ANIL HOSPITAL GENETIC CLINIC V. COMMISSIONER OF INCOME TAX JAI

ITA/164/2002

AI Insights

The case involves Anil Hospital Genetic Clinic, the appellant, contesting a decision by the ITAT which reversed the CIT(A)'s allowance of an investment benefit under Section 32A of the Income Tax Act, 1961. The dispute arose after a search at the assessee's premises led to the discovery of unrecorded receipts, which were subsequently admitted by Dr. Amarchand, a partner in the firm. The CIT(A) had accepted the assessee's claim for investment allowance, but the ITAT reversed this decision, leading to the present appeal. The High Court of Rajasthan, after considering precedents and the specifics of the case, sided with the assessee, reinstating the CIT(A)'s decision.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 684672 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 10-01-2017
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax vs. Trinity Hospital, Commissioner of Income Tax vs. Dr. S. Surender Reddy
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R B MATHUR
• Assessee Lawyers: SANJAY JHANWAR
• Keywords: Income tax appeal; Investment allowance; Search and seizure; Unrecorded receipts; Laprocators; Steam Sterilizer
• Section: 32A; 245(1)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 164 / 2002 Anil Hospital Genetic Clinic ----Appellant Versus Commissioner Of Income Tax Jai ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sanjay Jhanwar For Respondent(s) : Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHUR Judgment 10/01/2017 1. By way of this appeal, the assessee has assailed the judgment and order of the Tribunal whereby Tribunal has reversed the finding of the CIT(A) whereby CIT(A) has allowed the appeal preferred by the assessee. 2. While admitting the matter, this court has not framed substantial question of law, therefore, we are framing two questions for consideration questions No.1 & 4 which reads as under:- “1. Whether on the facts and circumstances of the case, the ld. ITAT was within its jurisdiction u/s 245(1) of the Act to deal with and decide an issue, which was not before it by way of either grounds of appeal or arguments of any of the parties? 4. Whether on the facts and circumstances of the case, the ld. ITAT was correct in denying the benefit of investment allowance u/s 32A of the Act in respect of “Laprocators and & Steam Sterilizer” by holding (2 of 4) [ITA-164/2002] that the appellant do not satisfy the conditions laid down u/s 32A of the Act?” 3. The facts of the case are that The assessee firm carries on the profession of detection of pathogenic funggi in tissues, genetic assessments requiring flourescence microscopy, detection of outsperm antibodies and examination of issue defects. 4. A search was conducted at the business premises of the assessess and at the residence of its partners on 13/9/88. Besides cash and jewellery the books of accounts for the period upto the date of search were seized. During the course of search statement of Dr. Amarchand who is head of the family was recorded. In his statement Dr. Amarchand admitted that receipts to the extent of 25% are not recorded in the books of the assessee firm. Subsequently a joint petition dated 29/11/88 was filed with the Dy. Director of Investigation wherein the unrecorded receipts for the assessment year under consideration were quantified at Rs. 1,35,485/-. However in the computation of income the assessee has shown the unrecorded receipts at Rs. 1,37,196/-. It is explained that the slight variation is on account of actual calculations. 5. The assessee has declared gross receipts from Genetic Clinic at Rs. 5,87,037/-. A scrutiny of the details furnished revealed that the average receipt for the post search period has declined considerably in comparison to the receipts for the period before search. The details in this regard are as under:- (3 of 4) [ITA-164/2002] Period Amount as per books Amount surrendere d Total Average From 1.7.1987 to 12.9.1988 4,11,587/- 1,37,196/- 5,48,783/- 37,847/- From 13.9.1988 to 31.3.1989 (6 months) 1,75,450/- Nil 175,450/- 26,992/- 6. While the average monthly receipts for the period before search amounted to Rs. 37,847/- the average monthly receipts for the post search period has declined to Rs. 26,992/. The assessee was asked to explain the reason for decline in receipts for the post search period. 7. The CIT(A) while considering the case of the assessee has given cogent reasons while considering Section 32A(2)(b)(ii) of the Income Tax Act, 1961 and held as under:- Section 32A(2)(b)(ii) “in any other industrial undertaking for the purpose of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Scheduled.” 8. However, the tribunal while considering the same has not followed the decision and has reversed the findings of the CIT(A). 9. Counsel for the appellant Mr. Jhanwar has relied upon the decision in Commissioner of Income Tax vs. Trinity Hospital reported in (1997) 225 ITR 0178. Subsequently, the same judgment was also followed by the Hon’ble High Court or other High Court one of them being Andhra Pradesh High Court in (2000) 243 ITR 0110 Commissioner of Income Tax (4 of 4) [ITA-164/2002] vs. Dr. S. Surender Reddy. 10. Counsel for the respondent Mr. Mathur has contended that in view of the facts and circumstances, the view taken by the tribunal is just and proper. No interference is called for. 11. We have heard counsel for the parties. 12. Taking into consideration the fact that view taken by this court in Trinity Hospital (supra) has been rightly followed by the CIT(A), in our view, the tribunal has committed serious error in reversing the finding of the CIT(A). 13. In that view of the matter, both the issues are required to be answered in favour of the assessee and against the Department. 14. The appeal stands allowed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. Brijesh 6. "