Dr .Kondepi Nagarjuna, Nellore V. ITO., Ward-3, Nellore

ITA 1390/HYD/2014

• Counselvise Citation: 139022514 RSA 2014
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 11-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA B
• Assessee Lawyers: K P ANDURANGAIAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1 3 8 9/HYD/14 : ASSESSMENT YEAR 2009 - 10 ITA NO.1390/HYD/14 : ASSESSMENT YEAR 2010 - 11 DR.KONDEPI NAGARJUNA, NELLORE (PAN A CZPK 5629 A ) V/S. INCOME TAX OFFICER , WARD 3 , NELLORE (APPELLANT) (RESPONDENT) A PPELLANT BY : SHRI K. P ANDURANGAIAH RESPONDENT BY : S HRI RAMAKRISHNA B., DR DATE OF HEARING 10 .12.2014 DATE OF PRONOUNCEMENT 24.12.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT E D AGAINST A COMMON ORDER OF THE LEARNED CIT(A) GUNTUR DATED 21.5.2014, WHE R EBY HE SUSTAINED THE ADDITIONS OF R S .6,69,500 AND RS.4,90,800 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED UNDISCLOSED RECEIPTS, TO THE EXTENT OF RS.1,23,675 AND RS.1,77,480 FOR ASSESSMENT YEAR 2009 - 10 AND 2010 - 11 RESPECTIVELY. 2 . A SSESSEE IN THE PR E SEN T CASE IS AN INDIVIDUAL WHO I S PRACTICING AS A DOCTOR IN DERMAT O LOGY AT THRIVENI H OSPITAL, BRUNDAVANAM, N EL L ORE. H E IS A PARTNER PRACTICED IN TH E SAID HOSPITAL AND IS ALSO CARRYING ON HI S PROFESSION IN HIS INDIVIDUAL CAPACITY. THE RETURNS OF INCOME FOR BOTH THE YEARS UNDER CONSIDERATION WERE FIL E D BY HIM ON 14.12.2009 AND 13.10.2010 DECLARING TOTAL INCOMES OF RS .3,15,000 AND RS.5,15,000 FOR ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 RESPECTIVELY . I TA NO. 1389 - 90/H YD/20 14 DR.KONDEPI NAGARJUNA, NELLORE 2 SUBSEQU E N T LY, A SURVEY UNDER S.133A WAS CARRIED OUT AT TH E PREMISES OF M/S. THRIVENI HOSPITAL ON 8.2.2011. DURIN G T H E COU R SE OF SURVEY, I T W A S FOUND TH A T THE ASSESSEE HAS NO T MAI N TAIN E D ANY BOOKS O F ACCOUNT AND THE INCOME FOR BOTH THE YEARS UNDER CON S I D E RATION WAS DECLARED B Y HIM IN THE RETURNS OF INCOME ON ESTIMATE BASIS. CON SE QU E N T TO THE SU R VEY, NOTICES UNDER S.148 FOR BOTH THE YE A RS UNDER CONSIDERATION WERE ISSUED BY THE ASSESSING OFFICER, IN R E SPON S E TO WHICH A LETTER WAS FIL E D BY TH E ASSESSEE STAT ING THEREIN THAT THE R E TURNS ORIGINALLY FILED BY HIM COULD BE TREATED AS RETURNS FIL E D IN RESPONSE TO THE NOTICES UNDER S.148. IN TH E ASSESSMENTS COMPLETED UNDER S.143(3) READ WITH S.147, VIDE ORDER DATED 30.3.2013, THE INCOME DECLARED BY THE ASSESSEE ON ESTIM A TED BASIS IN TH E ABSENCE OF THE BOOK S OF ACCOUN T WAS NO T ACCEPTED BY THE ASSESSING OFFICER. HE ESTIMATED THE GROSS RECEIPTS OF THE M E DICAL PROFESSION OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 10 AT RS.14.94 LAKHS, TAKING THE WORKING DAYS AT 300 AND PATIENTS PER DAY AT 6 0 . THE FEE FROM THE PAT I ENTS WAS TAKEN BY HIM AT R S . 8 0 PER PATIENT FOR THE FIRST NINE MONTHS AND AT R S .90 PER PATIENT FOR THE BALANCE THREE M O NTH S . SIN C E THE RECEIPTS DISCLOSED BY TH E ASSESSEE FORM HIS PROFESSION FOR THE ASSESSME NT YEAR 2009 - 10 WERE R S .8,2 4 , 5 00, THE DIFFERENCE OF R S . 6 ,69,500 WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF TH E ASSESSEE FOR ASSESSMENT YEAR 2009 - 10, B E ING U N DI S CLO S ED PROFESSIONAL RECEIPTS. SIMILARLY, FOR ASSESSMENT YEAR 2010 - 11, THE GROSS PROFESSIONAL RECEIP T S OF THE ASSESSEE WERE ESTIMATED BY THE ASSESSING OFFICER AT R S .16.74 LAKHS, TAKING THE CHARGES PER PATIENT AT RS.90 FOR FIRST NINE MONTHS AND AT R S .100 FOR THE BALANCE THREE MONTHS. SIN C E THE GROSS PROFESSIONAL RECEIPTS DISCLOSED BY T HE ASSESSEE WERE RS.11,83,200, THE DIFFERENCE OF R S . 4,90,800 WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL IN C OM E O F TH E ASSESSEE FOR ASSESSMENT YEAR 2010 - 11, BEING UNDISCLOSED RECEIPTS . I TA NO. 1389 - 90/H YD/20 14 DR.KONDEPI NAGARJUNA, NELLORE 3 3 . TH E ADDITIONS MADE BY THE ASSESSING OFFICER ON A C COUN T O F AL LEGED UNDI S CLO S ED PROFESSIONAL RE C EIP T S FOR BOTH TH E Y E ARS UNDER CONSIDERATION WERE DISPU T ED BY THE ASSESSEE IN THE APPEALS FIELD BEFORE THE LEARNED CIT(A). AFTER CON S IDE R IN G TH E SUBMI S SION S MADE BY THE ASSESSEE AS WELL AS THE M A TERIAL AVAILABLE ON RECORD, THE LEARNED CIT(A) SUSTAINED THE ADDITION OF RS. 6,69,500 MADE BY THE ASSESSING OFFICER ON THIS ISSUE FOR THE ASSESSMENT YEAR 2009 - 10 TO THE EXTENT OF RS. 1,23,675 FOR THE FOLLO W IN G REASON S GIVEN IN PARAGRAPH N O.4. 4. 3 OF HIS IMP UGNED ORDER - 4.4.3 I HAVE PERUSED THE SUBMI S SION S MADE BY THE APPELLANT, BOTH DURING ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROC E EDIN G S, AS WELL AS THE ASSESSMENT ORDER. IT IS AN ADMITTED FACT THAT THE ONLY DOCUMENTARY E VI D ENCE RE G ARDIN G UN D ERSTAT EMENT OF PROFESSIONAL RECEIPTS IS FOR THE PERIOD 17.01.2010 TO 23.01.2010, WHEREIN THE ACTUAL RECEIPTS WERE RS.15,400/ - , WHEREAS THE AMOUNT RECORDED AS MEDICAL PRACTICE COLLECTION IN THE BOOKS WAS RS.12,552/ - . THIS SHOWS THAT THE UND E RSTATEMENT OF P R OFESSIONAL RECEIPTS IS 22.68% O F THE FIGURE RECORDED IN THE BOOKS. APART F R OM THE SAME, THERE IS NO OTHER DOCUM E N T HAVING EVIDENTIARY VALUE, BASED ON WHI C H A R E A S ONABLE ESTIMATE OF P R OFESSIONAL RECEIPTS CAN B E MADE. I HAVE PERUSED THE STATEMENT OF THE APP E LL A N T RECORDED DURING SURVEY AND THE ANSWER TO QU E STION NO.10, IS EXTREMELY VAGUE. WH E N ASKED, HOW MANY PATIENTS YOU SEE IN A DAY, HE RESPONDED TEN TO HUNDRED. BOTH OLD AND NEW. THIS IS HARDLY ANY EVIDENCE, BASED ON WHICH A REASONABLE ESTIM A TE OF PR OFESSIONAL RECEIPTS CAN B E WORKED OUT. PAYING PATIENTS ARE RE FER RED TO AS NEW PATIENTS AND TO HOLD THAT THE APPELLANT HAS ATTENDED TO 60 NEW PATIENTS PER DAY BASED ON THE ABOVE STATEMENT DOES NOT APPEAR JUST, FAIR OR REASONABLE. MOREOVER, THE ASSESSING O FFICER HAS NO T BROUGHT ANY EVIDENCE ON RECORD TO SUG G EST THAT THE APPELL A N T IS ATTENDIN G TO PATIENTS FOR 300 DAYS A Y E AR OR TO COUNTER THE APPELLANTS CLAIM THAT HE ATTENDS TO PATIENTS FOR 250 DAYS A YEAR. HOWEVER, AS MENTIONED ABOVE, THE IMP OUND ED DOCUME NT FOR THE PERIOD 07.01.2010 TO 23.01.2010 DOES IN D I C ATE SUPPRESSION OF PROFESSIONAL RECEIPTS AND IN MY VIEW, A REA S ON A BLE AND CORRECT COURSE OF ACTION WOU L D BE TO ESTIM A TE THE RECEIPTS BASED ON THE ABOVE IMPOUNDED DOCUMENTS. THIS DOCUM E N T RE VE ALS SUPPRESSION OF RECEIPTS TO TH E E X TENT OF 22.68% OF THE DISCLO S ED RECEIPTS. HOWEVER, THIS FIGURE IS ONLY FOR ONE WEEK AND IT I S POSSIBLE THAT THERE MAY BE V AR I ATIONS DURING T HE COUR S E O F TH E YEAR. KEEPIN G ALL TH E ATTENDANT I TA NO. 1389 - 90/H YD/20 14 DR.KONDEPI NAGARJUNA, NELLORE 4 CIRCUMSTANCES IN MIND, I AM OF T HE VIEW THAT A REASONABLE E STIM A TE OF SUPPRESSION OF RE C EIP T S WILL BE 15% OF THE RECEIPTS REFLECTED IN THE R ETURN OF INCOME. FOR TH E PR E SEN T ASSESSMENT YEAR, THE R E CEIP T S DISC L OSED ARE RS.8,24,500 AND 15% OF THE SAME WORKS OUT TO R S .1,23,675/ - . I AM HENCE CONFIRMING AN ADDITION OF RS .1,23,675/ - DELETING THE BALANCE OF R S .5,45,825/ - . THE APPEAL IN RESPECT OF GROUN D NO.3 IS PARTLY ALLOWED. 4 . ADOPTIN G THE SAME BASIS AS TAKEN IN ASSESSMENT YEAR 2009 - 10, THE ADDITION OF R S . 4,90,800 MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2010 - 11 WAS RESTRICTED BY THE LEARNED CIT(A) TO RS.1,77,480 BEIN G 15% OF TH E R E CEIP T S DISCLO S ED BY THE ASSESSEE. 5 . STILL AGGRIEVED BY THE O R DERS OF THE LEARNED CIT(A) ON THIS ISSUE, THE ASSESSEE HA S PREFERRED TH E S E APPEAL S B E FORE THE TRIBUNAL. 6 . WE HAVE HEARD THE ARGUMENTS OF BOTH THE SI D ES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS NOTED BY THE LEARNED CIT(A) HIMSELF IN HIS IMPU G N ED ORDERS, THERE WAS NO DOCUM E N T ARY EVIDENCE FOUND DURI N G TH E COU R SE OF SURVEY ON THE BASIS WHICH OF THE REASONABLE ESTIMATE OF THE PRO F ESSIONAL RECEIPTS OF THE ASSESSEE COULD BE MADE, EXCEPT THE FACT THAT THE AMOUNT RECORDED IN THE BOOKS OF THE ASSESSEE AS MEDICAL PRACTICE COLLECTION FOR THE PERIOD FROM 17.1.2010 TO 22.1.2010 WAS RS.12,552 AS AGAINST ACTUAL RE C EIP T S OF R S .15,400. ACCORDING TO THE LEARNED CIT(A), THE UNDER - STATEMENT OF PROFESSIONAL RECEIPTS THU S WAS RS.22.68% AND ON THIS BASIS, HE ESTIMATED THE SUPPRESSION OF RECEIPTS OF TH E ASSESSEE AT 15% OF THE RECEIPTS DISCLOSE D AND SUSTAINED ADDITIONS TO THAT EXTENT. AFTER HAVING CON SIDERED THE RIVAL SUBMI S SION S AND PERUS ED THE RELEVANT MATERIAL ON RECORD, WE ARE UNABLE TO ACCEPT THE BASIS ADOPTED BY THE LEARNED CIT(A) TO ESTIM A TE THE SUPPRESSION OF RECEIPTS BY THE ASSESSEE TO BE FAIR AND I TA NO. 1389 - 90/H YD/20 14 DR.KONDEPI NAGARJUNA, NELLORE 5 REASONABLE. FIRS T OF ALL, THE UNDER - STATEMENT OF PROFESSIONAL RECEIPTS WORKED OUT BY THE LEARNED CIT(A) AT 22.68% W AS STATED TO BE BASED ON ACTUAL RECEIP T S AND RECEIPTS RECORDE D BY THE ASSESSEE IN THE BOOKS O F ACCOUNT, WHEREAS , ADMITTEDLY, THERE WERE NO BOOKS OF ACCOUNT STATED TO BE REGULARLY MAIN T AIN E D BY THE ASSESSEE FOR THE YEARS UNDER CONSIDERATION . MOREOVER, ON TH E BASIS OF SUCH ALL E GED UN D ERSTATEM E NT OF PROFESSIONAL RECEIPTS FOR THE PERI OD OF ONE WEEK, IT CANNOT B E PRESUMED THAT THE ASSESSEE H A S SUPPRESSED THE RECEIPTS CONSI S TENTLY TO THAT EXTENT, DURING THE Y E ARS UN D ER CONSIDERATION , ESPECIALLY WHEN THERE WAS NOTHING ELSE FOUND DURING THE COURSE OF SURVEY TO SHOW ANY SUCH UN D ERSTATEMEN T OF PROFESSIONAL REC E IP T S BY THE ASSESSEE. IT IS PERTIN EN T TO NOTE HERE THAT THE NET PROFIT OF RS.3,50,000 AND RS.5,15,000 WAS DISCLO S ED BY THE ASSESSEE ON RECEIPTS OF R S .8,24,500 AND R S .11,83,200 FOR ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 RESPECTIVELY, GIVING NET PROFIT RATE OF ABOUT 45% A N D KEEPING IN VIEW THE SAME AS WELL AS OTHER FACTS OF THE CA S E, WE ARE OF THE VIEW THAT TH E ASSESSEE CANNOT BE ALLEGED TO HAVE INDULGED IN SUPPRESSION OF RECEIPTS, ESPECIALLY WHEN NO EVIDENCE WAS FOUND EVEN DURING THE COU R SE OF SURV E Y OPERATIONS TO SUPPO R T AND SUBSTANTIATE SUCH AN A LLEGATION. AS SUCH, CON S I D ERING ALL THE FACTS OF THE CA S E, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS NO T JUSTIFIED IN SUSTAINING EVEN PARTLY, THE ADDITIONS MADE BY THE ASSESSING OFFICER FOR THE YE A RS UNDER A PPEAL ON ACCOUNT OF ALL E GED SUPPRESSION O F PROFESSIONAL RECEIPTS BY THE ASSESSEE. WE ACCORDINGLY DELETE EVEN THE ADDITIONS SUSTAINED BY THE CIT(A) ON THIS COUNT , IN THE YEARS UNDER APPEAL, AND ALLOW THE G R OUNDS OF THE ASSESSEE IN TH E S E APPEAL S . I TA NO. 1389 - 90/H YD/20 14 DR.KONDEPI NAGARJUNA, NELLORE 6 7. IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE ALLOWED ORDER PRONOUNCED IN THE COURT ON 24 TH DECEMBER, 2014 SD/ - SD/ - ( ASHA VIJAYARAGHAVAN ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 24 TH DECEMBER, 2014 COPY FORWARDED TO: 1. DR.KONDEPI NAGARJUNA, C/O. SHRI K.PANDU RANGAIAH, ADVOCATE, D.NO.5 - 1 - 679, SRIRANGARAJAPURAM, STONEHOUSEPET, NELLORE 524002 2 . INCOME TAX OFFICER WARD 3, NELLORE. 3. COMMISSIONER OF INCOME - TAX(APPEALS) GUNTUR 4. COMMISSIONER OF INCOME - TAX, GUNTUR 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S