TMI Blog2019 (4) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... d account mainly includes salary paid to Shri Sunil Jain and others which have been duly offered to tax by Shri Sunil Jain and others in their respective return of income tax. It is also discernable from the records that the impugned expenditure have been claimed against the income from organizing health camp which is also the part of the business activity of the assessee company. No infirmity in the finding of CIT(A) and the same needs to be confirmed. In the result Ground No.2 of the revenue stands dismissed. - ITA No.604/Ind/2017 - - - Dated:- 2-1-2019 - Kul Bharat, Judicial Member And Manish Borad, Accountant Member For the Assessee : S/Shri Sumit Neema, Sr.Adv Gagan Tiwari, Adv For the Revenue : Shri R.P. Mourya, Sr.DR ORDER PER MANISH BORAD, AM. The above captioned appeal is filed at the instance of Revenue pertaining to Assessment Year 2013-14 and is directed against the orders of Ld. Commissioner of Income Tax (Appeals)-I (in short Ld.CIT(A) ], Indore dated 20.06.2017 which is arising out of the order u/s 143(3)/147 of the Income Tax Act 1961(In short the Act ) dated 30.12.2016 framed by ACIT-2(1), Indore. 2. Revenue had raised following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income the two figures representing expenditure were added to the gross receipt from health camp which were required to be reduced from the gross receipt. The actual income from the undisclosed health camp was only at ₹ 2,11,29,807/- but assessee wrongly admitted it at ₹ 4,41,882,232/-. Ld.A.O however was not convinced with the submissions of the assessee and he gave only the benefit of deduction for web-site advertisement at ₹ 53,086/- and made addition for the remaining income admitted during the survey as against income declared in the income tax return at ₹ 2,30,53,039/- in the hands of the assessee. Ld.A.O also did not allow the set off of the expenses claimed at ₹ 19,17,923/- against the income disclosed on account of survey proceedings observing that such set off is not allowed u/s 115BBE. Income assessed at ₹ 4,41,88,232/-. 4. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and succeeded. 5. Now aggrieved revenue is in appeal before the Tribunal. 6. We will first take up Ground No.1. 7. Ld. Departmental Representative vehemently supported the orders of Ld.A.O. 8. Per contra Ld. Counsel for the assessee supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52/which also remained to be recorded in the regular books of account of the company. Dr. Sunil Jain during the course of recording of statement further stated that the Health Check-up Camps were started by the company in the year under consideration only and the receipts and expenses were not recorded in the regular books of account and hence in view of the above noted discrepancies, it was further admitted that the undisclosed income over and above the regular income for the year was ₹ 44188232/- and due taxes on the same will be paid. 5.2 However, in the return of income filed for the year under consideration, the appellant had shown only income of ₹ 21129807/-. AO therefore noted that the income shown was ₹ 23058425/- less than the income admitted during the course of survey of ₹ 44188232/-, Appellant was also asked clarify the reason for difference. The appellant submitted that receipts .on account of health Camps organized was ₹ 32000730/- against which expenses incurred in organizing the health camp were ₹ 6319150/- and expenses on material used for organizing the health camp was ₹ 5068352/- and thus the total of receipts and expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstand that if the expenses are related to the same receipts these are to be deducted in order to arrive at income subject to tax and ,hence it cannot be said that there was any mistake / error in admitting the undisclosed income. It was also pointed out by the AO that the statement was given under oath and had evidentiary value and the letter clarifying the mistake dated 12/03/2013 was filed after 8 months and was therefore only an after thought as it was not supported by any other documentary evidences. It was also argued by the AO that even otherwise the expenses were unexplained expenses and hence were deemed to be income u/s 69C of The Act and also were not eligible for deduction in view of the provisions of section 115BBE of The Act. AO also pointed out that no nexus has been established by the appellant between the income and the expenses and no documentary evidence were filed that the expenditure was incurred as Health Camp expenses. AO also doubted not only the expenditure incurred, in the absence of documentary evidences to establish that such expenses were actually incurred at the time of organizing the Health Camps, but also doubted the fact of holding of the Health ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses admitted as noted in the loose papers and there was no documentary evidence to support that expenses were relatable to the income. AO also doubted the very fact of holding of Health Camps and incurring of expenses for such camps. 5.8 As has already been stated above the entire case revolves around the papers found at the time of survey and the statement of Dr. Sunil Jain. There is no other material which has been relied upon. The papers clearly show that the unaccounted receipts were from holding of Health Check-up camps and the expenditure was on organizing these camps which included reimbursement of expenses, T.A./D.A. and payment of salary/fee' to field staff/Doctors, Medicines provided to patients, Tent and Local publicity expenses and other miscellaneous expenses. It is a well settled legal position that the documents have to be considered in entirety and not choosing only the parts which were beneficial to the revenue Appellant has relied on the decision in the case of Chander Mohan Mehta vs. ACIT 71 ITD 245 (Pune), wherein it has been held that the contents of the loose papers are to be accepted in toto. Otherwise also the income has to be taxed and not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of survey as the undisclosed income ₹ 21129807/- was stated to be the undisclosed income. The reason for this modification was stated to. be on account of. non appreciation of the technicalities of accounting and taxation principles at the time of making of statement by Dr. Sunil Jain who being a medical professional was unaware of these principles. AO has rejected the contention without taking note of the fact that the entire case rests on the papers found and the papers support the contention of the appellant that the gross undisclosed receipts were ₹ 32600730/- and not ₹ 44188232/-. No other surrounding circumstances or material is brought on record to disprove the contention of the appellant as to the actual quantum of the undisclosed receipts. In the case of CIT Vs. P. D. Abraham 349 ITR 442 (Ker.) has given the finding as under:- When the department relies on the seized record for estimating undisclosed income there is no reason why the expenditure stated therein should be disbelieved merely because there is no written agreement and that payments were not made through cheques or demand drafts. This also leads to the inference that the undisclosed inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, If there were no health check up camps there was no income as no other evidence is on record other than the papers found at the time of survey which categorically record the receipts being from holding of health check up camps and side by side the expenses on the check up camps so organized which has been duly admitted in the statement of Dr. Jain, Considering all the above facts and the contention of the appellant and the judicial position as brought out in the various judgments cited it cannot be upheld that the expenditure recorded in the papers found at the time of survey was unexplained as to the source of such expenditure and was covered 'within the scope of section 69C of The Act. 5.10 AO has also invoked the provisions of 115BBE of The Act in rejecting the claim of the appellant for set-off of expenses against the gross receipts, A reference may be made to the provisions of section 115BBE of The Act which are reproduced below:- (1) Whether the total income of an assessee includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, the income-tax payable shall be the aggregate of- (a) The amount of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Income on account of health camp Rs.3,26,00,730 2. Expenses incurred in organizing the health camp ₹ 65,19,150 3. Expenses/material used for Organizing the health camp ₹ 50,68,352 11. On the basis of these documents income works out to ₹ 2,10,13,228/- (Gross receipt ₹ 3,26,00,730/- less expenses ₹ 65,19,150/- less expenses ₹ 50,68,352/-), but inadvertently Director Shri Sunil Jain during the course of survey while admitting the undisclosed income totaled the three figures comprising ofincome and expenses and surrendered income at ₹ 4,41,88,232/- which in our view was a bonafide mistake as the income on the basis of impugned loose paper was desired to be surrendered. We therefore are of the considered view that Ld.CIT(A) has rightly deleted the addition of ₹ 2,30,53,039/- by allowing ground of the assessee and therefore needs no interference as the right amount of undisclosed income has been subjected to tax. We accordingly confirm the view taken by Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 68 of The Act therefore are not applicable to the fact of the case. further, it has already been held that the disallowance of expenses and treating the gross receipts as income was also not in accordance with the provision of the Act considering the extant legal position and therefore invoking of provision of section 69C of The Act was also not in accordance with the law In view of the above it cannot be said that the income offered by the appellant was within the purview of section 115BBBE of The Act and therefore the disallowance of the claim of set-off of loss of ₹ 1970923/- was not justified by invoking provision of section 69C and section 115BBE of The Act. The income which has been admitted by the appellant is on account of organizing Health Check-up Camps. The expenditure of ₹ 1970923/which is recorded in the books of accounts is consisting of salary paid to the Staff including major payment as salary to Director Dr. Sunil Jain which has been duly reflected in the return of income of Dr. Sunil Jain who is also subject to tax at the maximum rate. Further, it is to be noted that during the' year the appellant has not carried out any other activ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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