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TMI Blog2022 (7) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... same assessee circumventing the identical issue, these are heard analogously and are being disposed of by common order. ITA No. 305/Ahd/2014 is taken as the lead case. 3. The brief facts leading to the case is this that a search was carried out under Section 132 of the Act in the Heart Care group of cases on 21.08.2008. The said Heart Care group consisted of Cardiologists and Cardiac Surgeons who were working under the concept of group practice; the main persons whereof are as follows: Cardiologists (1) Dr. Keyur Parikh (2) Dr. Milan Chag (3) Dr. Urmil Shah (4) Dr. Hemant Baxi (5) Dr. Anish Chandrana (6) Dr. Ajay Naik (7) Dr. Satya Gupta Cardiac Surgeon (1) Dr. Anil Jain (2) Dr. S. N. Mallya (3) Dr. Naman Shastri (4) Dr. Vishal Gupta (5) Dr. Chirag Mehta (6) Dr. Dhiren Shah (7) Dr. Bharat Trivedi 4. The Cardiologists and Cardiac Surgeon group decided to start hospital project for which land was identified near Sola, Ahmedabad and further decided to purchase the said land in the name of Care Cardiovascular Consultants Private Ltd. (in short CCCP L) now known as CIMS Hospital Pvt. Ltd. In order to meet land cost and other expenses of the project, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CCCPL in assessment year 2007-08 Dr Keyur Parikh 552,50,000 130,00,000 300,000 107,00,000 315,00,000 Dr Dhiren Shah 25, 50,000 25, 15,000 Dr Hemang Baxi 55,00,000 55,00,000 Dr Milan Chag 112, 50,000 12,50,000 75,00,000 25,00.000 Dr A/ai Naik 21,25,000 21,25,000 Dr Satya Gupta 22,95,000 22 95,000 Dr Urmil Shah 46,75,000 11,75,000 35,00,000(subject to verification) Dr Anish Chandarana 46,75,000 31,75,000 15,00,000 8. On the above basis assessment was reopened by the Ld. AO and notice under Section 148 was issued on 15.11.2011 after recording the following reasons for the same the relevant extract whereof are reproduced herein below: "On going through entries in seized paper named as "Hosp. Det-Party pay details" it is noticed that this paper contains details of payments made for hospital project by doctors and name of the doctor is also mentioned along with date of payment and amount paid mentioning whether by cheque or by cash and also the name of the person to whom it is paid. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing of the appellants the Honourable Commissioner (Appeal) has decided to tax the unaccounted income in assessment years 2007-08 and 2008-09 in case of doctors and the assessee. The assessee had no opportunity to represent its case before Honourable Commissioner (Appeal). Therefore, the direction to tax the assessee without hearing is against the principles of natural justice. The settled issue is disturbed due to change of opinion. The addition is directed in case of the assessee for the reason that it could not be sustained in the case of doctors. All the doctors have not accepted the appellate order of CIT(A) and challenged the same before Hounrable (TAT, Ahmedabad. Therefore, the findings of CIT(A) are not final. It may be noted that the return of income filed u/s 153A has been assessed u/s 143(3) of the I.T. Act, 1961 vide order dated 29/12/2010 after calling various details and explanation from the assessee. Therefore, the documents submitted during the course of assessment proceedings will form part of this return of income. In the absence of new information or evidence/detail and having a reason to form a belief that income has escaped from assessment on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / Rupal Doshi and Akaash Ceramics Private Limited respectively. In the seized document it is categorically written that cash has been received by CCCPL from Dr Keyur Parikh. Therefore, based on the seized material found from the premises of the company CCCPL, it can be concluded that in cases where amount is shown as received in cash from a particular Doctor, then, that amount is considered to have been paid in cash to the company CCCPL by the said doctor and the onus is on the doctor to prove the source of the same. In case cheque has been shown as received by CCCPL from the particular doctor, then the onus lies on the company to explain the source of such cash payment given for the purchase of land. 5.6 On the basis of the above premise it is seen that the have either paid cash doctors have paid cash or the cheque amount does not match with the payment shown by them 5.6.1. In the case of Dr. Keyur Parih a total amount of Rs. 552,96,000/- has been given out of which cash amount of Rs.1 lakh received on 1/10/2006, Rs. 2 lacs received on 15/10/2006, Rs. 24 lakh and Rs. 60 Lacs on 13/6/2007 by the company CCCPL. Similarly, the amount of Rs. 1 lakh received on 12/10/2007 and Rs. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shaligram Buildcon Private Limited on 16/4/2007. Besides this, loan of Rs. 750,000/- has been paid to CCCPL on 19/3/2007. Some loan has been shown by in favour of his HUF namely Anishbhai Chandarana HUF of Rs. 20 Lacs on 19/2/2007, Rs.50 Lacs on 26/2/2007, Rs. 15 Lacs on 19/3/2007 and Rs. 15 Lacs on 7/4/2007. Further loan of f 10 lakh is also shown on 29/3/20$$ Himanshu DhananL Only the amount of Rs.15 lakh is shown as paid to Shaligram Buildcon Private Limited for the purchase of equity shares tallies with the books of accounts of Dr Anish Chandarana. Thus, Rs. 15 lacs is added in the case of the company CCCPL in the assessment year 2007-08 as payment ahs been made on 19.07.2007. (Addition Rs. 15,00,000) (iii) (Total addition = Rs. 312,96,000/- + 25,00,000 + 15,00,000)" Apart from that addition of Rs.25,00,000/- and Rs.15,00,000/- with the following observation: "In the case of Dr Milan Chag, the entries in the books of accounts is as under: Dr. Milan Chag 1/3/2007 2,500,000 Laljibhai Savla 4/11/2007 7,500,000 Shaligram buildcom P L 12/28/2007 12,50,000 Aakash Ceramics P.L. Sub Total 11,250,000 On verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tten to CCCPL to confirm whether the amount as mentioned above has been received by them. However, the assessee company has not admitted receipt of these cheques. However, from the bank account of Shri Urmil G Shah, it is evident that the cheque numbers as mentioned above has been issued. Further, as per entries in seized paper named as "Hosp. Det. - Party pay details" the amount of Rs. 30,00,000/-, Rs.500,000 and Rs.250,000/- has been shown as paid on 24/4/2007, 14/10/2007 and 15/10/2007, similarly as per the details of the loans advance and investment as per the books of accounts of Dr. Urmil G. Shah the loans and advances has been made on the same date. Analyzing both the entries together, it is evident that a total of Rs. 42,50,000/- was received from Dr. Urmil G. Shah by CCCPL out of which cheque component was Rs. 35 Lacs in the name of other entities. Hence, considering the fact that cheque has been issued by Dr. Urmil Shah and cash has been paid by the assessee company, it can be construed that the cash of ^.35,00,000 has been paid by the assessee company . Hence, this amount has been considered as unexplained investment in the hands of CCCPL in assessment year 2008-09. (Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was further argued that all these aspect were duly taken care of by the Ld. CIT(A) while deleting addition made by the Ld. AO in the case of the Doctors. In that view of the matter the appeal preferred by the Revenue against the assessee herein has no basis and, thus, liable to be dismissed as argued by the Ld. AR. 15. We have heard the rival submissions made by the respective parties, and we have also perused the relevant materials available on record. 16. It appears that while deleting the addition made by the Ld. AO the Ld. CIT(A) observed as follows: "6. AO also made addition of Rs. 5,06,53,799/- with the following observation: 6.3. The assessee company has furnished comments of Dr. Keyur Parikh, promoter of the company on the statements recorded during the course of cross examination. The comments of Dr. Keyur Parikh on the cross-examination are reproduced as under: "Comments on statements recorded in cross examination of surgeons On page no 26 of the assessment order in para 4.5 the learned assessing officer has relied upon the statements of the doctors of the surgeon group recorded u/s 131 of the Act during the course of assessment proceedings. During the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving this questions, you must have to replied the same Rs Ans.: No I do not remember the exact date. Que: 27 Can you tell us could it be more then month or less then one month Rs Ans: No. Que.:28 Did you personally go and deliver the typed copy to the department or did you deliver it through someone else Rs Ans: I think it was submitted by all of us, i.e., me, Chirag Mehta, and Naman Shastri. I had given my typed answer sheet to Dr. Chirag Mehta as he used to organize. Thus the statements on which the assessing officer has relied can not be considered as statement recorded on oath as per provisions of section 131 of the IT. Act, 1961. Further the statements recorded in April 2010 do not contain the information like place and time of recording of statement, name and designation of the officer who has administered oath. On the contrary at the time of search no body has given such type of replies in the statements recorded during the course of search. At the time of filing returns of income in response to notice u/s 153A surgeons group had declared the income and paid taxes thereon. Surgeons had declared income in their return of income as income from undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess for the signatory as seller of land. 6 None of the doctors have never seen or met land owners 7 None of the doctors are present when the payments are made to land owners. 8 All the doctors had contributed cash payments towards purchase of land by CCCPL. 9 No receipt has been collected for payment of cash to coordinator of the assessee. 10 No receipt has been issued for cash received from coordinator of the assessee. 11 All the doctors have confirmed the MOU with CCCPL but do not know the details of MOU." 6.4. The contention of the assessee has been considered but the same is not acceptable as it can be seen from the questions and answers recorded during the course of examination and cross examination of the six surgeon doctors, all of them have admitted that they have paid cash over and above the cheque amount for the purchase of land. They have also confirmed that at the time of their separation from CCCPL, they received back the cheque as well as the cash amount paid by them. In the cross examination they have mentioned the name of Mr Nihir Shah, an employee of CCCPL (manager) to whom they have paid cash or received cash. Therefore, it is evident that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al law that the 'Suspicion howsoever strong cannot take the place of evidence'. At best, it can only lead to investigation. No person can be punished merely on the basis of a doubt, but side by side, must not be spared on the basis of unfavorable evidence. So the procedure is that a mistrust leads to investigation and an investigation leads to collection of evidence. There are several decisions in the past pronounced by the Hon'ble Apex Court wherein a general rule is framed that although the ITO is not fettered by the technical rule of evidence, but ITO is not entitled to make a pure guess, however, required to make an assessment without reference to any evidence. There must be something more than bare suspicion. In the present appeal a fundamental question is that whether there was sufficient clinching evidence unearthed by the Revenue Department consequent upon the search to make a firm belief that in fact there was the existence of unaccounted investment in the purchase of land. Side by side a second question therefore arises that whether the impugned addition was in the nature of suspicion only. We have carefully examined both these questions and then on critical a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2008-09 utilized in acquiring the land, (c) The learned Commissioner (Appeal) erred in fact and in law in directing the addition of Rs.4,57,23,509/- in the hands of company CCCPL as unaccounted income utilized in paying back surgeons cash contribution at the time of their exit from the Hospital project." 16. All these grounds have been raised by this assessee because of the reason that the learned CIT(A) has given direction to assess the amounts in the hands of the company CCCPL either in the year under consideration, i.e., A.Y. 2008-09 or in the A.Y. 2007-08. In fact these additions have been suggested primarily because of the reason that the learned CIT(A) has taken a view that there was payment in cash for the purchase of the property. However, he has held that the same was required to be taxed partly in the year 2007-08 and partly in the year 2008-09. Learned AR has raised the legal issue that the learned CIT(A) was not empowered to direct the AO to assess the amount in the case of a person who has so far not been assessed by the AO. Moreover, the appeal of the said other person i.e., CCCPL was not pending before the learned CIT(A). According to learned AR, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby confirmed. The ground of the Revenue is, therefore, dismissed. 10. In the case of Dr. Urmil Shah, the ground of Revenue and the decision of Hon'ble IT.AT is reproduced below : I.IT(ss)A No. 602/Ahd/2011, A.Y. 2008-09 (Revenue's Appeal) (Dr. Urmil G. Shah) 40. This appeal of the Revenue is arising from the consolidated order of learned CIT(A)-III, Ahmedabad, dated 27.09.2011 and the only ground raised is as follows: "The Ld. CIT(A) has erred in low and on facts and circumstances of the case by providing relief of Rs.35,00,000/- to the assessee on the issue of unexplained investment for the purchase of land by holding that the said amount should be taxed in the hands of the company M/s. CCCPL " 41. In this case, the total amount stated to be invested in CCCPL was as under: Dr. Urmil Shah 4/24/2007 30,00,000 5/2/2007 5,00,000 10/14/2007 5,00,000 10/15/2007 2,50,000 1/23/2008 2,50,000 11/1/2007 1,75,000 Sub Total 46,75,000 41.1 During the proceedings, the assessee has explained the source in respect of the major investment of Rs.30 lacs and also in respect of the two amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the Ld. CIT(A) was that the AO had erred in relying upon the "Dumb Documents" particularly the hard disk found from the computer resulting in addition of Rs. 5,52,50,000/- as "unaccounted income" utilized in acquiring 9,75,000/- shares of CCCPL at Rs. 56.67 per shares. In respect of the contention of "Dumb Documents" the Ld. CIT(A) has given the order in favour of the assessee with the following manner: ""In response to this letter, the stamp duty valuation cell has computed the stamp duty at Rs.12,45,400/- on the total value of land of Rs.254,16,200/-. Accordingly CCCPL paid Rs.501,440 towards Stamp duty on 6.3.2007 by ch. no. 349370 and 336438 of Rs.250,720 each of ICICI Bank A/c No.029505000156. this clearly shows that CCCPL had agreed to purchase land before 5.3.2007. It is to be mentioned that the stamp duty valuation cellis interested in stamp duty collection on transfer of the land on the basis of higher of Jantri rate or the sale rate. In the absence of higher sale rate, for the purpose of stamp duty, valuation is done by them on the basis of Jantri rate which has been shown at Rs.254,16,200 for the said property which was brought by the CCCPL as on July 2007. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, it cannot be used as an evidence hence, such a statement has no evidentiary value. Rather in this case it was made in the form of a questionnaire handed over to those out-going doctors, who have not answered the questions under oath. This is one of the reason that we are hesitant to uphold the revenue's reliance on a statement made before the AO. Moreover, Dr. Anil Jain has kept on changing his statement therefore as far as his statements are concerned, those are not said to be very dependable. In this connection, it is also worth to mention that a third party statement should not be made the basis of addition for income tax purpose. The Tax proceedings should be based upon certain direct evidence so that there must not be any miscarriage of justice." 19. So far as the cash component in making payment towards the consideration of the property for consideration of the hospital is concerned the Coordinate Bench was pleased to observe as follows: "8.10 The Revenue Department has held that the 15% payment was in cheque and 85% payment was in cash which were mentioned on number of occasion as per the data sheets of the computer. Prima facie, those sheets have demonstrated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the block assessment did not emanate from the evidence found at the time of search hence the addition was not sustained. However, learned CIT(A) has directed to issue notice u/s 148 to bring to tax the bogus advances. It was held that the learned CIT(A) has failed to record a categorical finding justifying the direction given to the AO when the AO had not chosen for reopening of the assessment then the direction given by learned CIT(A) were to be set aside. In the light of these decisions, learned AR has vehemently pleaded that the direction made by learned CIT(A) to assess the cash component in the hands of the company was beyond his jurisdiction therefore required to be over ruled. Considering the circumstances under which such directions were given, it is hereby held, not valid in the eyes of law. 8.13 Next point. It is a universal law that the 'Suspicion howsoever strong cannot take the place of evidence'. At best, it can only lead to investigation. No person can be punished merely on the basis of a doubt, but side by side, must not be spared on the basis of unfavorable evidence. So the procedure is that a mistrust leads to investigation and an investigation leads to coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kh. Therefore, the Revenue Officers were not sure whether the cash was actually paid back to the outgoing doctors by CCCPL or by Dr Parikh. In the absence of any concrete evidence, it was not justifiable for the Revenue Officers to tax the impugned amount in the hands of the assesseee. Learned CIT(A) has rather confused the issue. If he is of the view that it was to be presumed that cash was paid back to the outgoing doctors then why at all merely on suspicion he has directed to assess the same in the hands of the company CCCPL. Skepticism must not lead to inflict punishment. Rather in a situation when CIT(A) had the uncertainty then judicious approach would be that he should have justifiably deleted the addition on his own, instead of directing the AO to examine the facts and tax in the hands of the company CCCPL. It is worth to mention that as on date nothing is on record to see whether any consequential action was taken in the case of CCCPL. In a situation when we have already taken a view that there was no element of on money in the purchase of the property in question then in consequence thereof, there was no element of payment of cash to the outgoing doctors. We, therefore, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reason to deviate from such stand taken by the Coordinate Bench in holding otherwise. We note that since the issue has already been decided there is no basis of agitating the same issue repeatedly by the Revenue in repeated litigation. We, therefore, find no ambiguity in the order passed by the Ld. CIT(A) in deleting the addition passed by the Revenue in view of the order passed by the Coordinate Bench in holding no unaccounted investment found towards purchase of the property in question. We, therefore, upheld the same. The Revenue's appeal is, thus, found to be devoid of any merit and hence dismissed. ITA No. 306/Ahd/2014 (A.Y. 2008-09):- 21. The identical issue involved in the case has already been dealt with by us in ITA No. 305/Ahd/2014 for A.Y. 2007-08 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the appeal preferred by the Revenue is dismissed. C.O. Nos. 132&133/Ahd/2014 (A.Y. 2007-08 & 2008-09):- 22. So far as assessee's Cross Objections are concerned, the same is merely in support of the order of the Ld. CIT(A), which we upheld as per the observations and finding recorded by us in the foregoing paragraphs. Hence, both ..... X X X X Extracts X X X X X X X X Extracts X X X X
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