ACIT, CENTRAL CIR-2(1), CHENNAI V. MEERA ARUN, CHENNAI

ITA 96/CHNY/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7994 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 09-01-2019
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Salary income; Set aside
• Section: 68; 274; 153C

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI Įी महावीर ͧसंह, उपाÚय¢ एवं Įी मनोज क ु मार अĒवाल, लेखा सदèय के सम¢ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.:3558 & 3560/CHNY/2018 & 96/Chny/2019 िनधाᭅरण वषᭅ /Assessment Years: 2014 – 15, 2015-16 & 2016-17 The ACIT, Central Circle – 2(1), Chennai. v. Smt. Meera Arun, No.199, St. Mary’s Road, Alwarpet, Chennai – 600018 PAN: AIGPM 6898J (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) & आयकर अपील सं./ITA No.: 3243/CHNY/2018 िनधाᭅरण वषᭅ /Assessment Year: 2015-16 Smt. Meera Arun, No.199, St. Mary’s Road, Alwarpet, Chennai – 600018 PAN: AIGPM 6898J v. The ACIT, Central Circle – 2(1), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) राजˢ की ओर से /Revenue by : Shri M. Rajan, CIT Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri S. Sridhar, Advocate स ु नवाई कȧ तारȣख/Date of Hearing : 21.02.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 25.02.2022 2 I.T.A. Nos.3243, 3558 & 3560/Chny/2018 & 96/Chny/2019 आदेश /O R D E R PER MAHAVIR SINGH, VP: These four appeals, three by Revenue and one by assessee are arising out of three different orders of Commissioner of Income Tax (Appeals)-18, Chennai in ITA No.273, 274 & 275/17-18, vide orders of even date 28.09.2018. The assessments were framed by the ACIT, Central Circle 2(1), Chennai u/s.144 r.w.s. 153C r.w.s.153A of the Income Tax Act, 1961 (hereinafter the ‘Act’) for the assessment years 2014-15 & 2015-16 vide orders of even date 27.12.2017 and u/s.143(3) of the Act for the assessment year 2016-17 vide order dated 29.12.2017. ITA 3558/Chny/2018 2. The first issue in this appeal of Revenue is as regards to the order of CIT(A) deleting the addition made by the AO towards Director’s remuneration accrued to the assessee from Vasan Health Care Pvt. Ltd. & Vasan Medical Centre India Pvt. Ltd., for an amount of Rs.1.50 crores in each i.e., total addition of Rs.3 crores. For this, Revenue has raised various grounds which we need not to reproduce. 3 I.T.A. Nos.3243, 3558 & 3560/Chny/2018 & 96/Chny/2019 3. We have heard rival contentions and gone through facts and circumstances of the case. Brief facts are that the assessee is an individual and is also a shareholder and director of Vasan Group of Companies. A search & seizure action u/s.132 of the Act was conducted on the business premises of Vasan Health Care Pvt. Ltd., and the residential premises of Dr. A.M. Arun, who is one of the directors of the assessee company on 01.12.2015. The AO during the course of assessment proceedings noticed from the computation of income filed, that the assessee has offered income from salary from Vasan Medical Centre (India) Pvt. Ltd., amounting to Rs.1 crore and agricultural income of Rs.3 lakhs but the same was not offered in the return of income filed in response to notice u/s.153C of the Act. The AO further noted that as per the audit report in Form No.3CD of Vasan Health Care Pvt. Ltd., and Vasan Medical Centre (India) Pvt. Ltd., the assessee has received remuneration amounting to Rs.1.50 crores from each. The assessee was asked to explain as to why she has not offered the same to tax. The assessee vide letter dated 18.12.2007 stated that though M/s. Vasan Medical Centre India Pvt. Ltd., had approved the directors remuneration but the same were not paid and company has decided not to pay the remuneration by passing necessary resolution. The 4 I.T.A. Nos.3243, 3558 & 3560/Chny/2018 & 96/Chny/2019 AO was not convinced with the reply and added the directors remuneration received from the above two concerns amounting to Rs.3 crores. Aggrieved, assessee preferred appeal before CIT(A). 3. The CIT(A) without passing a speaking order deleted the addition by observing in para 5.2 as under:- 5.2 On the second aspect of addition, the Assessing Officer has only relied on the Audit Report in respect of the Companies viz., VMCIPL, VHCPL, wherein it had been stated that, an amount of Rs.1.5 Crores each has been paid as Directors Remuneration to the assessee. The A.O. has not illustrated that the appellant is in actual receipt of such remuneration. While the A.O. has undertook the assessment in the case of both the companies, simultaneously, he has failed to remark as to whether this amount of Rs.3 Crores being Director’s remuneration is allowed as expenditure in the hands of both the companies separately. It is evident that the books of both the companies have been cooked up and thus, the Audit Report in Form No.3CD is totally unreliable. Drawing support from a fabricated material is not acceptable and therefore, the addition made on of Rs.3 Crores in the absence of its receipt by the Appellant is incorrect and therefore deleted. Accordingly, the Ground of Appeal is allowed. Aggrieved, now Revenue is in appeal before the Tribunal. 4. Now before us the ld.CIT-DR as well as the ld.counsel for the assessee stated that the CIT(A) has not passed a speaking order 5 I.T.A. Nos.3243, 3558 & 3560/Chny/2018 & 96/Chny/2019 and both agreed that matter can be restored back for fresh adjudication. At that point of time, the ld.counsel for the assessee Shri S. Sridhar, stated that matter can go back to the AO for proper adjudication of the issue and for bringing all material facts on record. To this proposal, the ld.CIT-DR agreed. 5. As both parties have conceded, without speaking on merits we set aside the orders of lower authorities i.e., of the AO as well as CIT(A) on this issue and remand the matter back to the file of the AO for fresh adjudication. 6. The next issue in this appeal of Revenue is as regards to the order of CIT(A) deleting the disallowance of credit card expenses of Rs.2,55,856/-. 7. We have heard rival contentions on this issue and gone through facts and circumstances of the case. We noted that the AO noted from ITS details that the assessee has incurred credit card expenses of HDFC bank of Rs.2,55,856/- but could not explain the source of that expenses. The only reply filed by assessee is that Dr. A.M. Arun claimed the same who have incurred but no explanation 6 I.T.A. Nos.3243, 3558 & 3560/Chny/2018 & 96/Chny/2019 regarding source of investment and details of investment in support of his claim were filed. Therefore, the AO added this expenses on protective basis. Aggrieved assessee preferred appeal before CIT(A). The CIT(A) deleted the addition by observing in para 5.3 as under:- The disallowance of credit card expenses of Rs.2,55,856/- is done on a protective basis and as in the case of item no.(i) , the substantive assessment made in the case of Dr.A.M.Arun. Further, Dr.A.M.Arun had filed a confirmation letter before the A.O. on 19.12.2012 that the credit card expenses were incurred by him on her behalf. When substantive addition have been made in the case of her spouse, the necessity to duplicate it in the hands of the appellant does not arise and therefore the addition made on this count of R.2,55,856/- is deleted. Accordingly, the Ground of Appeal is allowed. 8. We noticed that even now it is not clear whether these expenses were explained by Dr. A.M. Arun and in absence of the same, as conceded by both ld.counsel for the assessee and the ld.CIT-DR, we set aside the orders of the lower authorities and remit this issue back to the file of the AO. This appeal of Revenue is allowed for statistical purpose. 9. Coming to cross appeals in ITA No.3243 & 3560/Chny/2018 for assessment year 2015-16, the only issue in this appeal of Revenue is as regards to the order of CIT(A) deleting the addition 7 I.T.A. Nos.3243, 3558 & 3560/Chny/2018 & 96/Chny/2019 made by the AO towards directors remuneration accrued from Vasan Health Care Ltd., for an amount of Rs.1.50 crores. 10. As the facts and circumstances are exactly identical to assessment year 2014-15 in ITA No.3243/Chny/2018, taking a consistent view and as agreed by both the counsels, we restore this issue back to the file of the AO. The orders of the lower authorities on this issue are set aside and appeal of Revenue on this issue is allowed for statistical purpose. 11. As regards to assessee’s appeal, the only issue is as regards to the order of CIT(A) confirming the action of AO in adding a sum of Rs.1.89 crores representing unsecured loans received from various parties u/s.68 of the Act. For this, assessee has raised various grounds which we need not to reproduce. 12. Brief facts are that the AO during the course of assessment proceedings noted from the assessee’s bank account No.00581930005042 maintaining with HDFC Bank, Trichy that there is heavy transfer of funds by RTGS from various parties amounting to Rs.4,49,61,000/- on 18.09.2014 & 19.09.2014. The assessee 8 I.T.A. Nos.3243, 3558 & 3560/Chny/2018 & 96/Chny/2019 has filed confirmation from whom the funds have been received for an amount of Rs.2,60,61,000/- but could not file any details in respect of Rs.1,89,00,000/-. Therefore, the AO treated these amounts of Rs.1.89 crores as unexplained cash credit u/s.68 of the Act and added to the total income of the assessee. The CIT(A) also confirmed vide para 7 as under:- 7. Coming to the aspect of addition with regard to Unexplained Loans, the appellant has received funds from various parties amounting to Rs.4,49,61,000/- During the course of assessment proceedings, when the appellant was asked to furnish confirmation of receipts, the appellant was able to furnish confirmation only to the extent of Rs.2,60,61,000/- Therefore, the balance receipts of Rs.1,89,00,000/- was treated as unexplained cash credit u/s 68 of the I.T. Act in the hands of the appellant. 13. The ld.counsel for the assessee stated that the assessee could not file evidences before CIT(A) or the AO but now, the assessee is ready with the evidences and confirmations, as the other issue in this order is going back to the file of the AO, the ld.counsel requested for setting aside of this issue also to the file of AO. On this proposition also, the ld.CIT-DR has not objected. 14. After hearing both the sides, we are of the view that let this issue be re-examined by the AO afresh because neither the AO nor CIT(A) has passed speaking order or not carried out any enquiry or investigation for making addition. Hence, we set aside the orders of 9 I.T.A. Nos.3243, 3558 & 3560/Chny/2018 & 96/Chny/2019 the lower authorities and remand this issue back to the file of the AO. This appeal of the assessee is allowed for statistical purposes. ITA No.96/Chny/2019 15. The first issue in this appeal of Revenue is as regards to the order of CIT(A) deleting the add deleting the addition made by the AO towards directors remuneration accrued from Vasan Medical Centre India Pvt. Ltd., for an amount of Rs.2.40 crores. 16. At the outset, we have already adjudicated this issue in earlier assessment year 2014-15 in ITA No.3243/Chny/2018 and remanded the matter back to the file of the AO. As the facts and circumstances are exactly identical in this year also, we set aside the orders of the lower authorities and remand the matter back to the file of the AO for fresh adjudication. This issue of Revenue’s appeal is allowed for statistical purposes. 17. The last issue in this appeal of Revenue is as regards to the order of CIT(A) deleting the addition made by AO towards unexplained investments u/s.69B of the Act amounting to Rs.1,87,395/-. 10 I.T.A. Nos.3243, 3558 & 3560/Chny/2018 & 96/Chny/2019 18. We have heard rival contentions and gone through facts and circumstances of the case. We noticed that the credit card expenses incurred by assessee but claimed to have been incurred by Dr.A.M. Arun and added on protective basis in the hands of the assessee as in assessment year 2014-15 in ITA No.3558/Chny/2018, we remit this issue exactly on identical reasoning back to the file of the AO. This appeal of the Revenue is allowed for statistical purposes. 19. In the result, all the four appeals, three appeals by Revenue in ITA Nos. 3558 & 3560/Chny/2018 & 96/Chny/2019 and one appeal by assessee in ITA No.3243/Chny/2018 are allowed for statistical purposes. Order pronounced in the court on 25 th February, 2022 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य /ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 25 th February, 2022 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. िनधाᭅᳯरती/Assessee 2. राज᭭व/Revenue 3. आयकर आयुᲦ (अपील)/CIT(A) 4. आयकर आयुᲦ /CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF.