Bhandari Hospital and Research Centre (ITAT Indore)
Conclusion: When it was presumed that investment in hundi was bogus in such a situation there was no money available for the investment made by the assessee as such amount surrendered was not available, therefore, this proved that donation was made out of business receipts, which was an allowable expenditure.
Held: During the course of survey undisclosed income was surrendered by assessee through its partners under different heads. Out of the surrendered amount of Rs.31,24,41,685/-, the amount of Rs.23,61,18,930/- was surrendered in the hands of the assessee firm. Subsequently, assessee realized the mistake committed while making statement during the course of survey. Assessee stated that in respect of unaccounted receipts as per LP-02 totaling to Rs. 6,21,25,115/ – (i.e. Rs.6,45,02,010/- -Rs.23,69,425/ ) due to mental stress and lack of rest he forgot to bring to the notice of the authorized officer that unaccounted receipts as per LP-02 were utilized in making the hundi loans and therefore to the extent of unaccounted receipts the hundi loans were explained to be given out of this fund as per flow of undisclosed receipt and hundi loans given and only balance amount of Rs.104374885/ – (166500000-62125115) should be considered as unexplained. With regard to revised unaccounted receipts of Rs. 6,21,25,115/ – assessee claimed in affidavit that there were entries regarding discount allowed of Rs.23,69,425/- and petty cash expenses of Rs.7470/ – and therefore correct amount of unaccounted receipts was stated to be Rs.6,21,25,115/ – rather than Rs.6,45,02,010/- as surrendered during the course of survey as per documents placed on records which were found at the time of survey. Assessee firm had thus revised the total disclosure of surrendered income to Rs.17,16,16,920/ – as against the surrendered undisclosed income of Rs.23,69,425/- made during the course of survey proceedings in respective head. Since, the assessment order passed u/s 143(3) of the Income Tax Act, 1961 was erroneous and prejudicial to the interest of the revenue on account of failure on the part of AO in making necessary enquiries, the order of AO u/s 143(3) was set-aside and held to be erroneous and prejudicial to the interest of the revenue and AO was directed to pass the fresh assessment order after making proper enquiries on the relevant issue discussed in order u/s 263 after affording sufficient opportunity to assessee. It could be concluded that the maturity amount was available with assessee for making further investment. It was noteworthy that root of addition was the recovery of hundis. In case it was presumed that all the hundis so made were bogus and reflected imaginary figure as assessee failed to furnish confirmation from hundi holders, their identity and PAN etc, in such event only amount would be taxable what the assessee deposited in its bank account. It was held that when there was a maturity of hundi as well as investment in hundis normal corollary would be that the amount invested was out of the money received from maturity of hundis, unless adverse material was brought on record. AO had made necessary enquiry and issue was also scrutinized by the JCIT while passing order u/s 144A thus when two officers at different stage examined the issue before setting aside these finding CIT ought to have made some enquiry. If it was presumed that the hundis as recovered during the survey proceedings were not genuine in that situation the amount that was reflected on such hundis could not to be taken as income of the assessee. Therefore, the incidence of tax would be on the unexplained cash deposited in the bank account of the assessee. In this case the amount surrendered by assessee was higher than what it was found to be unexplained cash deposits in its bank account. Therefore there was no infirmity in the order giving set off of the maturity amount. PCIT had not brought any material suggesting that the amounts so surrendered by the partner of the firm was related to proceed of crime. CIT had also observed that AO failed to make enquiry in respect of year wise investment. No material was placed by assessee regarding this issue. Thus, when there was claim of investment being made out of unrecorded hospital receipts he ought to have made investigation regarding year wise investment. This observation of the Ld. Pr. CIT was sustained.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against order of the Pr.CIT-I, Indore dated 30.03.2017 for the A.Y. 2012-13. The assessee has raised following grounds of appeal:
1. THE ORDER U/ S 263 DATED 30.03.2017 IS ILLEGAL, VOID AND WITHOUT JURISDICTION:
1.1 That on the facts and circumstances of the case and in law the order dated 30.3.2017 passed by the Commissioner of Income-tax (CIT), u/s 263 of the Income-tax Act, 1961 (‘the Act’) setting aside the assessment framed u/s 143(3) of the Act as erroneous and prejudicial to the interest of the revenue is without jurisdiction, bad in law and void ab-initio.
1.2 That the AO having allowed the claims of the assessee after making due and specific enquiries and finding a reasonable view on the issues, the order of assessment dated 24.3.2015 cannot be regarded as erroneous in as much as prejudicial to the interest of revenue merely because ld. CIT held a different opinion on the scope of such enquiries.
1.3 That ld. CIT also failed to appreciate that, u/s 263 of the Act, an order of assessment Cannot be set-aside to AO to simply to make further enquiries and thereafter pass fresh order of assessment. Therefore, and as such, impugned order and directions issued u/s 263 are untenable, contrary to law unsustainable.
1.4 On the facts and in the circumstances of the case, the Ld. Commissioner has erred in treating the assessment order as erroneous and prejudicial to the interest of the Revenue on an issue which has been considered, examined and investigated upon during the assessment both by the assessing officer and also by the JCIT while giving his directions u/s 144A
2. NO JUSTIFICATION EITHER IN LAW OR ON FACTS AND THE GROSS ILLGALITY DONE BY THE Ld. CIT IN SETTING ASIDE THE ORDER DATED 24/ 3/ 2015 PASSED BY THE JCIT U/ S 144A. 2.1 That the Ld. CIT has simply set-aside the order dated 24/ 3/ 2015 passed u/s 144A by the JCIT without even pointing out any error in the said order. Since there was no error pointed out in the order u/s 144A therefore the same could not have been set-aside u/s263.
2.2 That the order passed u/s 144A was based on longstanding judicial matrix and the legal principle derived from an order of supreme court and thus without pointing out how the said order u/s 144A is erroneous the same could not have been revised u/s263.
3. NO ERROR IN THE ORDER OF THE AO IN ALLOWING TELESCOPING OF UNDISCLOSED CASH RECEIPTS OF RS. 6,21,25,115 FROM UNDISCLOSED HUNDI LOANS AND HENCE NO JUSTIFICATION EITHER IN LAW OR ON FACTS IN PASSING ORDER U/ S 263 ON THIS ISSUE:
3.1 The AO and JCIT have merely followed accepted principles of taxation in not making addition of both income and investment and thus no error could be attributed to such an approach. Merely because more revenue can be fetched by adding both income as well as investment cannot be a ground to term the order as erroneous.
4. NO ERROR IN THE ORDER OF THE AO IN ALLOWING DEDUCTION U/S 35AC OF RS. 8 CRORE AND HENCE NO JUSTIFICATION EITHER IN LAW OR ON FACTS IN PASSING ORDER U/S 263 ON THIS ISSUE:
4.1 The deduction u/s 35AC was allowed by the AO after calling a commission u/s 131(1)(d) from DDIT(inv)- Jaipur and after obtaining all the information and documents pertaining to the Donee trust and after verifying the genuineness of the said donation and such an order cannot be termed as erroneous and thus this issue could not have been revised u/s 263.
5. NO JUSTIFICATION EITHER IN LAW OR IN FACTS IN EXERCISING JURISIDCTION U/S 263 IN RESPECT OF THE FOLLOWING ITEMS SINCE THERE WAS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER AND THE ORDER IN RESPECT OF THESE ITEMS WAS PASSED AFTER DUE AND SUFFICIENT ENQUIRY :-
(i) Reduction of Rs. 223,76,985 & Rs. 7470 allowed by the AO from surrendered cash receipts.
(ii) Hundi loans of Rs. 10,43,41,885 received back by the assessee during the relevant financial year.
(iii) Year wise investment made by the assessee.
(iv) The angiography receipts of Rs. 1,96,900/ –
(v) To draw profit and loss for the survey period and that for the balance period separately.
(vi) Depreciation claimed @40% on PET CT Scan machine (vii) The TDS on salaries paid to the doctors.
2. The effective ground in this appeal is against the legality and justification of the order dated 30.03.2017 of invoking the provisions of u/s 263 of the Income Tax Act, 1961 hereinafter refer to as the Act, thereby revising the assessment order.
3. By way of this present appeal assessee has challenged correctness and legality of the impugned order passed u/s 263 of the Act.
4. The facts giving rise to present appeal are that a survey operation u/s 133A of the Act was carried out at the business premises of M/s Bhandari Hospital 85 Research Centre on 23.09.2011. During the course of survey undisclosed income amounting to Rs.31,24,41,685/- was surrendered by the assessee through its partners under different heads. Out of the surrendered amount of Rs.31,24,41,685/-, the amount of Rs.23,61,18,930/- was surrendered in the hands of the assessee firm under various heads as details below:
