ACIT, CHENNAI v. M/s Madras Medical Mission, CHENNAI

ITA 1475/CHNY/2010 | 2008-2009
Pronouncement Date: 31-07-2014 | Result: Partly Allowed

Appeal Details

RSA Number 147521714 RSA 2010
Assessee PAN AAATT0433G
Bench Chennai
Appeal Number ITA 1475/CHNY/2010
Duration Of Justice 3 year(s) 10 month(s) 22 day(s)
Appellant ACIT, CHENNAI
Respondent M/s Madras Medical Mission, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 31-07-2014
Date Of Final Hearing 24-07-2014
Next Hearing Date 24-07-2014
Assessment Year 2008-2009
Appeal Filed On 08-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI . . . . !' # $% $& BEFORE DR. O.K.NARAYANAN VICE-PRESIDENT AND SHRI V.DURGA RAO JUDICIAL MEMBER $ ./ ITA NO.1475/MDS/2010 # ' '' / ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-III(4) CHENNAI 34. VS. THE MADRAS MEDICAL MISSION L FLOOR 4-A DR. JJ NAGAR MOGAPPAIR CHENNAI 600 037. PAN AAATT0433G ( )*/ APPELLANT) ( -)*/ RESPONDENT) )* . $ / APPELLANT BY: SHRI SAILENDRA MAMIDI IRS CIT -)* . $ / RESPONDENT BY : DR. ANITA SUMANTH ADVOCATE $ . /0 / DATE OF HEARING : 24 TH JULY 2014 12' . /0 / DATE OF PRONOUNCEMENT : 31 ST JULY 2014 / O R D E R PER DR.O.K.NARAYANAN VICE-PRESIDENT THIS APPEAL IS FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2008-09. THE APPEAL IS DIRECTED AGAINST THE - - ITA 1475/20 10 2 ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)II AT CHENNAI PASSED ON 20.5.2010. THE APPEAL ARISES OU T OF THE ASSESSMENT COMPLETED UNDER SEC.43(3) OF THE INCOME- TAX ACT 1961. 2. THIS APPEAL FOR THE ASSESSMENT YEAR 2008-09 IN I TA NO.1475/MDS/2010 FILED BY THE REVENUE WAS HEARD ALO NG WITH OTHER APPEALS FILED BY THE REVENUE FOR THE ASSESSME NT YEARS 2003-04 TO 2007-08 IN ITA NOS.1470 TO 1474/MDS/201 0. CROSS APPEALS WERE FILED BY THE ASSESSEE FOR THE A SSESSMENT YEARS 2003-04 2004-05 2006-07 AND 2008-0 9. ALL THESE APPEALS WERE DISPOSED OFF THROUGH THE COMMON ORDER PASSED BY THE TRIBUNAL ON 30 TH JULY 2012. THE APPEALS FILED BY THE REVENUE HAVE BEEN DISMISSED AND THE CROSS APPEALS F ILED BY THE ASSESSEE HAVE BEEN ALLOWED. 3. THEREAFTER THE REVENUE FILED A MISCELLANEOUS PE TITION IN M.P.NO.34/MDS/2014 WITH REFERENCE TO THE ASSESSMENT YEAR 2008-09 IN APPEAL NO.1475/MDS/2010. THE REVENUE HA S POINTED OUT AN OMISSION IN THE COMMON ORDER OF THE TRIBUNAL IN AS MUCH AS THE TRIBUNAL HAS NOT ADJUDICATED THE IS SUE OF - - ITA 1475/20 10 3 ADDITION OF ` 18 LAKHS MADE TOWARDS UNACCOUNTED CAPITATION FEES COLLECTED FOR THE COURSE OF NURSING. THE TRIBUNAL FOUND THAT THE REVENUE IS RIGHT IN POINTING OUT THAT THE SAID GROU ND RAISED BY THE REVENUE FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO.1475/MDS/2010 HAS NOT BEEN ADJUDICATED BY THE TR IBUNAL. IN ORDER TO RECTIFY THE ABOVE MISTAKE THE TRIBUNAL RE CALLED ITS COMMON ORDER DATED 30 TH JULY 2012 PARTIALLY FOR THE PURPOSE OF DECIDING THE SAID GROUND. THE RECALLING ORDER WAS PASSED BY THE TRIBUNAL ON 20 TH JUNE 2014. 4. IT IS IN THE MANNER STATED ABOVE THAT THIS APPEA L FOR THE ASSESSMENT YEAR 2008-09 FILED BY THE REVENUE IS COM ING UP FOR SECOND TIME BEFORE THE TRIBUNAL. AS ALREADY STATED THE GROUNDS OF THE ONLY ISSUE TO BE CONSIDERED IN THE PRESENT PROCEEDING IS EXTRACTED BELOW : ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 18 LAKHS TOWARDS UNACCOUNTED CAPITATION FEES FOR THE COURSE OF NURSI NG. - - ITA 1475/20 10 4 5. WE HEARD SHRI SAILENDRA MAMIDI THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E AND DR. ANITA SUMANTH THE LEARNED COUNSEL APPEARING FOR TH E ASSESSEE. 6. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE IMPUGNED ASSESSMENT YEAR THE ASSESSING OFFICER HAD OBSERVED THAT THE ASSESSEE SOCIETY HAD COLLECTED AN AMOUNT O F ` 50 000/- EACH IN THE CASE OF EVERY STUDENT ADMITTED TO THE N URSING COURSE. THE ASSESSEE HAS DESCRIBED THE SAID COLLEC TION AS REGISTRATION FEES. THE ASSESSING OFFICER FOUND THA T THIS AMOUNT IS COLLECTED IN ADDITION TO THE REGULAR FEE PAYABLE BY EACH STUDENT. IN THE COURSE OF SEARCH DEMAND DRAFTS RE CEIVED FROM RESPECTIVE STUDENTS OF NURSING COURSE VALUED AT ` 18 LAKHS WERE FOUND. THESE COLLECTIONS AMOUNTING TO ` 18 LAKHS HAD NOT BEEN ACCOUNTED BY THE ASSESSEE SOCIETY AS ON THE DATE OF SEARCH EVEN THOUGH THE AMOUNTS WERE COLLECTED MUCH EARLIER . THE ASSESSEE WAS ASKED TO FURNISH DETAILS REGARDING THE SE RECEIPTS AND TO EXPLAIN HOW THE COLLECTIONS WERE ACCOUNTED I N ITS BOOKS OF ACCOUNT. BUT ACCORDING TO THE ASSESSING AUTHORITY THE ASSESSEE FAILED TO FILE ANY DETAIL. IN THE ABOVE CIRCUMSTAN CES THE ASSESSING AUTHORITY TREATED THE SUM OF ` 18 LAKHS AS - - ITA 1475/20 10 5 UNACCOUNTED CAPITATION FEES COLLECTED BY THE ASSESS EE FOR THE IMPUGNED ASSESSMENT YEAR AGAINST THE ADMISSION TO N URSING COURSE AND ADDED THE SAME TO ITS TAXABLE INCOME. 7. IN FIRST APPEAL THE ASSESSEE EXPLAINED BEFORE T HE COMMISSIONER OF INCOME-TAX(APPEALS) THAT THE DEMAND DRAFTS FOUND IN THE COURSE OF SEARCH WERE PAYMENTS MADE BY THE APPLICANTS TOWARDS FEES AND DUES AND THE PAYMENTS W ERE ADJUSTED TOWARDS FEES IN THE CASE OF STUDENTS ADMIT TED FOR THE NURSING COURSE AND IN RESPECT OF OTHER APPLICANTS THE AMOUNTS WERE RETURNED BACK. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE AND DE LETED THE SAID ADDITION OF ` 18 LAKHS. THE PARTICULAR FINDING OF THE COMMISSIONER OF INCOME-TAX(APPEALS) IS REPRODUCED B ELOW: 36. I HAVE PERUSED THE ASST. ORDER WRITTEN SUBMISSION MADE BY THE LEARNED AR. AS THE ADMISSION PROCESS WAS NOT OVER I AM INCLINED TO AGREE WITH THE CONTENTION OF THE LEARNED AR AND DIR ECT THE AO TO DELETE THE ADDITION MADE ON THIS GROUND. - - ITA 1475/20 10 6 8. IT IS AGAINST THE ABOVE THAT THE REVENUE HAS RAI SED ITS GROUND. 9. WE CONSIDERED THE MATTER VERY CAREFULLY. IN THE COURSE OF SEARCH DEMAND DRAFTS TOTALLING TO ` 18 LAKHS WERE FOUND. THESE AMOUNTS WERE NOT RECORDED IN THE BOOKS OF ACCOUNT M AINTAINED BY THE ASSESSEE AT THE TIME OF SEARCH. NO EXPLANA TION WAS OFFERED BEFORE THE ASSESSING OFFICER. LATER ON BE FORE THE COMMISSIONER OF INCOME-TAX(APPEALS) THE EXPLANATIO N OF THE ASSESSEE WAS THAT THOSE AMOUNTS WERE COLLECTED FROM RESPECTIVE APPLICANTS AND THE AMOUNTS WOULD BE ENTE RED IN THE ACCOUNTS ONLY AFTER THE ADMISSION PROCESS WAS FINAL IZED. THE ASSESSEE ALSO EXPLAINED THAT THE AMOUNTS WERE PAID BACK TO THOSE APPLICANTS WHO WERE NOT ADMITTED TO THE NURS ING COURSE. 10. WE FIND THAT THE ABOVE EXPLANATION OF THE ASSES SEE IS DEVOID OF ANY MERIT. IT IS A FACT THAT DEMAND DRAF TS AMOUNTING TO ` 18 LAKHS WERE FOUND AT THE TIME OF SEARCH. IT IS ALSO TRUE THAT THOSE AMOUNTS WERE NOT RECORDED IN THE BOOKS OF ACC OUNT OF THE ASSESSEE. EVEN IF THOSE AMOUNTS WERE COLLECTED BY THE ASSESSEE FROM THE RESPECTIVE APPLICANTS SUBJECT TO THE - - ITA 1475/20 10 7 FINALIZATION OF ADMISSION PROCESS NOTHING PREVENTS THE ASSESSEE FROM BRINGING THOSE AMOUNTS IN ITS REGULAR BOOKS OF ACCOUNT. KEEPING SUCH A HUGE AMOUNT OF ` 18 LAKHS OUTSIDE THE BOOKS OF ACCOUNT CANNOT BE JUSTIFIED AT ALL. THE ASSESSEE C OULD HAVE ACCOUNTED THE RECEIPTS AS AND WHEN RECEIVED UNDER A PARTICULAR PROVISIONAL HEAD. WHEN THE ADMISSION PROCESS IS OV ER THE PROVISIONAL HEAD COULD BE CLOSED BY TRANSFERRING TH E AMOUNTS TO FEES AND DUES ACCOUNT IN THE CASE OF APPLICANTS ADM ITTED FOR THE NURSING COURSE AND BY RETURNING THE AMOUNTS IN RES PECT OF THE APPLICANTS NOT SELECTED FOR THE COURSE. THEREFORE THE EXPLANATION OF THE ASSESSEE THAT THE AMOUNTS WERE N OT RECORDED IN THE BOOKS OF ACCOUNT FOR THE REASON THAT THE ADM ISSION PROCESS WAS NOT COMPLETE AT THE TIME OF SEARCH IS NOT ACCEPTABLE IN LAW. THE DETAILS MUST BE PROPERLY RE CORDED ATLEAST IN A ROUGH BOOK. IT IS A CLEAR CASE THAT THE ENTIR E AMOUNT OF ` 18 LAKHS WAS BLACKED OUT OF THE RECORDS OF THE ASSESSE E. 11. IN ADDITION TO THIS THE ASSESSEE HAS NEVER EXP LAINED HOW FINALLY THIS AMOUNT WAS ADJUSTED OR ACCOUNTED IN T HE BOOKS OF ACCOUNT. THE ASSESSEE HAS NOT FURNISHED THE DETAIL S THAT HOW MUCH AMOUNTS WERE RETURNED TO THE APPLICANTS WHO W ERE NOT - - ITA 1475/20 10 8 ADMITTED TO THE NURSING COURSE. THE COMMISSIONER O F INCOME- TAX(APPEALS) ACCEPTED THE EXPLANATION OF THE ASSESS EE AND DELETED THE ADDITION ONLY ON THE GROUND THAT .. A DMISSION PROCESS WAS NOT OVER WHETHER ADMISSION PROCESS W AS COMPLETE OR NOT RECEIPT AND PAYMENTS OF MONEY SHOU LD BE ACCOUNTED IN THE BOOKS THEN AND THERE. 12. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE CONVINCED THAT THE ASSESSEE SOCIETY HAD COLLECTED C APITATION FEES FROM THE STUDENTS ADMITTED TO THE NURSING COUR SE AND THOSE CAPITATION FEES WERE KEPT OUTSIDE THE BOOKS OF THE ASSESSEE. THEREFORE THE ASSESSING OFFICER IS JUSTIFIED IN TR EATING THE SUM OF ` 18 LAKHS AS UNACCOUNTED CAPITATION FEES. 13. THE COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT JUSTIFIED IN DELETING THE SAID AMOUNT OF ` 18 LAKHS AND ACCORDINGLY HIS ORDER ON THIS ISSUE IS SET ASIDE AND THE ADDITION I S RESTORED. 14. IN RESULT THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2008-09 IS PARTLY ALLOWED. - - ITA 1475/20 10 9 15. THIS ORDER SHALL BE READ ALONG WITH OUR COMMON ORDER DATED 30 TH JULY 2012. ORDER PRONOUNCED ON THURSDAY THE 31 ST OF JULY 2014 AT CHENNAI. SD/- SD/- ( . !' ) ( . . . ) (V.DURGA RAO) (DR. O.K.NARAYANAN) # $% /JUDICIAL MEMBER /VICE-PRESIDENT /CHENNAI 4 /DATED THE 31 ST JULY 2014 MPO* 5 . #/67 87'/ /COPY TO: 1. )* /APPELLANT 2. -)* /RESPONDENT 3. 9/ () /CIT(A) 4. 9/ /CIT 5. 7:! #/# /DR 6. !' ; /GF.