9911796707
TMI Blog2024 (8) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... section 68 of the Act, despite the fact that the appellant has provided corroborative evidence in support of his claim. 4. The learned CIT (Appeals) has erred in disbelieving that the impugned cash deposits were proceeds from the professional receipts already offered f or tax. 5. The learned CIT (Appeals) erred by alleging that the appellant has failed to furnish service tax returns, without appreciating that service tax was not applicable to medical practitioners. 6. The learned CIT (Appeals) misconstrued the nature of the appellant's professional income as exclusively from cash receipts, whereas the appellant derives income from both cash and banking channels. The commissioner alleged non-submission of bank statements and cash book, despite the appellant having duly furnished all the relevant documents during the course of assessment proceedings. 7. The learned CIT (Appeals) erred in confirming the additions of cash deposits made during the demonetization period without rejecting the books of accounts and thereby bringing the same amount to tax twice. 8. Without prejudice to the above, the learned CIT(Appeals) erred by altering the applicability of tax provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) both failed to appreciate the fact the appellant had disclosed his net agricultural income after setting off with the relevant expenditure. Furthermore, they disallowed to the extent of 30% on ad hoc basis without providing a substantiated rationale for such disallowance. 18. The appellant craves leave to add, alter, substitute, and delete any or all the grounds of appeal urged above." 2. At the time of hearing, the assessee has not put any argument with regard to ground Nos.1 & 2, though elaborate written submissions were filed on these grounds. Further, it was stated by the ld. A.R. that he would confine his arguments only to ground Nos.3 to 18. Hence, these grounds are not considered for adjudication and are dismissed as not pressed. Ground Nos.3 to 8:- 3. Facts of the issue are that the assessee has made cash deposit of Rs. 61,98,000/- during the demonetization period from 09/11/2016 to 30/12/2016. The assessee was requested to provide the sources for the cash deposit of Rs. 61,98,000/- during demonetization. The assessee has submitted before the ld. AO that out of total cash deposit of Rs. 61,98,000/- the receipts on account of profession were Rs. 31,98,000/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning Rs. 5,03,047/- This is without logic. The sources of income for the applicant have the be the source of the entire amount deposited after 09.11.2016. If only Rs. 5,03,047/- is from his income of the year, how the cash balance of Rs. 26,94,953/- has accumulated is not understood. However, on perusal of the cash book, it is seen that the entire receipts of a nursing home is shown as cash received. There is no evidence to back this claim especially, when all the amount is accumulated without deposit into bank account. No service tax return, no bank statement explaining the credits, when most turnover is cash is given. It is rather impossible that all patients paid only cash and there are no credit card or payments or bank transfers. If this was the general mode of business for the appellant, then the pattern of cash deposits across years is to be the same. This is not established by the appellant. Further, no details are given. In view of the same, considering the business of the appellant and the agricultural income, income returned, Rs. 10,00,000/- is found to be the acceptable source of cash deposit and the addition of Rs. Rs. 21,98,000/- is upheld. AO is directed to restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is running his business only on a cash basis without any substantial review. In this regard, he submitted that apart from the cash receipts, professional income is also received through the bank channel and credit card during the year under consideration in the following manner. S. No Professional receipts Amount (2016-17) (Rs.) 1 Through - Insurance Receipts 35,22,382/- 2 Through - Credit Card 49,66,492/- 3 Through -Cash 1,66,60,300/- Total 2,51,49,174/- 5.2 He submitted that the learned CIT (Appeals) further alleged that the Assessee has not filed the service tax return for the AY 2016-17. However, the learned CIT (Appeals) erred in noticing that the Assessee is a medical practitioner and he is exempt from the Service Tax Act. He submitted that health care Services by a clinical Establishment or Authorized Medical Practitioner or Para medics are exempt from service tax, Notification No. 25/2012 - ST dated 20.06.2012 w.e.f 1-7-2012. 5.3 He further submitted that the cash deposit of Rs. 31,98,000 has been recorded in the books of accounts and the books of accounts are audited under section 44AB of the Act and the same has been offered to tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not doubted or rejected the books of accounts of the assessee and accepted the books of accounts of the Assessee without finding any defects. He further submitted that the professional receipts were recorded in the regular books of accounts, and the amount was deposited in the bank account. Subsequently, the contention was raised before the learned CIT (Appeals) wherein he stated that the rejection of books and estimation of income does not make any difference to the income returned by the Assessee and remains only a technical/procedural aspect. 5.9 Further, he submitted that the learned CIT (Appeals) himself accepted that the returned income i.e. net profit of 19.14% for the year under consideration is higher than the previous two years i.e. 11.64% and 15.46% respectively. Therefore, when the professional receipts were recorded in the regular books of accounts, and the amount was deposited in the bank account out of the professional receipts, treating such deposits as unexplained credits by the learned Assessing Officer and the learned CIT (Appeals) is not justified. 5.10 Without prejudice to the above, he submitted that upholding the additions made by the learned Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared as income, wherein the Hon'ble Tribunal found that the assessee had sufficient cash in hand in the books of account of the assessee, that there was no reason to treat the cash deposits as income from undisclosed sources. The Hon'ble Vishakapatnam Tribunal in the case of Hirapanna Jewellers (supra) on identical facts held that when cash receipts represent the sales which the assessee has offered for taxation and when trading account shows sufficient stock to effect the sales and when no defects are pointed out in the books of account, it was held that when Assessee already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again, I am of the view that in the light of the facts and circumstances of the present case, the addition made is not sustainable and the same is directed to be deleted. 10. In the result, appeal of the assessee is allowed." 5.14 Without prejudice to the above, the ld. A.R. submitted that no power conferred upon the learned CIT (Appeals) to assess a particular item under a different provision of the Act what the learned Assessing Officer had made an addition without giving specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own as receipt from Nursing Home by way of cash and there is no supporting evidence to come to the conclusion that how the assessee has received the entire amount by way of cash and there are no credit cards or payment through bank transfers and no details are given to prove the same. In our opinion, it is the duty of the assessee to place necessary corroborative material to show that the above amount has been received by way of cash receipts from Nursing Home by producing the relevant documents. The ld. A.R. made a plea before us that the assessee maintained the regular books of accounts and audited u/s 44AB of the Act and the same has been disclosed as professional income and due credit to be given. In our opinion, this issue has been considered by this Tribunal in the case of Bhoopalam Marketing Services Pvt. Ltd. In ITA No.375/Bang/2022 dated 15.9.2022 wherein held as under: "7. We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly the assessee has deposited Rs. 298,08,080/- during the post- demonetization between 09/11/2016 and 30/12/2016. Therefore, Ld.AO made addition of INR 5,82,76,300/- as income of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not." 7.1 In view of the above order of the Tribunal, we are inclined to remit the issue in dispute to the file of ld. AO for fresh consideration to examine in the light of above order of the Tribunal. Ground Nos.9 to 14:- 8. Facts of the issue are that the assessee has shown unsecured loan of Rs. 3,96,81,929/- as on 31/03/2017. The assessee was requested to provide the details of persons from whom he has received unsecured loan along with their ITR V, computation of income, balance sheet etc., the assessee has not submitted any details which can prove the genuineness of the unsecured loan and creditworthiness of persons who have advanced the loan. As the assessee has not submitted any documents to substantiate the genuineness of the unsecured loan, the ld. AO held that the same is liable to be added as unexplained cash credits u/s 68 of the Act. "Section 68 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn looked like loans were given in the relevant year under consideration. In this regard, the ld. A.R. submitted that the HUF has incurred the expenses in connection with the investments in the name of the Assessee during the previous year amounting to Rs. 95,78,422/- in earlier years but the same was not recorded in the books of accounts in the year of expenditure. However, the same was capitalized in the year under consideration and hence the expenditure incurred by the HUF has been recorded in the books of the Assessee as prior period items. The balance expenditure of Rs. 14,26,612/- was incurred by the HUF on behalf of the Assessee in the current year. Therefore, he prayed before us to delete the additions to the extent that the loan amount not relating to the year under consideration following the order of the learned CIT (Appeals) that the amount relating to the previous year cannot be brought to tax in the current year under section 68 of the Act. Further, the ld. A.R. for the assessee has explained the source of such unsecured loans by furnishing written submissions, confirmation letters, bank statements, and return of income of HUF which is enclosed on page no. 174 to 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the undisclosed income of the Assessee. The Assessee in the present case has duly discharged its onus to prove the identity and the transactions' genuineness. The ld. A.R. placed reliance on the plethora of case laws wherein it has been upheld that once the Assessee discharged the onus cast upon it by furnishing necessary details/ documents to show the identity of the creditors and genuineness of the transactions, it is on the learned Assessing Officer to make further inquiry. The Assessee can be expected to only maintain adequate documents as required under the law. He submitted that the law does not contemplate or require the performance of an impossible act on the part of the Assessee as was held in Life Insurance Corporation of India vs. CIT (1996) 219 ITR410 (SC), although pronounced in a different context. In this connection he placed reliance on the decision of the ITAT, Bangalore in the case of D M Estates (P.) Ltd. v. DOT, Circle- 2(l)(l), [2020] 113 taxmann.com 386 (Bangalore -Trib.)/[2020] 180 ITD 813, held that, "The assessee has discharged its primary onus/burden and the assessee could not be asked to do impossible. Fourthly, itheld that the Income-tax Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the transactions. The documents produced by the assessee are self- serving document as not enough to justify the claim of the assessee. It was submitted that banking documents are mere self-serving recitals and these documents cannot be relied upon. It is to be noted that Hon'ble Supreme Court in the case of CIT Vs. P. Mohanakala (291 ITR 278), wherein held that "the money came by way of bank cheque and was paid through the process of banking transactions was not by itself of any consequences. The burden of proof is on the assessee in the matter of justification of receipts, which are of suspicious and dubious nature." 12.1 In the case of CIT Vs. Durga Prasad More (82 ITR 540) (SC), wherein their Lordship laying down the significance of human probabilities held as under: "In the case where a party relied on self-serving recitals in documents, it was for that party establishing the truth of those recitals; the taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals. Similarly, in the case of Sumati Dayal Vs. CIT (214 ITR 801) (SC), it was held that in view of section 68 of the Act, where any sum is found credited i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions and creditworthiness of the lender, then the lower authority is duty bound to conduct an independent enquiry to verify the same. However, in the present case, the lower authorities has not made any independent enquiry to verify the capacity of lenders of genuineness of the transactions, though the lower authorities has pointed out the discrepancy and insufficiency in the documents furnished by the assessee before him. As seen from the facts of present case, the lower authorities concerned has to examine the evidences furnished by conducting independent enquiry and there after to state whether he is satisfied with the details of evidences produced by the assessee and conducting of enquiry made by him. If he is not satisfied with the details of evidence and enquiry made by him after confronting the same to the assessee, he should take a decision to make an addition or not to make addition. At this point of time, it is not possible to hold that assessee has successfully discharged its primary onus cast upon him to explain the source of alleged credits in its books of accounts. Though the lower authorities noted the various shortcomings in the compliance made by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural receipts of Rs. 5,69,500/- and without any debit of expenditure brought the entire receipts as exempt agricultural income. This defies all logic and probability. The assessee cannot undertake agricultural activities even in form of fruit orchards without some expenditure. Thus, the ld. CIT(A) held that the calculation of agricultural income is not correct. AO liberally calculated the expenditure at 30% alone considering the orchards of the assessee. Thus, by disallowing the 30% expenditure of Rs. 1,70,850/-, the agricultural income gets reduced and the amount becomes unexplained cash credit in the books of the assessee. Thus, the ld. CIT(A), directed the ld. AO to bring to tax the same u/s 68 subject to the applicable rate of taxation. Against this assessee is in appeal before us. 15. The ld. A.R. submitted that during the year under consideration the Assessee disclosed his agricultural income of Rs. 5,69,500/- after setting off the expenditure incurred in relation to the agricultural income and showed the net agricultural income. The assessee was holding agricultural land of 12 Acres and 20 Guntas and has carried the agricultural activities on the same land. The Assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensive records of all incurred expenses is extremely challenging. The Assessee has consistently expended funds as needed from the personal drawings, making it impractical to seamlessly consolidate all incurred expenses. Furthermore, given the exemption of agricultural income, the learned Assessing Officer and CIT(Appeals) erred in providing adequate justification for disallowing expenses related to agricultural income raising questions about how such disallowances would contribute to an increase in taxable income. In this regard the ld. A.R. placed reliance upon the judgement of the ITAT, Chennai in the case of Smt. Annakkalanjiam Mathivanan Vs. ACIT, ITA No. 2451/Chny/2018 order dated 22-01-2019 where it was held as under: "5. The Assessing Officer as well as the CIT(Appeals) have to appreciate the fact that the agricultural products in this country are traded in unorganized sector. The workforce in the agricultural sector is unorganized. When the agricultural products are traded in unorganized sector in the country, expecting the assessee to produce bills for sale of agricultural produce is something which cannot be produced by the assessee. Moreover, when the assessee engages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extract that the land in question was subject to cultivation. In those circumstances, this Tribunal is of the considered opinion that there is no reason to disallow any part of claim. Therefore, this Tribunal is unable to uphold the order of the lower authority. Accordingly, orders of both the authorities below are set aside and the Assessing Officer is directed to delete the addition of GBP8,00,000/- 7. In the result, the appeal filed by the assessee is allowed. 15.2 Thus, the ld. A.R. prayed before us to delete the addition made on the agricultural income. 16. We have heard the rival submissions and perused the materials available on record. In this case, the addition of Rs. 1,70,850/- has been treated as income u/s 68 of the Act out of Rs. 5,69,500/- declared by assessee as an agricultural income. It was the contention of the ld. D.R. that the assessee has not placed necessary evidence with regard to earning of agricultural income along with details of land holdings and also details of expenditure incurred for the purpose of earning agricultural income. On the other hand, ld. A.R. submitted that assessee is holding 12 acres & 20 guntas of agricultural land and also filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
