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2015 (10) TMI 2004 - ITAT DELHI

2015 (10) TMI 2004 - ITAT DELHI - TMI - Addition u/s 68 - unexplained cash credit - CIT(A) deleted the addition - Held that:- CIT (Appeals) noticed that the additions made by the Assessing Officer on the basis of transactions in the bank account of Mr. Dharmendra Kumar Nagar has no relevance at all because the same relate to the share capital which has already been accepted and the actual increase in unsecured loans is attributed to the amount advanced by Mr. Rajendra Singh. Hence, the genuinene .....

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Therefore, the identity, source, capacity and genuineness of the transactions as required for Section 68 of the Act has been prima facie established - Decided in favour of assessee.

Addition on on account of unexplained advances received from patients - CIT(A) deleted the addition - Held that:- In the year under consideration, no fruitful purpose shall serve to the Revenue because if the patientís advance is sustained during the year under consideration, then the consequential effect .....

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re being made. It appears that the said additions have been made u/s 68 of the Act because it is the only section under which any sum found credited in the books of account can be added back. In the case of Jatia Investment Co. [1992 (8) TMI 16 - CALCUTTA High Court] it is held that in case no cash has been received by the assessee, then no addition can be made u/s 68 of the Act. In the instant case, the assessee had not received any amount in the form of cash from the sundry creditors. In fact, .....

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. SUDHAKAR REDDY, ACCOUNTANT MEMBER This is an appeal filed by the Revenue and is directed against the order of the Ld.CIT(A), Faridabad dated 26.12.2011 pertaining to the A.Y. 2007-08. 2. Facts in brief:- The facts of the case are brought out at para 4 of the Ld.CIT(A) s order, which is extracted for ready reference. 4. The brief facts of the case are that the return of income declaring NIL income was e-filed by the assessee on 07.11.2007. The case was selected for scrutiny through CASS and a n .....

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as outstanding in the name of Dr. Dharminder Kumar Nagar and an amount of ₹ 60,00,000/- was outstanding in the name of Shri Rajender Singh. From the statement of bank account filed in the case of Dr. Dharminder Kumar Nagar, the AO noticed that there were several loan entries in his bank account before extending loan to the assessee company and the funds were actually routed through various group companies and the relatives of the directors. Based on these observations, the AO, vide order s .....

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of patients and certain other details in compliance to which the assessee expressed its inability contending that such type of details were not available. Consequently, the AO has made addition of ₹ 17,22,979/- on account of unexplained advances received from patients. In respect of sundry creditors outstanding at ₹ 1,88,14,222/-, the AO has also made addition in absence of confirmations. The IPD billing register checked by the AO revealed that certain bills were not reflected in the .....

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of ₹ 78,87,060/-. 3. We have heard Sh.Vikram Sahay, Ld.Sr.D.R. on behalf of the Revenue and Shri MP Rastogi, Ld.Counsel for the assessee. 4. On a careful consideration of the facts and circumstances of the case, on perusal of orders of lower authorities, material placed on record, we hold as follows. 5. Ground no.1 reads as follows. 1. That the CIT(A) erred in law and on facts of the case in deleting the addition of ₹ 56,25,000/- made by the AO u/s 68 of the Act on account of unexpl .....

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ceding year. The amount of ₹ 5,56,09,875/- was outstanding in the name of Mr.Dharmendra Kumar Nagar and an amount of ₹ 60,00,000/- was outstanding in the name of Mr. Rajendra Singh. The assessee had filed a statement of account, of both the directors. Citibank statements where from the amount was advanced, copy of their personal balance sheet and copy of income-tax return, the PAN details of Directors were also furnished. From the bank statement of one Director Mr. Dharmendra Kumar N .....

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on that ground. Before the CIT(Appeals), the assessee explained the details of unsecured loans and its increase as under: Name Balance as on 31st March, 2006 Balance as on 31st March, 2007 Dr.Dharmendra Kumar Nagar Rs.5,59,84,875.30 Rs.5,56,09,875.30 Mr.Rajendra Singh Nil Rs.60,00,000.00 Rs.5,59,84,875.30 Rs.6,16,09,875.30 Increase = ₹ 56,25,000.00 The assessee explained that both the directors are income-tax assesses since last so many years. Mr. Dharmendra Kumar Nagar has PAN No. ADGPN51 .....

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, the Assessing Officer had required the assessee to justify the deposits made by the assessee-company and in response thereto the assessee had filed copies of their respective ITRs and the personal balance sheet of both the directors as were immediately available with the assessee to prove their creditworthiness and the identity thereof. It was further explained that, in the assessment order, the Assessing Officer has justified the additions based on certain additions in the bank account of Mr. .....

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ich there is no dispute at all, because the same has been accepted by the Assessing Officer while scrutinizing, the subscription of share capitals. The increase in unsecured loan was basically on account of the deposits made by Mr.Rajendra Singh. The assessee explained before the CIT (Appeals) that all the deposits in the account of Mr. Rajendra Singh have been made out of the amount transferred from his saving bank account maintained with Citibank. However, in order to clarify the availability .....

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h it was a partner. After crediting the said fund in the account of Mr. Rajendra Singh, the cheque, as deposited on 16th May 2006 with the appellant-company, has been got cleared from the account of Mr. Rajendra Singh on 18th May 2006. The statement of account of Ved Ram & Sons (HUF) in the books of partnership firm M/s Ved Ram & Sons are enclosed herewith. Ved Ram & Sons (HUF) is assessed to tax by PA No. AADHV7767C and Ved Ram & Sons (Regd firm) is assessed to tax vide PA No. A .....

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st March, 2007: The amount of ₹ 60,00,000/- was deposited by Mr. Rajendra Singh with the appellant-company vide cheque No. 011477. This cheque was cleared from the amount of Mr. Rajendra Singh maintained with Citibank on 16th April 2007 .. Prior to the clearance of this cheque from the account of Mr. Rajendra Singh, there is a deposit of ₹ 60 lakhs in the account of Mr. Rajendra Singh in Citibank on 13th April 2007. The credit in the Citibank account of Mr. Rajendra Singh on 13th Apr .....

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tion. It was claimed by the assessee that in the remand proceedings, the Assessing Officer had verified these amounts, but in the remand, the CIT (Appeals) noticed that instead of reporting the outcome of the enquiries made in the assessment proceedings, the Assessing Officer simply tried to justify the additions, as made by the Assessing Officer, in his order, to which the assessee highly objected. However, the CIT (Appeals), on verification of the evidences as available on record and filed bef .....

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attributed to the amount advanced by Mr. Rajendra Singh. Hence, the genuineness of unsecured loans is required to be examined only in the case of Mr. Rajendra Singh who advanced loan of ₹ 60 lakhs. The CIT (Appeals) noticed that Mr. Rajendra Singh is an old income-tax assessee and that the entire amount has been advanced through banking channels and for that purpose Mr. Rajendra Singh had not only filed a personal balance sheet but had also filed copy of the saving bank account maintained .....

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der. 2. That the CIT(A) erred in law and on facts of the case in deleting the addition of ₹ 17,22,979/- made by the AO on account of unexplained advances received from patients. 6.1. The facts relating to ground no.2 of the Revenue are as under. 6.2. The assessee runs a hospital and has IPD and OPD Divisions. In IPD, as and when a patient is admitted in the hospital for treatment, the attendants of the patient are asked to deposit some amount to cover up the intended cost of treatment. The .....

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o time, who are yet to be discharged. The patient advance which was outstanding on 31st March,2007 has been adjusted against the final bills of patients raised at the time of discharge, which has been made in subsequent years and almost all the patient advance has been adjusted against the final bills raised at the time of discharge and offered for taxation in subsequent year. Before the CIT (Appeals), the assessee had filed name-wise details of the patients advance outstanding as on 31st March .....

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als), after examining and verifying the details, agreed with the assessee s contention. The CIT (Appeals) observed that it is common practice that, when a patient is admitted in the hospital for the treatment in IPD, the attendants of the patient are asked to deposit some amount to cover up the intended cost. of treatment. The amount deposited by the patient from time to time is credited in the patient s advance account. At the time of discharge of patient, the final bill is prepared and the adv .....

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nt s advance is sustained during the year under consideration, then the consequential effect has to be given in subsequent years by way of reducing the similar amount out of income offered in subsequent year. Otherwise it will amount to double assessment. It is not the case of the Assessing Officer that the patients advance has not been offered for taxation at all in subsequent year. The learned DR could not controvert the finding of CIT (Appeals). He simply relied upon the order of Assessing Of .....

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n 31st March 2007 as filed before the Assessing Officer and CIT (Appeals) are as under: (i) Sundry creditors for equipment - ₹ 29,01,028/- (ii) Sundry creditors for projects - ₹ 74,15,739/- (iii) Sundry creditors for expenses - ₹ 84,97,455/- ₹ 1,88,14,222/- TOTAL = Rs.1,88,14,222/- As far as item No. (i) is concerned, it is stated that, the assessee had not claimed any revenue expenditure against the purchases so made for equipment against which such sundry creditors are .....

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ubsequent years, the Assessing Officer after verification, has allowed the depreciation on the cost of completed projects. Item No. (iii) represents the sundry creditors for expenses claimed at ₹ 84,97,455/- and relates to the expenses incurred by the assessee from time to time and claimed as revenue expenditure. During the course of assessment proceedings, the Assessing Officer had required to file the confirmation of such sundry creditors having balance of more than Rs. one lakh. The Ass .....

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made. In spite of such evidences, the Assessing Officer had made the additions of the consolidate figure of ₹ 1,88,14,222/ - merely on the ground that, in the absence of confirmation, the creditors cannot be ascertained to be genuine. Before the CIT (Appeals), the assessee again reiterated its stand as was made before the Assessing Officer. The CIT (Appeals) forwarded the submissions of the assessee to the Assessing Officer for verification and comments. As per the assessee, in remand proc .....

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fficer in remand proceedings have also been filed before the CIT (Appeals). The Assessing Officer, in spite of such exercises of verification, has not made any adverse comment on any of the account but contrary to that has simply tried to reiterate the stand of the then Assessing Officer made in assessment order. The CIT (Appeals), after considering the evidence, held that as far as the sundry creditors for equipment amounting to ₹ 29,01,028/- and sundry creditors for projects outstanding .....

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Officer so much so the depreciation has been allowed by the Assessing Officer on acquisition of assets. The CIT (Appeals), after relying upon the judgment of the Delhi Tribunal in the case of YFC Projects Pvt. Ltd. vs. DCIT in 134 TTJ 167 held that merely due to non-filing of the confirmation of the supplier, it cannot be held that the credit balances in the shape of sundry creditors appearing in the books of account are unaccounted money of the assessee when there is an evidence that the chequ .....

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