY WERE YET TO B E ALLOTTED SHARES. BUT THE EXPLANATION OF THE ASSESSEES AR WAS CONTRARY TO THE ADMISSION MADE AT THE TIME OF SURVEY CONDUCT ED ON 5.3.2009. DR.D.SILAMBUCHELVI AT THE TIME OF SURVEY HAD ADMITTED THAT SHE AND HER HUSBAND HAD ONLY MADE INV ESTMENT AND NEVER DISCLOSED ABOUT THE SHARE ADVANCE RECEIVE D FROM OTHER PERSONS. IT CLEARLY SHOWED THAT THE CLAIM OF SHARE CAPITAL ADVANCE WAS ONLY AN AFTER THOUGHT. THIS POINT WAS FURTHER STRENGTHENED SINCE THE AMOUNT CLAIMED TO HAVE BEEN RECEIVED IN CASH AND THE ASSESSEES CLAIM OF SHARE CAPITAL A DVANCE WAS REJECTED AND ADDED TO THE TOTAL INCOME OF THE ASSES SEE AND HER HUSBAND. ACCORDINGLY, ` 10 LAKHS WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AND THE BALANCE ` 10 LAKHS WAS TO BE CONSIDERED IN THE HANDS OF DR. S. PARAMASIVAM FOR T HE ASSESSMENT YEAR 2008-09 AS INCOME FROM OTHER SOURC ES. THE ASSESSING OFFICER FURTHER OBSERVED THAT SO FAR AS THE UNEXPLAINED SUNDRY CREDITORS ARE CONCERNED, THE ASS ESSEE IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF IN COME HAD ITA NOS. 776 & 991/MDS /2012 : 6 : CLAIMED SUNDRY CREDITORS TO THE TUNE OF ` 23,07,148/- TOWARDS PURCHASES. IT WAS NOTICED THAT THE ` 9,90,340/- WAS CL;AIMED AS OTHER CREDITORS. THE ASSESSING OFFICER ASKED FOR THE DETAILS AND EXPLANATION FROM THE AUTHORIZED REPRESE NTATIVE OF THE ASSESSEE. NO EXPLANATION OR DETAILS WERE SUBMI TTED BEFORE THE ASSESSING OFFICER AND AGREED FOR THE ADDITION. HENCE A SUM OF ` 9,90,340/- CLAIMED UNDER SUNDRY CREDITORS WAS ADDED TO THE INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE CIT(APPEALS) WITH REGARD TO THE INVESTME NT IN SHARE CAPITAL AS WELL AS UNEXPLAINED SUNDRY CREDITORS. I T WAS SUBMITTED BEFORE THE CIT(APPEALS) THAT THE INVESTME NT IN THE COMPANY OF SHREE SHIVAA HOSPITAL P. LTD. BY SHARE A DVANCE IS TO BE CONSIDERED IN THE BOOKS OF THE COMPANY AS IT IS A SEPARATE LEGAL ENTITY AND NOT IN THE HANDS OF THE A SSESSEE. THE CIT(APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT AS SEEN FROM THE DETAILS REG ARDING SHARE CAPITAL ADVANCE , IN THE RETURN OF INCOME, DR . D. SILABUCHELVI ADMITTED ` 20 LAKHS TOWARDS SHARE CAPITAL AND ` 19,95,590/- TOWARDS SHARE ADVANCE AND DR. D. PARAMA SIVAM ITA NOS. 776 & 991/MDS /2012 : 7 : DID NOT ADMIT ANY INVESTMENT IN THE COMPANY. THE A UTHORISIED REPRESENTATIVE OF THE ASSESSEE WAS ASKED BY THE ASS ESSING OFFICER TO EXPLAIN THE BALANCE OF ` 20 LAKHS ( ` 39,92,590 ` 19,92,599) ACCOUNTED AS SHARE ADVANCE. DR. D. SILA MBUCHELVI EXPLAINED THAT ` 20 LAKHS WAS RECEIVED FROM VARIOUS PERSONS IN CASH TOWARDS SHARE CAPITAL AND ACCOUNTED AS SHARE A DVANCE SINCE THEY WERE YET TO BE ALLOTTED SHARES. THE CIT (APPEALS) ASKED THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE TO PRODUCE THE DETAILS OF PERSONS WHO HAD CONTRIBUTED CASH TOWARDS SHARE CAPITAL. NO DETAILS WERE FILED BEFOR E THE CIT(APPEALS). THEREFORE THE CIT(APPEALS) CAME TO T HE CONCLUSION THAT THE ASSESSEE AND HER HUSBAND WERE O NLY THE INVESTORS IN THE COMPANY PROMOTED BY THEM. HENCE T HE ADDITION OF ` 10 LAKHS WAS CONFIRMED IN THE HANDS OF THE ASSESSEE. 5. INSOFAR AS THE ADDITION IN RESPECT OF SUNDRY CRE DITORS IS CONCERNED, THE CIT(APPEALS) OBSERVED THAT SINCE THE AMOUNT OF ` 10 LAKHS WAS ADDED AS UNEXPLAINED INVESTMENT IN TH E SHARE CAPITAL AND A SUM OF ` 9,93,940/- CAN BE TELESCOPED AGAINST THE INVESTMENT MADE IN THE SHARE CAPITAL. THERE IS NO EVIDENCE ON RECORD TO SHOW THE YEAR IN WHICH THE SU NDRY ITA NOS. 776 & 991/MDS /2012 : 8 : CREDITORS HAVE BEEN REFLECTED IN THE BALANCE SHEET. SINCE THE AMOUNT OF ` 9,90,340/- HAD BEEN TREATED AS INCOME FROM OTHER SOURCES, THE ASSESSING OFFICER WAS DIRECTED T O GIVE TELESCOPING TO THE INVESTMENT OF ` 10 LAKHS. 6. AGGRIEVED BY THE ORDER PASSED BY THE CIT(APPEALS ), BOTH THE ASSESSEE AND THE REVENUE HAVE CARRIED THE MATTE R IN APPEAL BEFORE THE TRIBUNAL. 7. THE LEARNED D.R. SUBMITTED THAT IN THE ASSESSMEN T ORDER THE ADDITION OF ` 20 LAKHS ( ` 10 LAKHS IN THE HANDS OF THE ASSESSEES HUSBAND) WAS MADE TOWARDS UNEXPLAINED IN VEST- MENT IN THE COMPANY CLAIMED AS SHARE CAPITAL ADVANC E BECAUSE THE ASSESSEE AND HER HUSBAND HAD ONLY PROMO TED THE COMPANY AND THE ASSESSEE ALSO CLAIMED SUNDRY CREDIT ORS TO THE TUNE OF ` 9,90,340/-.THIS WAS ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CREDITORS SINCE NO EXPLANAT ION HAD BEEN OFFERED. THE LEARNED DR ARGUED THAT THE CIT(AP PEALS) WAS NOT CORRECT IN DIRECTING TO GIVE A TELESCOPING OF THE ADDITIONS IN RESPECT OF UNEXPLAINED SUNDRY CREDITOR S TO THE INVESTMENT MADE IN SHARE CAPITAL. HE FURTHER SUBMIT TED THAT SINCE BOTH THE SUNDRY CREDITORS AS WELL AS SHARE CA PITAL APPEARED ON THE LIABILITY SIDE OF THE BALANCESHEET, INVESTMENTS ITA NOS. 776 & 991/MDS /2012 : 9 : CORRESPONDING TO THESE AMOUNTS ARE ALREADY AVAILABL E IN THE ASSET SIDE OF THE BALANCE SHEET. HE THEREFORE SUBMI TTED THAT THERE IS NO TELESCOPING FOR THE ADDITION MADE IN TH E SHARE CAPITAL AND THE ORDER OF THE CIT(APPEALS) CANNOT BE SUSTAINED. 8. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE CIT(APPEALS) WRONGLY CONFIRMED T HE ADDITION IN RESPECT OF UNEXPLAINED INVESTMENT AS CL AIMED BY THE ASSESSEE AS SHARE ADVANCE AND SAME MAY BE DELET ED. 9. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. T HE ADDITION IN RESPECT OF SHARE CAPITAL IS CONCERNED, THE ASSES SING OFFICER HAD ASKED THE ASSESSEE TO EXPLAIN THE DIFFERENCE. T HE ASSESSEE EXPLAINED THAT ` 20 LAKHS WAS RECEIVED FROM VARIOUS PERSONS IN CASH TOWARDS SHARE CAPITAL AND ACCOUNTED AS SHARE ADVANCE. NO SHARES WERE ALLOTTED TO THEM SO FAR. WHEN IT WAS POINTED OUT BY THE ASSESSING OFFICER TO THE LEA RNED COUNSEL FOR THE ASSESSEE THAT AT THE TIME OF SURVEY IT WAS SUBMITTED BY THE ASSESSEE THAT ONLY THE ASSESSEE AN D HER HUSBAND HAD MADE THE INVESTMENT IN THE COMPANY, THE LEARNED COUNSEL FOR THE ASSESSEE OF THE ASSESSEE HA D NOT GIVEN ANY PROPER AND CONVINCING MATERIAL TO THE ASSESSING OFFICER TO ITA NOS. 776 & 991/MDS /2012 : 10 : SHOW THAT ` 20 LAKHS WAS RECEIVED FROM VARIOUS PERSONS TOWARDS SHARE CAPITAL. THEREFORE, THE ASSESSING OF FICER CAME TO THE CONCLUSION THAT THE AMOUNT SHOWN AS SHARE AD VANCE BY THE ASSESSEE IS THE INCOME OF THE ASSESSEE AS WELL AS HER HUSBAND. ACCORDINGLY, THE ADDITION OF ` 10 LAKHS EACH WAS MADE IN THE HANDS OF THE ASSESSEE AS WELL AS HER HU SBAND. THE SAME WAS CONFIRMED BY THE CIT(APPEALS). WE FIN D NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(APPEA LS). EVEN BEFORE US NOTHING HAS BEEN PRODUCED AND NO SATISFAC TORY AND CONVINCING EXPLANATION WAS GIVEN. WE THEREFORE CON FIRM THE ORDER PASSED BY THE CIT(APPEALS) ON THIS ISSUE. 10. INSOFAR AS THE UNEXPLAINED SUNDRY CREDITORS ARE CONCERNED, IN THE BALANCE SHEET THE ASSESSING O FFICER FOUND THAT SUNDRY CREDITORS OF ` 9,90,340/- HAD BEEN CLAIMED AS OTHER CREDITORS. THE ASSESSING OFFICER ASKED THE LEARNED COUNSEL FOR THE ASSESSEE TO PRODUCE THE DET AILS AND EXPLAIN AS TO WHO WERE THE OTHER CREDITORS. THE LEARNED COUNSEL FOR THE ASSESSEE NEITHER FILED ANY DETAILS NOR EXPLAINED THE DETAILS OF THE OTHER CREDITORS. THEREFORE, THE ASSESSING OFFICER ADDED THE SUM OF ` 9,90,340/- AS INCOME OF THE ASSESSEE FROM OTHER SOURCES. ON APPEAL, THE C IT(APPEALS) ITA NOS. 776 & 991/MDS /2012 : 11 : OBSERVED THAT SINCE THE AMOUNT OF ` 9,90,340/- HAS BEEN TREATED AS INCOME FROM OTHER SOURCES, THE ASSESSING OFFICER WAS DIRECTED TO GIVE TELESCOPING TO THE INVESTMENT OF ` 10 LAKHS. WE FAIL TO UNDERSTAND WHAT IS THE BASIS FOR THE CIT(APPEALS) TO GIVE SUCH A DIRECTION. SO FAR AS T HIS AMOUNT OF ` 9,90,340/- IS CONCERNED, THE ASSESSEE HAS NOT PROD UCED ANY DETAILS AND NOT EXPLAINED WHO ARE THE OTHER CREDITO RS BUT SIMPLY WITH AN ENTRY, CLAIMED AS OTHER CREDITORS. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY ADDED THE SAME AS INCOME OF THE ASSESSEE FROM OTHER SOURCES. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(APPEALS) AND THIS GROUND OF AP PEAL RAISED BY THE REVENUE IS ALLOWED. THE ASSESSEES APPEAL I N RESPECT OF THE GROUNDS RELATING TO SHARE ADVANCE AND OTHER SUNDRY CREDITORS IS DISMISSED. 11. ONE MORE ISSUE HAS BEEN RAISED BY THE ASSESSEE IN HER APPEAL WITH REGARD TO THE ADDITION OF ` 2,34,093/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER OBSERVED THAT THE ASSESSEE IN THE PHARMACY BUSINESS HAS ADMITTED GROSS PROFIT @ 17.4%. THIS WAS AGAINST TH E PREVIOUS YEAR GROSS PROFIT OF 25.75%. THE ASSESSING OFFICER ASKED THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE TO EXPLAI N THE ITA NOS. 776 & 991/MDS /2012 : 12 : REASON FOR THE STEEP FALL IN THE GROSS PROFIT. NO REASON WAS GIVEN AND HE WAS READY TO ACCEPT THE GROSS PROFIT R ATE REPORTED FOR THE ASSESSMENT YEAR 2007-08. ACCORDIN GLY THIS ADDITION WAS MADE. ON APPEAL THE CIT(APPEALS) CONF IRMED THIS ADDITION. 12. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROSS PROFIT RATE AT 25.75% IN THE PHARMACY BUSINES S IS ON HIGHER SIDE AND THE RATE SHOWN BY THE ASSESSEE AT 1 7.4% MAY BE ACCEPTED. 13. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS PASSED BY THE AUTHORITIES BELOW. 14. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT THE ASSESSEE IN THE EARLIER ASSE SSMENT YEAR 2007-08 SHOWED THE GROSS PROFIT RATE AT 25.75%. WH EN THE ASSESSING OFFICER ASKED THE LEARNED COUNSEL FOR THE ASSESSEE TO EXPLAIN THE REASON FOR THE STEEP FALL IN THE GRO SS PROFIT, NO REASON WAS GIVEN AND HE WAS READY TO OFFER THE RATE REPORTED IN THE ASSESSMENT YEAR 2007-08. WE FIND NO REASON TO INTERFERE WITH THIS ADDITION. ACCORDINGLY, THIS GR OUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. ITA NOS. 776 & 991/MDS /2012 : 13 : 15. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED AND THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 13 TH OF FEBRUARY, 2013, AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) (V.DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 13 TH FEBRUARY, 2013. H. COPY TO: ASSESSEE/AO/CIT(A)/CIT/D.R./GUARD FILE