Dr. Shyamala Reddy, Bangalore v. ITO, Bangalore

ITA 1069/BANG/2009 | 2006-2007
Pronouncement Date: 26-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 106921114 RSA 2009
Bench Bangalore
Appeal Number ITA 1069/BANG/2009
Duration Of Justice 3 month(s) 13 day(s)
Appellant Dr. Shyamala Reddy, Bangalore
Respondent ITO, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 26-02-2010
Assessment Year 2006-2007
Appeal Filed On 13-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBE R AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.1069/BANG/2009 ASSESSMENT YEAR : 2006-07 DR. SHYAMALA REDDY PROPX. M/S. SHYAMALA HOSPITAL & RESEARCH CENTRE NO.17/4 CAMBRIDGE ROAD BANGALORE 560 008. : APPELLANT VS. THE INCOME TAX OFFICER WARD 5(4) BANGALORE. : RESPONDENT APPELLANT BY : SHRI ASHOK KUMAR DODDI RESPONDENT BY : SMT. V.S. SREELEKHA O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-II BANGALORE IN ITA NO: 268/W 5(4)/CIT(A)-I I/08-09 DATED: 12.8.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS OF APPEAL. HOWEVER ON A PERUSAL OF THE SAME THE SUBSTANCE OF THE GRIEVANCE OF THE ASSESSEE IS CONFINED TO A LONE GROUND THAT - ITA NO.1069/BANG/09 PAGE 2 OF 8 THE LD. CIT(A) WAS WRONG IN HOLDING THAT THE INTR ODUCTION OF CAPITAL OF RS.30 LAKHS REMAINS UNEXPLAINED AND INCL UDABLE AS INCOME U/S 68 OF THE ACT. 3. THE ASSESSEE - AN INDIVIDUAL A MEDICAL PRACTIT IONER AND PROPRIETRIX OF SHYAMALA HOSPITAL & RESEARCH CENTRE [SH&RC] SITU ATED AT ULSOOR FURNISHED A RETURN OF INCOME ADMITTING AN INCOME OF RS.3.35 LAKHS AND AGRICULTURAL INCOME OF RS.30 LAKHS. IN SPITE OF ST ATUTORY NOTICES ISSUED FROM TIME TO TIME TO FURNISH CERTAIN DETAILS THERE WAS NO COMPLIANCE WHICH LED THE AO TO CONCLUDE THE ASSESSMENT EX-PARTE BASED O N THE MATERIALS AVAILABLE ON RECORD. WHILE CONCLUDING THE ASSESSME NT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD [SUCH AS BALANCE SHEET COMPUTATION OF INCOME ETC.] AND IN THE ABSENCE ANY CLARIFICATION THE AO RESORTED TO THE FOLLOWING ADDITIONS VIZ. - CAPITAL INTRODUCED IN SHYAMALA HOSPITAL & RESEARCH CENTRE DURING THE YEAR RS.11035000/- CAPITAL INTRODUCED IN M/S.CUREWELL PHARMACY 50000/- AGRICULTURAL INCOME IN THE ABSENCE OF I & E STATE MENT TREATED THE SAME AS INCOME FROM OTHER SOURCES 3000000 /- 4. AGITATED THE ASSESSEE TOOK UP THE MATTER WITH T HE LD. CIT (A) FOR REDRESSAL. AFTER DUE CONSIDERATION OF THE ARGUMENT S PUT-FORTH BY THE ASSESSEE ALSO VARIOUS DOCUMENTS PRODUCED DURING TH E APPELLATE PROCEEDINGS AND ANALYZING THE ISSUES AT LENGTH TH E LD. CIT(A) HAD DELETED THE ADDITIONS MADE IN RESPECT OF (I) CAPITAL INTRO DUCED IN CURE-WELL PHARMACY OF RS.50000/- AND (II) AGRICULTURAL INCOME OF RS.30 LAKHS FOR THE DETAILED REASONS SET-OUT IN THE IMPUGNED ORDER. ITA NO.1069/BANG/09 PAGE 3 OF 8 4.1. HOWEVER IN RESPECT OF THE CAPITAL INTRODUCED IN SH&RC DURING THE YEAR OF RS.11035000/- AFTER TAKING INTO ACCOUNT TH E DETAILS AND EVIDENCES PRODUCED BY THE ASSESSEE THE CIT(A) HAD ACCEPTED T HE EXPLANATION OFFERED BY THE ASSESSEE TO THE EXTENT OF RS.8260000 /- OUT OF THE CAPITAL OF RS.11035000/- INTRODUCED IN THE SAID HOSPITAL. 4.2. AS REGARDS THE BALANCE AMOUNT OF RS.27.75 LAKH S AFTER ANALYZING THE BALANCE SHEET OF THE INDIVIDUAL CONCERNED FOR T HE YEAR-ENDED 31.3.2004 AND INDIVIDUAL CAPITAL ACCOUNTS FOR THE YEARS-ENDED 31.3.2005 AND 31.3.2006 AND ALSO SCRUTINIZING THE BALANCE SHEET O F SGR FARMS AN AOP WHICH WAS CONSTITUTED BY THE ASSESSEE ALONG WITH DR.SRINIVAS REDDY THE MAIN ACTIVITIES WERE FARMING OF AGRICULTURAL PRODUC TS AND DURING THE YEAR UNDER DISPUTE THE AOP EARNED AGRICULTURAL INCOME O F RS.5771680/- WHICH HAS BEEN APPORTIONED AMONG THE ASSESSEE AND DR. RED DY AT THE RATIO OF RS.30 LAKHS AND RS.27.71 LAKHS RESPECTIVELY - THE LD. CIT (A) HAS OBSERVED THUS 4.12. THUS IT MAY BE SEEN THAT AGRICULTURAL INCOM E EARNED DURING THE PREVIOUS YEAR-ENDING ON 31.3.2006 FORMED PART OF TH E CAPITAL OF THE AOP AS WELL AS CASH ON HAND AT RS.6031680/- ON THE ASSETS SIDE OF THE BALANCE SHEET. AFTER ANALYSIS OF THE STATEMENT OF ACCOUNT OF M/S. SGR FARMS THE FOLLOWING FACTS EMERGED: (I) AGRICULTURAL INCOME OF RS.5771680/-FORMED PART OF T HE AOPS CAPITAL ACCOUNT AND REMAINS AS CASH ON HAND IN THE AOPS BOOKS OF ACCOUNT; (II) NO WITHDRAWALS WERE MADE FOR INCLUSION IN THE CAPIT AL ACCOUNT OF THE INDIVIDUAL; (III) IN THE BALANCE SHEET (INDIVIDUAL) IT DOES NOT APPE AR AS INVESTMENT IN THE AOP 4.13. FROM THESE FACTS IT EMERGES THAT INTRODUCTION OF F RESH CAPITAL OF RS.2775000/- REMAINED UNEXPLAINED AND THE CORRESPONDING EXPENSES INCURRED WERE AS FOLLOWS: (I) PERSONAL EXPENSES RS. 225000 (II) REPAYMENT OF LOANS RS. 2250000 ITA NO.1069/BANG/09 PAGE 4 OF 8 (III) HOSPITAL EXPENSES RS. 575000 (IV) EDUCATION EXPENSES FOR SON RS. 300000 TOTAL RS.3350000 4.14. THE DETAILED DISCUSSION MADE ABOVE SHOWS THAT INTRO DUCTION OF CAPITAL OF RS.3000000/- REMAINS UNEXPLAINED AND INCLUDIBLE AS INCOME U/S 68 OF THE ACT. THEREFORE THE ADDITION TO THE EXTENT OF RS.3000000 /- OUT OF RS.11035000/- IS CONFIRMED. 5. AGGRIEVED THE ASSESSEE HAS COME UP WITH THE PRE SENT APPEAL. DURING THE COURSE OF HEARING THE LD. A.R HAD VEHEM ENTLY ARGUED THAT THE LD. CIT(A) HAD FAILED TO APPRECIATE THE GROUND REALITIES THAT THE ASSESSEE HAD SUFFICIENT INCOME FROM VAST AGRICULTUR AL LANDS SPREAD OVER IN ANDHRA PRADESH COORG CHHATISGARH ETC. AND THA T WHEN THE CIT(A) WAS FULLY CONVINCED AND ACCORDINGLY DELETED THE ADDITION OF RS.30 LAKHS MADE ON THIS COUNT HE HAD FAILED TO APPRECIA TE THE FACT THAT THE SAME AMOUNT WAS PUMPED IN TO THE CAPITAL ACCOUNT. IT WAS FURTHER SUBMITTED THAT AFTER THE DEMISE OF THE ASSESSEES H USBAND THE ASSESSEE COULD NOT ABLE TO CONCENTRATE ON THE FARMI NG ACTIVITIES DUE TO HER INDIFFERENT HEALTH AND IT WAS BEING SUPERVISED BY HER CHILDREN. DUE TO THIS THERE WAS A POSSIBILITY OF GOOF IN MAINTAI NING THE ACCOUNTS TOO. WHEN THE FIRST APPELLATE AUTHORITY WAS MAGNANIMOUS IN ACCEPTING THE INCOME FROM AGRICULTURAL PRODUCES AT RS.30 LAKHS AS BONA FIDE THERE WAS NO REASON FOR NOT ACCEPTING THE SAME WHICH WAS INTRODUCED AS CAPITAL IN THE ACCOUNT OF SH&RC. IT WAS THEREFO RE PLEADED THAT THE ADDITION MADE U/S 68 OF THE ACT REQUIRES TO BE DELE TED. DURING THE COURSE OF HEARING THE LD. A R ALSO FURNISHED A PAP ER BOOK CONTAINING COPIES (I) ASSESSMENT ORDER FOR THE AY 2004-05;(II) RETURNS OF INCOME FOR ITA NO.1069/BANG/09 PAGE 5 OF 8 THE AYS. 04.05 & 05.06 WITH ITS ENCLOSURES; (III) BALANCE SHEET P & L A/C STATEMENT SHOWING AGRICULTURAL INCOME ETC. 6. ON THE OTHER HAND THE LD. D R CONTENDED THAT TH E FIRST APPELLATE AUTHORITY HAD ANALYZED THE ISSUE IN ALL ANGLES AND CAME TO A CONCLUSION IN A JUDICIOUS MANNER THAT THE CAPITAL OF RS.30 LAK HS REMAINS UNEXPLAINED AND INCLUDABLE AS INCOME U/S 68 OF THE ACT. IT WAS THEREFORE PLEADED THAT THE IMPUGNED ORDER OF THE C IT (A) REQUIRES NO INTERFERENCE AT THIS STAGE AND THE SAME BE SUSTAINE D. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS PERUSED THE RELEVANT RECORDS AND ALSO THE EVIDENCES PRODUCED BY THE LD. A R DURING THE COURSE OF HEARING. 7.1. ON A PERUSAL OF THE IMPUGNED ASSESSMENT ORDER WE FIND THAT THE AO HAS OBSERVED THUS (2) AS SEEN FROM THE BALANCE SHEET OF THE PROPRIET ARY CONCERN M/S SHYAMALA HOSPITAL & RESEARCH CENTRE THERE IS AN ADD ITION TO THE CAPITAL DURING THE YEAR UNDER CONSIDERATION TO THE EXTENT OF RS.11035000/-. ALTHOUGH NOTICES WERE ISSUED ASSESS EE DID NOT RESPONSE TO THE SAID NOTICES AND FAILED TO PARTICIP ATE IN THE ASSESSMENT PROCEEDINGS TO FILE THE EVIDENCES IN REGARD TO THE NATURE AND SOURCES OF INCOME FOR THE SAID CAPITAL INTRODUCED. IN THE ABS ENCE OF PROPER EXPLANATIONS THE AMOUNT OF RS.11035000/- IS BROUGH T TO TAX. 7.1.1. IT COULD BE SEEN FROM THE ABOVE THAT THE AO HAD FAILED TO SPECIFY THE SECTION UNDER WHICH THE ENTIRE SUM HAS BEEN BROUGHT TO TAX. 7.1.2. BEFORE THE FIRST APPELLATE AUTHORITY THE A SSESSEE HAD PLEADED THE REASONS FOR NOT RESPONDING TO THE NOTIC ES ISSUED BY THE AO ITA NO.1069/BANG/09 PAGE 6 OF 8 WHICH AND AFTER DUE CONSIDERATION THE CIT(A) OPIN ED THAT THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE. 7.1.3. WHILE CONSIDERING THE CAPITAL INTRODUCED TO THE ACCOUNT OF SH&RC FOR THE DETAILED REASONS SET-OUT IN THE IMPU GNED ORDER THE CIT(A) HAD ACCEPTED THE CAPITAL INTRODUCED TO THE E XTENT OF RS.8260000/- STANDS EXPLAINED AND FOR THE BALANCE OF RS.27.75 LA KHS (AND NOT RS.30 LAKHS) THE CIT(A)S CONTENTION WAS THAT IT REMAINS UNEXPLAINED AND THUS RESORTED TO INVOKE THE PROVISIONS OF S.68 OF THE ACT TO BRING THE SAME UNDER THE TAX NET. HOWEVER IN THE SAME BREAT H HE HAD CONCEDED THAT THE ASSESSEE WAS HOLDING VAST LANDS SCATTERED OVER THE STATES OF KARNATAKA A.P CHATTISHGARH BESIDES BANGALORE. 7.1.4 ON THE OTHER HAND THE CIT(A) IN HIS IMPUGNE D ORDER HAS STATED THAT 4.4IT IS OBSERVED THAT IN THE CAPITAL ACCOUN T WITH M/S. SHYAMALA HOSPITAL AND RESEARCH CENTRE THE FRE SH CAPITAL INTRODUCED TO THE EXTENT OF RS.11030000/- AND THE A O HAS ADDED THE SAME ON THE GROUND THAT THE APPELLANT DID NOT RESPOND TO THE NOTICES ISSUED BY HIM AND NO EVIDENCE WAS AVAILABLE IN THE RETURN OF INCOME IN REGARD TO THE NATURE OF SOURCES OF INCOME FOR THE SAID CAPITA L INTRODUCED. AT THE TIME OF APPEAL HEARING THE APPELLANT HAS FILED EVI DENCE. THE AO WAS ASKED TO PUT HIS COMMENTS FOR THE EVIDENCE SO FURNI SHED VIDE THIS OFFICE LETTER DATED 7.7.2009. IN COMPLIANCE THE AO VIDE LETTER DATED 15.7.2009 INTIMATED THAT IN SPITE OF OPPORTUNITIES BEING GIV EN THE APPELLANT PREFERRED NOT TO APPEAR BEFORE THE AO AND PRODUCE N ECESSARY DETAILS. ITA NO.1069/BANG/09 PAGE 7 OF 8 ACCORDINGLY HE EXPRESSED HIS INABILITY TO SUBMIT H IS REMAND REPORT.. 7.2. CONSIDERING THE FACTS AS NARRATED IN THE FORE-GOING PARAGRAPHS IT EMERGE THAT (I) THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED U/S 1 44 OF THE ACT ON THE BASIS OF MATERIALS AVAILABLE ON RECORD; (II) THE BALANCE SHEET FOR THE YEAR-ENDED 31.3.2004 CAP ITAL ACCOUNTS FOR THE YEARS-ENDED 31/3/2005 AND 31/3/2006 OF THE ASSESSEE PRODUCED BEFORE THE CIT(A) AS EVIDENCE WERE NOT BEF ORE THE AO WHILE CONCLUDING THE ASSESSMENT U/S 144 OF THE ACT ; (III) THE AO WAS ALSO DEPRIVED OF CONSIDERING THE NEW EVI DENCE DURING THE COURSE OF REMAND REPORT PROCEEDINGS AS THE ASSE SSEE ACCORDING TO THE AO HAD NOT APPEARED AND PUT FORT H HER CONTENTIONS SO AS TO ENABLE HIM TO CONSIDER THE I SSUE IN DETAIL AND SUBMIT A REMAND REPORT; (IV) THE CIT(A) HAD CONFIRMED ADDITION U/S 68 OF THE ACT TO THE EXTENT OF RS.30 LAKHS WHEREAS THE ALLEGED ADDITION SHOULD HAVE BEEN LIMITED ONLY TO RS.27.75 LAKHS [RS.11035000 82600 00] AS THE CIT (A) HIMSELF HAD CONCEDED THAT RS.82.6 LAKHS ST AND EXPLAINED. (V) THE CIT(A) PERHAPS BY OVERSIGHT HAD NOT CONSIDER ED THE AGRICULTURAL INCOME OF THE EARLIER YEARS WHICH HAS BEEN INTRODUCED DURING THE CURRENT YEAR . 7.3. IN AN OVERALL CONSIDERATION OF THE FACTS AND C IRCUMSTANCES OF THE ISSUE WE ARE THE UNANIMOUS VIEW THAT IN THE INTERE ST OF JUSTICE AND EQUITY THE ISSUE SHOULD BE REMITTED BACK FOR THIS LIMITED PURPOSE ON THE FILE OF THE AO WITH A SPECIFIC DIRECTION TO LOOK INTO THE ASPEC T OF CONFIRMATION MADE BY THE LD.CIT TO THE EXTENT OF RS.27.75 LAKHS AND NOT RS.30 LAKHS AS MENTIONED IN THE IMPUGNED ORDER OF THE CIT AFRESH AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AFTER AFFORDING A ITA NO.1069/BANG/09 PAGE 8 OF 8 REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEA RD. IN THE MEANWHILE THE ASSESSEE THROUGH HER AR IS DIRECTED TO FURNISH ALL RELEVANT PARTICULARS AT HER POSSESSION TO FACILITATE THE AO TO CARRY OUT THE ABOVE DIRECTION OF THE BENCH REFERRED SUPRA EXPEDITIOUSLY. 8. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY A LLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF FEBRUARY 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE DATED THE 26 TH FEBRUARY 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.