Dr. Rajesh Babulal Patel, Patan V. The Income Tax Officer, Ward-1, Patan

ITA 2118/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5968 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR VARMA
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained cash credit; Principle of natural justice

Judgement Text

SMC-ITA NO. 2118/AHD/2014 DR. RAJESH BABULAL PATEL VS. ITO ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ] ITA NO. 2118/AHD/2014 ASSESSMENT YEAR : 2009-10 DR. RAJESH BABULAL PATEL ............ APPELLANT PROP. OF KEVAL PATHOLOGY LABORATORY, SUBHADRANAGAR, AT & POST - PATAN [PAN : ABZPP 0691 A] VS. INCOME-TAX OFFICER .......................RESPONDENT WARD-1, PATAN APPEARANCES BY: SN DIVATIA FOR THE APPELLANT SUMIT KUMAR VARMA FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 01.12.2017 DATE OF PRONOUNCING THE ORDER : 27.02.2018 O R D E R 1. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGAINST LEARNED CIT(A)S ORDER DATED 10 TH APRIL 2014, FOR THE ASSESSMENT YEAR 2009-10. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S:- 1.1 THE ORDER PASSED U/S.250 ON 10.04.2014 FOR A. Y.2009-10 BY CIT(A), GNR, CONFIRMING ADDITIONS/DISALLOWANCES MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FUR NISHED AND THE EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AN D OR ON FACTS IN CONFIRMING THE FOLLOWING ADDITIONS/DISALLOWANCES: A) CASH PAYMENT TO UGVCL RS. 97,233/- B) CASH CREDIT U/S.68 RS.38,000/- C) ESTIMATED GROSS RECEIPTS RS.3,25,566/- 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE ID. CIT(A) HAS GRIEVOUSLY ERRED CONFIRMING ABOVE SAID A DDITIONS/DISALLOWANCES. SMC-ITA NO. 2118/AHD/2014 DR. RAJESH BABULAL PATEL VS. ITO ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 5 3.1 THE ID.CIT(A) HAS GRIEVOUSLY ERRED IN REJECTING THE COPY OF CASE REGISTER PRODUCED DURING THE APPELLATE PROCEEDINGS AND THERE BY CONFIRMING THE REJECTION OF THE BOOKS RESULT MADE BY AO. 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , BOTH THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT THE APPELLANT HAD NOT MA INTAINED CASE REGISTER AND THEREBY REJECTING THE COPY THEREOF PRODUCED DURING THE APPELLATE PROCEEDINGS. 3.3 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN CONF IRMING THE ESTIMATION OF MEDICAL RECEIPTS AT RS.50 LACS AND APPLYING NET PRO FIT OF 30% AND THEREBY MAKING AN ADDITION OF RS.3,25,566/-/- 3. AS EVIDENT FROM THE ABOVE GROUNDS OF APPEAL, GRI EVANCE OF THE ASSESSEE, IN SUBSTANCE, IS AGAINST LEARNED CIT(A) CONFIRMING (A) THE DISALLOWANCE OF ELECTRICITY PAYMENTS AGGREGATING TO RS.97,233/-; (B) THE CASH C REDIT ADDITION OF RS.38,000/-; AND (C) PROFESSIONAL INCOME AT RS.3,25,566/-. I WILL T AKE UP THESE THREE ISSUES ONE BY ONE. 4. SO FAR AS DISALLOWANCE OF RS.97,233/- ON ACCOUNT OF CASH PAYMENT OF ELECTRICITY BILLS IS CONCERNED, THE RELEVANT FACTS ARE LIKE THIS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE HAS MADE CASH PAYMENTS OF RS.97,233/-, FOR ELECTRIC ITY BILLS, TO UTTAR GUJARAT VIJ CO. LTD. AS THESE PAYMENTS WERE IN VIOLATION OF SECTI ON 40A(3), THE ASSESSING OFFICER DISALLOWED THE SAME. AGGRIEVED, ASSESSEE CARRIED T HE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NO T SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. 5. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE IS SUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY A THIRD MEMBER DECISION OF THIS TRIBUNAL IN THE CASE OF ARUNA RANI VS. ITO [(2017) 82 TAXMANN.COM 391 (JPR-TM)]. I HAVE ALSO NOTED THAT UTTAR GUJARAT VIJ CO. LTD, BEING A WHOLLY OWNED SUBSIDIAR Y OF PSU NAMELY GUJARAT URJA VIKAS NIGAM LTD, IS A PUBLIC SECTOR UNDERTAKING WHO LLY OWNED BY GUJARAT GOVERNMENT. LEARNED DEPARTMENTAL REPRESENTATIVES, N EVERTHELESS, DUTIFULLY RELIED UPON THE STAND OF THE AUTHORITIES BELOW. 6. RESPECTFULLY FOLLOWING ORDERS OF THE TRIBUNAL, I N THE CASE OF ARUNA RANI (SUPRA) AND BY SEVERAL AHMEDABAD BENCHES ON THE SAM E LINES, I UPHOLD GRIEVANCE OF THE ASSESSEE. THE DISALLOWANCE OF RS.97,233/- I S, ACCORDINGLY, DELETED. 7. AS REGARDS THE ADDITIONS OF RS.19,000/- EACH IN RESPECT OF UNEXPLAINED CASH CREDITS, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS . THE ASSESSEE CLAIMED TO HAVE BORROWED RS.19,000/- EACH FROM SMT. SARMADABEN PATE L AND SHRI KESHAVLAL PATEL. EVEN THOUGH THE ASSESSEE HAD FILED COPIES OF ACCOUN T OF THESE PARTIES, THE ASSESSING OFFICER ADDED THE SAME AS UNEXPLAINED CAS H CREDITS, ON THE GROUND THAT THE ASSESSEE HAS NOT SUBMITTED ANY SUPPORTING EVIDE NCES. IN APPEAL, IT WAS EXPLAINED BY THE ASSESSEE THAT THESE PERSONS ARE HI S CLOSE RELATIVES AUNT AND GRANDFATHER RESPECTIVELY, THE ASSESSEE FILED CONFIR MATION FROM THESE PARTIES AND SUBMITTED THAT THE ASSESSEE WAS NEVER ASKED TO FURN ISH ANY FURTHER DETAILS AT THE ASSESSMENT STAGE. HOWEVER, THE CIT(A) CONFIRMED TH E ADDITION AND OBSERVED THAT SMC-ITA NO. 2118/AHD/2014 DR. RAJESH BABULAL PATEL VS. ITO ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 5 THE ASSESSEE HAS ONLY FURNISHED CONFIRMATIONS AND N O FURTHER DETAILS HAVE BEEN FILED. THE ASSESSEE IS NOT SATISFIED AND IS IN APPEAL BEFO RE ME. 8. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLIC ABLE LEGAL POSITION. 9. I FIND THAT, AS EVIDENT FROM THE STATEMENT OF FA CTS BEFORE THE CIT(A) AS WELL, THAT THE ASSESSEE HAD DULY FILED CONFIRMATIONS FROM HIS TWO RELATIVES NAMELY SHRI KESHAVLAL PATEL (GRANDFATHER) AND SMT NARMADABEN PA TEL (AUNT) AND THE ASSESSING OFFICER DID NOT PUT ANY FURTHER QUESTIONS TO HIM DU RING THE ASSESSMENT PROCEEDINGS. LOOKING TO THESE FACTS AND AS THESE ARE SMALL AMOUN TS BORROWED FROM CLOSE RELATIVES, I AM INCLINED TO ACCEPT EXPLANATIONS OF THE ASSESSEE. I DO NOT THINK IT WAS A FIT CASE FOR CONFIRMING THE ADDITIONS OF RS.38,000/ - AS UNEXPLAINED CASH CREDITS. I, THEREFORE, DELETE THE SAME. 10. THAT TAKES ME TO THE LAST OF THE DISPUTED ADDIT ION IN THIS CASE, I.E. RS.3,25,566/- ON ACCOUNT OF PROFESSIONAL INCOME. 11. AS FAR AS THIS ADDITION IS CONCERNED, THE RELEV ANT MATERIAL FACTS ARE LIKE THIS. WHEN ASSESSEE, A DOCTOR, WAS ASKED WHETHER THE ASSE SSEE IS MAINTAINING ANY BOOKS OF ACCOUNTS UNDER RULE 6F, THE ASSESSEE SUBMI TTED THAT AS PER PERSONAL DISCUSSIONS AND ALSO DURING SURVEY, WE INFORMED THA T THE REGISTER WAS MAINTAINED IN COMPUTER BUT DUE TO TECHNICAL PROBLEMS, WE COULD NO T ACCESS DETAILS. THE ASSESSING OFFICER ALSO NOTED THAT, GOING BY ASSESSE ES OWN ADMISSION, THE ASSESSEE HAD MADE CASH PAYMENTS OF RS.20,84,615/-. IT WAS I N THIS BACKDROP THAT THE ASSESSING OFFICER PROCEEDED TO MAKE AN ADDITION OF RS.3,25,566/- BY OBSERVING AS FOLLOWS:- 9. IN VIEW OF THE ABOVE FACTS AND AS THE ASSESSEE IS MEDICAL PRACTITIONER AND AS REQUIRED, THE ASSESSEE HAD NOT MAINTAINED THE BO OKS OF ACCOUNT AS PER RULE 6F(1)(2) & (3), I DO NOT ACCEPT THE BOOK RESUL T SHOWN BY THE ASSESSEE AND AS THE ASSESSEE SUBMITTED DETAILS OF CASH OF RS .28,64,615/- AS MENTIONED ABOVE OUT OF TOTAL RECEIPTS OF RS.45,62,0 16/- IS USED FOR OTHER PURPOSE. FURTHER THE ASSESSEE IS MEDICAL PRACTITION ER AND HAVING LABORATORY IN THE MIDDLE OF THE CENTRE OF PATAN AND MOST OF THE L EADING MEDICAL PRACTITIONERS OF PATAN CITY ARE SENDING THEIR PATIENT TO THIS LAB ORATORY AND THEREFORE, THE RECEIPTS SHOWN BY THE ASSESSEE IS NOT ACCEPTABLE AN D ALSO IN DETAIL AS DISCUSSED ABOVE THE DIFFERENT ASPECTS FOR NOT ACCEP TING THE BOOK RESULT, I ESTIMATE THE TOTAL RECEIPT AT RS.50,00,000/- AND CO NSIDERING NET PROFIT AT AN AVERAGE RATE IF 30% OF THE SAID RECEIPTS, THE NET P ROFIT COMES TO RS.15,00,000/- AS AGAINST WHICH THE ASSESSEE HAD SH OWN N.P. OF RS.11,74,434/- HENCE THERE IS DIFFERENCE OF RS.3,25 ,566/- (RS.15,00,000 - RS.11,74,434) WHICH THE ASSESSEE SHOWN UNDER RECEIP TS AND THEREFORE AN AMOUNT OF RS.3,25,566/- IS ADDED TO THE TOTAL INCOM E ON THIS ISSUE AND PENALTY U/S. 274 R.W.S. 271(1)(C) OF THE ACT INITIATED SEPA RATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 12. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A), IN HIS DETAIL ED ANALYSIS, OBSERVED AS FOLLOWS:- SMC-ITA NO. 2118/AHD/2014 DR. RAJESH BABULAL PATEL VS. ITO ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 5 9.5 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSES SMENT ORDER, SUBMISSION MADE BY THE APPELLANT, REMAND REPORT AND THE REJOIN DER FILED BY THE APPELLANT. ON THE ISSUE, I FIND THAT AO HAD SPECIFICALLY ASKED THE APPELLANT DURING THE REMAND PROCEEDINGS TO BE PRESENT BEFORE HIM ALONG W ITH THE PERSON/AGENCY PERSONNEL IN GETTING THE DATA ACCESSED. BUT, APPELL ANT DID NOT ATTEND BEFORE HIM NOR ANY PERSONNEL ATTENDED BEFORE THE AO. THERE FORE, THE AO IS OF THE VIEW THAT THE APPELLANT IS MAKING UP STORIES OF COM PUTER VIRUS AND DID NOT PRESENT HIMSELF BEFORE THE AO. THE AO IS OF THE OPI NION THAT APPELLANT HAS DURING THE APPELLATE PROCEEDINGS MADE UP THE ENTIR E CASE REGISTER TO BE PRODUCED DURING THE APPELLATE PROCEEDINGS TO MATCH HIS CASH CREDITS IN THE BANKS AND TO SUPPRESS THE TURNOVER. THE APPELLANT HAS CONTENDED BEFORE ME THAT THE AO H AS FAILED TO APPRECIATE THAT WHEN THE HARD DISK WAS IMPOUNDED BY SURVEY PAR TY AND COPY FROM SUCH RECORD WAS REQUIRED THE PRIMARY BURDEN LIE UPON THE AO TO GET IT OPENED AND FURNISH COPY TO THE APPELLATE AUTHORITY. SECONDLY, WHEN THE IMPOUNDED DISK WAS TO BE OPENED BY THE AGENCY OF THE APPELLANT, THE AO SHOULD HAVE ADDRESSED A LETTER TO THE APPELLANT AND GIVEN WRIT TEN AUTHORITY TO THE AGENCY BECAUSE THE AGENCY CONTACTED BY THE AR OF THE APPEL LANT REFUSED TO OPEN IT WITHOUT SUCH WRITTEN LETTER AND HE WAS BUSY. FURTH ER, THE APPELLANT HAS CONTENDED THAT THE AO SHOULD HAVE CONTACTED THE COM PUTER AGENCY WHO IS LOOKING AFTER THE MAINTENANCE AND OTHER WORK OF THE ENTIRE DEPARTMENT AND THIRDLY THE AO SHOULD HAVE EXAMINED THE CASE REGIST ER AS PRODUCED BEFORE HIM AND POINTED OUT ALLEGED MADE UP ENTRIES. THE APPELLANT CONTENTS THAT THE AO HAS SOUGHT TO TAKE ADVANTAGE OF HIS OWN INABILIT Y TO GET THE DISC OPENED. AFTER CONSIDERING THE ENTIRE FACTS, I FIND THAT THE AO HAD DURING THE REMAND PROCEEDINGS SPECIFICALLY WRITTEN A LETTER NO.ITO WD .I/PTN/REMAND REPORT / RBP/2013-14 DATED 21/02/2014 SPECIFICALLY REQUESTIN G THE APPELLANT TO REMAIN PRESENT IN HIS OFFICE ON 28/02/2014 ALONG WITH THE PERSON/AGENCY PERSONNEL WHO HELPED THE APPELLANT IN GETTING THE DATA ACCESS ED AND FILES OPENED. BUT, APPELLANT HAS NOT COMPLIED TO THE SPECIFIC DIRECTIO NS OF THE AO. IT WAS THE APPELLANT WHO HAS TO OPEN THE DISC TO PROVE HIS CAS E, WHICH THE APPELLANT HAS TOTALLY FAILED AND HAS ALSO NOT COOPERATED WITH THE AO. THE APPELLANT DURING THE APPELLATE PROCEEDINGS CANNOT TAKE THE PLEA THAT HE WAS NOT GRANTED OPPORTUNITY AS I FIND THAT SUCH OPPORTUNITY HAS BEE N GRANTED TO THE APPELLANT BY THE AO DURING THE REMAND PROCEEDINGS. MOREOVER, THE ONUS OF BURDEN LIES UPON THE APPELLANT TO OPEN THE DISC AND TO SUBMIT T HE REQUIRED DETAILS CALLED FOR BY THE AO. IN ABSENCE OF ANY EVIDENCES PRODUCED BY THE APPELLANT BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AS WELL AS DURING REMAND PROCEEDINGS AND CONSIDERING THE COMMENTS OF THE AO IN THE REPORT SUBMITTED, THE ADDITION MADE BY THE AO OF RS.3.25.566/- IS HER EBY CONFIRMED THE RELEVANT GROUND, APPEAL IS REJECTED. 13. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE ME. SMC-ITA NO. 2118/AHD/2014 DR. RAJESH BABULAL PATEL VS. ITO ASSESSMENT YEAR: 2009-2010 PAGE 5 OF 5 14. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLIC ABLE LEGAL POSITION. 15. I FIND THAT THE ASSESSEE HAS NOT BEEN ABLE TO P RODUCE BOOKS OF ACCOUNTS ON THE GROUND THAT DUE TO VIRUS PROBLEM IN HIS (THE ASSESSEES) COMPUT ER, IT COULD NOT BE OPENED AND ALL THAT THE ASSESSEE HAS BEEN ABLE TO PRODUC E IS AN AUDITED SET OF YEAR END ACCOUNTS. IN THE ABSENCE OF ANY SUPPORTIN G EVIDENCE, I AM NOT INCLINED TO ACCEPT THE RESULTS SHOWN BY THESE FINANCIAL STATEME NTS. I AM IN CONSIDERED AGREEMENT WITH THE DETAILED REASONING SET OUT BY TH E CIT(A) AND I APPROVE THE SAME. ACCORDINGLY, THE IMPUGNED ADDITION OF RS.3,25,566/- IS CONFIRMED. 16. IN EFFECT THUS, THE ASSESSEE GETS PART RELIEF T O THE EXTENT OF DELETION OF DISALLOWANCE OF RS.97,233/- AND DELETION OF CASH CR EDITS TO THE TUNE OF RS.38,000/-. 17. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. P RONOUNCED IN THE OPEN COURT TODAY ON THE 27 TH FEBRUARY, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT M EMBER) AHMEDABAD, THE 27 TH DAY OF FEBRUARY, 2018 **TB8PBN COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: ....ORDER PREPARED AS PER FI VE PAGES MANUSCRIPTS OF HONBLE AM, WHICH IS ATTACHED ......12.02.2018.... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 12.02.2018.... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: .27.02.2017..... . 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 27.02.2017 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : .. 27.02.2017... 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER: