Dr. Rohit P. Patel, Vijapur V. The Income tax Officer,Patan War-3, Mehsana

ITA 2313/AHD/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9176 (ITAT-AHMEDABAD)
• Duration Of Justice: 40 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2010
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Depreciation; Corroborative evidences; Valuation report
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI G.D.AGRAWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER DATE OF HEARING : 04/11/2010 DRAFTED ON: 30/1 1/2010 APPEAL(S) BY SL. NO(S). ITA NO(S) ASSESSMENT YEAR(S) APPELLANT (S) RESPONDENT ( S ) 1. 2313/AHD/2007 2001-02 DR.ROHIT PURSHOTTAMBHAI PATEL, PROP.POOJA HOSPITAL NR.VETERINARY HOSPITAL VIJAPUR, MEHSANA PAN : ABKPP 0210 H (ASSESSEE) THE INCOME TAX OFFICER PATAN WARD- 3 MEHSANA (REVENUE) 2. 2791/AHD/2007 2001-02 REVENUE ASSESSEE 3. 1019/AHD/2006 2002-03 ASSESSEE REVENUE 4. 1570/AHD/2006 2002-03 REVENUE ASSESSEE 5. 2314/AHD/2007 2003-04 ASSESSEE REVENUE 6. 2792/AHD/2007 2003-04 REVENUE ASSESSEE ASSESSEE(S) BY : SHRI A.L. THAKKAR, A.R. REVENUE BY : SHRI ABHIJEET KUMAR N. D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : ALL THESE SIX APPEALS ARE CROSS-APPEALS AND FOR TH E SAKE OF CONVENIENCE CONSOLIDATED AND HEREBY DECIDED BY THIS COMMON ORDER. A. ASSESSEES APPEAL, ITA NO.2313/AHD/2007 (A.Y. 2001-02) 2. GROUND NO.1 1. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE ORDER PASSED BY THE A.O. BY REOPENIN G THE ASSESSMENT U/S.147 OF THE ACT ONLY ON THE BASIS OF DVOS ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 2 - VALUATION REPORT IN RESPECT OF RESIDENTIAL PROPERTY OF THE APPELLANT WHICH IS ILLEGAL AND BAD IN LAW. 2.1. FACTS IN BRIEF AS EMERGED FROM THE IMPUGNED L EARNED CIT(APPEALS)XXI AHMEDABAD ORDER DATED 28/08/2007 A ND THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) R. W.S. 147 OF THE I.T. ACT, 1961 DATED 27/12/2006 WERE THAT A SURVEY U/S.133A OF THE I.T.ACT WAS CARRIED OUT ON 13/01/2003. A QUESTION OF UNACCOUNTED INVESTMENT IN A RESIDENTIAL-BUNGALOW WAS RAISED AND THE MATTER WAS ALSO REFERRED TO DISTRICT VALUATION OFFICER(IN SHORT DVO ). ON THE BASIS OF THE DVOS REPORT, THERE WAS A DIFFERENCE BETWEEN THE CO ST OF CONSTRUCTION AS DISCLOSED BY THE ASSESSEE AND AS DETERMINED BY THE DVO. CONSEQUENTLY, NOTICE U/S.148 WAS ISSUED AND THE CAS E WAS REOPENED . ON HEARING BOTH THE SIDES AND CONSIDERING THE APPLI CABILITY OF THE LAW IN RESPECT OF THE REOPENING OF AN ASSESSMENT WE FIND N O FALLACY IN THE ACTION OF THE ASSESSING OFFICER. WITH THE RESULT, WE HERE BY UPHOLD THE FINDINGS OF THE LEARNED CIT(APPEALS) AND THIS GROUND OF THE ASSESSEE IS HEREBY DISMISSED. 3. GROUND NO.2 2. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN RETAINING THE ADDITION OF RS.2,00,000/- OUT OF ADDI TION MADE OF RS.8,98,807/- BY THE A.O. FOR ALLEGED UNEXPLAINED INVESTMENT IN THE RESIDENTIAL PROPERTY CALLED JOYAL BUNGLOW AT VIJAPUR U/S.69 OF THE I.T. ACT, 1961. ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 3 - 3.1. AS IS EVIDENT FROM THE ORDERS OF THE AUTHORIT IES BELOW, THE MATTER WAS REFERRED TO THE DVO WHO HAS ASSESSED THE COST O F CONSTRUCTION PERTAINING TO THE THREE YEARS AND VALUED THE SAME A S FOLLOWS:- SR.NO. PERIOD CONSTRUCTION EXPENDITURE STATED BY ASSESSEE (RS.) ASSESSED COST OF CONSTRUCTION DIFFERENCE 1 2000-01 6,31,328 15,30,135 8,98,807 2 2002-02 15,01,409 35,98,654 20,97,245 3 2002-03 1,80,070 3,62,364 1,82,284 TOTAL 23,12,807 54,91,153 31,78,346 3.2. AS PER THE ABOVE CALCULATION THERE WAS A VARIATION BETWEEN THE VALUE DECLARED BY THE ASSESSEE FOR THE YEAR UNDER C ONSIDERATION AT RS.6,31,328/-; AS AGAINST THAT, THE VALUE DETERMINE D BY DVO AT RS.15,30,135/-; THE DIFFERENCE OF RS.8,98,807/- WAS TAXED BY THE ASSESSING OFFICER AS AN UNEXPLAINED INVESTMENT IN T HE HANDS OF THE ASSESSEE. 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES OF TH E CASE, HE WAS OF THE VIEW THAT IT WOULD BE REASONABLE TO RESTRICT THE AD DITION AT RS.2,00,000/- FOR THE YEAR UNDER CONSIDERATION. 5. WITH THIS BRIEF FACTUAL BACKGROUND, WE HAVE HEAR D BOTH THE SIDES AT LENGTH. IT IS WORTH TO MENTION THAT WHILE DECIDI NG THE APPEAL OF THE ASSESSEE FOR THE SUBSEQUENT ASSESSMENT YEAR 2002-03 , THE LEARNED ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 4 - CIT(APPEALS) HAS MADE AN ELABORATE DISCUSSION THROU GH WHICH FEW IMPORTANT POINTS HAVE EMERGED AS FOLLOWS: (A) THE DECLARED COST OF CONSTRUCTION INCLUDING THE COST OF LAND AND BUILDING AS PER ASSESSEE WAS AT RS.21,91,423/-. THE ASSESSEE HAS OBTAINED A VALUATION OF A REGISTERED V ALUER SHRI B.B. PATEL WHO HAS ESTIMATED THE COST OF CONST RUCTION AT RS.29,03,300/-. (B) THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF CONSTRUCTION AND MADE A CLAIM THAT ALL THE BILLS AND INVOICES IN RESPECT OF THE COST OF CONSTRUCTION, LABOUR CHARGES, PURCHASE OF MATERIAL, PAYMENTS TO CONTRACTOR, ETC. HAVE BEEN DU LY PRODUCED BEFORE THE DVO. (C) THROUGH SUBMISSIONS MADE BEFORE DVO, THE ASSESS EE HAS FURNISHED BUILDING PLAN, STRUCTURAL DRAWINGS AND VA LUATION REPORT OF A REGISTERED VALUER. (D) A VEHEMENT CONTENTION WAS THAT NO DEFECT WAS FO UND IN THE BOOKS OF ACCOUNT WHICH WERE STATED TO BE DULY AUDIT ED UNDER THE PROVISIONS OF SECTION 44AB OF THE I.T.ACT. (E) BEFORE THE DVO, OBJECTIONS WERE RAISED IN RESPE CT OF PLINTH RATES APPLIED WITHOUT ANY SUPPORTING EVIDENCE OR SP ECIFIC DATAS, IF ANY COLLECTED. ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 5 - (F) CASE LAWS CITED IN SUPPORT OF THE CORRECTNESS O F THE VALUATION AS DISCLOSED BY THE ASSESSEE WERE K.K. SHESHA IYER 246 ITR 351 (MAD.), HOTEL JOSHI 242 ITR 478 (RAJ.), RAJGIR BUILDERS 70 ITD 226(MUM.), VAISHALI HOTELS 66 TTJ 692(PUNE) . (G) VALUATION REPORT OF THE DVO, WHICH WAS RELIED U PON BY THE ASSESSING OFFICER, WAS VERY CRYPTIC WITHOUT GIVING SPECIFIC DETAILS AS IS EVIDENT FROM THE FINAL VALUATION AND THE RATES ADOPTED, FOR EXAMPLE, REPRODUCED BELOW:- 8.0 RATE ADOPTED FOR VALUTION: 8.1. PLINTH AREA RATES ADOPTED : PREVALENT MARKE T RATE AT VIJAPUR, MEHSANA APPRO- PRIATE TO THE TYPE AND EQUALLY OF WORKS AND SPECIFICATIONS ADOPTED IN THE BUILDING FOR THE RELEVANT PERIOD OF CONSTRUCTION. 8.2. ADDITIONAL ITEMS NOT MARKET RATE FOR THE COVERED UNDER 8.1. RELEVANT PE RIOD OF CONSTRUCTION. 9.0 COMMNETS ON REGISTERED VALUERS REPORT: IN THIS CASE THE ASSESSEE HAS NOT SUBMITTED ANY REG ISTERED VALUERS REPORT HENCE NO COMMENTS ARE BEING OFFER ED. 6. ON HEARING BOTH THE SIDES AND IN THE LIGHT OF TH E ABOVE OBSERVATIONS, WE ARE OF THE VIEW THAT THE LEARNED C IT(APPEALS) HAS PARTLY AFFIRMED THE IMPUGNED ADDITION TOWARDS COST OF CONSTRUCTION THAT TOO MERELY ON AN ESTIMATION. WE HAVE BEEN REQUESTE D TO THOROUGHLY ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 6 - EXAMINE THE DVOS REPORT WHICH WAS MADE THE BASIS F OR THE IMPUGNED ADDITIONS RESPECTIVELY IN EACH THREE YEARS. IT I S TRUE THAT THE DVOS REPORT WAS FULL OF SHORTCOMINGS. IN THE SAID VALUA TION REPORT, THERE IS NO INFORMATION THROUGH WHICH IT COULD BE FOUND THE BAS IS FOR ADOPTION OF HIGHER VALUATION THAN THE VALUE DECLARED BY THE ASS ESSEE. IT IS ALSO NOT EVIDENT THAT ON WHAT MARKET RATE THE DVO HAS ARRIVE D AT THOSE FIGURES OF VALUATION. THE DVO HAS ALSO NOT MENTIONED THE AREA OF CONSTRUCTION OR THE COVERED AREA WHICH WAS MADE THE BASIS FOR CALCU LATION OF THE COST OF CONSTRUCTION. IT IS VERY STRANGE TO SEE THAT A T ECHNICAL PERSON, I.E. DVO HAS NOT MADE AN EFFORT TO COMMENT UPON CERTAIN BASI C INFORMATION BUT ARRIVED AT A FINAL CONCLUSION ABOUT THE OVERALL VAL UATION OF THE PROPERTY. ON THE OTHER HAND THE ASSESSEE HAS STATED THAT ALL THE BILLS, VOUCHERS AND PURCHASE DETAILS OF BUILDING MATERIALS WERE NOT ONL Y PLACED BEFORE THE AO BUT ALSO BEFORE THE DVO. IT HAS ALSO BEEN STATED THAT THE ASSESSEE HAS OBTAINED ONE VALUATION REPORT OF A REGISTERED VALUE R DT.18.10.2003 AND ALSO AN OPINION OF ONE SRI BIPIN CHANDRA PARIKH, GO VT. REG. VALUER DATED 7.3.2005. BOTH WERE VERY MUCH PLACED BEFORE THE DVO THROUGH WHICH BUILDING PLAN, STRUCTURAL DRAWINGS AND THE CONSTRUC TION SPECIFICATIONS WERE SUBMITTED. SO THE VEHEMENT CONTENTION WAS THA T WITHOUT PINPOINTING ANY DEFECT OR DISCREPANCY IN THE ASSESS EES VALUATION THE SAME WAS REJECTED. TO BUTTRESS OUR VIEW, WE HEREBY QUOTE A DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF K.K.SESHAI YER REPORTED AT 246 ITR 351 (MAD.), WHEREIN IT WAS OBSERVED THAT AN OPI NION OF THE DVO CANNOT BE STRAIGHTAWAY SUBSTITUTED FOR THE ACTUAL C OST RECORDED IN THE ASSESSEES BOOKS WHEN THE CREDIBILITY OF BOOKS MAIN TAINED BY THE ASSESSEE IS NOT DOUBTED AND CORRECTNESS OF THE ENTR IES THEREIN WAS NOT ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 7 - QUESTIONED. LIKEWISE, THE HON'BLE RAJASTHAN HIGH C OURT IN THE CASE OF CIT VS. HOTEL JOSHI REPORTED AT 242 ITR 478 (RAJ.) HAS MADE AN OBSERVATION THAT IF THE ACCOUNT OF EXPENSES OF CONS TRUCTION IS MAINTAINED AND THE ASSESSEE ALSO PRODUCES THE VOUCHERS THERE S HOULD BE NO REASON NOT TO ACCEPT THE SAME, EVEN WHERE A REFERENCE IS M ADE TO DVO, ASSESSING OFFICER HAS TO ULTIMATELY APPRECIATE THE MATERIAL ON RECORD AND SATISFY HIMSELF AS TO CORRECT VALUATION OF THE ASSE T. IN VIEW OF THIS AND CONSIDERING THE PRINCIPLES LAID DOWN IN THE AFORE C ITED CASE LAWS, WE ARE OF THE VIEW THAT IN THE ABSENCE OF ANY CONTRARY MAT ERIAL OR AN EVIDENCE AGAINST THE ASSESSEE IT WAS NOT JUSTIFIABLE ON THE PART OF THE REVENUE AUTHORITIES TO MAKE AN ADDITION MERELY ON AN ESTIMA TION. WE, THEREFORE, REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND D IRECT TO ADOPT THE VALUE OF THE PROPERTY YEAR-WISE AS DISCLOSED BY THE ASSES SEE. THEREFORE, THIS GROUND IS ALLOWED. 7. GROUND NO.3 3. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSES OF RS.50,780/- MADE BY THE A.O. HOLDING THAT THE BORROWED AMOUNT HAS NOT BEEN UTILIZED FOR BUSINESS PURPOSE AND THAT THE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S.24 OF THE I.T. ACT SINCE THE CONST RUCTION OF THE PROPERTY WAS NOT COMPLETED IN THE PREVIOUS YEAR. 7.1. IN RESPECT OF THE ABOVE GROUND, IT WAS OBSER VED BY THE ASSESSING OFFICER THAT THE INTEREST WAS PAID TO STATE BANK OF INDIA PERTAINING TO HOUSING LOAN OBTAINED BY THE ASSESSEE. IT WAS HELD THAT SINCE THE BORROWED AMOUNT WAS NOT UTILIZED FOR BUSINESS PURPO SES, THEREFORE, THE CLAIM OF INTEREST WAS INADMISSIBLE. WHEN THE MATTE R WAS CARRIED BEFORE ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 8 - THE FIRST APPELLATE AUTHORITY, THE ACTION OF THE AS SESSING OFFICER WAS CONFIRMED AS PER THE FOLLOWING OBSERVATION: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE FACTS OF THE CASE. I DO NOT SEE ANY MERIT IN THE ARGUMENT OF THE LD. AUTHORISED REPRESENTATIVE OF THE APPELLANT THAT THE ASSESSING OFFICER SHOULD HAVE MATERIAL ON RECORD TO PROVE THA T THE LOAN BORROWED BY THE APPELLANT FOR HOUSE BUILDING WAS US ED FOR BUSINESS. THE ONUS IS ON THE ASSESSEE TO PROVE THA T THE HOUSING LOAN FOR CONSTRUCTION OF RESIDENTIAL BUNGLOW WAS OB TAINED BY THE APPELLANT AND THE SAME WAS UTILIZED FOR CONSTRUCTIO N OF BUNGLOW AND NOT FOR ANY OTHER PURPOSE. IN THE ALTERNATE, T HE LD. AUTHORISED REPRESENTATIVE OF THE APPELLANT HAS CONTENDED THAT AS PER PROVISIONS OF EXPLANATION TO SECTION 24, THE INTERE ST ON BORROWED CAPITAL IS ALLOWABLE EVEN FOR THE PERIOD BEFORE ACQ UISITI8ON OR CONSTRUCTION IS COMPLETED. I FIND THAT ALLOWABILI TY OF INTEREST ON BORROWED FUNDS IS TO BE CONSIDERED AS PER SECTION 2 4 OF THE I.T. ACT. THE APPELLANT HAS ADMITTED THAT THE CONSTRUC TION OF RESIDENTIAL HOUSE WAS COMPLETED IN THE PREVIOUS YEA R RELEVANT TO A.Y. 2003-04. THEREFORE, FOR THE CURRENT A.Y. NO A MOUNT OF INTEREST ON THE BORROWED FUND IS ALLOWABLE AND THER EFORE, DISALLOWANCE OF RS.50,780/- MADE BY THE ASSESSING O FFICER IS CONFIRMED. THE APPELLANT MAY PUT UP HIS CLAIM FOR THE DEDUCTION OF INTEREST IN THE PROCEEDINGS FOR A.Y. 2003-04. 8. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUM STANCES OF THE CASE AND IN VIEW OF THE SPECIFIC OBSERVATION OF THE REVE NUE AUTHORITIES THAT THE INTEREST IN QUESTION WAS NOT AN ALLOWABLE EXPENDITU RE BEING NOT RELATED TO THE PROFESSION OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, WE HEREBY CONFIRM THE FINDINGS OF TH E LEARNED CIT(APPEALS). THIS GROUND IS, THEREFORE, DISMISSED . 9. GROUND NO.4 ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 9 - 4. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE A.O. OF RS. 4000/- OUT OF TELEPHONE EXPENSES AND OF RS.1500/- OUT OF PETROL EXPENSES ON LUMP SUM BASIS. 9.1. THESE ADDITIONS WERE PRIMARILY ON THE GROUND T HAT THE POSSIBILITY OF PERSONAL USE OF TELEPHONE AND PETROL EXPENSES CO ULD NOT BE RULED OUT IN THE CASE OF THE ASSESSEE. NOTHING MUCH HAS BEEN AR GUED IN THIS REGARD AND CONSIDERING THE SMALLNESS OF THE AMOUNT AND THE TRIFLE NATURE OF THE ISSUE, WE ARE NOT INCLINED TO INTERFERE WITH THE FI NDINGS OF THE LEARNED CIT(APPEALS), HENCE AFFIRM THE SAME AND REJECT THIS GROUND OF THE ASSESSEE. B . REVENUES APPEAL, ITA NO.2791/AHD/2007 (A.Y. 2001-0 2) 10. THE ONLY SUBSTANTIVE GROUND RAISED BY THE REVE NUE READS AS UNDER:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITIONS OF RS.6,98,807/- MADE ON ACC OUNT OF UNEXPLAINED INVESTMENT IN RESIDENTIAL BUNGALOWS. 10.1. WHILE DECIDING THE ASSESSEES APPEAL(SUPRA), WE HAVE ALREADY TAKEN A VIEW THAT THE DVOS REPORT WHICH WAS MADE T HE BASIS OF THE IMPUGNED ADDITION AS UNEXPLAINED INVESTMENT TOWARDS COST OF CONSTRUCTION IN A RESIDENTIAL-BUNGALOW WAS FULL OF DEFECTS AND NOT BASED UPON ANY CONVINCING MATERIAL OR DATAS. THE SAID REP ORT IS ABSOLUTELY SILENT TO DESCRIBE THE BASIS ON WHICH THE VALUATION WAS COMPUTED OF THE PROPERTY. THEREFORE, FOLLOWING THE REASON ALREADY ASSIGNED HEREINABOVE, WE FIND NO FORCE IN THIS GROUND OF THE REVENUE, HEN CE DISMISSED. C. ASSESSEES APPEAL, ITA NO.1019/AHD/2006 (A.Y. 2002-03) ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 10 - 11. GROUND NO.1 1. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.116298/- MADE BY THE A.O. ESTIMATING THE FEES OF RS.1846/- IN RESPECT OF 63 (405-352) PATIENTS EVEN THOUGH THE APPELLANT HAS PROVIDED FRE E SERVICE TO THEM. 11.1. FACTS IN BRIEF AS EMERGED FROM THE CORRESPOND ING ASSESSMENT ORDER PASSED U/S.143(3) DATED 21/03/2005 AND THE IMPUGNED ORDER OF LEARNED CIT(APPEALS)-XXI, DATED 10/03/2006 WERE THAT THE AS SESSING OFFICER HAD MADE AN ALLEGATION THAT THE FULL AMOUNT OF MEDI CAL FEES OF ALL THE PATIENTS HAVE NOT BEEN RECORDED BY THE ASSESSING OF FICER. THE ASSESSING OFFICER HAS ALSO NEGATED THE CLAIM THAT THE ASSESSE E HAS PROVIDED FREE TREATMENT TO NUMBER OF PATIENTS. AN ADDITION OF RS .7,47,630/- WAS MADE. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELL ATE AUTHORITY, COMPLETE DETAILS WERE FURNISHED WITH THE HELP OF PATIENTS R EGISTER AND AFFIDAVITS HAVE ALSO BEEN PLACE ON RECORD. ON DETAILED EXAMI NATION, LEARNED CIT(APPEALS) FOUND THAT 352 PATIENTS HAVE BEEN PROVIDED FREE SERVICES BASED UPON THEIR AFFIDAVITS, HOWEVER, IN RESPECT OF 63 PATIENTS, THE ASSESSEE HAS FAILED TO PROVE THAT NO FEES WAS RECEI VED. THE FINDINGS OF LEARNED CIT(APPEALS), IN THIS REGARD, WERE AS UNDER : I HAVE EXAMINED THE BASIS OF DISALLOWANCE BY THE A O AND THE CONTENTION RAISED BY THE APPELLANT. I FIND CONSIDE RABLE FORCE IN THE ARGUMENTS MADE BY THE APPELLANT. IT HAS BEEN THE CONSISTENT STAND OF THE APPELLANT THAT COMPLETE BOOKS OF ACCOUNTS AR E MAINTAINED WHICH ARE DULY AUDITED AS PER THE PROVISIONS OF SEC TION 44 AB OF THE I.T.ACT, 1961. NO SPECIFIC DEFECT OR DISCREPAN CY HAS BEEN POINTED OUT THEREIN. IT IS ALSO SEEN THAT THE BIR TH REGISTER IS DULY MAINTAINED WHICH CONTAIN COMPLETE RECORDS OF THE PA TIENTS, SEX OF CHILD, DATE OF DELIVERY, RELIGION, ETC. SIMILARLY, SERIALLY NUMBERED RECEIPT BOOKS ARE MAINTAINED AND CONTAIN THE NIL RE CEIPTS ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 11 - WHEREVER THEY HAVE BEEN ISSUED. ALL THESE RECORDS HAVE BEEN FURNISHED AT THE ASSESSMENT STAGE, WHICH HAS NOT BE EN CONTRADICTED BY THE AO. EVEN OTHER REGISTERS RECORDING THE BIRT H IN THE HOSPITAL ARE MAINTAINED WHICH THE RELEVANT AUTHORITIES AUTHE NTICATE. WHERE THE RECEIPTS ARE SERIALLY NUMBERED THE ALLEGA TION OF INTERPOLATION WOULD NOT SURVIVE. AS REGARDS THE DE TAILS OF 132 PATIENTS WHICH HAVE BEEN PLACED AS ANNEXURE TO THE ASSESSMENT ORDER THE APPELLANT HAS FURNISHED A RECONCILIATION STATEMENT CONTAINING THE DETAILS OF THE OPD RECEIPT NO., DELI VERY RECEIPT NO. DATE OF RECEIPT ETC. IT IS OBSERVED THAT RECEIP TS HAVE BEEN ISSUED IN ALL BUT ONE CASE. THEREFORE, THE ALLEGATION OF THE AO DOES NOT SEEM TO BE CORRECT. THE APPELLANT HAS FILED AFFIDA VITS OF 138 PATIENTS AT THE TIME OF ASSESSMENT PROCEEDINGS AND FURTHER AFFIDAVITS OF 214 PATIENTS AT THE APPELLATE STAGE C ONFIRMING THE NON- PAYMENT OF FEES OR HAVING RECEIVED THE SERVICES FRE E OF CHARGE. THE AO AT THE ASSESSMENT STAGE AFTER CROSS EXAMINA TION OF 10 PATIENTS HAS NOT BROUGHT ON RECORD ANY MATERIAL WHI CH WOULD SUPPORT HIS ALLEGATION THAT THE PATIENTS HAVE PAID FEES TO THE APPELLANT WHICH HAVE NOT BEEN RECORDED BY THE APPEL LANT. HE HAS MERELY ATTEMPTED TO RAISE DOUBTS BY STATING THE PAT IENTS DID NOT COMPLY TO THE SUMMONS OR WERE UNAVAILABLE ETC. HE HAS ALSO NOT MENTIONED WHICH PARTICULAR PATIENT RESPONDED TO THE SUMMONS AND WHO DID NOT COMPLY IT IS SEEN THAT THE OBJECTIONS ARE GENERAL IN NATURE AND IF THE AO HAD ANY DOUBTS AFTER HIS CROS S EXAMINATION HE COULD HAVE PUT IT BEFORE THE APPELLANT SO THAT H E COULD HAVE MADE THE NECESSARY CLARIFICATION WHICH THE AO HAS FAILED TO DO. THE AO HAS AT THE TIME OF THE APPELLATE PROCEEDING S ALSO CHOSEN NOT TO EXAMINE ANY OF THE PATIENTS WHO HAVE STATED THAT THEY HAVE RECEIVED FREE TREATMENT AND NOT PAID ANY FEES. HOW EVER, I FIND THAT EVEN AT APPELLATE STAGE THE APPELLANT HAS NOT FURNI SHED EVIDENCE IN CASE OF ALL PATIENTS CLAIMED TO HAVE BEEN PROVIDED FREE SERVICE BY HIM. FURTHER, THE FACT THAT IN THE SUBSEQUENT YEAR THE APPELLANT HAS MADE A DISCLOSURE IN THE SURVEY PROCEEDINGS U/S .133A ALSO, CANNOT BE OVERLOOKED. I, THEREFORE ACCEPT THAT 352 PATIENTS (138 + 214) WHOSE AFFIDAVITS HAVE BEEN FURNISHED AT THE AS SESSMENT AS WELL AS APPELLATE STAGE HAVE NOT PAID ANY FEES AND THE APPELLANT HAS RENDERED FREE SERVICES. HOWEVER, IN THE CASE OF THE REMAINING 63 PATIENTS (405 352) I CONFIRM THE ADD ITION MADE BY ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 12 - THE AO . THE ADDITION SO CONFIRMED WORKS OUT TO RS.116298 (RS.1846 X 63 PATIENTS). 12. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES AND CONSIDERING THE OVERALL EVIDENCES AS APPRECIATED BY THE LEARNED CIT (APPEALS), WE ARE ALSO OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR THE RELIEF IN RESPECT OF THOSE PATIENTS WHO HAVE CONFIRMED THROUGH THEIR RES PECTIVE AFFIDAVITS THAT NO FEES HAS BEEN PAID FOR THE MEDICAL TREATMENT. H OWEVER, IN RESPECT OF THE REMAINING PATIENTS, THERE WAS NO CONCLUSIVE EVI DENCE THAT NO FEES WAS RECEIVED BY THE ASSESSEE, RATHER THE DELIVERY REGIS TERS AND THE MUNICIPAL RECORD HAVE CAUSED SOME DOUBTS WHICH STILL REMAINE D UNSUBSTANTIATED. THUS, THE TOTALITY OF THE FACTS AND CIRCUMSTANCES O F THE CASE HEREBY WARRANTS NOT TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(APPEALS), SO THE SAME IS HEREBY CONFIRMED. THIS GROUND OF TH E ASSESSEE IS, THEREFORE , DISMISSED. 13. GROUND NO.2 2. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING AN ADDITION OF RS.500000/- FOR ALLEGED UNDISCLOSED/UNACCOUNTED COST CONSTRUCTION OF THE RESIDENTIAL HOUSE ON ESTIMATE BASIS. 13.1. WE HAVE ALREADY TAKEN A VIEW WHILE DECIDING A PPEAL FOR ASSESSMENT YEAR 2001-02(SUPRA) THAT THERE WAS NO BA SIS FOR AN ESTIMATED ADDITION TOWARDS COST OF CONSTRUCTION OF THE RESIDE NTIAL-BUNGALOW, SPECIALLY WHEN THE ASSESSEES STAND GOT THE SUPPORT OF TWO REGD.VALUERS AND CONTRARY TO THIS THE DVOS REPORT WAS A CRYPTIC AND UNSUBSTANTIATED VALUATION. FOLLOWING THE SAME, WE HEREBY REVERSE T HE FINDINGS OF THE ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 13 - LEARNED CIT(APPEALS) AND DIRECT TO GRANT THE RELIEF . THIS GROUND OF THE ASSESSEE IS ALLOWED . 14. GROUND NO.3 3. THE LEARNED COMMISSIONER OF INCOME TAX (A), HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY A.O. OF RS.3529 7/- FOR THE ALLEGED EXCESS DEDUCTION OF INTEREST ON HOUSING TERM LOAN CLAIMED BY THE APPELLANT. 14.1. FOR THE YEAR UNDER CONSIDERATION, THE APPELLA NT HAS CLAIMED THE PAYMENT OF INTEREST AS PER PROFIT & LOSS ACCOUNT WH ICH WAS STATED TO BE AGAINST THE LOAN TAKEN FROM STATE BANK OF INDIA AND UTILIZED FOR THE CONSTRUCTION OF RESIDENTIAL-HOUSE. UNDISPUTEDLY, IT WAS A HOUSING LOAN, THEREFORE, ASSESSEES CLAIM WAS THAT IT WAS ALLOWAB LE U/S.24(B) OF THE I.T.ACT. LD. LEARNED CIT(APPEALS) HAS REFERRED SECOND PROVISO TO SECTION 24(B) OF THE I.T.ACT AND HELD THAT THE CLAIM WAS NOT ALLOWABLE. WE FIND NO FALLACY IN THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) AND AFFIRM THE SAME. THIS GROUND OF THE ASSESSEE IS, T HEREFORE, DISMISSED. 15. GROUND NO.4 4. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE A.O. OF RS. 7228/- OUT OF ELECTRICITY EXPENSES . 15.1 IN RESPECT OF THE ELECTRICITY BILL, THERE WAS A FINDING THAT THE SAME WAS IN THE NAME OF THE WIFE OF THE ASSESSEE. ON A CCOUNT OF THE SAID FACT, THE ELEMENT OF PERSONAL USE WAS NOT RULED OUT AND A PROPORTIONATE DISALLOWANCE WAS MADE. IN THE ABSENCE OF ANY SUB STANTIVE EVIDENCE TO ESTABLISH THAT THE ENTIRE CLAIM WAS MEANT WHOLLY AN D EXCLUSIVELY FOR THE ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 14 - PURPOSE OF THE BUSINESS, WE FIND NO REASON TO INTE RFERE WITH THE FINDINGS OF THE LEARNED CIT(APPEALS), THEREFORE, THIS GROUND IS DISMISSED. 16. GROUND NO.5 IS GENERAL IN NATURE REQUIRES NO IN DEPENDENT ADJUDICATION. D. REVENUES APPEAL, ITA NO.1570/AHD/2006 (A.Y. 2 002-03) 17. GROUND NO.1 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN RESTRICTING THE UNDISCLOSED INCOME TO RS.1,16,298/- AS AGAINST THE ADDITION MADE BY THE A.O. OF RS.7,47,630/-. 17.1. WE HAVE ALREADY TAKEN A VIEW WHILE DECIDING GROUND NO.1 FOR THIS YEAR IN ASSESSEES APPEAL HEREINABOVE AND CONFIRMED THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) THROUGH WHICH A PART RELIE F, IN RESPECT OF THE ISSUE OF FREE MEDICAL SERVICES, WAS GRANTED. RES ULTANTLY, THIS GROUND OF THE REVENUE IS HEREBY DISMISSED . 18. GROUND NO.2 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT O F UNDISCLOSED OUTDOOR FEE RECEIPTS OF RS.50,000/- . 18.1. AN ADHOC ADDITION OF RS.50,000/- WAS MADE B Y THE ASSESSING OFFICER PRIMARILY ON THE REASON THAT THE ASSESSEE H AS NOT MAINTAINED A DAILY PATIENTS REGISTER AS PRESCRIBED ON FORM NO.3 C. THE ASSESSEE HAS PRODUCED OTHER EVIDENCES AND THE PATIENTS REGISTER TO DEMONSTRATE THAT COMPLETE DETAILS OF OPD PATIENT HAVE DULY BEEN MAIN TAINED, THEREFORE, ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 15 - THERE WAS NO IRREGULARITY IN THE BOOKS OF ACCOUNT. THE LEARNED CIT(APPEALS) HAS ALSO GIVEN A CATEGORICAL FINDING T HAT THE ASSESSING OFFICER HAS NOT SPECIFIED ANY PARTICULAR INSTANCE O F SUPPRESSION OF RECEIPTS. CONSEQUENTLY, WE HEREBY CONFIRM THE DELET ION MADE BY THE LEARNED CIT(APPEALS) AND THIS GROUND OF THE REVENUE IS THEREFORE, DISMISSED. 19. GROUND NO.3 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN RESTRICTING THE UNDISCLOSED INVESTMENT IN THE IMMOVABLE PROPERTY TO RS.5,00,000/- AS AGAINST THE ADDITION MADE BY TH E A.O. OF RS.20,97,245/-. 19.1 A VIEW HAS ALREADY BEEN TAKEN IN FAVOUR OF THE ASSESSEE THROUGH WHICH THE PART RELIEF GRANTED BY THE LEARNED CIT(AP PEALS) WAS REVERSED AND DIRECTED TO ACCEPT THE ASSESSEES VALUATION IN RESPECT OF THE CONSTRUCTION OF RESIDENTIAL-BUNGALOW. IN THE LIGHT OF THE DISCUSSION ALREADY MADE HEREINABOVE, THIS GROUND OF THE REVENU E IS DISMISSED. 20. GROUND NO.4 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON ACTS OF THE CASE IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT O F UNEXPLAINED INVESTMENT IN MOVABLE PROPERTY OF RS.4,50,000/-. 20.1. THE BASIC CONTENTION BEFORE THE FIRST APPELLA TE AUTHORITY WAS THAT THE SURVEY WAS CONDUCTED ON 13/01/2003 RELEVANT FOR THE FINANCIAL YEAR 2002-03, HENCE PERTAINING TO THE ASSESSMENT YEAR 20 03-04. IF AT ALL, AN ADDITION WAS TO BE MADE IN RESPECT OF THE INVESTMEN T IN CERTAIN MOVABLE ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 16 - PROPERTIES, THE SAME SHOULD HAVE BEEN CONSIDERED FO R ASSESSMENT YEAR 2003-04 AND NOT FOR ASSESSMENT YEAR 2002-03,I.E. TH E YEAR UNDER APPEAL. LEARNED CIT(APPEALS) HAS ACCEPTED THE SAID CONTENTI ON AND HELD THAT CERTAIN DISCLOSURE HAD ALREADY BEEN MADE BY THE ASS ESSEE IN THE SUBSEQUENT ASSESSMENT YEAR, THEREFORE, THERE WAS NO OCCASION TO TAX THE SAID AMOUNT IN ASSESSMENT YEAR 2002-03, THE SAME WA S DIRECTED TO BE DELETED. REASONING ASSIGNED APPEARS TO BE LOGICAL, THEREFORE WE HEREBY CONFIRM THE FINDINGS OF THE LEARNED CIT(APPEALS) AN D DISMISS THIS GROUND OF THE REVENUE. REVENUES APPEAL IS DISMIS SED. E. ASSESSEES APPEAL, ITA 2314/AHD/2007 (A.Y. 2003-04) 21. GROUND NO.1 1. THE LEARNED CO OF INCOME TAX (A) HAS ERRED IN R ETAINING AN ADDITION OF RS.1,00,000/- OUT OF RS.9,70,000/- MADE BY THE A.O. FOR THE ALLEGED UNACCOUNTED COST OF CONSTRUCTION OF HOSPITAL BUILDING. 22. ON THE BASIS OF THE DISCLOSURE MADE AT THE TIM E OF SURVEY, THE ASSESSING OFFICER HAS HELD THAT THE COST OF THE HOS PITAL BUILDING AS DISCLOSED BY THE ASSESSEE AT RS.14,92,925/- WAS INA DEQUATE. AS PER ASSESSING OFFICER, THERE WAS UNACCOUNTED BILLS AND VOUCHERS WHICH WERE TO THE TUNE OF RS.9,70,000/- NOT ACCOUNTED FOR IN T HE BOOKS OF ACCOUNT. THIS MATTER WAS ALSO REFERRED TO THE GOVERNMENT APP ROVED VALUER AND THE COST OF CONSTRUCTION OF THE HOSPITAL BUILDING A S DISCLOSED BY THE ASSESSEE WAS ALMOST ACCEPTED. THE FIRST APPELLAT E AUTHORITY HAS MADE A PRESUMPTION THAT SINCE IN RESPECT OF THE COST OF CO NSTRUCTION OF THE RESIDENTIAL-HOUSE AN ADHOC ADDITION OF RS.5 LACS WA S SUSTAINED BY HIM, ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 17 - THEREFORE, IN THE LIKE MANNER IN RESPECT OF THE COS T OF CONSTRUCTION OF THE HOSPITAL BUILDING AN ADHOC ADDITION OF RS.1 LAC WAS UPHELD. NOW BEFORE US THE VEHEMENT CONTENTION IS THAT EVEN AFTE R THE SURVEY NO MATERIAL WAS FOUND ON THE BASIS OF WHICH IT COULD B E ALLEGED THAT THERE WAS UNEXPLAINED INVESTMENT NOT RECORDED IN THE BOOK S OF ACCOUNT FOR CONSTRUCTION OF THE SAID HOSPITAL BUILDING. CONSID ERING ALL THESE ASPECTS, WE CAN HOLD THAT ONCE THE ASSESSEE HAS FURNISHED TH E DETAILS OF CONSTRUCTION ALONG WITH BILLS AND VOUCHERS AND NO E RROR WAS FOUND IN THE RECORDS MAINTAINED BY THE ASSESSEE, THEREFORE, THER E WAS NO SCOPE FOR SUCH AN ADDITION MADE MERELY ON AN ESTIMATION. WE, THEREFORE, REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND DELETE TH E ADDITION. GROUND ALLOWED. 23. GROUND NO.2 2. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION OF RS.33523/- CLAIMED BY THE APPELLANT ON AHMEDABAD BUILDING. 23.1. IN BRIEF, THE FACTS ARE THAT THE ASSESSEE HA S CLAIMED A DEPRECIATION IN RESPECT OF A BUILDING STATED TO BE SITUATED AT A HMEDABAD. THE CLAIM OF THE ASSESSEE WAS THAT THE SAID BUILDING WAS ACQU IRED FOR THE PURPOSE OF SETTING UP A CLINIC AT AHMEDABAD. AS PER ASSESSEE S CLAIM THE BUILDING WAS READY FOR USE, HENCE ENTITLED FOR CLAIM OF DEPR ECIATION. HOWEVER, AS PER ASSESSING OFFICER, NEITHER THERE WAS ANY EVIDEN CE THAT IT WAS ACTUALLY USED FOR THE PURPOSE OF MEDICAL PROFESSION NOR THER E WAS ANY EVIDENCE THAT IT WAS READY FOR USE, HENCE, CLAIM OF DEPRECIA TION WAS DISALLOWED. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELL ATE AUTHORITY ASSIGNING ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 18 - THOSE VERY REASONS THE ACTION OF THE ASSESSING OFFI CER WAS AFFIRMED. ON HEARING BOTH THE SIDES, WE ARE ALSO OF THE VIEW THA T IN THE ABSENCE OF ANY SPECIFIC EVIDENCE THAT EITHER THE ASSET IN QUESTION WAS READY FOR USE OR USED FOR THE MEDICAL PROFESSION, THE CLAIM OF DEPRE CIATION WAS WRONGLY MADE. FACTS OF THE CASE HAVE REVEALED THAT IT WAS MERELY AN INVESTMENT IN A BUILDING AND THERE WAS NO PROFESSIONAL ACTIVIT Y CARRIED OUT BY THE ASSESSEE, NEITHER IT WAS IN ANY MANNER PREPARED FOR THE PURPOSE OF PROFESSION, HENCE, AN INVESTMENT IN A BUILDING SHOU LD NOT BE ENTITLED FOR CLAIM OF DEPRECIATION. WITH THESE REASONS THIS GRO UND OF THE ASSESSEE IS HEREBY DISMISSED. 24. GROUND NO.3 3. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE A.O. OF RS. 90,620/- FOR THE ALLEGED EXCESS INTEREST CLAIMED ON HOUSING LOAN U/S.24(1)(VI) OF THE ACT. 24.1. A VIEW HAS ALREADY BEEN TAKEN HEREINABOVE THA T AS PER THE SECOND PROVISO TO SECTION 24(1)(VI), THE ASSESSEE IS ENTIT LED FOR AN INTEREST CLAIM ON HOUSING LOAN UPTO THE EXTENT OF RS.1,50,000/- ON LY. OVER AND ABOVE THE PRESCRIBED LIMIT THE SAME HAS RIGHTLY BEEN DIS ALLOWED. DUE TO THIS REASON THE DISALLOWANCE IS HEREBY AFFIRMED AND THIS GROUND IS DISMISSED. ASSESSEES APPEAL IS PARTLY ALLOWED. F. REVENUES APPEAL, ITA NO.2792/AHD/2007(A.Y. 200 3-04) 25. GROUND NO.1 ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 19 - (1) THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,39,659/- MADE ON ACCO UNT OF EXCESS CASH F OUND DURING THE COURSE OF SURVEY U/S.133A OF THE AC T. 25.1. THE ALLEGATION WAS THAT AT THE TIME OF SURVEY AN EXCESS CASH OF RS.4,30,000/- WAS FOUND WHICH WAS ALSO OFFERED FOR TAXATION AS PER THE STATEMENT RECORDED DURING THE COURSE OF SURVEY U/S. 133A OF THE I.T.ACT ON 13/01/2003. LATER ON, WITHIN FEW DAYS I.E. ON 17/01/2003 THE SAID STATEMENT WAS RETRACTED. IN RESPECT OF THE CASH, IT WAS STATED THROUGH AN AFFIDAVIT THAT OUT OF A TOTAL CASH FOUND AT THE TIME SURVEY OF RS.4,31,530/-; A SUM OF RS.1,42,024/- WAS A CASH BALANCE AS PER THE REGULAR BOOKS OF ACCOUNT . FURTHER IT IS MENTIONED THAT THERE WAS A DISCLOSURE BY THE ASSESSEE OF A TOTAL SUM OF RS.11, 90,341/- WHICH HAS A COMPONENT OF RS. 2,00,341/- TOWARDS CASH DISCLOSED . IT WAS EXPLAINED THAT THE TOTAL DISCLOSURE BY THE ASSESSEE WAS RS.11 ,90,341/- INSTEAD OF RS.25,00,000/- WHICH WAS BIFURCATED AS FOLLOWS:- 1. CASH RS.2,00,341/- 2. FURNITURE & FIXTURE RS.4,50,000/- 3. REPAIRING OF BUNGALOW RS.3,00,000/- 4. SUNDRY DEBTORS RS.1,50,000/- 25.2. ON THE BASIS OF ABOVE CALCULATION, IT WAS EXP LAINED THAT THE CASH FOUND AS PER THE REGULAR BOOKS OF RS.1,42,024/ - AND A DISCLOSURE MADE OF RS.2,00,341/- HAS ALREADY BEEN ACCOUNTED FO R . VEHEMENTLY IT WAS ARGUED THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS SOLELY ON THE BASIS OF THE SAID STATEME NT RECORDED DURING THE SURVEY OPERATION. BEFORE LEARNED CIT(APPEALS) ALL THOSE EVIDENCES WERE PLACED AND AFTER CAREFUL ANALYSIS, IT WAS OPINED TH AT THE ASSESSING OFFICER ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 20 - WAS ALSO NOT ABLE TO PROVE THAT THE CASH AS DISCLOS ED IN THE BOOKS OF ACCOUNT WAS INCORRECT. EVEN BEFORE US THERE IS NO EVIDENCE PLACED FROM THE SIDE OF THE REVENUE TO DEMONSTRATE THAT THE CAS H AS PER BOOKS OF ACCOUNT WAS NOT TALLIED. ONCE THE ADMITTED FACTUAL POSITION IS THAT OUT OF THE ACTUAL CASH FOUND AT THE TIME OF SURVEY PART OF IT WAS FOUND RECORDED IN THE BOOKS OF ACCOUNT AND THE BALANCE WAS OFFERED FOR TAX. THEREFORE, NOW THE POSITION IS THAT THE ASSESSEE HAD CASH AS PER BOOKS OF RS.1,42,024/; PLUS THE ASSESSEE HAD MADE A DISCLOSURE OF RS. 2,00,341/; THUS TOTALING RS.3,42,365/, BUT THE CASH FOUND A THE TIME OF SURVEY WAS RS.4,31,530/- HENCE THE BALANCE REMAINED UNEXPLAINED OR UNACCOUNTED IS RS.89,165/- . IN OUR CONSIDERED OPINION, THIS DIFFERENCE WAS NOT CORRECTLY APPRECIATED BY THE LD.CIT(A) AND THE SAME IS TO BE TAXED IN THE HANDS OF THE ASSESSE. WE HEREBY MODI FY THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) AND THIS GROUND OF THE REV ENUE IS PARTLY ALLOWED. 26. GROUND NO.2 (2) THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.8,70,000/- MADE ON ACCO UNT OF UNACCOUNTED COST OF CONSTRUCTION HOSPITAL BUILDING . 26.1. THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.9,70,000/- BASICALLY RELYING UPON THE STATEMENT OF THE ASSESSE E RECORDED AT THE TIME OF SURVEY, HOWEVER THE SAME WAS RETRACTED WITHIN FE W DAYS . FACTS HAVE REVEALED THAT THE SURVEY WAS CONDUCTED AND THE STAT EMENT WAS RECORDED ON 13.01.2003 AND THROUGH AN AFFIDAVIT DATED 17.1.2 003 THE SAID ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 21 - DISCLOSURE WAS REVISED IN WHICH AN AMOUNT OF FURNIT URE AND FIXTURE OF RS.4,50,000/- WAS MADE. WHEN THE MATTER WAS CARRI ED BEFORE THE FIRST APPELLATE AUTHORITY, THOUGH LEARNED CIT(APPEALS) HA S MADE A SPECIFIC REFERENCE THAT THE ASSESSEE HAS FURNISHED A VALUATI ON REPORT OF A GOVERNMENT APPROVED VALUER AND THAT VALUATION WAS V ERY CLOSE TO THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE, HOWE VER, HE HAS THOUGHT IT PROPER TO RETAIN THE ADDITION AT RS.1,00,000/- ON E STIMATE BASIS. IT IS ALSO WORTH TO NOTE THAT THE LEARNED CIT(APPEALS) HAS ASK ED THE COMMENTS OF THE ASSESSING OFFICER, HOWEVER, EVEN AFTER REMINDER S THERE WAS NO REPLY RECEIVED FROM THE OFFICE OF THE ASSESSING OFFICER, THEREFORE, LEARNED CIT(APPEALS) THOUGHT IT PROPER TO PROCEED WITH THE APPEAL AS PER THE RECORD AVAILABLE BEFORE HIM. CONSIDERING THE ARGUM ENTS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT ONCE A VALUATION REP ORT OF A TECHNICAL PERSON IS ON RECORD AND WHICH IS VERY CLOSE TO THE COST OF CONSTRUCTION DISCLOSED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT A ND THE REVENUE IS NOT IN A POSITION TO PLACE ANY CONTRARY MATERIAL, THERE FORE, THERE WAS NO JUSTIFICATION FOR SUCH AN ADHOC ADDITION. A VIEW H AS ALREADY BEEN TAKEN WHILE DECIDING THE ASSESSEES APPEAL, THEREFORE, TH IS GROUND OF THE REVENUE IS HEREBY DISMISSED. 27. GROUND NO.3 (3) THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,00,000/- MADE ON ACCO UNT OF HOUSEHOLD EXPENSES. ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 22 - 27.1. THE ACTION OF THE ASSESSING OFFICER FOR MAKIN G THE ADDITION FOR HOUSE-HOLD EXPENSES WAS BASED UPON THE STATEMENT RE CORDED DURING THE COURSE OF SURVEY. HOWEVER, THE ADMITTED FACTUAL PO SITION IS, AS DISCUSSED HEREINABOVE, THE ASSESSEE HAS FURNISHED AN AFFIDAVI T AND RETRACTED THE STATEMENT LATER ON. WHEN THE MATTER WAS CARRIED BE FORE THE FIRST APPELLATE AUTHORITY, IT WAS FOUND THAT THE APPELLANT WAS SHOW ING A MONTHLY WITHDRAWAL OF RS.10,000/-. LEARNED CIT(APPEALS) HA S ALSO GIVEN A FINDING THAT IN THE PAST AS WELL THE SAID WITHDRAWA L WAS ACCEPTED. AS PER LEARNED CIT(APPEALS), RS.1,20,000/- WAS REASONA BLE HOUSE-HOLD EXPENDITURE CONSIDERING THE PLACE WHERE THE ASSESSE E IS RESIDING. A FUNDAMENTAL QUESTION IS RAISED BEFORE US THAT IN TH E ABSENCE OF ANY CONTRARY MATERIAL IN THE POSSESSION OF THE REVENUE DEPARTMENT EVEN AFTER SURVEY OPERATION THROUGH WHICH IT COULD BE DEMONSTR ATED THAT THE ASSESSEE HAS INCURRED, OVER AND ABOVE, THE EXPENDIT URE FOR HOUSE-HOLD, WHETHER IT WAS JUSTIFIABLE TO DISTURB THE CLAIM OF EXPENDITURE AS DISCLOSED IN THE BOOKS OF ACCOUNT. WE DO AGREE WITH THE FIND ING OF LEARNED CIT(APPEALS) AND, THEREFORE, AFFIRM HIS VERDICT THA T THE H.H.EXPENDITURE AS DISCLOSED WAS A REASONABLE EXPENDITURE. THIS GR OUND OF THE REVENUE IS, THEREFORE, DISMISSED. 28. GROUND NO.4 (4) THE EARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITION OF RS.49,000/- MADE ON ACCOUN T OF UNEXPLAINED CREDITS IN CAPITAL ACCOUNT. ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 23 - 28.1. ON SCRUTINY OF THE ACCOUNTS, IT WAS NOTICED B Y THE ASSESSING OFFICER THAT A SUM OF RS.49,000/- WAS FOUND CREDITE D IN THE ASSESSEES CAPITAL ACCOUNT. THE EXPLANATION OF THE ASSESSEE W AS THAT IT BELONGED TO HIS BROTHER-IN-LAW WHO HAPPENED TO BE A PARTNER OF A FIRM M/S.POOJA PLASTICS. THE SAID UNIT WAS CLAIMED TO HAVE BEEN CLOSED DOWN AND THE AFORESAID AMOUNT WAS NOTHING BUT SALE CONSIDERATION OF MACHINERY. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED AN D TAXED THE SAME. BEFORE LEARNED CIT(APPEALS), A CONFIRMATION FROM TH E CONCERNED PARTIES HAVE BEEN FILED AND IT IS ALSO WORTH TO MENTION THA T FOLLOWING THE PROCEDURE OF RULE 46A OF THE I.T. RULES, 1962 LEARN ED CIT(APPEALS) CONFRONTED ALL THOSE EVIDENCES TO THE ASSESSING OFF ICER AS WELL. NATURALLY, ONCE IT WAS ESTABLISHED THAT THE AMOUNT IN QUESTION DID NOT BELONG TO THE ASSESSEE, THEREFORE, IT WAS DIRECTED TO DELETE THE SAME. ON DUE CONSIDERATION OF THE RELEVANT MATERIAL, WE HERE BY AFFIRM THOSE FINDINGS OF LEARNED CIT(APPEALS). THIS GROUND OF T HE REVENUE IS DISMISSED. 29. GROUND NO.5 (5) THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,82,284/- MADE ON ACCO UNT OF UNACCOUNTED INVESTMENT IN RESIDENTIAL BUNGALOW. 29.1. IN RESPECT OF THE ALLEGED UNACCOUNTED INVESTM ENT IN RESIDENTIAL- BUNGALOW, WE HAVE ALREADY TAKEN A VIEW IN FAVOUR OF THE ASSESSEE AND THEREUPON HELD THAT THE VALUE AS DECLARED BY THE AS SESSEE HAS TO BE ACCEPTED SUBJECT TO THE DIRECTIONS MADE HEREINABOVE . CONSEQUENTLY, WE ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 24 - FIND NO FORCE IN THIS GROUND OF THE REVENUE IN THIS ASSESSMENT AS WELL AND HEREBY DISMISSED. 30. WE SUMMARIZE THE RESULT AS UNDER:- 1. ASSESSEES APPEAL, ITA NO.2313/AHD/2007 FOR ASSESS MENT YEAR 2001-02 IS PARTLY ALLOWED. 2. REVENUES APPEAL, ITA NO.2791/AHD/2007 FOR ASSESSM ENT YEAR 2001-02 IS DISMISSED. 3. ASSESSEES APPEAL, ITA NO.1019/AHD/2006 FOR ASSESSM ENT YEAR 2002-03 IS PARTLY ALLOWED. 4. REVENUES APPEAL, ITA NO.1570/AHD/2006 FOR ASSESSME NT YEAR 2002-03 IS DISMISSED. 5. ASSESSEES APPEAL, ITA NO.2314/AHD/2007 FOR ASSESSM ENT YEAR 2003-04 IS PARTLY ALLOWED. 6. REVENUES APPEAL, ITA NO.2792/AHD/2007 FOR ASSESSME NT YEAR 2003-04 IS PARTLY ALLOWED. ` ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 10/ 12 /2010. SD/- SD/- ( G.D.AGRAWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 10 / 12 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XXI, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NOS.2313,2791/AHD/07, 1019, 1570/AHD/2006 & 2314, 2792/AHD/2007 DR.ROHIT PURSHOTTAMBHAI PATEL VS. ITO (CROSS APPEAL S) AYS 2001-02, 2002-03 & 2003-04 - 25 - 1. DATE OF DICTATION..30/11/2010 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01/12/2010 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S10/12/10 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 10/12/10 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER