DCIT, CIRCLE - 1 (3), CHENNAI V. M/S. SHIFA HOSPITAL AND RESEARCH CENTRE, CHENNAI

ITSSA 2/CHNY/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5476 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-12-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 25-05-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Principle of natural justice; Block assessment; Set aside
• Section: 68; 143(3); 158BD

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी वी. दुगाŊ राव, Ɋाियक सद˟ एवं ŵी मनोज कु मार अŤवाल, लेखा सद˟ के समƗ । Before Shri V. Durga Rao, Judicial Member & Shri Manoj Kumar Aggarwal, Accountant Member I.T(SS).A. No.02/Chny/2020 Block Assessment Period: 01.04.1995 to 28.03.2002 The Deputy Commissioner of Income Tax, Central Circle 1(3)(I/c), Chennai 600 034. Vs. M/s. Shifa Hospital and Research Centre, No. 55, New No. 93, Triplicane High Road, Triplicane, Chennai 600 005. [PAN:ABEFS5536Q] (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri S. Palani Kumar, CIT ŮȑथŎ की ओर से/Respondent by : Shri S. Sridhar, Advocate सुनवाई की तारीख/ Date of hearing : 01.12.2021 घोषणा की तारीख /Date of Pronouncement : 29.12.2021 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 18, Chennai dated 29.01.2020 relevant to the block assessment period 01.04.1995 to 28.03.2002. 2. The appeal filed by the Revenue is delayed by 45 days, for which, the Revenue has filed a petition for condonation of the delay due to COVID-19 pandemic, to which; the ld. Counsel for the assessee I.T(SS).A. No.02/Chny/20 2 has not raised any serious objection. Consequently, since the Revenue was prevented by sufficient cause, the delay of 45 days in filing of the appeal stands condoned and the appeal is admitted for adjudication. 3. Brief facts of the case are that it is second round of litigation. Originally, the appeal arises out of the assessment order passed under section 158BD r.w.s. 143(3) of the Income Tax Act, 1961 [“Act” in short] dated 31.01.2006 by arriving at the undisclosed income of ₹.1,70,57,966/- for the block assessment period 01.04.1995 to 28.03.2002. The assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) partly allowed the appeal filed by the assessee. Against the appellate order, both the assessee as well as Revenue filed appeals before the ITAT. The Tribunal vide its order dated 01.02.2008, set aside the appellate order and restored the matter to the file of the Assessing Officer with the direction to re-examine the whole issue in the light of the observations made in that order. Accordingly, the assessment was completed under section 158BD r.w.s. 254 dated 29.12.2008, wherein, the Assessing Officer restored all the additions made in the original assessment except restricting the addition made in the financial year 1998-99 to ₹.19,77,696/-. Against I.T(SS).A. No.02/Chny/20 3 the assessment order dated 29.12.2008, the assessee filed an appeal before the ld. CIT(A). By following the decision of the Tribunal in assessee’s sister concern, in the case of ACIT v. Shifa Jaundice Clinic, the ld. CIT(A) directed the Assessing Officer to work out 15% of the year-wise bank deposits to be assessed as the net income of the assessee and partly allowed the appeal of the assessee. 4. Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that the assessee has failed to make an attempt to correlate the deposits versus receipts and not discharged the onus cast upon the assessee to demonstrate that a part of the deposit was used for the purpose of business. The ld. DR further submitted that since the assessee has not co-related the receipts with the bank deposits as directed by the ITAT, the ld. CIT(A) has erroneously directed the Assessing Officer to work out 15% of the year-wise bank deposits in respect of the relevant block years to determine the income of the assessee and pleaded for reversing the CIT(A)’s order. 5. On the other hand, the ld. Counsel for the assessee has submitted that by following the decision of the Tribunal in assessee’s sister concern in the case of ACIT v. Shifa Jaundice Clinic, the ld. I.T(SS).A. No.02/Chny/20 4 CIT(A) has rightly directed the Assessing Officer to work out 15% of the year-wise bank deposits to be assessed as the net income of the assessee and prayed for confirmation of the order passed by the ld. CIT(A). 6. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, block assessment was completed under section 158BD of the Act for the block period 01.04.1995 to 28.03.2002 on 03.01.2006 on a total undisclosed income of ₹.1,70,57,960/- and the year-wise undisclosed income of the assessee are as under: Financial year Undisclosed income assessed 1995-96 23,48,500 1996-97 31,98,000 1997-98 21,24,580 1998-99 40,85,886 1999-00 39,39,957 2000-01 3,95,493 2001-02 9,68,550 TOTAL 1,70,57,960 6.1 The assessee went on appeal before the ld. CIT(A) against the above assessment. The ld. CIT(A) vide order dated 30.11.2006 confirmed the additions for the financial year 2000-01 and 2001-02 and deleted the additions for the remaining years for the reason that the I.T(SS).A. No.02/Chny/20 5 return of income for those years are filed before the date of search. The Department as well as assessee went to the ITAT against the above order of the ld. CIT(A). The order of the ld. CIT(A) was set aside by the ITAT vide order dated 01.02.2008 and remitted the matter to the file of the Assessing Officer with a direction to re-examine the whole issue in the light of the observations made in that order. In pursuance to the order of the ITAT, the Assessing Officer completed the assessment order under section158BD r.w.s. 143(3)/254 of the Act dated 29.12.2008 by determining the total undisclosed income of the assessee at ₹.1,46,81,760/-. Against the above re-assessment order, the assessee filed an appeal before the ld. CIT(A) and filed evidences. Accordingly, the ld. CIT(A) called for remand report from the Assessing Officer and forwarded the remand report to the assessee for filing its rejoinder. After considering the remand report as well as assessee’s detailed submission against the remand report and by following the decision of the Tribunal in assessee’s sister concern, in the case of ACIT v. Shifa Jaundice Clinic in I.T(SS).A. No. 34/Mds/2012 dated 28.02.2014, the ld. CIT(A) has observed and held as under: “10. I have given my personal thoughts to the issue and have considered the facts of the case, submissions of the appellant and the materials available on record. The issue to be decided is whether the addition under Section 68 had rightly been made or not. As per section I.T(SS).A. No.02/Chny/20 6 68, when a cash credit entry appears in the appellant's bank account and that too, when the books of accounts are not maintained by the appellant, the appellant is under legal obligation to explain the same to the satisfaction of the A.O. In case the appellant did not offer any explanation or fails to tender evidence then the A.O. can hold that income as 'Income from undisclosed sources'. It is thus, imperative for the appellant to prove prima facie the transactions, which resulted in cash deposits in the bank account. In the present case, the genuineness of the transaction was not established. Thus, the onus lies upon the appellant to prove the cash found deposited in the bank accounts was not discharged either before the A.O. or before the undersigned. 10.1. The other technical objection raised by the appellant is that the AO should not have assessed the entire gross receipts as the undisclosed income particularly when the appellant has withdrawn moneys from the same bank account. In principle I agree that the AO should have considered the withdrawals also. But at the same time, the onus lies on the appellant to establish that the money withdrawn was utilized for the business purposes. 10.2. Further, during the course of appeal proceedings, the appellant furnished a copy of the Tribunal's order and contended that, a similar view has been taken by the Hon'ble ITAT 'B' Bench, Chennai in the case of M/s. Shifa Jaundice Clinic, a sister concern of the appellant firm wherein it has been decided that 8% of the total deposits representing receipts can be taken as a reasonable net income of the firm. 10.3. The appellant has furnished the figures of receipts and the bank deposits for the years under consideration: S.No. Financial year A.Y. Receipts as per Account Undisclosed income assessed 1. 1995-96 1996-1997 3846269.00 2348500.00 2. 1996-97 1997-1998 6470982.00 3198000.00 3. 1997-98 1998-1999 5752053.00 2124580.00 4. 1998-99 1999-2000 6084458.00 4085886.00 5. 1999-00 2000-2001 8428324.00 3939957.00 6. 2000-01 2001-2002 8148020.00 395493.00 7. 2001-02 2002-2003 2490696.00 968550.00 TOTAL 41220802.00 17057960.00 I.T(SS).A. No.02/Chny/20 7 10.4. It is true that entire deposits should not be construed as assessable income. It is noticed that certain expenditures have been incurred for the purposes of the business from out of deposits. It is relevant to correlate the deposit in the bank account with reference to receipts. At the same time, the appellant cannot simply absolve its liability by saying that the receipts are more than the deposits and hence pleading that the whole deposits should not suffer taxation. The deposits should be fully correlated to the receipts and after demonstrating that certain expenditures relatable to the business have been incurred. I have kept in view the decision of the Hon'ble ITAT in the appellant's sister concern Viz. M/s. Shifa Jaundice wherein the Tribunal has endorsed the first appellate authority's estimate of 8% of the bank deposits as income. However, each case has to be examined on its own facts. In the present case, considering the canvas and size of operations, the appellant's failure to make an attempt to correlate the deposits versus receipts; and to discharge its onus by demonstrating that a part of the deposits was used for the purpose of the business, I hold that 15% of the deposits is liable to be assessed as the income of the appellant, for that would meet the ends of justice and that would be in consonance with the principle of estimation approved by the Hon'ble ITAT in the case of aforementioned sister concern of the appellant. The AO will work out 15% of the year-wise bank deposits in respect of the relevant block years. The appellant's ground are partly allowed. Accordingly, the grounds are partly allowed.” 6.2 In this case, when the cash credit entry appears in the assessee’s bank account and that too, when the assessee has not maintained books of accounts, the assessee is under legal obligation to explain the cash credit to the satisfaction of the Assessing Officer. However, in this case, the assessee has not offered any explanation or evidence before the Assessing Officer. However, it was the submissions of the assessee before the ld. CIT(A) that the Assessing Officer has not considered the withdrawals made from the same bank I.T(SS).A. No.02/Chny/20 8 account of the assessee. By considering the submissions of the assessee, remand report of the Assessing Officer as well as by following the decision of the Tribunal in assessee’s sister concern, we find that the ld. CIT(A) has rightly held that 15% of the deposits are liable to be assessed as the income of the assessee to meet the ends of natural justice and partly allowed the ground raised by the assessee. Thus, we find no infirmity in the order passed by the ld. CIT(A) and accordingly, the ground raised by the Revenue stands dismissed. 7. In the result, the appeal filed by the Revenue is dismissed. Order pronounced on 29 th December, 2021. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 29.12.2021 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ (अपील)/CIT(A), 4. आयकर आयुƅ/CIT, 5. िवभागीय Ůितिनिध/DR & 6. गाडŊ फाईल/GF.