9911796707
TMI Blog2018 (5) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee and as such separate addition made by the AO is unjustified. 3(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of an amount of Rs. 3,99,951/- made by AO on account of stock surrendered at the time of survey. (ii) That the above addition has been confirmed despite the assessee bringing on record evidences to show that the assessee has duly recorded and included the surrendered stock in the income returned by him. 4(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of an amount of Rs. 24,24,650/- made by AO on account of business promotion expenses. (ii) That the above-said disallowance has been confirmed despite the assessee bringing all material and evidences to prove the same. (iii) That the addition has been confirmed relying upon the statement recorded at the back of the assessee and without allowing cross examination. 5 (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of an amount of Rs. 5, 14,86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner and has derived Professional income from his proprietorship firm M/s Delhi IVF & Fertility Clinic Research Centre. Apart from this, assessee is also deriving income from house property, capital gain and income from other sources. A survey was conducted on 11.2.2009 at the premises of the assessee u/s. 133A of the Act whereby the assessee agreed to surrender following sum for the AY 2009-10. S. NO. Details Amount 1. Sundry Creditors 55,19,650/- 2. Sundry Creditors Ferring Pharmaceuticals 23,24,216/- 3. Unaccounted Cash 17,98,122/- 4. Unexplained Medicine in Stock 3,99,951/- 2.1 During the course of the assessment, the AO raised the issue of inclusion of the above amounts in the return filed by the assessee. The AO was satisfied with the explanation of the assessee with regard to the inclusion of amount of Rs. 55,19,650/- and Rs. 23,24,216/- in the return of income. However, the AO was not satisfied with the explanation of the assessee with regard to the other two amounts i.e., Rs. 17,98,122/- on account of cash and Rs. 3,99,951/-. Accordingly, he added these amounts in the income declared by the assessee. The AO further made disallowance on account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue, it was submitted that during the appellate proceeding, the assessee has submitted a complete reconciliation which has been quoted on page 10 & 11 of the impugned order. The cash in hand as on 1st February, 2009 as per the seized cash book was Rs. 23,72,810.65/- and after reconciliation the cash in hand as on 11th February, 2009 comes to Rs. 17,98,122.65/-. This was exact cash found at the time of the survey. It was further submitted that the issue at the time of the survey as is evident in the statement recorded was not writing of the cash book from 1st February to 7th February, 2009. The assessee post survey has written the cash book an accounted for the entire amount. As regards the comparison carried out by the CIT(A), it was submitted that the CIT(A) has failed to appreciate the facts in the right perspective. The assessee is carrying on the profession as medical practitioner and receipts are received from the patients and the difference in the name is sometimes because of the relatives accompanying the patients. Our attention was drawn to the Table 2 at page 12 and 13 where the Ld. CIT(A) has just picked up certain figures to make out a case ignoring the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form part of the income declared in the return. The same amount cannot be added again and hence addition of the same amount on the above reasoning is not justified. Accordingly delete the addition by allowing the Ground No. 2. 6. As regards Ground No. 3 is concerned, which is relating to addition of Rs. 3,99,951/- on account of the difference in stock at the time of the survey. In this regard, the ld. AR of the assessee submitted that there is no dispute as regards the value of the stock as in the date of survey of Rs. 7,40,551/-. The issue is limited to the figure of the stock as per the books of accounts taken at Rs. 3,40,600/-. It was further submitted that figure as per trial balance taken at the time of the survey does not represent the stock as on the date of the survey. The stock in the tally shown in the trial balance is the opening stock and that is why this confusion has arisen. It was further submitted by the ld. AR that addition is otherwise untenable in view of the fact that the closing stock of Rs. 4,84,500/- as on 31st March, 2009 will itself set off the above difference even if it is assumed that there was a difference. It was contended that the Ld. AO has accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The assessee accordingly requested the Ld. CIT(A) that the matter be remanded to the AO for giving a copy of the statement recorded of Mr. Hardeep Bisht and also allowing cross examination. The Ld. CIT(A) considering the above explanation of the assessee and the facts, called for the remand report from the AO. The Ld. CIT(A) also held a joint hearing with the AO and AR of the assessee whereby it was decided to allow cross examination of Mr. Hardeep Bisht. The AO did not allow the cross examination and shifted the onus on assessee of producing Mr. Hardeep Bisht. Despite, no cross examination being allowed the Ld. CIT(A) confirmed the action of AO ignoring the specific issue raised by the assessee and quoted by the Ld. CIT(A) in para 7.2 of its order. On the basis of the above, it was contended that the order passed by the AO and the Ld. CIT(A) is in violation of the settled law that no adverse view can be taken against the assessee in respect of the statement recorded at the back of the assessee unless an opportunity of cross examination is allowed to the assessee. Further, the Ld. AR submitted that the AO has failed to ask any further question from Mr. Hardeep Bisht at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the totality of the above said facts, we feel it appropriate to remit this issue back to the AO with a direction that he will allow cross-examination of Mr. Hardeep Bisht before relying upon the same for rejecting the claim of the assessee. Needless to say that assessee should be given adequate opportunity of being heard by the AO. Therefore, the ground No. 4 is allowed for statistical purpose. 10. As regards Ground No. 5 which is relating to addition of Rs. 5,14,867/- on account of electricity expenses disallowed by the AO by invoking explanation below Section 37(1) on the ground that such expenses are penal in nature. It was submitted by the Ld. AR of the Assessee that this amount has been paid to the New Delhi Municipal Corporation on account of the commercial use of the premises. The electricity charges for commercial use are different than the charges for domestic use. The NDMC accordingly has levied charges on account of the commercial use. It was submitted that charges nowhere has been termed as penalty. The Ld. AR placed reliance on the decision of the ITAT Bench of the Hyderabad in the case of Dy. Commissioner of Income Tax vs. FOSAN & Co. 40 ITD 306. 11. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year is concerned, we note that the assessee during the year has sold first floor of the property in Sundar Nagar for a total consideration of Rs. 1,50,00,000/-. After deducting the indexed cost of the residential property of Rs. 39,35,655/-, there was a net capital gain of Rs. 1,10,65,345/- out of which assessee invested a sum of Rs. 70,00,000/- in the capital gains scheme and offered balance amount of Rs. 40,64,345/- towards tax. The AO however was of the view that the property sold is not a residential property and hence assessee is not eligible for claiming benefit of investment made by it in the capital gains scheme of Rs. 70,00,000/- and accordingly, he added the same while computing total income of the assessee. The AO also got a physical verification done whereby the Inspector obtained some of the photographs from the outside of the property. The ld. CIT(A) has confirmed the findings of the AO. It was contended by the Ld. AR that the finding recorded by the AO and upheld by the Ld. CIT(A) are factually incorrect. It was submitted that AO has not appreciated the facts in the right perspective. The assessee during the year has sold only first floor which is a resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record and without appreciating that in market area there is commercial area on the ground floor and the first floor and barsati floor are residential floor. The assessee has clarified these facts vide letter dated 27th December 2011 which has been totally ignored. The inspector's report relied upon by the AO has failed to take into consideration these aspects. The photograph which is forming part of the assessment order apparently is of the ground floor where JaganNath Hem Chand was the tenant since 1993. Further, this property was sold on 5th June, 2008 and the inspector visit is on 23rd December, 2011 i.e. after a period of more than 3 years. Further, the electricity bills in the name of the assessee is continuing as the buyer would not have applied for substitution of name. The name in the electricity bill does not change automatically, it is the buyer who has to get the name changed. It was further submitted that though the Inspector has taken a few photographs which are part of the assessment order but these photographs nowhere confirms that the gas agency was running on the first floor as can be seen from the photographs. It was also pointed out that the inspector has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty or not. The AO has stated in the assessment order that the property sold is not residential. In this regard, he has made reference to the documents and also to the Inspectors' report. However, on going through the various documents placed in the Paper Book, we note that the finding recorded by the AO is factually incorrect. The AO on page 11 and in para 7.5 of the assessment order has made a reference to the purchase deed of F.Y. 1993- 94 to assert that this purchase deed nowhere states that the property is residential. In this regard, we have examined the entire set of documents including the Agreement for Lease executed between the President of India and Mrs. VidyaWati from whom Mr. Ashok Kumar Gupta, the legal heir, the assessee has purchased the property in the year 1993-94. In the lease deed, it has been clearly stated that the ground floor is shop and the first floor and the barsati floor is residence. We have also examined the document being General Power of Attorney dated 4th June, 2008 whereby it is clearly stated that Smt. VidyaWati after possession of the plot of land, constructed a building on the same comprising of a shop on the ground floor and the residential p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents confirming to the fact that the first floor and barsati floor was constructed as residential and the other facts analysed herein above. There is no evidence that the said property has been reconstructed as commercial property. In fact it is not the case of the AO. Accordingly, we hold that the property sold by the assessee during the year was residential property and hence assessee is entitled for exemption under section 54 of the Act. We are also in agreement with the alternative contention of the learned AR that the use of the property is not the relevant criteria to consider the eligibility of the benefit of section 54 of the Act. There is no such condition that the property should be occupied as a residence for claiming the exemption. As against this it may be relevant to mention that section 54B providing for exemption in respect of agriculture land specifically provides that such agriculture land was being used for agricultural purposes. In the absence of any such specific condition in Section 54, no such condition can be read. Our this interpretation get further supported by the judgment in the case of Mahavir Prasad Gupta Vs Joint Commissioner of Income-tax [2006] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes, it cannot be said that what was acquired by the assessee was not a residential property, but a commercial one. Subsequent change in the user of the property does not disentitle the assessee to relief under S.54F of the Act, as held by Hyderabad Bench B of this Tribunal in the case of Shri M.V. Subramanyeswara Reddy (HUF)(supra)," Further, in the case of Income-tax Officer, Ward 24(2) (2) Versus Ms. SandhyaSaxena [2006] 7 SOT 527 (MUM.) where the court has held as under: "3. After going through the rival contentions and after perusing the material on record, we are not inclined to interfere with the well reasoned finding of the CIT(A), who has held that house property, i.e., B-I and B-II, though purchased by two separate agreements on the same day, is one house property despite the fact that a part of this house property was used by the assessee for running a beauty parlour for some time. The said beauty parlour had already been closed prior to sale. Even if part of the said property had been used for commercial purpose for some time, but it does not change the character of the house property in view of the reasoning that no depreciation had been claimed thereon in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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