CARDIAC CARE & ALLIED HEALTH PVT. LTD., JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR

ITA 247/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6491 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RUNI PAUL CIT DHK
• Assessee Lawyers: BINOD KR GUPTA
• Keywords: Gross profit estimation; Rejection of books of accounts; Depreciation; Principle of natural justice; Reasonable cause
• Section: 143(3); 142(1); 115JB; 143(2); 191; 13; 145(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES B, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH LANHI XLKA ] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI SANDEEP GOSAIN, JM VK;DJ VIHY LA -@ ITA NO. 247/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2006-07 CARDIAC CARE & ALLIED HEALTH PVT. LTD., 7, VIVEKANAND MARG, C- SCHEME, JAIPUR - 302001. CUKE VS. D.C.I.T., CIRCLE-6, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AAACC 7489 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI BINOD KR. GUPTA & SHRI DEEPAK SHARMA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. RUNI PAUL (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/09/2020 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/09/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), AJMER DATED 10/12/2018 FOR THE A.Y. 2006-07 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. THE HEARING OF THE APPEAL WAS CONCLUDED THROUGH VIDEO CONFERENCE IN VIEW OF THE PREVAILING SITUATION OF COVID-19 PANDEMIC. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY RUNNING A ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 2 HOSPITAL. FOR THE SUBJECTED ASSESSMENT YEAR ROI DATED 09.09.2006 DECLARING PROFIT OF RS.32,68,832/- WAS FILED WHEREIN, AFTER SETTING OFF OF THE BROUGHT FORWARD DEPRECIATION TOTAL INCOME OF RS. NIL WAS SHOWN, HOWEVER, TAX WAS PAID U/S 115JB OF THE ACT. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) AND 142(1) OF THE ACT WAS ISSUED ON 11.07.2008 WHICH WERE DULY REPLIED AND DETAILS AS REQUIRED WERE SUBMITTED BEFORE THE AO. 4. THE ASSESSMENT U/S 143(3) WAS MADE AFTER INVOKING SECTION 145(3) OF THE ACT, DISALLOWING CERTAIN EXPENSES AMOUNTING TO RS.48,18,492/-IN THE FOLLOWING MANNER: DISALLOWANCES OUT OF EXPENSES DEBITED IN TRADING ACCOUNT S.NO. EXPENSES AMOUNT DEBITED AMOUNT DISALLOWED/ADDED 1. DISCOUNTS 42,06,761 21,03,380 (50% OF TOTAL AMOUNT DEBITED) 2. ORTHOPEDIC CONSUMPTION EXPENSES 2,91,000 2,91,000 3. CATH LAB EXPENSES - 19,36,062/- (ESTIMATION MADE) 4. JOB CHARGES PAID 1,02,750/- 1,02,750/- U/S 40(A)(I) TOTAL 44,33,192/- ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 3 ESTIMATED THE TOTAL RECEIPT @388% OF EXPENSES BY DRAWING INFERENCE FROM EXPENSES AND RECEIPTS OF MONTH OF MAY. DISALLOWANCES OUT OF EXPENSES DEBITED IN P&L ACCOUNT S.NO. EXPENSES AMOUNT DEBITED AMOUNT DISALLOWED/ADDED 1. SALARY TO DIRECTOR 1,09,300/- 1,09,300/- U/S 40A(2)(B) 2. RENT PAID TO DIRECTOR 36000/- 36000/- 3. RENT PAID TO DIRECTOR 2,40,000/- 2,40,000/- TOTAL 3,85,300/- 3,85,300/- 5. CONSEQUENT TO REJECTION OF BOOKS OF ACCOUNTS U/S 145(3), THE TRADING RESULTS OF THE ASSESSEE WERE DISBELIEVED AND GP WAS ESTIMATED AT THE RATE OF 32.74% AS AGAINST GP RATE OF 27.15% SHOWN BY THE ASSESSEE WHICH RESULTED INTO DIFFERENTIAL GP ESTIMATION OF RS.47,08,357/-. AS THE ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENSES OF TRADING ACCOUNT WAS ALREADY MADE, THEREFORE THE AMOUNT OF ESTIMATED GP WAS NOT ADDED SEPARATELY. 6. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS CONFIRMED ALL THE ADDITIONS/DISALLOWANCES, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT BY TAKING FOLLOWING GROUNDS OF APPEAL: ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 4 1. GROUND OF APPEAL-1: IMPUGNED ORDER PASSED U/S 143(3) IS BAD IN LAW AND ON THE FACTS BEING AGAINST THE PRINCIPAL OF NATURAL JUSTICE, PERVERSE AND FOR MANY MORE STATUTORY REASONS. 2. UNDER THE FACTS AND CIRCUMSTANCES, LD.AO HAS ERRED BY REJECTING THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 AND CIT(A) HAS ERRED BY CONFIRMING THE SAME. THE ACTION OF THE LD.AO AND CONFIRMED BY THE CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. 3. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING THE DISCOUNT OF RS. 21,03,380/- AND CIT(A) HAS ERRED BY SUSTAINING THE SAME. THE DISALLOWANCE MADE AND CONFIRMED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 4. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING THE ORTHOPEDIC CONSUMPTION EXPENSES OF RS. 2,91,000/- AND CIT(A) HAS ERRED BY SUSTAINING THE SAME. THE DISALLOWANCE MADE AND CONFIRMED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 5. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING THE CATH LAB EXPENSES OF RS. 19,39,062/- AND CIT(A) HAS ERRED BY SUSTAINING THE SAME. THE DISALLOWANCE MADE AND CONFIRMED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 6. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING SALARY OF RS. 1,09,300/- U/S 40A(2)(B) AND CIT(A) HAS ERRED BY SUSTAINING THE SAME. THE DISALLOWANCE MADE AND CONFIRMED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 7. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING RENT OF RS. 2,76,000/- PAID TO SHRI GUMAN MAL UONGIA AND M/S HEART HOSPITAL & RESEARCH CENTRE U/S 40A(2)(B) AND CIT(A) HAS ERRED BY SUSTAINING THE SAME. THE DISALLOWANCE MADE AND CONFIRMED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 8. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING THE JOB PAID CHARGES OF RS. 1,02,750/- AND CIT(A) HAS ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 5 ERRED BY SUSTAINING THE SAME. THE DISALLOWANCE MADE AND CONFIRMED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 9. UNDER THE FACTS AND CIRCUMSTANCES, LD. AO HAS ERRED BY MAKING A TRADING ADDITION OF RS. 47,08,357/- BY APPLYING GP RATE OF 32.74% AND CIT(A) HAS ERRED BY SUSTAINING THE SAME. THE ADDITION MADE AND CONFIRMED IS UNJUSTIFIED, ILLEGAL AND EXCESSIVE. 10. THAT THE APPELLANT CRAVES YOUR INDULGENCE TO ADD, AMEND, MODIFY OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED ENTIRE MATERIAL PLACED ON RECORD AND THE JUDICIAL PRONOUNCEMENTS CITED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LD. AR AND LD. DR DURING THE COURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. SINCE THE A.O. HAS NOT MADE ANY TRADING ADDITION BUT HAD MADE SPECIFIC ADDITIONS WITH RESPECT TO EXPENDITURE CLAIMED, WE ARE DEALING WITH THE PRECISE ADDITION MADE BY THE A.O. FIRSTLY, THE A.O. HAD DISALLOWED DISCOUNT GIVEN TO THE PATIENT AMOUNTING TO RS. 42,06,781/-. THE A.O. DISALLOWED 50% OF SUCH EXPENSES WHICH WAS CONFIRMED BY THE LD. CIT(A). 8. FROM THE RECORD, WE FOUND THAT DURING THE YEAR ASSESSEEE ALLOWED DISCOUNT AND AMOUNT WRITTEN OFF DURING THE YEAR TOTALING TO RS.42,06,781/-. DURING THE COURSE OF ASSESSMENT, 50% OF AMOUNT SO ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 6 INCURRED WAS DISALLOWED BY THE AO. DURING THE COURSE OF FIRST APPEAL, THE DISALLOWANCE SO MADE WAS SUSTAINED BY THE LD. CIT(A) 9. COMPLETE DETAILS AMOUNTING TO RS.42,06,781/- WERE MADE AVAILABLE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE SUMMARY OF TOTAL DISCOUNT EXPENSE IS AS UNDER: PARTICULARS AMOUNT AMOUNT PBP DISCOUNT TO PATIENT BY SEPARATE VOUCHERS* 95,855/ - 52 - 53 CONCESSION DETAILS (INDOOR PATIENTS) 24,19,010/- 54-66 & 161-174 DISCOUNT DUE TO CANCELLATION OF PATIENT ADMISSION 12,995/ - DISCOUNTS TO RECOGNIZED INSTITUTES 12,10,342/- DISCOUNTS TO FR IENDS AND RELATIVES 2,71,522/ - DISCOUNT TO MISCELLANEOUS PARTIES 1,84,300/- DISCOUNTS AS PART OF PACKAGE 42,324/- DISCOUNTS TO POOR PARTIES 1,85,845/ - DISCOUNTS TO DOCTORS AND THEIR RELATIVES 3,96,572/ - DISCOUNT TO STAFF AND THEIR 1,15,110/- W/OFF DURING THE PERIOD 11,49,944/ - CONCESSION (OPD) DETAILS 5,41,972/- TOTAL 42,06,781/ - ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 7 10. FROM THE RECORD, WE FOUND THAT THE ASSESSEE PROVIDES TWO TYPES OF DISCOUNT TO RECOGNIZED INSTITUTIONS: DIFFERENCE BETWEEN RATE CHARGED FROM THESE INSTITUTIONS AND NORMAL RATE OF HOSPITALS PERCENTAGE WISE DISCOUNT ON THE BILL AMOUNT. COMPLETE DETAILS OF AMOUNT WRITTEN OFF WERE PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE COMPANY MADE EFFORTS TO REALIZE THE PENDING AMOUNT BUT SINCE THE SAME WAS NOT RECOVERED, IT HAS BEEN WRITTEN OFF. THE AMOUNT AS WRITTEN OFF ARE DEDUCTIBLE U/S 36(1)(VII) IN THE YEAR WHICH THE SAME IS WRITTEN OFF IRRESPECTIVE OF THE YEAR IN WHICH THEY HAVE ORIGINATED. 11. WE OBSERVE THAT THE AO WRONGLY OBSERVED THAT ASSEESSEE SUBMITTED ONLY THE NAME OF THE PATIENTS TO WHOM DISCOUNT WAS ALLOWED. IN FACT THE DETAILS SUBMITTED BEFORE THE AO CONTAINED THE FOLLOWING PARTICULARS: PATIENT NAME REG NO. PERIOD OF TREATMENT BILL NO. AMOUNT CONCESSION/DISCOUNT/W/OFF AMOUNT REASON OF CONCESSION ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 8 FROM THE ABOVE DETAILS IT CAN BE CLEARLY UNDERSTOOD THAT ALL THE DETAILS WERE AVAILABLE BUT SINCE THE DETAILS WERE BULKY (109 PAGES/MORE THAN 4000 ENTRIES) AND FURTHER FURNISHING ADDRESSES WOULD HAVE MADE THE DETAILS FURTHER BULKIER WHICH RESULTS INTO WASTAGE OF STATIONERY AND MAN- POWER UNNECESSARY. 12. WE FURTHER OBSERVE THAT THE ASSESSEE IS RUNNING HEART & GENERAL HOSPITAL AND DUE TO MEDICO LEGAL REASON ASSESSEE COMPANY IS EXPECTED TO HAVE ADDRESS OF EACH PATIENT. 13. FROM THE RECORD, WE ALSO FOUND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS COMPLETE BOOKS OF ACCOUNTS ALONG WITH SUPPORTING VOUCHERS, BILLS CONTAINING ADDRESSES OF THE PATIENTS AND OTHER EVIDENCES WERE PRODUCED ON 6 TH , 14TH & 21ST OCTOBER, 4 TH , 12TH NOVEMBER, 2008. THE AO COULD HAVE VERY WELL CROSS VERIFIED THE DETAILS AND FOUND OUT THE ADDRESSES FROM THE BILLS PRODUCED HAS HE SO DESIRED. HOWEVER, NO PROPER VERIFICATION WAS MADE WITH RESPECT TO BOOKS PRODUCED BEFORE HIM AND ARBITRARILY DISALLOWED 50% OF SUCH DISCOUNT. 14. FROM THE RECORD, WE FOUND THAT EVEN BEFORE THE LD. CIT(A), COPIES OF BILLS RAISED AND SOME PAGE OF PATIENT REGISTER EVIDENCING THAT COMPLETE DETAILS OF PATIENTS WERE AVAILABLE WITH THE COMPANY WERE FILED: (REPRODUCED AT PAGE 3-14 OF CIT(A) ORDER) ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 9 PARTICU LARS S. NO. SELECTED RANDOMLY FROM DISCOUNT DETAILS PB PAGE NO. CONCESSION DETAILS (INDOOR PATIENTS) 5,10,5,205,305,405 175-179 W/OFF DURING THE PERIOD 180 - 191 SAME WERE SENT FOR REMAND, WITHOUT DISPUTING THE FACTUAL DOCUMENTS, THE AO REITERATED THE ASSESSMENT ORDER AND IT WAS ALSO SUBMITTED BEFORE CIT(A) THAT THESE EXAMPLES WERE SELECTED RANDOMLY AND IF REQUIRED ANY OTHER DOCUMENT, SAME CAN BE FILED. IN THIS REGARD, AT PAGE NO. 3 OF THE ASSESSMENT ORDER, THE A.O. HAS OBSERVED AS UNDER: ALL THE DOCTORS ARE CHARGING THE VISITING FEES, THEREFORE THERE IS NO REASONABLE CAUSE TO ALLOW DEDUCTIONS TO THE RELATIVES OF THE DOCTORS. HOWEVER IF THE COMPANY ALLOW SO THIS AMOUNT HAVE TO BE ADDED BACK IN THE HAND OF THE DOCTOR. 15. IN THIS REGARD, WE OBSERVE THAT IT IS GENERAL PRACTICE IN ANY PROFESSION TO ALLOW DISCOUNTS TO THE RELATIVE AND KNOWN, WHICH CANNOT BE DENIED AND CANT BE TERMED AS PERQUISITES IN THE HANDS OF DOCTORS. 16. WE DO NOT FIND ANY MERIT IN THE OBSERVATION OF THE A.O. TO THE EFFECT THAT WHEN COMPANY WAS IN LOSSES IT WAS NOT JUSTIFIABLE FOR THE COMPANY TO ALLOW DISCOUNT TO PATIENTS. THE AO HAS TRANSGRESSED INTO THE ARENA OF BUSINESSMAN. HOW BUSINESS IS TO BE CONDUCTED IS THE SOLE PREROGATIVE OF THE ASSESSEE. THE AO CANNOT SIT IN THE ARM CHAIR OF THE BUSINESSMAN AND DICTATE THE TERMS AT WHICH BUSINESS IS TO BE CONDUCTED. ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 10 17. EVEN THE PAST HISTORY OF THE ASSESSEE, WHERE THE ASSESSMENTS WERE FRAMED U/S 143(3) OF THE ACT AND NO DISALLOWANCE WAS MADE IN THE A.Y. 2004-05 AND 2005-06. DISALLOWANCE MADE IN THE A.Y. 2001-02 AMOUNTING TO RS. 25,000/- WAS DELETED IN THE APPEAL BY THE LD. CIT(A) VIDE ORDER DATED 16/02/2006 IN APPEAL NO. 97/04-05. COPY OF THE SAME IS PLACED ON RECORD. 18. IN VIEW OF ABOVE, DISCOUNT OF RS. 42,06,781/- CLAIMED BY THE ASSESSEE COMPANY IS JUSTIFIED WHICH DESERVES TO BE ALLOWED AND DISALLOWANCE OF RS. 21,03,380/- IS QUASHED. 19. THE A.O. HAS ALSO DISALLOWED THE ORTHOPEDIC CONSUMPTION EXPENSES OF RS. 2,91,000/- AND THE LD. CIT(A) HAS SUSTAINED THE SAME. IN THIS REGARD, WE OBSERVE THAT DURING THE YEAR UNDER APPEAL, ASSESSEE COMPANY INCURRED RS. 4,81,000/- TOWARDS ORTHOPEDIC EXPENSE DETAILS OF WHICH ARE AS UNDER: MONTH AMOUNT INCURRED ORTHOPEDIC INCOME APRIL 1,25,500/- - MAY 1,500/ - 4,95,000/ - JUNE 2,91,000/- - MARCH - 10,000/ - TOTAL 4,18,000/ - 5,05,000/ - THE AO DISALLOWED THE EXPENSES AMOUNTING TO RS. 2,91,000/- INCURRED IN JUNE FOR THE REASON THAT THE CONSUMPTION DECLARED IN THE MONTH OF JUNE HAVE NOT BEEN USED FOR THE BUSINESS PURPOSES. ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 11 20. FROM THE RECORD, WE FOUND THAT THE ABOVE EXPENDITURE WAS INCURRED FOR THE TREATMENT OF FOLLOWING THREE PATIENTS: 1. NIRMALA BHARGAV 2. USHA BHARGAV 3. RADHA DEVI SHARDA THE ABOVE TREATMENT WAS DONE IN THE MONTH OF APRIL FOR WHICH ONLY PROFESSIONAL FEES OF RS.1,25,500/- WAS PAID IN THE SAME MONTH. THE MATERIAL FOR CONSUMPTION IN TREATMENT AMOUNTING TO RS.2,91,000 WAS PURCHASED IN THE MONTH OF APRIL. BILLS OF WHICH WERE ACCOUNTED FOR IN THE MONTH OF JUNE. DETAILS ARE AS UNDER: S. NO. NAME OF PATIENT FEES CHARGED MATERIAL CONSUMPTION BILL DATE AMOUNT 1 NIRMALA BHARGAV 1,60,000/- (PBP 194) 30/04/05 82,000/- (PBP 200- 204 ) 2 USHA BHARGAV 1,60,000/- (PB P - 193 30/04/05 1,02,000/- (PB P 20 1 ) 3 RADHA DEVI SHARDA 1,75,000/- (PBP-201) 30/04/05 1,02,000/- (PBP 199- 203) UNALLOCATED EXPENDITURE 5,000/- (PBP-198) TOTAL 4,95,000/ - 2,91,000/ - SINCE THE COMPLETE EXPENSE IS FULLY VERIFIABLE AS EVIDENT FROM ABOVE TABLE, AO AS WELL AS CIT(A) HAS WRONGLY OBSERVED THAT CONSUMPTION DECLARED IN THE MONTH OF JUNE HAVE NOT BEEN USED FOR BUSINESS PURPOSE. IN VIEW OF ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 12 ABOVE, ORTHOPEDIC EXPENSE OF RS. 4,18,000/- CLAIMED BY THE ASSESSEE COMPANY IS FULLY VERIFIABLE. ACCORDINGLY, WE DIRECT THE A.O. TO DELETE THE DISALLOWANCE OF RS. 2.91 LACS. 21. THE A.O. HAS ALSO DISALLOWED CATH LAB EXPENSES OF RS. 19,39,062/- AND CIT(A) HAS ERRED BY SUSTAINING THE SAME. IN THIS REGARD WE OBSERVE THAT DURING THE YEAR ASSESSEE COMPANY HAD DEBITED RS.2,82,63,133/- UNDER THE HEAD CATH LAB EXPENSE AND DECLARED CATH LAB RECEIPTS OF RS.4,04,58,638/-. THE AO HAD ADDED A SUM OF RS.19,36,062/- TO THE TOTAL INCOME OF THE ASSESSEE BY ESTIMATING CASH LAB RECEIPTS TO RS.4,23,94,700/- ON THE BASIS OF RATIO BETWEEN CATH LAB INCOME AND CATH LAB EXPENSE FOR THE MONTH MAY I.E. 388%. (AO APPLIED 175%). ASSESSEE COMPANY MAINTAINED TWO SEPARATE ACCOUNTS FOR CATH LAB EXPENSE AS UNDER: CATH LAB EXPENSES PURCHASES OF CONSUMABLES USED IN CATH LAB PROCEDURE PURCHASES OF BLOOD FROM BLOOD BANK CALL DUTIES PAID TO STAFF COST OF MEDICINES REIMBURSED TO RELATIVES COVERED UNDER PACKAGE CATH LAB RECOVERABLE COST OF SPECIAL DIES AND INJECTIONS COST OF STENTS, BALLOONS ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 13 22. WE ALSO OBSERVE THAT THE ASSESSEE COMPANY AND OTHER HOSPITALS ALSO FOLLOW AN ACCOUNTING PROCEDURE, WHEREIN, EXPENSE INCURRED ON PURCHASE OF CONSUMABLES LIKE STENTS, BALLOONS, SPECIAL DIES, INJECTIONS ETC. ARE RECOVERABLE FROM THE PATIENTS. THESE EXPENSES ARE DEBITED TO THE ACCOUNT OF PATIENT AS SOON AS THE INVOICE OF SUPPLIER IS RECEIVED. BUT JOURNAL VOUCHERS FOR THESE EXPENSES ARE PASSED AFTER BEING APPROVED. THE AO HAS ESTIMATED THE GROSS CATH LAB INCOME ON THE BASIS OF RATIO OF CATH LAB EXPENSE AND CATH LAB INCOME FOR THE MONTH OF MAY. HE HAS FAILED TO CO-RELATE THE EXPENSE INCURRED WITH THE INCOME RECORDED IN THE MONTH OF MAY. MOST OF THE EXPENSES WHICH HAVE ACTUALLY BEEN INCURRED IN MAY MONTH WERE BOOKED IN THE MONTH OF JUNE. IT IS CLEAR THAT EXPENDITURE IN RELATION TO ANY PARTICULAR INCOME WAS NOT NECESSARILY BOOKED IN THE SAME MONTH. THEREFORE, MONTH WISE CORRELATION DONE BY THE AO BETWEEN CATH LAB INCOMES AND EXPENDITURES IS BASELESS. THE AO IGNORING THE ABOVE FACTS APPLIED THE RATIO OF 175% ALTHOUGH APPLIED BY AO 150%), TO THE CATH LAB EXPENSE FOR DETERMINING CATH LAB RECEIPTS WHICH IS NOT JUSTIFIED. 23. FROM THE RECORD, WE ALSO FOUND THAT DURING THE MONTH OF MAY SOME SPECIFIC PROCEDURES WERE ALSO CARRIED OUT, FOR WHICH DOCTORS WERE CALLED FOR FROM MUMBAI. PROFESSIONAL FEES PAID TO THESE DOCTORS WERE ALSO RECOVERED FROM THE PATIENTS AND CREDITED TO CATH LAB INCOME A/C. SINCE ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 14 THE AMOUNT PAID TO DOCTORS WAS SEPARATELY CONSIDERED UNDER THE HEAD PROFESSIONAL FEES PAID, IT RESULTED INTO ENHANCEMENT OF RATIO BETWEEN CATH LAB INCOME AND CATH LAB EXPENSE. 24. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE DISALLOWANCE SO MADE BY THE A.O. AMOUNTING TO RS. 19,39,062/-. 25. THE A.O. ALSO DISALLOWED SALARY OF RS. 1,09,300/- U/S 40A(2)(B) AND THE LD. CIT(A) HAS SUSTAINED THE SAME. IN THIS REGARD, WE OBSERVE THAT DURING THE YEAR UNDER APPEAL, ASSESSEE COMPANY HAS PAID SALARY AMOUNTING RS. 1,09,300/- TO SHRI GUMAN MAL TONGIA, DIRECTOR OF THE COMPANY WHICH WAS DISALLOWED BY AO ON THE ALLEGED GROUND THAT ASSESSEE FAILED TO JUSTIFY THIS EXPENDITURE. SHRI GUMAN MAL JI WAS LOOKING AFTER THE ADMINISTRATION WORK OF THE ASSESSEE COMPANY WHICH INCLUDED THE FOLLOWING: LOOKING AFTER THE ATTENDANCE OF STAFF, PAYMENT OF SALARY, PF ADMINISTRATION COPY OF LETTER SIGNED BY SHRI GUMAN MAL JI INSTRUCTING SBBJ BRANCH FOR PAYMENT OF SALARY TO EMPLOYEES WERE FILED BEFORE THE LOWER AUTHORITIES. COPY OF LETTER WRITTEN TO COMMISSIONER, EMPLOYEES PROVIDENT FUND SIGNED BY SHRI GUMAN MAL JI WAS FILED BEFORE THE LOWER AUTHORITIES. ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 15 ADMINISTRATION OF CASH. HE WAS 83 YEARS OLD AND EARLIER WORKING AS ADMINISTRATOR AT M/S HEART HOSPITAL & RESEARCH CENTRE AND PURCHASE EXECUTIVE IN M/S CAPSTAN METERS INDIA LTD. FOR MORE THAN 40 YEARS AND LOOKING TO HIS VAST EXPERIENCE, SALARY PAID TO HIM WAS REASONABLE. 26. IN VIEW OF THE ABOVE FACTUAL POSITION AND KEEPING IN VIEW THE WORK UNDERTAKEN BY SHRI GUMAN MAL TONGIA, THERE IS NO JUSTIFICATION FOR DISALLOWANCE OF SALARY OF RS. 1,09,300/-. 27. THE A.O. HAS ALSO DISALLOWED RENT OF RS. 2,76,000/- PAID TO SHRI GUMAN MAL UONGIA AND M/S HEART HOSPITAL & RESEARCH CENTRE U/S 40A(2)(B) AND THE LD. CIT(A) HAS SUSTAINED THE SAME. IN THIS REGARD, WE OBSERVE THAT DURING THE YEAR UNDER APPEAL, ASSESSEE COMPANY HAS PAID AMOUNTING TO RS. 2,76,000/- TO FOLLOWING PARTIES WHICH WAS DISALLOWED BY AO ON THE ALLEGED GROUND THAT ASSESSEE FAILED TO JUSTIFY THIS EXPENDITURE. RENT TO SHRI GUMAN MAL JI TONGIA WAS PAID FOR HOUSE SITUATED AT 2KA 23, JAWAHAR NAGAR, JAIPUR. THE HOUSE WAS PROVIDED TO SHRI KAMAL KUMAR TONGIA, DIRECTOR OF THE COMPANY. SAID AMOUNT OF RENT WAS OFFERED FOR TAX S.NO. PARTY NAME AMOUNT 1. SHRI GUMAN MAL TONGIA 36,000/- 2. M/S HEART HOSPITAL & RESEARCH CENTRE 2,40,000/- TOTAL 2,76,000/ - ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 16 IN THE RETURN OF INCOME OF SHRI KAMAL KUMAR JI TONGIA AS PERQUISITE. RENT TO M/S HEART HOSPITAL & RESEARCH CENTRE WAS PAID FOR ACCOMMODATION FOR KEEPING RECORDS AND FOR PROVIDING RESIDENCE TO DR. RAVINDRA TONGIA, DIRECTOR OF THE COMPANY. 28. WITH REGARD TO ABOVE, THE SALARY PAID TO SHRI RAVINDERA TONGIA, WE OBSERVE THAT THE PREMISE IS SITUATED AT 8/A, YUDHISTER MARG, C-SCHEME, JAIPUR WHICH IS NEAR TO HOSPITAL OF THE ASSESSEE COMPANY. LOOKING TO THE AREA OCCUPIED BY THE ASSESSEE COMPANY. THE PROXIMITY TO THE HOSPITAL AND POSH LOCALITY OF THE PREMISES, THE RENT PAID IS REASONABLE. THE SERVICES OF DR. R.K. TONGIA ARE REQUIRED BY THE ASSESSEE COMPANY ON 24 HOURS BASIS. THE AREA OCCUPIED FOR DR. R.K. TONGIAS RESIDENCE IS APPROXIMATELY 4000 SQ. FT. AND AREA OCCUPIED FOR RECORD KEEPING IS APPROXIMATELY 188 SQ. FT. 29. FROM THE RECORD, WE ALSO FOUND THAT THE ASSESSEE COMPANY HAS ALSO PAID THE SAME RENT IN AY 2005-06 WHICH WAS ALLOWED BY IN THE ASSESSMENT MADE U/S 143(3) OF THE ACT. IN VIEW OF THE ABOVE, THERE IS NO JUSTIFICATION FOR THE DISALLOWANCE MADE BY THE A.O. AMOUNTING TO RS. 2,76,000/-. 30. THE A.O. HAS ALSO DISALLOWED JOB PAID CHARGES OF RS. 1,02,750/- AND THE LD. CIT(A) HAS SUSTAINED THE SAME. AFTER GOING THROUGH THE ITA 247/JP/2019_ CARDIAC CARE & ALLIED HEALTH P LTD. VS DCIT 17 DETAILS OF JOB CHARGES PAID AND REASONING GIVEN BY THE A.O., WE RESTRICT THE DISALLOWANCE ON ACCOUNT OF JOB PAID CHARGES TO RS. 25,000/-. 31. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2020. SD/- SD/- LANHI XLKA JES'K LH 'KEKZ (SANDEEP GOSAIN) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/09/2020 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- CARDIAC CARE & ALLIED HEALTH PVT. LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE D.C.I.T., CIRCLE-6, 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. 247/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR