ACIT 11(3), MUMBAI V. SANJEEVANI HOSPITAL, MUMBAI

ITA 7782/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3806 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FENIL BHATT SHRI KAMAL
• Keywords: Income from undisclosed sources

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI AMARJIT S INGH, JM / I.T.A. NO.7782/MUM/12 ( / ASSESSMENT YEAR: 2007-08) ASST. COMMISSIONER OF INCOME TAX 11(3) ROOM NO.446, 4 TH FLOOR, AYAKAR BHAVAN, MUMBAI - 400020 / VS. SANJEEVANI HOSPITAL GROUND FLOOR, A7, SECTOR 2, SHANTI NAGAR, MIRA ROAD(E), MUMBAI - 400107 ./ ./ PAN/GIR NO. : AABFS7433G ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 26.04.2016 !' /DATE OF PRONOUNCEMENT:10.08.2015 #$ / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 30.10.2012 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) 2, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- ASSESSEE BY: SHRI YOGESH THAR & FENIL BHATT DEPARTMENT BY: SHRI KAMAL MANGAL ITA NO.7782/M/12 A.Y. 2007-08 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.50 LAKHS MADE BY THE AO ON THE BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SURVEY U/S.133A. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED THE RETURN OF INCOME ON 22.05.2007 DECLARING TOTAL INCOME TO T HE TUNE OF RS.27,63,342/-. THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). THE CA SE WAS SELECTED FOR SCRUTINY. THEREFORE, NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 12.09.2009 AND SERVED UPON THE ASSESSEE. THE ASSES SEE IS A HOSPITAL FOR WOMEN AND CHILDREN. THE ASSESSEES SOURCE OF I NCOME CONSISTS OF INCOME FROM PROFESSION AND INCOME FROM OTHER SOUR CES. THE SURVEY ACTION U/S.133A OF THE ACT TOOK PLACE ON 13. 12.2006. THE STATEMENT OF ASSESSEE WAS RECORDED WHEREIN ASSESSEE ADMITTED HIS INCOME TO THE TUNE OF RS.50,00,000/- FOR THE A.Y.20 07-08. THE ASSESSING OFFICER DEALT THIS INCOME AS ADDITIONAL I NCOME AND ASSESSED THE INCOME TO THE TUNE OF RS.77,63,940/-. FEELING AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DELE TED THE SAID ADDITION, THEREFORE THE REVENUE HAS FILED THE PRESE NT APPEAL BEFORE US. ISSUE NO.1 &2:- ITA NO.7782/M/12 A.Y. 2007-08 3 4. ISSUE NO.1 AND 2 ARE INTERCONNECTED, THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUES T HE REVENUE HAS CHALLENGED THE DELETION OF RS.50,00,000/- BY THE CI T(A) WHICH WAS ADDED BY THE ASSESSING OFFICER IN VIEW OF THE STATE MENT OF ONE OF THE PARTNER. THE LEARNED REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT CIT(A) HAS WRONGLY DELETED THE SAID ADDITION, HENCE THE ORDER DATED 30.10.2012 UNDER CHALLENGED IS WRONG AGAINST LAW AN D FACTS AND IS LIABLE TO BE SET ASIDE. ON THE OTHER HAND THE LEAR NED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE STATEMENT OF PARTN ER REVEALS ABOUT THE TOTAL INCOME OF THE ASSESSEE FOR THE A.Y.2007-08 TO THE TUNE OF RS.50,00,000/- APPROXIMATE WHEREAS THE ASSESSING OF FICER TREATED THE SAID INCOME AS ADDITIONAL INCOME WRONGLY AND ILLEGA LLY HENCE THE CIT(A) HAS RIGHTLY DELETED THE ADDITION IN ACCORDAN CE WITH LAW. 5. KEEPING IN VIEW OF THE ARGUMENT ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR D CAREFULLY, IT IS OBSERVED THAT THE ASSESSING OFFICER ADDED THE ADDIT IONAL INCOME OF RS.50,00,000/- ON THE BASIS OF THE STATEMENT RECORD ED ON 13.12.2006. HOWEVER TO MAKE MORE CRYSTAL CLEAR THE QUESTION AND ANSWER OF THE ASSESSEE AS WELL AS THE AUTHORITY IS HEREBY PRODUC ED BELOW:- Q.NO.12. AS PER THE REGISTERS MAINTAINED IT IS SEEN YOU HAVE COLLECTED RS.49,88,625/- FROM IPD. WHAT WILL BE YOUR APPROXIMATE RECEIPTS FOR THE YEAR AND WHAT WILL BE YOUR NET INCOME. ITA NO.7782/M/12 A.Y. 2007-08 4 ANS. CONSIDERING THE UPWARD TREND IN BUSINESS THE I PD COLLECTION WILL BE APPROXIMATELY RS.80 TO 85 LACS. AFTER DEDUCTING ALL THE OUTGOING DEPN ETC. THE INCOME WILL BE RS.30 LACS APPROXIMATELY. THUS THE TOTAL INCOME FOR THE YEAR 2007-08 WILL BE RS.50 LACS OF THE FIRM. THE ABOVE SAID QUESTION AND ANSWER NOWHERE SPEAKS A BOUT THE ADDITIONAL INCOME OF THE ASSESSEE TO THE TUNE OF RS .50,00,000/- AS ADDITIONAL INCOME. ANYHOW, HOW THE CIT(A) HAS DEAL T THIS MATTER IS ALSO REQUIRE TO BE SEEN. THE FINDING OF THE CIT(A) IN THIS REGARD IS HEREBY REPRODUCED BELOW:- 2.9 I HAVE GONE THROUGH THE FACTS OF THE ISSUE. IN THIS CASE, SURVEY U/S.133A WAS CONDUCTED ON 13.12.2006. IN TH E ANSWER TO QUESTION NO.10, THE PARTNER HAS STATED TH AT THE COLLECTIONS FROM OPD FOR THE ENTIRE AMOUNTING YEAR WILL BE AROUND RS.30 TO 35 LACS. IN THE ANSWER TO QUEST ION NO.12, THE PARTNER HAS REPLIED THAT IPD COLLECTIONS FOR THE ENTIRE ACCOUNTING YEAR WILL BE AROUND RS.80 TO 85 L ACS. IT IS SEEN FROM THE P&L FOR THE Y.E. ON 31.3.07, IT IS SEEN THAT TOTAL EARNING FROM THE PATIENTS IS RS.1,13,51, 170/- WHICH IS ALMOST TALLYING WITH THE ESTIMATE MADE BY THE PARTNER DOING THE SURVEY. FURTHER, THE APPELLANT I N THE ANSWER TO QUESTION NO.12 HAS ESTIMATED THE INCOME A T ITA NO.7782/M/12 A.Y. 2007-08 5 RS.50 LACS. IT IS SEEN FROM THE P&L ACCOUNT THAT T HE NET PROFIT IS RS.54,83,851/- (I.E. THE INCOME BEFORE DE BITING PARTNERS SALARY AND INTEREST TO PARTNERS). FROM T HIS EVEN THE ESTIMATE MADE BY THE APPELLANT DURING THE SURVE Y IS ALMOST REFLECTED IN THE ACTUAL BUSINESS RESULTS. F URTHER, FROM THE STATEMENT RECORDED AND FROM THE ASSESSMENT ORDER, IT IS SEEN THAT THERE WAS NO DISCREPANCY FOU ND IN THE ACCOUNTS MAINTAINED BY THE APPELLANT EITHER DUR ING THE SURVEY U/S.133A OF THE I.T.ACT OR DURING THE ASSESSMENT PROCEEDINGS. 2.9FURTHER, IT IS SEEN THAT THE APPELLANT HAS WRIT TEN A LETTER DATED 15.01.2007 (WHICH IS RECEIVED BY THE A.O. ON 29.01.2007) AND IT IS EXTRACTED BELOW: PLEASE REFER TO THE SURVEY CONDUCTED U/S.133A AT OUR PREMISES ON 13.12.2006. AT THE TIME OF SURVEY, OUR PARTNER, DR. VENKATESHWAR MOORTHY, HAD, ON BEHALF O F THE FIRM, ADMINISTERED A STATEMENT ON OATH. IN THE STATEMENT, IT WAS INDICATED THAT THE TOTAL INCOME O F THE FIRM FOR THE A.Y.2006-07 RELEVANT TO THE A.Y.2007-0 8 WOULD BE APPROXIMATELY RS.50 LACS. SINCE WE ARE TO PAY ADVANCE TAX BASES ON THE SAID ESTIMATED INCOME, THE FOLLOWING TWO CHEQUES FOR THE ADVANCE TAX PAYABLE H AVE BEEN SUBMITTED: ITA NO.7782/M/12 A.Y. 2007-08 6 1. CHEQUE NO.05723 DATED 15.12.2006 FOR RS.10 LACS DRAWN ON NEW INDIA CO-OPERATIVE BANK LTD. 2. CHEQUE NO.052724 DATED 15.03.2007 FOR RS.5 LACS DRAWN ON NEW INDIA CO-OPERATIVE BANK LTD. MAY WE SUBMIT THAT, WHILE ESTIMATING THE TAX ON THE SAID INCOME AND ACCORDINGLY, THE ADVANCE TAX, THE DEDUCT ION FOR THE REMUNERATION WHICH THE PARTNERS WOULD BE EN TITLED TO ON THE ENTIRE INCOME WAS NOT CONSIDERED. IT WOU LD BE APPRECIATED THAT IN TERMS OF SECTION 40(B) OF THE I .T. ACT, THE REMUNERATION TO THE PARTNERS IS DEDUCTIBLE EXPE NSES IN THE HANDS OF THE PARTNERSHIP FIRM AND IS TO BE TAXE D AS INCOME OF THE PARTNERS. AS PER CLAUSE 7(A) OF THE PARTNERSHIP DEED DATED 01.04.1998, FOR THE BOOK PROFIT ABOVE RS.1,50,000/- , 40% OF THE BOOK PROFITS WOULD HAVE TO BE DISTRIBUTED TO THE PARTNERS AS REMUNERATION. THUS, OF THE ESTIMATED I NCOME OF RS.50 LACS, ABOUT RS.20 LACS WOULD BE PAID TO TH E PARTNERS AS REMUNERATION, RESULTING IN REDUCTION IN THE TAXABLE INCOME TO THAT EXTENT. HENCE, IT IS OUR CO NTENTION THAT, 40% OF THE TAX PAID RS.10 LACS, ABOUT RS.4 LA CS WOULD BE THE TAX ON ACCOUNT OF THE REMUNERATION. T HE PARTNERS WHO ARE ENTITLED TO SUCH REMUNERATION (EQU ALLY, AS PER CLAUSE 7(A) OF THE PARTNERSHIP DEED), NAMELY , ITA NO.7782/M/12 A.Y. 2007-08 7 DR.VENKATESHWAR M. MOORTHY AND DR.(MRS.) SMITHA V. MOORTHY, HAVE CONSIDERED THE SAME FOR THEIR ESTIMAT ED INCOME FOR THE YEAR UNDER QUESTION AND THE TAX LIAB ILITY SO COMPUTED HAS BEEN PAID BY WAY OF ADVANCE TAX AS UND ER: 1. CHEQUE NO.201119 DATED 15.12.2006 FOR RS.2 LACS DRAWN ON ICICI BANK LTD. 2. CHEQUE NO.202137 DATED 15.12.2006 FOR RS.2.10 LACS DRAWN ON ICICI BANK LTD. IN VIEW OF THE ABOVE, THE FIRMS TAX LIABILITY WOUL D BE RESTRICTED TO RS.6 LACS WITH RESPECT TO THE SECOND INSTALLMENT OF ADVANCE TAX AND RS.3 LACS FOR THE TH IRD INSTALLMENT DUE IN MARCH 2007 AND NOT RS.10 LACS AN D RS.5 LACS, RESPECTIVELY, FOR WHICH THE CHEQUES HAVE BEEN SUBMITTED. THEREFORE, OUT OF RS.10 LACS OF THE SEC OND INSTALLMENT, WE REQUEST YOU TO CONSIDER THE BALANCE OF RS.4 LACS (THE AMOUNT IN EXCESS OF THE ADVANCE TAX LIABILITY OF RS.6 LACS) AS TOWARDS THE THIRD INSTAL LMENT WOULD NOT BE REQUIRED TO BE PAID BY THE FIRM. WE BRING TO YOUR ATTENTION THAT THIS CHANGE WOULD B E TRANSLATE INTO ANY LOSS TO THE DEPARTMENT AS MENTIO NED EARLIER THE SAID AMOUNT OF RS.4 LACS HAS ALREADY BE EN CONSIDERED FOR THE ADVANCE TAX PAID BY THE PARTNERS . ITA NO.7782/M/12 A.Y. 2007-08 8 FURTHER, AS YOU ARE AWARE THAT, WE HAVE HANDED OVER TO THE DEPARTMENT A POST DATED CHEQUE OF RS.5 LACS FOR THE THIRD INSTALLMENT OF ADVANCE TAX PAYABLE IN MARCH 2 007 AND AS EXPLAINED HEREIN, SINCE WE WOULD NOT BE REQU IRED TO PAY THE THIRD INSTALLMENT, WE REQUEST YOU THAT T HE POST DATED CHEQUE NO.052724 FOR RS.5 LACS, DRAWN ON NEW INDIA COOPERATIVE BANK LIMITED, BE RETURNED SO AS T O MAKE SURE THAT EVEN INADVERTENTLY, ON MARCH 15, 200 7, THE SAME IS NOT ENCASHED. WE REQUEST YOU TO CONSIDER AND RECORD THE ABOVE PROPOSAL AND GIVE EFFECT TO THE STATEMENT MADE ON O ATH ACCORDINGLY, FOR WHICH ACT OF KINDNESS, WE SHALL FO REVER REMAIN GRATEFUL. 2.10 THIS LETTER ALSO MAKES IT CLEAR THAT THE ADMIT TED ESTIMATED INCOME DURING THE SURVEY IS THE NET INCOME BEFORE CONSIDERING THE SALARY AND INTEREST PAYABLE TO PART NERS. IT IS ALSO PERTINENT TO NOTE THAT THE A.O. HAS NOT ENC AHSED THE CHEQUE FOR RS.5 LACS. ALL THESE FACTS SHOWS THAT THE ACTUAL INCOME SHOWN BY THE APPELLANT IN THE P&L ACCOUNT IS ALMOST TALLYING WIT H THE ESTIMATE MADE DURING THE SURVEY. FURTHER, THERE WA S NO DISCREPANCY NOTICED IN THE BOOKS OF ACCOUNTS OR THE A.O. ITA NO.7782/M/12 A.Y. 2007-08 9 HAS FOUND ANY UNACCOUNTED INCOME EITHER DURING THE SURVEY U/S.133A OF THE I.T.ACT OR DURING THE ASSESS MENT PROCEEDINGS. IN VIEW OF THIS, I HOLD THAT THE ADDI TION OF RS.50 LACS MADE IN THE ASSESSMENT IS PURELY ON THE BASIS OF SURMISE AND SUSPICION AND NOT BASED ON ANY VALID EVIDENCE. THE ADDITION MADE WHICH IS NOT SUPPORTED BY VALID EVIDENCE CANNOT BE SUSTAINED. IN VIEW OF THI S I DIRECT THE A.O. TO DELETE THE ADDITION OF RS.50 LAC S. 6. ON APPRAISAL OF THE FINDING OF THE CIT(A), IT IS QUITE CLEAR THAT THE ASSESSEE DECLARED HIS APPROXIMATE INCOME FOR TH E A.Y.2007-08 TO THE TUNE OF RS.50,00,000/-. THE P & L ACCOUNT OF T HE ASSESSEE SPEAKS ABOUT THE PROFIT TO THE TUNE OF RS.54,83,851/- WHIC H IS QUITE NEAR TO THE ASSESSMENT ASSESSED BY THE ASSESSEE WHILE MAKING HI S STATEMENT. NO DISCREPANCIES OF ANY KIND WAS FOUND IN THE ACCOUNT MAINTAINED BY THE ASSESSEE EITHER DURING THE SURVEY ACTION U/S.133A O F THE ACT AND DURING THE ASSESSMENT PROCEEDINGS. THE SUBMISSION MADE BY THE ASSESSEE VIDE HIS LETTER DATED 15.01.2007 WAS FOUND CORRECT. THE ADDITION MADE BY THE ASSESSING OFFICER IS BASED ON SURMISES AND CONJECTURES AND IS NOT BASED UPON ANY COGENT AND CO NVINCING EVIDENCE ON RECORD. NO DISTINGUISHABLE FACTS OF ANY KIND HA VE BEEN PLACED ON RECORD BEFORE US. THEREFORE IN VIEW OF THE SAID CI RCUMSTANCES WE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER IN QU ESTION CORRECTLY ITA NO.7782/M/12 A.Y. 2007-08 10 AND JUDICIOUSLY WHICH DOES NOT REQUIRE TO BE INTERF ERE WITH AT THIS APPELLATE STAGE. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST , 2016. SD/- SD/- (D.KARUNAKARA RAO) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 10 TH AUGUST,2016 MP MP MP MP ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// (/') * (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI