LAKHOTIA DIAGNOSTIC SERVICE PVT. LTD.,HOWRAH vs. ACIT, CEN. CIR. 3(2), KOLKATA

PDF · subscribers
ITSSA 16/KOL/2024Status: DisposedITAT Kolkata14 June 2024AY 2020-213 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 28,51,404 made by the AO on account of commission and interest on alleged cash loans was unjustified. The Tribunal noted that the Additional Commissioner (ACIT) had dropped penalty proceedings under Section 271D, which implied that the loan was not received in cash. Furthermore, the Tribunal observed that the assessment was made under Section 153A, but the alleged incriminating document relevant for AY 2020-21 was not seized from the assessee's premises, suggesting the assessment should have been under Section 153C. Since the cash transactions were found not to be cash transactions and penalty proceedings under Section 271D were dropped, the Tribunal found no justification for the addition. The appeal of the assessee was allowed, and the addition was deleted. No issue was expressly left undecided.

What were the facts?

The assessee, Lakhotia Diagnostic Service Private Limited, is engaged in the healthcare business. A search and seizure operation was conducted on the Lakhotia Group on February 5, 2021. For Assessment Year 2020-21, the assessee filed a return of income of Rs. 41,68,600 in response to a notice under Section 153A. The Assessing Officer (AO) made an addition of Rs. 28,51,404 on account of alleged interest and brokerage paid on cash loans, invoking Section 69C of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed this addition, holding that the assessee failed to discharge its onus to prove the AO's action was incorrect and did not provide an affidavit denying the acceptance of cash loans. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether, in the facts and circumstances of the case, the Ld. CIT(A) was justified in confirming the addition of Rs. 28,51,404 relying on seized dumb documents (marked as LDS-3) without proper verification and establishing a nexus with the assessee company? (Question of law and fact, turning on the validity of additions based on seized documents). Assessee's contention: The addition was unlawful as it relied on unverified 'dumb documents' without establishing any nexus with the assessee company. Revenue's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 69C,Section 153A,Section 153C,Section 271D,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH KOLKATA

Before: SHRI RAJPAL YADAV & SHRI RAKESH MISHRA

For Appellant: Shri Miraj D. Shah, AR
For Respondent: Shri Subhendu Datta, CIT, DR
Hearing: 12.06.2024Pronounced: 14.06.2024

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER IT(SS)A Nos.16/KOL/2024 Assessment Year: 2020-21

Lakhotia Diagnostic Service ACIT, Central Circle-3(2), Private. Limited. Kolkata. 93/C/A, Block-E, Vivek Bihar, G. T. Road (South), Shibpur, Vs Howrah-711102, West Bengal- 711102. (PAN: AAACO6522G) (Appellant) (Respondent)

Present for: Appellant by : Shri Miraj D. Shah, AR Respondent by : Shri Subhendu Datta, CIT, DR Date of Hearing : 12.06.2024 Date of Pronouncement : 14.06.2024 O R D E R PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeal), Kolkata-21 (hereinafter referred to as “the Ld. CIT(A)” passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2020-21 vide Order No. ITBA/APL/S/250/2023-24/1060339700(1) dated 31.01.2024.

2.

Grounds of appeal raised by the assessee are reproduced as under:

“1. FOR THAT in the facts and circumstances of the case the Ld. CIT(A) was not justified in law in confirming the unlawful addition of Rs.28,51,404/- relying on seized dumb documents marked as LDS-3 without verifying the same in proper

2 IT(SS)A No. 16/Kol/2024 Lakhotia Diagnostic Service pvt. Ltd., AY: 2020-21 perspective and without establishing any nexus of such dumb documents with the assessee company. Your appellant craves leave to add supplement or amend further ground or grounds at the time of hearing.” 3. Briefly stated facts as culled out from records are that assessee is engaged in the business of healthcare business. The assessee filed its return of income in response to notice u/s. 153A on 19.03.2022 declaring total income of Rs.41,68,600/-. Original return u/s. 139(1) was filed on 08.02.2021 declaring a total income of Rs.41,76,270/-. A search and seizure operation u/s. 132 of the Act was conducted in various office premises cum residence of Lakhotia Group on 05.02.2021. The said Group is engaged in real estate, manufacturing and export-import business, healthcare diagnostic including laboratory, radiology, cardiology and neurology services, industrial fabrication, industrial automation, woven and non-woven fabric business, education and services, hotel industry. The AO made the addition of Rs.28,51,404/- on account of cash transactions u/s. 69C of the Act as alleged interest and brokerage paid on alleged loan. Aggrieved, assessee preferred appeal before the Ld. CIT(A), who confirmed the action of the AO by observing that the addition made by the AO is on account of interest as well as brokerage paid on cash loan. Ld. CIT(A) also stated that the assessee produced nothing to demonstrate that cash loans were not accepted by the assessee and in support of this assessee has not produced any affidavit denying the acceptance of such cash loans. Hence, the Ld. CIT(A) held that the onus is completely upon the assessee to prove that the action of the AO was legally or factually incorrect. Since the assessee failed to discharge its onus and there is no material before him to show that the action of the AO is incorrect, the addition was confirmed. Aggrieved, the assessee is in appeal before the Tribunal.

3 IT(SS)A No. 16/Kol/2024 Lakhotia Diagnostic Service pvt. Ltd., AY: 2020-21 4. We have heard both the Ld. AR and the Ld. DR and perused the material available on record. It is observed that the AO treated the commission and interest on the alleged cash amount received but the Addl. CIT in the course of penalty u/s. 271D dropped the penalty thereby implying that the loan was not received in cash. Further, this is a matter of search and seizure and the AO has merely mentioned the Sl. No. of the annexure, the assessment has been made u/s. 153A of the Act whereas the alleged incriminating document relevant for AY 2020- 21 was not seized from the premises of the assessee and, therefore, the assessee ought to have been made u/s. 153C of the Act and not u/s. 153A of the Act. Since the cash transactions were found to be not cash transactions and the proceeding initiated for penalty u/s. 271D was dropped, therefore, there appears no justification for the addition made on account of commission and interest which has been estimated by the AO. Hence, the appeal of the assessee is allowed and the addition of Rs.28,51,404/- is hereby deleted.

5.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 14th June, 2024. Sd/- Sd/- (Rajpal Yadav) (Rakesh Mishra) Vice President Accountant Member Dated: 14th June, 2024 JD, Sr. P.S. Copy to: 1. The Appellant: 2. The Respondent. 3. CIT(A), Kolkata-21, Kolkata 4. Pr. CIT, 5. DR, ITAT, Kolkata Bench, Kolkata //True Copy// By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata

More judgments on Section 69C

All 8,217 judgments and leading authorities on Section 69C →

Recent GST High Court judgments

Search GST case law →