M/S ORTHONOVA HOSPITAL,JALANDHAR vs. THE DY COMMISSIONER OF INCOME TAX, JALANDHAR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. No. 125/(Asr)/2017 Assessment Year: 2007-08 [PAN: AAAFO 7491B]

M/s. Orthonova Hospital Vs. Deputy Commissioner of Income Near Nari Niketan Tax Central Circle-II, Nakodar Road, Jalandhar (PB) Jalandhar (PB). (Appellant) (Respondent)

Appellant by : Sh. Surinder Mahajan (C.A.) Respondent by: Sh. P. K. Sharma (D.R.) Date of Hearing: 01.03.2018 Date of Pronouncement: 09.05.2018

ORDER Per Sanjay Arora, AM: This is an Appeal by the Assessee agitating the Order by the Commissioner of Income Tax (Appeals), Bathinda ('CIT(A)' for short) dated 23.01.2017, confirming the rectification order u/s. 154 of the Income Tax Act, 1961 ('the Act' hereinafter) dated 08.07.2009 for the Assessment Year (AY) 2007-08.

2 ITA No.125 (Asr)/2017(AY 2007-08) Orthonova Hospital v. Dy. CIT a sum of Rs. 29.29 lacs. The cash was, in terms of the cash book seized, found deficit (i.e., in the negative) on different dates during the relevant year, in the aggregate of the said sum. The Assessing Officer (AO) accordingly made an adjustment for this sum in-as-much as cash, an asset, can, at the minimum, be nil, but not negative, so that the source of cash, at least to the extent ‘negative’, remained unexplained. The assessee preferred a petition u/s. 264 before the Commissioner of Income Tax, Central, Ludhiana (‘CIT’/’competent authority, hereinafter) on 19.02.2009, claiming that it had reworked the cash shortfall on different dates, and already included a sum of Rs. 15 lacs per its return of income u/s. 153A. No further adjustment was accordingly called for. Pending the adjudication u/s. 264, the assessee field an application u/s. 154 (on 02.03.2009), i.e., toward rectifying the said ‘mistake’, claimed to imbue its assessment dated 29.12.2008. The petition u/s. 264 was disposed by the competent authority on 31.03.2010 (copy of the order on record), holding as under:

‘4. The contentions of the assessee have been considered and it is observed as follows: (i) As far as addition of Rs. 29,29,000/- is concerned, in the body of the assessment order, it is has been elaborately discussed on the basis of the seized material how the assessee had suppressed professional receipts. Talking specifically about the figure Rs. 29,29,000/-, addition made was kept restricted to this amount by giving benefit of doubt to the assessee through warding off every iota of estimation, conjecture of surmise, even though possible ground for making further addition under this head was there. The assessee in his own submission has himself submitted that there was discrepancy in as much as professional receipts were not fully disclosed in the cash book for which he has sought to explain being purely a problem of an inefficient accountant. Whether right or wrong, fact remains that total professional receipts were not-disclosed in his books of accounts. Further, it has been found that the assessee, in course of assessment proceedings, himself admitted of non-recording of professional receipts to the tune of Rs. 44,10,620/- which were intended to get partly offset through matching entries in his books of accounts and for which he disclosed Rs. 15,00,000/- as misc. income. Thus, the balance amount to be thus off-set by him, in his own admission comes to Rs. 29,10,626, which is pretty close to the addition made by the A.O. on this account. Thus, addition gets justified through the submission of the assessee himself. Therefore, the addition on this ground is very much reasonable and does not call for any further intervention. Moreover, it is seen that the assessee has given detailed explanation at

3 ITA No.125 (Asr)/2017(AY 2007-08) Orthonova Hospital v. Dy. CIT the time of assessment and the same has been closely examined lay the A.O., hence at this stage, (no) further interference on this issue is called for.’ [emphasis, ours] The assessee’s application was, in view thereof, regarded as not maintainable by the Revenue Authorities, so that, aggrieved, the assessee is in second appeal.

5.2 Our first observation in the matter is that the assessee has not brought any material on record whereby the claim being now made before us, i.e., that it had reworked the cash shortfall on different dates and, further, included a sum of Rs. 15 lacs toward the same per its return of income furnished in response to notice u/s. 153A, stands made during the assessment proceedings. The same in fact ought to find mention in the return of income itself. Rather, even where so, it would require verification as to its veracity, i.e., with reference to the assessee’s books of account, comparing the same with the cash-book seized, which exercise could be carried out only in the assessment proceedings, whereat this aspect of the matter, even as apparent from the assessment order, and noticed by the ld. CIT, stands discussed on merits in considerable detail. The assessee’s plea therefore cannot be apparently admitted in the instant proceedings, the scope of which is severely limited, i.e., toward rectifying mistake/s apparent from record. At the same time though, if the assessee has indeed included Rs. 15 lacs as income toward cash shortfall, i.e., as against the shortfall of Rs. 29.29 lacs for

4 ITA No.125 (Asr)/2017(AY 2007-08) Orthonova Hospital v. Dy. CIT which addition has been subsequently made in assessment, there is apparently an excess addition (on account of cash shortfall) to the extent of Rs. 15 lacs, which could be rectified u/s. 154. We may though clarify that we assume a cash shortfall of Rs. 29.29 lacs as per cash-book seized on the basis of the statement made before us as well as the plain reading of the assessment order, which records the relevant issue, even as, as aforenoted, the raising of the relevant claim per the return of income or during the assessment proceedings, has not been exhibited. Upon this being observed by the Bench during hearing, the ld. Authorized Representative (AR), the assessee’s counsel, Sh. Surinder Mahajan, CA, would agree to the matter being restored to the file of the AO to satisfy him, on the basis of the material on record, that there has been an excess addition by Rs. 15 lacs. He would though subsequently contend that the matter be restored to the file of the first appellate authority in-as-much as the said authority had omitted to adjudicate the assessee’s case on merits, stating that the application u/s. 154 is not maintainable in view of the petition u/s. 264, and which is clearly not the correct position in law in view of the decisions by hon’ble High Courts and the tribunal, some of which stand cited. Our purview therefore gets limited to examining whether we could remand back the matter in the instant proceedings, i.e., in view of the clear findings in the assessment order, as well as by the competent authority u/s. 264, reproduced above, and the absence of any material indicating the stated ‘mistake.’

5.3 It is patently clear that the subject issue has been subject to elaborate consideration, both at assessment stage as well as in the proceedings under section 264. As aforenoted, no material or evidence of the mistake under reference in either - the findings per the two orders afore-said being subject to the doctrine of merger, stands brought to our notice. Be that as it may, it is also, at the same time, abundantly clear that if there has been, as claimed, double addition, or the assessee

5 ITA No.125 (Asr)/2017(AY 2007-08) Orthonova Hospital v. Dy. CIT has been omitted to be allowed credit in respect of an addition made suo motu per its return of income in assessment, it ought to be, if not already taken into account or considered, i.e., while computing the taxable income, so done, so that to that extent there could be a scope for a mistake, as being claimed. Both the AO and the ld. CIT(A) have, however, not decided the assessee’s petition under section 154 on merits, stating it to be not maintainable in view of the petition u/s.264, since disposed and, as hereinabove observed, issuing findings of fact and, further, in respect of the same matter qua which the assessee claims a mistake. Consideration of a matter in detail, however, would not per se preclude a mistake, the burden to prove which (mistake) though is squarely on the person who so claims, i.e., the existence of a mistake/s liable for rectification. The limited issue before us is the maintainability of the assessee’s application u/s. 154. No doubt, the scope or margin for such an obvious error, as being claimed, given that the relevant aspect has been the subject matter of deliberation on more than one occasion, and by more than one authority, stands greatly reduced. The same, however, cannot be eliminated though. There is, thus, little merit in not deciding/disposing the assessee’s application u/s. 154 on merits. That is, in spite of the ld. CIT having considered the aspect of suo motu disclosure of Rs.15 lacs by the assessee. Why, a mistake – which is apparent from record, could occur at any stage. All that the assessing authority had to do was to issue a finding/s, one way or the other, per a speaking order.

[ 5.4 In view of the fore-going, we see no reason for regarding the assessee’s application u/s. 154 as not maintainable, as held by the Revenue authorities. We, accordingly, vacating their finding as to non-maintainability, restore the matter back to the file of the AO (i.e., whose order is claimed to bear the ‘mistake’) for the consideration of the assessee’s application u/s. 154 on merits. Further, we

6 ITA No.125 (Asr)/2017(AY 2007-08) Orthonova Hospital v. Dy. CIT consider it proper to clarify that we may not construed as having issued any direction or finding impacting the said consideration. The burden to prove the mistake, apparent from record, so that it is liable for rectification u/s. 154, would be clearly on the assessee. We decide accordingly.

Sd/- Sd/- (N. K. Choudhry) (Sanjay Arora) Judicial Member Accountant Member Date: 09.05.2018 /GP/Sr. Ps. Copy of the order forwarded to: (1) The Appellant: Orthonova Hospital Nakodar Road, Jalandhar (PB) (2) The Respondent: Dy. C. I. T. Central Circle-II Jalandhar (PB). (3) The CIT(A), Bathinda. (4) The CIT concerned. (5) The Sr. DR, I.T.A.T.