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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K. & Ms. PADMAVATHY S
Date of hearing : 22.02.2023 Date of Pronouncement : 24.02.2023 O R D E R
Per Padmavathy S., Accountant Member
This appeal is against the order of the CIT(A), National Faceless Appeal Centre, Delhi [NFAC] dated 31.10.2022 for the assessment year 2017-18.
The assessee an individual is a Cardiology Doctor by profession. The assessee filed the return of income for AY 2017-18 on 21.9.20-17 declaring an income of Rs.1,21,65,700. The case was taken up for complete scrutiny under CASS and statutory notices were duly served on the assessee. During the course of assessment, the AO noticed that the assessee has deposited a sum of Rs.1,03,674 in SBI Account and a sum of Rs.33,35,000 in Axis Bank during the demonetisation period from 9.11.2019 to 30.12.2019. The AO called on the assessee to furnish the details explaining the source for cash deposit made into the Axis Bank account and also as to why his cash receipts are high during the period April to October 2016 as compared to the same period in the earlier year. The assessee submitted that the amount of cash deposited is derived from the consultancy charges from patients which the assessee provides through private clinic of the assessee. The assessee also submitted that he has retired from his fulltime employment with Jayadeva Hospital and started dedicating more time for private practise practice during the FY 2016-17 and the cash collected from patients towards consultancy charges were accumulated and deposited in the Axis Bank. The AO did not accept the submissions of the assessee and proceeded to treat the amount deposited into Axis Bank account for a sum of Rs.33,35,000 as unexplained credit u/s. 68 and applied the rate of tax on the said amount u/s.115BBE. The relevant extract of the AO’s order is as given below.
“8. I have considered the submissions of the assessee. However, I do not find it acceptable. The assessee's claim that he had retired from Jayadeva Hospitals during the year is not borne out from the facts on record. From the TDS Schedule in the ITR, it is clear that during the financial yearl6-17, the assessee was still in service and in receipt of salary income from Jayadeva Institute of Cardiovascular Sciences and Research. Further, from the TDS schedule it is clear that he was in receipt of substantial professional income from Imperial Hospital and Research Center, besides receipt of professional income from others. The private practice to the extent referred to by the assessee is not humanly possible as the other activities itself would have taken up the time of the assessee.
In the circumstances, as I find the explanation of the assessee to be not satisfactory, the amount of Rs. 33,35,000 is treated as unexplained credits u/s 68 and added to the income of the assessee.”
Aggrieved, the assessee filed appeal before the CIT(Appeals).
4. The assessee submitted before the CIT(A) that he was working full time in Jayadeva Hospital as a Cardiologist Surgeon and with Manipal Hospital as a consultant. With regard to the AO’s contention that the assessee would not have had time to practice since he was fully employed in Jayadeva Hospital the assessee submitted that he has retired from Jayadeva on 8.11.2016 and practiced full time in his own clinic. The assessee stated this as a reason for the consultancy income being lower during the FY 2015-16 which the AO quoted as one of the reasons for making the addition u/s.68. For the AO’s contention that the assessee’s has not substantiated that he has retired from full time service, the assessee produced before the CIT(A) a certificate from Sri Jayadeva Institute of Cardiovascular Sciences & Research evidencing the fact that he has retired from 1.8.2016. The assessee also furnished the detailed patient wise list of consultancy fees received during the FY 2016-17 (page 121 to 189 of paper book) along with the cash book (page 210 & 211 of paper book), audited financials, and ITRs. The assessee submitted before the CIT(A) that cash collected from patients as per the details furnished is accumulated and deposited when demonitisation was announced. The assessee also submitted that in return of income filed for the year under consideration the assessee has declared the income from consultancy services, salary received from Jayadeva Hospital and other professional charges. The assessee accordingly submitted that based on these evidence, it is clear that the source for the cash deposited is from the consultancy fees collected from the patients and as on the date of demonetisation, the assessee had an accumulated balance of Rs.35,52,885 from the fees collected. Therefore the assessee submitted that the addition u/s. 68 by the AO is not correct. Without prejudice, the assessee also submitted that since the consultancy fees collected has already been offered to tax business income the same cannot be added again u/s. 68 which would amount to double taxation.
5. The CIT(A) after considering the submissions of the assessee, gave partial relief to the extent of Rs.17 lakhs and sustained the balance addition of Rs.18,35,000 by holding as under:-
“6. Ground no. 1 to 4 of the appeal are against addition of Rs.33,35,000/- on account of unexplained cash deposits. Before the AO the appellant stated that he retired from Jaydeva Hospital during FY 2016-17 and started private practice, receipts of the same was deposited in bank account. But AO on the basis of TDS schedule, held that the appellant had not retired from Jaydeva Hospital and could not have done private practice. During appellate proceedings the appellant submitted that he retired on 01/08/2016 and filed certificate dated 20/12/2016 issued by the hospital. A copy of cash receipt statement for the period 01/04/2016 to 31/07/2016 amounting to cash receipt of Rs.5,67,850/- was filed (also filed before AO). Further as per monthly statement of cash filed by the appellant, the cash availability on 08/11/2016 was Rs.35,52,885/- (also filed before AO). No supporting evidence was filed to substantiate figures given in these statements. AO did not examine these cash statements. As per the cash statement cash received after retirement from Jaydeva Hospital on 01/08/2016 to 31/10/2016 is Rs.14,88,060/- and no cash has been deposited in Bank during this period. Therefore, after giving allowance of personal and household expenses, it will be reasonable to consider that cash of Rs.13,00,000/- was available. As the appellant was in service and only doing nominal private practice, the cash received before 01/08/2016 must have been consumed for personal and household needs. Further for the sake of equity and justice, further allowance of Rs.4,00,000/- is allowed for past withdrawals and savings. Thus, by taking cash availability at Rs.17,00,000/- the addition is restricted to Rs.18,35,000/-. The grounds of appeal are ‘Partly Allowed'.”
6. Aggrieved by the order of the CIT(Appeals), the assessee is in appeal before the Tribunal raising the following grounds:-
“1. The learned Assessing officer had erred in passing the order in the manner passed by him and the learned Commissioner of Income-Tax (Appeals) has erred in partially confirming the same. The order passed by CIT(A) to the extent it confirms the assessment order is bad in law and is required to be quashed in toto.
2. Without prejudice, The learned Assessing officer had erred in adding the cash deposits in bank of Rs. 33,35,000/- u/s 68 of the Act and the learned Commissioner of Income tax (Appeals) has erred in confirming the addition to the extent of Rs. 18,35,000/- On proper appreciation of facts and law applicable, the entire cash deposits in bank are duly explained and there being no unexplained cash credit at all, the addition as confirmed being erroneous is to be deleted.
3. The authorities below have erred in not appreciating the facts that the appellant is a senior medical practitioner and the cash deposits were made out of professional/Consultation receipts. The additions as made/confirmed are without basis and based on surmises and conjectures are to be deleted.
In any case, the addition of cash deposits as made/confirmed being part of professional /consultation charges which have already suffered taxation, the addition on account of bank deposits as confirmed amounts to double addition and hence the same is to be deleted.
The learned Assessing Officer has erred in holding the provisions of Section 115BBE of the I.T. Act, are applicable to the facts of the case and the learned CIT(A) has erred in confirming the same. On proper appreciation of the facts of the law, it is clear from provisions of Section 115BBE of the I.T. Act, are not applicable to the case of the appellant and therefore the computation of tax under Section 115BBE of the I.T. Act, being erroneous is to be deleted.
The appellant also denies the liability to pay interest levied U/s. 234B and 234C of I.T. Act, 1961. The Interest having been wrongly levied has to be deleted.
In view of the above and other grounds to be adduced at the time of hearing, it is requested that the impugned orders of the lower authorities be quashed or atleast the additions as made by the Assessing Officer to the extent confirmed by the Commissioner of Income tax (Appeals) be deleted and interest levied be deleted and it be held that the provisions of Section 115BBE of the I.T. Act, are not applicable to the case of the appellant.”
7. The ld. AR submitted that the assessee had submitted the patient wise list and also the cash book which shows an accumulated balance of Rs.35,52,885 that would explain the source of cash deposited into the bank account. The ld. AR also submitted that the reason as quoted by the AO for making the addition u/s. 68 has also been rebutted by the assessee before the CIT(A) by submitting the necessary evidence with regard to the fact that the assessee has resigned from Jayadeva from 1.8.2016 and that he practised in his own clinic. The ld AR further submitted that the assessee has already included the impugned addition as part of its income from profession while filing the return of income and therefore the addition made u/s. 68 would amount to double taxation. In this regard, the ld. AR drew our attention to the return of income filed by the assessee for the AY 2017-18 wherein the consultancy charges received have been offered to tax (page 45 to 48 of PB). The ld. AR further submitted that the accounts of the assessee are subject to audit and the AO did not reject the books of accounts. It is therefore contended that the AO ought not to have made the addition u/s 68. With regard to findings given by the CIT(A) that as per the cash receipt statement for the period 01/04/2016 to 31/07/2016 the cash receipt of Rs.5,67,850/- only, the ld AR submitted that the said amount is the collection for the month of July 2016 alone (page 155 of the paper book) and not for the aforesaid period as held by the CIT(A).
The ld DR, on the other hand, supported the order of the lower authorities. The ld. DR drew our attention to the cash book furnished by the assessee to submit that the consultancy receipts have been high from 1.4.2016 to 31.10.2016 i.e.pre-demonitisation period and that after this period the consultancy charges have substantially reduced. It is therefore submitted by the ld. DR that the cash book cannot be relied.
9. We heard the parties and perused the material on record. The addition is made for the deposit of SBN during demonetization period by the AO on the ground that it would not have been humanly possible for the assessee to provide consultancy to patients when he is in full employment. The reason for AO not to be satisfied with the explanation of the assessee is based on incorrect fact that the assessee was in full time employment with Jayadeva throughout the year and also on the basis that he had other professional receipts. We notice from the perusal of records that the assessee has retired from full time services effective 01.08.2016 and this fact has been substantiated by producing the letter from the hospital where assessee was employed fulltime and that he retired from services on 01.08.2016 and also from Form 26AS. The CIT(A) while confirming the addition partially has done so for the reason that there has not been adequate withdrawals for personal expenses. However it is noticed that the revenue has not recorded any adverse factual finding with regard to the source for the cash deposited whereas the source for impugned addition is adequately evidenced by the assessee by way of patient wise list of daily receipt from consultation in order to support that it derived from the professional income. It is also noticed that the amount of consultancy receipts is already offered to tax by the assessee by reflecting the same in the P&L Account which are duly audited and this fact is not doubted by the lower authorities. In that case, if the cash deposits are added under section 68 of the Act, then it would result in taxing the impugned amount twice, once as a consultancy income and secondly as an addition under section 68 of the Act.
We notice that the coordinate bench of the Tribunal in the case of Shri. Pukhraj vs ACIT (ITA No.43/Bang/2022 dated 19.07.2022) has considered a similar issue and held that - 9.******* The Hon’ble Delhi High Court in the case of PCIT Vs. Singhal Exim Pvt. Ltd., [ITA No.228/2020 dated 22/02/2021] on similar issue took the view that the addition under section 68 of the Act is contradictory to the stand taken while accepting the business income and that the amount in question have already been charged to the income of the assessee, cannot be taxed again under section 68 of the Act.
10. The Hon'ble Kolkata Tribunal in the case of CIT Vs. Associated Transport Pvt. Ltd. reported in 84 Taxman 146 on identical facts took the view that when cash sales are admitted and income from sales are declared as income, wherein the Hon'ble Tribunal found that the assessee had sufficient cash in hand in the books of account of the assesses, that there was no reason to treat the cash deposits as income from undisclosed sources. The Hon’ble Vishakapatnam Tribunal in the case of ACIT Vs. Hirapanna Jewelers in on identical facts held that when cash receipts represent the sales which the assessee has offered for taxation and when no defects are pointed out in the books of account, it was held that when assessee already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. Similar view is taken by the Hon’ble ITAT in the following cases: (i) The Hon’ble Delhi ITAT in the case of Agons Global (P) Ltd., Vs. ACIT [ITA 3741 to 3746/Del/2019] (ii) The Hon’ble Indore ITAT in the case of Dewas Soya Ltd., Vs. ITO [ITA No.336/Ind/2012]. 11.We also notice that the Hon’ble Supreme Court in the case of CIT Vs. Devi Prasad Viswanath Prasad (1969) 72 ITR 194 (SC) on the issue of additions under section 68 held that “It is for the assessee to prove that even if the cash receipts represents income, it is income from a source, which has already been taxed.” Applying this ratio, in our view, the assessee has discharged the onus by offering the sales for taxation and therefore the same income cannot be taxed again. In view of the above discussion, we are of the considered view that the addition of Rs.19,50,000/- made under section 68 of the Act cannot be sustained and is therefore deleted. This ground is allowed in favour of the assessee.
In assessee’s case we notice that the assessee has offered the impugned income to tax and that the lower authorities have not rejected the books of accounts. The ld AR during the course of hearing submitted the returns filed for AY 2018-19 where the assessee has offered a similar amount to tax to substantiate that the assessee is receiving the income from consultation in the same range post retirement and that has been regularly offering the same to tax. Given the facts of the assessee’s case and considering the above decision of the coordinate bench of the Tribunal we are of the view that the assessee has discharged the onus by providing the necessary evidences and by offering the income to tax. Accordingly we hold that the addition of Rs.18,35,000/- made under section 68 of the Act cannot be sustained and is therefore deleted. Ground Nos.2 to 4 are allowed in favour of the assessee.
In view of our decision as given above, the ground No.5 raised with respect to levy of tax u/s. 115BBE has become academic. Ground Nos.1 & 7 are general not warranting separate adjudication.
In the result, the appeal is allowed in favour of the assessee.
Pronounced in the open court on this 24th day of February, 2023.