DR. BABU LAL BARALA, JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 206/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8079 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 09-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA JCIT DHK
• Assessee Lawyers: PRERNA
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause; Set aside
• Section: 40A(3); 143(3); 250

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 206/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2012-13 DR. BABU LAL BARALA, PROP.- M/S BARALA HOSPITAL, 1, KACHOLIYA ROAD, CHOMU. CUKE VS. INCOME TAX OFFICER, WARD 7(1), JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: ACAPB 3039 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SMT. PRERNA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROSHANTA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16/04/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 15/07/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE EX PARTE ORDER OF LD.CIT(A)-3, JAIPUR DATED 18/12/2017 FOR THE A.Y. 2012-13 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT), WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID. CIT(A) ERRED IN ADJUDICATING THE APPEAL, WITHOUT PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD. IT IS THEREFORE PRAYED THAT ORDER PASSED BY LD. CIT(A) IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND DESERVES TO BE HELD BAD IN LAW. ITA 206/JP/2018 DR. BABU LAL BARALA VS ITO 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ID.A0 IN REJECTING THE BOOKS OF ACCOUNT OF ASSESSEE ULS 145(3) ON THE GROUND THAT THE INCOME ADMITTED BY ASSESSEE IN THE STATEMENTS RECORDED ON OATH DURING THE COURSE OF SURVEY WAS NOT DECLARED IN THE RETURN OF INCOME FILED BY COMPLETELY IGNORING THE SETTLED LAW THAT NO STATEMENTS CAN BE RECORDED ON OATH DURING SURVEY AND IF RECORDED IN DEFIANCE OF THIS SETTLED LAW, CANNOT BE RELIED UPON FOR THE PURPOSE OF COMPLETING ASSESSMENT. APPELLANT PRAYS THAT THE ADDITIONS BASED UPON SUCH STATEMENTS DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ID.AO IN INVOKING THE PROVISIONS OF SECTION 145(3) OF INCOME TAX ACT, 1961 ARBITRARILY AND WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD MAINTAINED PROPER BOOKS OF ACCOUNT. 3.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIRMING THE REJECTION OF BOOKS OF ACCOUNT BY COMPLETELY IGNORING THE FACT THAT THE ASSESSEE HAS DULY MAINTAINED PROPER BOOKS OF ACCOUNT WHICH ARE SUBJECT TO AUDIT AND NO DEFECT WHATSOEVER HAS BEEN POINTED OUT IN THE AUDIT REPORT. THE ASSESSEE HAS MAINTAINED DAY TO DAY CASH BOOK AS PER RULE 6F OF INCOME TAX RULES,1962. THEREFORE, THE REJECTION OF THE BOOKS OF ACCOUNT OF ASSESSEE DESERVES TO BE HELD BAD IN LAW. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF LD. AO IN HYPOTHETICALLY ESTIMATING THE ADMISSION FEE OF ASSESSEE AT RS. 4,65,000/- (THOUGH NO SEPARATE ADDITION HAS BEEN MADE ON THIS ACCOUNT) WITHOUT ANY BASIS AND MERELY ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS. 4.1 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ESTIMATION OF ADMISSION FEES MADE BY LD.A0 AT RS.4,65,000/- BY IGNORING THE FACT THAT THE ASSESSEE DOES NOT CHARGE SEPARATELY FOR ADMISSION FEE, RATHER THE SAME IS INCLUDED IN THE TOTAL FEE CHARGED BY ASSESSEE, WHICH THE ASSESSEE HAS TERMED AS 'PACKAGE SYSTEM', THEREFORE, THE ESTIMATION OF ADMISSION FEE MERELY ON THE BASIS OF PRESUMPTION WOULD AMOUNT TO TAXING THE SAME INCOME TWICE. THEREFORE, SUCH ESTIMATION DESERVES TO BE HELD BAD IN LAW. ITA 206/JP/2018 DR. BABU LAL BARALA VS ITO 3 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE' LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD.AO IN ARBITRARILY MAKING LUMP- SUM ADDITION OF RS. 10 LACS (INCLUDING ADDITION OF RS. 4,65,000/- ON ACCOUNT OF ADMISSION FEE) ON ESTIMATE BASIS ON ACCOUNT OF ALLEGED DIFFERENCE IN TOTAL CASH RECEIPTS AND ALLEGED NON DISCLOSURE OF COMPLETE RECEIPTS FROM ALL OT PATIENTS IN THE BOOKS OF ACCOUNT MAINTAINED BY ASSESSEE. THEREFORE, THE ADDITION OF RS. 10 LACS DESERVES TO BE DELETED. (THOUGH, THIS ADDITION HAS NOT BEEN CONSIDERED WHILE COMPUTING THE TOTAL ASSESSED INCOME.) 5.1 THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS RECORDED COMPLETE RECEIPTS AND EXPENDITURE IN THE CASH BOOK WHICH DULY STAND RECORDED IN THE BOOKS OF ACCOUNT OF ASSESSEE AND MORE THAN 95% ENTRIES STOOD VERIFIED BY THE LD. AO DURING ASSESSMENT PROCEEDINGS, THUS THE ADDITION OF RS. 10 LACS DESERVES TO BE DELETED. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 19,60,067/- MADE BY LD.AO U/S 40A(3) OF THE INCOME TAX ACT, 1961 BY COMPLETELY IGNORING THE WELL ESTABLISHED LAW THAT ONCE THE BOOKS OF ACCOUNT OF ASSESSEE HAVE BEEN REJECTED U/S 145(3), THE SAME BOOKS OF ACCOUNT CANNOT BE RELIED UPON FOR THE PURPOSE OF MAKING FURTHER ADDITIONS/DISALLOWANCES. THUS, THE ADDITION OF RS. 19,60,067/- DESERVES TO BE DELETED. 6.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIRMING THE ADDITION MADE BY LD.A0 BY IGNORING THE SETTLED LAW THAT THE HAVING REJECTED THE BOOKS OF ACCOUNT OF ASSESSEE U/S 145(3), THE ASSESSING OFFICER IS REQUIRED TO MAKE BEST JUDGMENT ASSESSMENT BY ESTIMATING THE INCOME OF ASSESSEE AND IT IS NOT OPEN TO THE AO TO MAKE ANY OTHER DISALLOWANCE / ADDITION ON THE SAME. 6.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIRMING THE ACTION OF ID.AO IN OBSERVING THAT THE ASSESSEE HAS MADE CASH PAYMENTS OF RS. 19,60,067/- IN VIOLATION OF SECTION 40A(3). IT IS PRAYED THAT SUM OF RS. 10,92,000/- WAS GIVEN AS ADVANCE AGAINST PURCHASE OF PROPERTY TO DR. U.S. BENIWAL AND DR. GAMBHIR SINGH AND WAS SHOWN UNDER THE HEAD 'LOANS AND ADVANCES' AND THE REMAINING AMOUNT WAS PAID ON VARIOUS DATES IN AMOUNTS ITA 206/JP/2018 DR. BABU LAL BARALA VS ITO 4 BELOW RS. 20,000/- THUS, THE PROVISIONS OF SECTION 40A(3) WERE NOT ATTRACTED. 6.3 WITHOUT PREJUDICE TO GROUNDS OF APPEAL NOS. 4 TO 4.2 AND IN THE ALTERNATIVE THE LD. CIT(A) HAS FURTHER ERRED IN CONFIRMING THE ADDITION OF RS. 10,92,000/- ULS 40A(3) BY NOT CONSIDERING THE FACT THESE ARE ADVANCES GIVEN AGAINST THE PROPOSED PURCHASES OF LAND AND NO EXPENDITURE ON THIS SCORE WAS CLAIMED THUS THE DISALLOWANCE MADE AT RS. 10,92,000/- BEING NOT AN EXPENDITURE DESERVES TO BE DELETED. 7. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE, AMEND OR ABANDON THE GROUND OF THIS APPEAL AT THE TIME OR BEFORE THE ACTUAL HEARING OF THE CASE. 2. I HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE VARIOUS ADDITIONS MADE BY THE A.O. WAS CONFIRMED BY THE LD. CIT(A) BY DECIDING THE APPEAL EX PARTE. EVEN THOUGH, THE LD. CIT(A) HAS GIVEN OPPORTUNITY TO THE ASSESSEE BUT DUE TO VARIOUS REASONS, THE ASSESSEE COULD NOT APPEAR BEFORE THE LD. CIT(A). THE REASONS WERE EXPLAINED BEFORE ME WHICH I FIND TO BE REASONABLE CAUSE FOR NON-APPEARANCE BEFORE THE LD. CIT(A). I ALSO FOUND THAT THE LD. CIT(A) HAS NOT ADJUDICATED THE ISSUES ON MERITS. IN TERMS OF PROVISIONS OF SUB-SECTION (6) OF SECTION 250 OF THE ACT, THE ORDER OF THE LD. CIT(A) DISPOSING OFF THE APPEAL OF ASSESSEE SHOULD BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REASON FOR THE DECISION. THE ORDER SO PASSED BY THE LD. CIT(A) IS NOT IN TERMS OF SECTION 250(6) OF THE ACT, THEREFORE, IN THE SUBSTANTIAL ITA 206/JP/2018 DR. BABU LAL BARALA VS ITO 5 INTEREST OF JUSTICE, I SET ASIDE THE MATTER TO THE FILE OF THE LD. CIT(A) FOR DECIDING AFRESH AFTER GIVING DUE AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO APPEAR BEFORE THE LD. CIT(A) WITHIN THE PERIOD OF 2 MONTHS FROM THE DATE OF RECEIPT OF THIS ORDER. IN CASE OF ANY FAILURE ON THE PART OF THE ASSESSEE, THE LD. CIT(A) IS AT LIBERTY TO DECIDE THE ISSUE AS PER MATERIAL AVAILABLE ON RECORD. NEEDLESS TO SAY, THE ORDER SHOULD BE PASSED WITHIN THE PROVISIONS OF SECTION 250(6) OF THE ACT. 3. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY 2019 SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 15 TH JULY, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANTS- DR. BABU LAL BARALA, CHOMU. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., WARD 7(1), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 206/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR