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TMI Blog2020 (1) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A 11.03.2019 2. 37/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2011-2012 14.07.2017 153A 11.03.2019 3. 38/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2012-2013 14.07.2017 153A 11.03.2019 4. 39/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2013-2014 14.07.2017 153A 11.03.2019 5. 40/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2014-2015 14.07.2017 153A 11.03.2019 6. 41/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2015-2016 14.07.2017 153A 11.03.2019 7. 42/CTK/19 M/s Cuttack Hospital Pvt. Ltd. 2016-2017 14.07.2017 143(3) 11.03.2019 3. Since the issues involved in all the appeals are identical to each other, except different in figure, therefore, with the consent of both the parties, all the appeals are heard analogously and disposed off by this consolidated order. For the sake of convenience, we shall take into consideration the facts and grounds mentioned in IT(SS)A No.36/CTK/2019 for the assessment year 2010-2011 for deciding all the appeals. Grounds taken by the assessee in the said appeal for assessment year 2010-2011 are as under :- Addition of Rs. 5,46,000/- (a) For that the learned AO is erred in making addition of Rs. 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and findings of AO, the CIT(A) observed that it cannot be denied that the assessee has established information centres at seventeen places in rented premises and has appointed staff members to facilitate treatment of patients from these places at its hospital in Cuttack. Accordingly, the CIT(A) restricted the disallowance to 30% of the total expenditure claimed by the assessee in the following manner for the respective assessment years under consideration :- A.Y. Total expenditure claimed Addition Made by the AO Addition confirmed Addition ordered to be deleted 2010-11 7,80,000 5,46,000 2,34,000 3,12,000 2011-12 21,90,000 15,33,000 6,57,000 8,76,000 2012-13 3,06,000 2,14,200 91,800 1,22,400 2013-14 4,27,500 2,99,250 1,28,250 1,71,000 2015-16 30,54,000 21,37,800 9,16,200 12,21,600 2016-17 32,43,600 22,70,600 9,73,080 12,97,5201 Total 1,00,01,100 70,00,850 30,00,330 40,00,520 For the assessment year 2014-2015, the CIT(A) partly deleted the addition made by the AO on the total expenditure claimed by the assessee after restricting to 30% and confirmed the addition made by the AO on account of unexpla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the people of weaker society of the state of Odisha, therefore, the expenditure has been incurred for the business purpose of the assessee which cannot be disallowed. Ld. counsel strenuously contended that merely because the assessee could not produce some bills and vouchers which were prepared at the information centers and could not reach and collect at central account office of the assessee, the adhoc addition of 30% cannot be held as justified and reasonable. Alternatively, the assessee concluded his argument with a prayer that if it is found necessary then the percentage of adhoc disallowance and addition may kindly be reduced in the interest of justice to 5 to 10%. 11. Replying to the above, ld. Departmental Representative (DR) took us through the relevant part of the assessment and first appellate order and submitted that the ld. CIT(A) has already granted relief to the assessee by reducing to the addition from 100% to 30% and no further reduction in the addition should be granted. Ld. CITDR also submitted that despite opportunity was given by the lower authorities the assessee failed to submit relevant documentary evidence, bills and vouchers in support of his claim of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we are of the considered view that the authorities below have not disputed that the assessee has established information centres at 17 places in the rented premises and has appointed staff members to facilitate the treatment of patients of these places to Cuttack, meaning thereby the information centres were established for the purpose of business of the assessee to secure high number of patients from remote areas by way of guiding them and facilitating them to reach Cuttack for treatment and getting benefited from the information given by these centers to the patients located at remote, rural and semi-urban areas. The authorities below have not doubted this fact that the assessee established information centers in the rented premises and also deployed therein. Therefore, incurring of expenditure towards payment of rent and salary to the employees is obvious and this was for the purpose of business of the assessee. The main allegation of the AO is that the assessee could not produce any documentary evidence in support of his claim and could not satisfactorily explained for non-production of the same. In this regard, we are in agreement with the contention of the ld. counsel of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Studies & Research (IPSAR), which is not correct on the face of the audited balance sheet, cash flow statement and expenditure towards consideration of renovation of the building. Ld. Counsel of the assessee further submitted that the CIT(A) has not disputed the statement recorded on oath of Dr.J.K.Mishra owner/director of IPSAR wherein he denied having receipt of amount of Rs. 70 lakhs from the assessee towards sale of land and building from IPSAR. Ld. Counsel of the assessee strenuously contended that the first appellate authority has wrongly shifted the onus on the assessee company to disprove the negative that the assessee has not paid amount of Rs. 70 lakhs. The assessee cannot be compelled to prove the negative fact after the stand of the purchaser Shri J.K.Mishra, that if the onus was shifted to the AO to prove that the assessee has paid Rs. 70 lakhs over and above the amount stated in the registered sale deed. 16. Ld.Counsel further submitted that the document (seized material indexing No.AH-55) was seized from the custody of Chief Financial Officer Mr. Rajendra Kumar Sahoo (FCA) and the statement of Mr. Sahoo was recorded by the Investigating Officer, who had categoricall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spent by the assessee on renovation was gross receipts disclosed by the assessee company in the I.T. return for A.Y.2014-2015 which comes to Rs. 30,52,23,808/-, therefore, the conclusion arrived at by the ld. CIT(A) based on the remand report without any interpretation of facts and circumstances and without expressing his independent view point is not sustainable in the eyes of law. 18. It was also vehemently contended by the ld. Counsel that the fact of incurring expenditure on renovation cannot be disputed by the authorities below on the basis of sham and meaningless documents. Ld. counsel further submitted that in paragraph 4.3 of the first appellate order, the CIT(A) has mis-directed himself while sustaining the addition as in the seized material AH-55 as reflected, in the order of the assessment nowhere the facts and figures have been mentioned which have been brought in para 4.3 by the CIT(A) to tilt the case in favour of the Revenue. 19. Ld. Counsel of the assessee further submitted that the addition has been based on two documents i.e.(i) AH-55 which was extract of mail received from Shri Rajendra Kumar Sahoo, the Chief Financial Officer to Dr. Mishra (IPSAR) and (ii) pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned in the sale deed and the amount was paid over and above of the amount which was written in the sale deed. 21. It was also the contention of ld. DR that if it is assumed that Rs. 70 lakhs is the part of Rs. 4.95 crore which was withheld by the assessee and the same was spent in cash, then also the total amount should have been paid by the cheque/DD to the vendor should have been Rs. 4.25 crore(4.95 crore - 0.70 crore). The fact that the payment to the vendor is Rs. 4.95 crore by cheque/DD clearly proves beyond doubt that the total transaction on record was Rs. 4.95 crore and Rs. 70 lakhs was additionally paid in cash over and above the consideration mentioned in the registered sale deed, which is evident from the incriminating material found during the course of search. Ld. DR further submitted that the mail sent by the CFO of the assessee Shri R.K.Sahoo confirmed the total payment of 5.65 crores which includes Rs. 70 lakhs in cash and, therefore, in the said mail he insisted for refund of excess payment of Rs. 94,750/- and this again supports factum of payment of Rs. 70 lakhs towards purchase of land and building. Ld. DR submitted that the second incriminating material i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. He further pointed out that in absence of any specific date and mode of payment of Rs. 70 lakhs, the addition on allegation of unexplained investment cannot be sustained against the assessee. Ld. Counsel also submitted that the AO has allowed depreciation on the total cost of renovated building which includes amount of Rs. 70 lakhs. Therefore, if any further addition is made on the allegation of unexplained expenditure that would amount to double taxation, hence, in the interest of justice, the addition made by the AO and confirmed by the CIT(A) may kindly be deleted. 24. On careful consideration of the above rival submissions, first of all, we observe that the main basis for making and confirming the addition is two documents viz. (i) AH-55, which is an email from CFO Shri R.K.Sahoo of assessee to Dr. J.K.Mishra of IPSAR, ,the seller, which was extracted from the computer of CFO of the assessee; and (ii) hand written noting on page no.38 of a diary seized during the course of search. In both these documents amount of Rs. 70 lakhs has been written with a specific mentioning that "Rs. 70,00,000/- has been paid afterwards". In both documents there is no mention of any date on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was any mutual agreement between the assessee and the seller regarding withholding of Rs. 70,00,000/-. Obviously, if the amount of sale consideration would have been determined including Rs. 70 lakhs then such kind of expectation of the first appellate authority could have been satisfied by way of MOU or any other written agreement but when at the time of making agreement to sale the amount of sale consideration was determined between the parties at Rs. 4.95 crores, there was no need of any other agreement or MOU that the purchaser has withheld amount of Rs. 70 lakhs out of the sale consideration. The AO has not taken any action against the seller by way of any mode or procedure provided in the Act and show-causing him as to why the amount of Rs. 70 lakhs should not be treated as unexplained income while determining the capital gain accrued to him on sale of land and building to the assessee then the AO cannot made any addition in the hands of the assessee only on the basis of two documents, which does not reveal any date and mode of payment, as unexplained investment in the hands of the assessee towards purchase of land and building. 29. Keeping in view the entire facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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