2019 (8) TMI 556 - AT - Income Tax

Addition u/s 68 - alleged that whole amount related with cash receipts in Annexure A2 was not deposited in banks and shown in the books of account - HELD THAT - Considering the plea of the Revenue that the assessee has not demonstrated the deposit of entire cash receipts as noted in the diary as being deposited in the bank also, we find no strength in the same also because the facts reveal otherwise. The assessee has demonstrated the fact that against the cash receipts of ₹ 6.68 crores noted in the diary, it has deposited cash in various bank accounts operated by it amounting to ₹ 6.58 crores which is substantially almost the entire amount of cash received by it. This fact has also remained uncontroverted before us. Therefore, there remains no basis with the Revenue for justifying the addition. We agree with the Ld.CIT(A) that the assessee had duly demonstrated the fact of having accounted for all entries noted in the diary Annexure A-2 of cash receipts and, therefore, the addition made of ₹ 5.45 crores on account of holding the entries to this extent as unaccounted for in the books of the assessee, has been rightly deleted by the CI T(A), we hold. - ground of appeal No.2 raised by the Revenue is dismissed. Excess depreciation claimed - claim of higher depreciation on life saving equipments - HELD THAT - CIT(A) had noted from the details of assets purchased during the year that certain assets did not qualify for higher rate of depreciation and accordingly asked the assessee to file a revised calculation of depreciation. The same was duly filed, gone through by the CIT(A) and no discrepancy or anomaly found in the same and excess depreciation as worked out by the assessee amounting to ₹ 27,71,054/- was upheld by the CIT(A). DR has been unable to point out any anomaly or discrepancy in the findings of the CIT(A). DR has been unable to point out from the revised calculation filed by the assessee to the CIT(A), any incorrectness in the claim of the assessee. In the light of any discrepancy having not been pointed out by the Ld. DR on the facts relating to the revised computation filed by the assessee, we find no reason to interfere in the order of the Ld.CI T(A) restricting the disallowance made by the AO on the excess claim of depreciation to ₹ 27,71,054/-. Moreover, we find that the excess depreciation as worked out by the AO on the additions made during the year amounted to ₹ 10,70,314/-, while the Ld.CIT(A) has disallowed the excess depreciation on the additions made during the year to ₹ 27,71,054/-. In view of the same, since the Ld.CI T(A) has disallowed the excess depreciation on the additions made during the year more than what was disallowed by the AO, there cannot be any grievance of the Revenue on this account. Ground No.3 raised by the Revenue merits no consideration and, therefore, is dismissed. Disallowance of interest expenses u/s 36(1)(iii) - whether advance was made for business purpose ? - HELD THAT - It is settled law that where sufficient own interest free funds are available, the presumption is that non business advances/investments have been made out of the said interest free funds. The Hon'ble Supreme Court has held so in the case of CIT (LTU) vs Reliance Industries Ltd. in 2019 (1) TMI 757 - SUPREME COURT - As the assessee had own interest free funds in the form of profits of the year alone amounting to ₹ 2.12 crores which were more than sufficient for making the impugned investments of ₹ 42.92 lakhs, we hold that no disallowance of interest u/s 36(1)(iii) was warranted in the present case, since the investments are presumed to have been made out of own interest free funds of the assessee. The disallowance so made of ₹ 5,15,190/- u/s 36(1)(iii) is, therefore, directed to be deleted. Addition made on account of higher receipts from ECHS and CGHS noted in a document Annexure A-119 as against that reflected in the books of the assessee by ₹ 2.23 crores - HELD THAT - The CIT(A), we find, deleted the addition when the figures on recalculation of the amounts mentioned in document A-119 by the AO was found to be less than that accounted for in the Books of the assessee. The Ld.DR has not controverted the above fact before us. The findings of the CIT(A) therefore that there was no understatement of receipts as per document A-119,we hold, calls for no interference on our part. The order of the CIT(A) deleting the addition of ₹ 2.23 crores on account of document A-119 is therefore upheld. Addition u/s 68 based on entries of the seized material - HELD THAT - it is not denied that the documents mentioned the name of Dr. Manjari Bhargava on the first page but in her statement made to the AO she has denied making any entry in the same and has stated that the same may have been made by some staff member. No statement of any staff member has been recorded by the search team. The Ld.CIT(A), we find, has gone through the contents of the document, Annexure A-120, and has noted that it only contains some general notings about the reminders of the work to be done, how the work is to be done and some observation probably of audit. The Revenue has not disputed this fact by pointing out otherwise from the document. As for the figures noted in the document which were the basis of addition made, we find that before the Ld.CIT(A) the assessee had explained the same to be pertaining to balances in its various bank accounts on the said dates, had filed a reconciliation of the figures reflected in the balance sheet with the balances in its bank accounts on that date and had substantiated the same with copies of the relevant bank statements. This explanation has also not been shown to be false before us. We therefore find no infirmity in the order of the Ld.CIT(A) holding the impugned figures in the document to be mere rough notings made during audit and thus deleting the addition made by the A.O. - order of the CIT(A) in deleting the addition is, therefore, upheld. Difference between audited trial balance and trial balance found during the course of search - addition made on account of difference of gross receipts as reflected in the provisional trial balance seized and that reflected in the Profit Loss Account - HELD THAT - Since it is an admitted fact that the document Annexure A-110 was a provisional trial balance of the assessee, the onus rested on the assessee to explain the difference between the gross receipts reflected in the same and that accounted for in the books of the assessee. Whatsoever and howsoever meagre they were the assessee was required to give a plausible explanation for the same since the recordings in the provisional trial balance was admittedly made by the assessee itself and, therefore, there was reason behind recording the gross receipts at ₹ 21.24 crores which was best known to the assessee only. It could not have been brushed aside as being mere provisional figure and difference between the provisional and actual figure being meagre. The action of the Ld.CIT(A), therefore, in confirming the addition of ₹ 11 lacs on account of the same is, therefore, upheld. Short collections in cash recorded in the books of the assessee - HELD THAT - Refunds of ₹ 2,86,939/- and ₹ 40,87,812/- in OPD and IPD and the net collection after reducing refunds being Net 18928149.10 and Net 9433746400 respectively ,meaning thereby that the total collections reflecting cash, cheque, draft, etc. recorded in Annexure -95, page 84 are inclusive of these refunds ,which have to be reduced, therefore, to arrive at the net cash collection. The refunds so reflected in the summary sheet amount to approximately ₹ 42 lacs(OPD 2lacs IPD 40lacs) and difference between the cash collected as recorded in the document/summary sheet and that recorded in the books of account is approximately ₹ 32 lacs and, therefore, what emerges, therefore, is that there is no short collections in cash recorded in the books of the assessee, in fact, higher cash collection recorded and for this reason also, there is no need for making any addition on account of unaccounted cash collections made from OPD/IPD.The order of the CIT(A), therefore, deleting the addition is upheld. Addition of share capital - HELD THAT - Revenue has not controverted the factual findings of the Ld.CIT(A) that Confirmations, PAN and details of cheques issued by the investors and credited in the bank account of the assessee were submitted. No discrepancy has been pointed out by the Ld.DR in the aforesaid documents. The Ld.CIT(A) has also we find specifically dealt with the contention of the AO that there was mismatch in the cheques shown to be issued by the investors and that shown as deposited by the assessee in his bank account. The Ld.CIT(A) has verified this fact and given a categorical finding that there was no such mismatch. The Ld.DR has been unable to controvert this finding of the Ld.CIT(A). No other anomaly or fact has been brought to our notice by the DR casting any doubt on the genuineness of the transaction. The Ld.CIT(A) has also given a finding that share application money received from two persons was returned subsequently, which also has not been controverted by the Revenue before us. We therefore agree with the Ld.CIT(A) that the assessee had duly discharged its onus of proving the genuineness of the transaction and with the Revenue not pointing out any reason to doubt the same, there remains no basis for treating the share capital as unexplained . Assessment us 153A - HELD THAT - Admittedly no incriminating material relating to share application money received during the year was found during search. The assessment for the impugned year was also earlier completed. Case of KABUL CHAWLA 2015 (9) TMI 80 - DELHI HIGH COURT can be well applied to the facts and circumstances of the case in hand. In view of this, we do not find any justification on the part of the lower authorities for making addition on account of share application money for the year under consideration. Penalty levied u/s 271(1)(c) - addition made on account of disallowance u/s 36(l)(iii) - HELD THAT - As in the case of Trident Infotech 2013 (5) TMI 492 - PUNJAB HARYANA HIGH COURT wherein penalty levied on identical disallowance of interest u/s 36(1)(iii) was deleted holding that mere disallowance of interest following decision of the Court in the case of Abhishek Industries 2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT does not establish that the assessee had concealed /furnished inaccurate particulars of income, particularly when all particulars relating to the claim had been duly disclosed. The facts leading to the disallowance of interest in the present case are identical. Penalty for disallowance of excess depreciation - HELD THAT - DR has been unable controvert the findings of the CIT(A) that full and complete disclosure regarding the particulars of claim of depreciation was filed by the assessee. Ld.DR has also not been able to controvert the findings of the Ld.CIT(A) that whether an asset qualified as life saving equipment ,qualifying for depreciation at higher rate, was a debatable issue. Moreover it is an undisputed fact that the assessee had conceded to the disallowance , for the reason that in any case 100% was allowable spread over a period of time. It is not that the claim of the assessee was found wholly untenable. We, therefore, see no reason to interfere in the order of the CIT(A) deleting penalty levied on disallowance of excess depreciation in all the impugned years. Penalty for disallowance of consultancy charges - HELD THAT - Undisputedly all particulars relating to the claim had been duly disclosed and the disallowance made for want of evidence to prove the rendering of services by the said consultant. It is also a fact on record that the payment was made through banking channels and even TDS deducted on the same. Clearly ,it is not the case that the claim of the assessee was found to be wholly false by the Revenue. We therefore hold that though it may be a fit case for making disallowance of expenses,but definitely the assessee cannot be charged with having concealed/furnished inaccurate particulars of income relating to the same. We therefore direct that the penalty levied on the disallowance of consultancy charges of ₹ 15 lacs be deleted. Penalty for addition on account of difference in receipts reflected in the provisional trial balance and that shown in the books of account - HELD THAT - The figures reflected in the provisional trial balance cannot be said to the final figures of receipts and, therefore, as rightly stated by the assessee, the addition made is not on account of any concrete finding that the assessee had not disclosed income to the extent of difference between the two document. We therefore hold that though it may be a fit case for making addition but in the facts of the case the assessee cannot be charged with having concealed/furnished any inaccurate particulars of income so as to attract levy of penalty u/s 271(1)(c). We, therefore, direct the deletion of penalty on the addition of ₹ 11 lacs.

Summary

Issues Involved:
1. Addition of ?5.45 crores under Section 68 of the Income Tax Act.
2. Disallowance of depreciation on life-saving equipment.
3. Disallowance of interest expenses under Section 36(1)(iii).
4. Addition of ?3.72 crores under Section 68.
5. Addition of ?2.23 crores based on Annexure A-119.
6. Addition of ?2.50 crores under Section 68.
7. Addition of ?16.92 crores based on Annexure A-120.
8. Addition of ?32.38 lakhs based on Annexure A-95.
9. Addition of ?28.33 lakhs based on Annexure A-127.
10. Addition of ?60.74 lakhs based on Annexure A-21.
11. Addition of ?36.03 lakhs based on Annexure A-3.
12. Addition of ?45.17 lakhs based on cash seized.
13. Addition of ?90 lakhs under Section 68 for share application money.
14. Penalty under Section 271(1)(c) on various disallowances and additions.

Detailed Analysis:

1. Addition of ?5.45 crores under Section 68:
The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the diary (Annexure A-2) was incomplete and the assessee had accounted for more cash receipts in its books than noted in the diary. The Tribunal also noted that the assessee had deposited almost the entire cash receipts in the bank and the income returned exceeded the receipts reflected in the diary.

2. Disallowance of depreciation on life-saving equipment:
The Tribunal upheld the CIT(A)'s partial relief, noting that the assessee had foregone the claim of higher depreciation on assets purchased up to FY 2005-06. For assets purchased thereafter, the CIT(A) had restricted the disallowance based on a revised claim filed by the assessee.

3. Disallowance of interest expenses under Section 36(1)(iii):
The Tribunal deleted the disallowance, noting that the assessee had sufficient own interest-free funds to make the advances. The Tribunal relied on the Supreme Court's decision in Reliance Industries Ltd., which held that where sufficient own funds are available, the presumption is that non-business advances are made out of those funds.

4. Addition of ?3.72 crores under Section 68:
The Tribunal upheld the CIT(A)'s deletion of the addition, following the same reasoning as in the ?5.45 crores addition for AY 2008-09.

5. Addition of ?2.23 crores based on Annexure A-119:
The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the recalculated total of Annexure A-119 was less than the amount accounted for by the assessee in its books.

6. Addition of ?2.50 crores under Section 68:
The Tribunal upheld the CIT(A)'s deletion of the addition, following the same reasoning as in the ?5.45 crores addition for AY 2008-09.

7. Addition of ?16.92 crores based on Annexure A-120:
The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the entries in the document were rough notings related to audit observations and were explained as bank balances.

8. Addition of ?32.38 lakhs based on Annexure A-95:
The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the billing software summary related to the preceding year and the figures in the summary sheet were not reliable.

9. Addition of ?28.33 lakhs based on Annexure A-127:
The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the entries were mere scribblings and could not be said to be unaccounted income or receipts.

10. Addition of ?60.74 lakhs based on Annexure A-21:
The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the register contained details of receipts from ECHS/CGHS, which were received through cheques and duly accounted for in the books.

11. Addition of ?36.03 lakhs based on Annexure A-3:
The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the advances received from ECHS/CGHS patients were received by way of cheques and duly reflected in the books.

12. Addition of ?45.17 lakhs based on cash seized:
The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the cash found was less than the cash reflected in the books and the document A-116 was only a petty cash book.

13. Addition of ?90 lakhs under Section 68 for share application money:
The Tribunal upheld the CIT(A)'s deletion of the addition, noting that the assessee had provided PANs, addresses, and details of cheques, and the money received from two persons was returned due to strained relations.

14. Penalty under Section 271(1)(c) on various disallowances and additions:
The Tribunal deleted the penalties related to disallowance of interest under Section 36(1)(iii) and excess depreciation, noting that the issues were debatable and the assessee had disclosed all particulars. The Tribunal also deleted penalties on disallowance of consultancy charges and addition of ?11 lakhs based on provisional trial balance, noting that mere disallowance does not lead to concealment or furnishing inaccurate particulars of income.