2015 (12) TMI 691 - AT - Income Tax

Addition u/s. 68 - Held that - Different figures being claimed as the amount of cash loans, viz. at ₹ 3,55,330/- as per the memo of appeal before the ld. CIT(A); ₹ 4,59,500/- per the statement of cash loans received from 10.08.2008 to 05.01.2009 (adduced now); and at ₹ 3,85,430/-, per the summary of cash-book (adduced now). It has already been explained that the documents being relied upon cannot be said to form part of the record, being not per a paper-book, i.e., containing documents before the authorities below nor certified for being true copies. In fact, all that the assessee, to substantiate its claim, was required to do was to produce the A.O. s letter dated 20.12.2011 (to him), calling for the explanation for the credits (refer page 2 of the assessment order), as well as the assessee s reply thereto in-as-much as, the difference being substantiate, this would be the first objection that the assessee would have raised in the matter. The A.O. has already confirmed per s. 159 order (supra) the figure adopted in assessment to be in terms of the cash-book produced before him during the assessment proceedings. The assessee s balance-sheet (as on 31.03.2009) (now produced), assuming the same as filed along with the return of income, itself shows the unsecured loans as well as the deposits from the patients to be at ₹ 15.96 lacs and ₹ 5.8 lacs (as on 31.3.2009) respectively. The addition u/s.68 is under the circumstances confirmed; the parameter of section 68 being clearly unsatisfied - Decided in favour of assessee. Disallowance of interest expenditure claimed on proportionate basis - Held that - The assessee explained that the amounts were already advanced for the purchase of surgical instruments, on which therefore no interest could be charged. The same did not find favour as the contention was not substantiated with any evidence. In further appeal before this tribunal, no improvement in its case could be made by the assessee. The amounts, it is stated, had been advanced in earlier years. In that case, there would definitely be some correspondence for/or follow-up by the assessee seeking reasons for or to expedite the delay in the purchase, which would substantiate its claims and, besides, also reveal the reason for the non-supply of goods. The purpose of advance to Sushila Hospital is also not spelled out. It is only where the advance is shown to be for the purpose of assessee s business or profession, that interest attributable thereto could not be allowed. The assessee s case is wholly unevidenced. - Decided against assessee. Disallowance of consultation fees paid to three doctors - Non-deduction and deposit of tax at source (TDS) - Held that - The default in the noncompliance of the TDS provision, i.e., in first deducting tax at source then depositing the tax, is admitted. Section 40(a)(i) only introduces a timing effect, so that on the deduction of tax and its deposit, the corresponding amount would stand to be allowed as deduction for that year, i.e., the year of deposit/payment - Decided against assessee. Levy of interest u/s. 234B is mandatory and consequential and, accordingly, there is no merit in the assessee s case.

Summary

Issues:
1. Disallowance of cash loans received by the assessee.
2. Disallowance of interest expenditure.
3. Disallowance of consultation fees exceeding a specified limit.
4. Levy of interest under section 234B of the Income Tax Act.

Issue 1: Disallowance of Cash Loans Received:
The appellant, a doctor, received cash loans during the assessment year but failed to provide confirmations, names, addresses, or evidence of creditworthiness of the creditors. The Assessing Officer confirmed the amount of loans as unexplained. The appellant claimed a lower sum of loans, but the documents submitted were not certified as true copies. The appellant's balance sheet also did not support the claimed amount. The addition under section 68 was upheld as the appellant failed to substantiate the claimed lower sum of loans. The Tribunal affirmed the decision.

Issue 2: Disallowance of Interest Expenditure:
The appellant claimed interest expenditure on investments and loans but could not prove that the amounts were advanced for business purposes. The lack of evidence led to the disallowance of interest expenditure. The appellant's explanation was deemed insufficient, and no improvement was made in the case during the appeal. The Tribunal upheld the disallowance of interest expenditure due to the absence of substantiating evidence.

Issue 3: Disallowance of Consultation Fees:
Consultation fees paid to doctors exceeding a specified limit were disallowed for non-deduction and deposit of tax at source. The appellant argued that since the fees were paid during the year, section 40(a)(ia) should not apply. However, the default in complying with TDS provisions was admitted. The Tribunal noted that the appellant's reliance on a specific case law was not substantial in light of other court decisions. The disallowance of consultation fees was upheld due to non-compliance with TDS provisions.

Issue 4: Levy of Interest under Section 234B:
The levy of interest under section 234B was contested by the appellant. However, the Tribunal stated that such interest is mandatory and consequential, finding no merit in the appellant's case. The levy of interest under section 234B was upheld as per the provisions of the Income Tax Act.

In conclusion, the Appellate Tribunal upheld the disallowances of cash loans received, interest expenditure, and consultation fees, while also confirming the levy of interest under section 234B of the Income Tax Act. The appellant's failure to provide necessary documentation and evidence led to the dismissal of the appeal. The Tribunal emphasized the importance of compliance with tax provisions and the substantiation of claims to avoid disallowances and penalties.