ITO, CHITTORGARH V. Dr. Suresh Sharma, BARI SADRI

ITA 251/JODH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54394 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gross profit estimation; Unexplained expenditure; Business income; Depreciation; Business expenditure; Income from undisclosed sources; Opportunity of cross examination
• Section: 143(3)

Judgement Text

1 ITA 251(8)-09 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 251/JODH/2009 ASSTT. YEAR : 2005-06. ITA NO. 652/JODH/2008 ASSTT. YEAR : 2003-04. ITA NO. 653/JODH/2008 ASSTT. YEAR : 2004-05. ITA NO. 659//JODH/2008 ASSTT. YEAR : 2002-03. ITA NO. 494/JODH/2009 ASSTT. YEAR : 2006-07. THE INCOME-TAX OFFICER, VS. DR. SURESH SHARMA, WARD-3, PROP. M/S. SHARMA NURSING CHITTORGARH. HOME, BARI SADRI. (APPELLANT) (RESPONDENT) C.O. NO. 27/JODH/2009 (ARISING OUT OF ITA NO. 653/JODH/2008 ASSTT. YEAR : 2004-05) C.O. NO. 25/JODH/2009 (ARISING OUT OF ITA NO. 659/JODH/2008 ASSTT. YEAR : 2002-03) C.O. NO. 28/JODH/2009 (ARISING OUT OF ITA NO. 652/JODH/2008 ASSTT. YEAR : 2003-04) DR. SURESH SHARMA, VS. THE INCOME-TAX OFFICER, BARI SADRI. WARD-3, CHITTORGARH. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI MAHESH KUMAR RESPONDENT BY : SHRI SANDEEP JHANWAR DATE OF HEARING : 01.12.2011. DATE OF PRONOUNCEMENT : 09.12.2011. ORDER DATED : 09/12/2011. PER R.K. GUPTA, J.M. THESE ARE FIVE APPEALS BY THE DEPARTMENT AND THREE CROSS OBJECTIONS BY ASSESSEE RELATING TO ASSESSMENT YEARS 2002-03 TO 06-07. 2 2. COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS OF DEPARTMENT AND CROSS OBJECTIONS OF THE ASSESSEE. THEREFORE, THEY ARE DI SPOSED OFF TOGETHER. 3. THE APPEALS OF THE DEPARTMENT AND CROSS OBJECTIO NS OF THE ASSESSEE YEAR-WISE ARE DISPOSED OFF IN THE FOLLOWING MANNER. ITA NO. 659/JODH/09 & CO NO. 28/JODH/09- A.Y. 2002- 03 . 4. GROUND NO. 1 IS AGAINST DELETING THE ADDITION OF RS. 13,5441 ON ACCOUNT OF UNACCOUNTED PURCHASES OF MEDICINES. 5. THE ASSESSING OFFICER PREPARED ANNEXURE -14 ON T HE BASIS OF REGISTERS/ FILES FOUND DURING THE COURSES OF SURVEY AS PER WHICH ASSESSEE HAS NOT INCLUDED PURCHASES TO THE EXTENT OF RS. 1,35,441/- IN THE PURCHASES SHOWN IN TRADING A/C OF RS. 10,35,860/-. HE ACCORDINGLY CONSIDERED THESE PURCHASES AS PURCHASES FROM UNDISCLOSED SOURCES AND MADE AN ADDITION OF RS. 1,35,441/-. THE CIT(A) HOWEVER, DELETED THE ADDITION FINDING THAT IN THE ASSESSMENT MADE U/S 143(3) THE TOTAL SALES WERE ESTIMATED AT RS. 15 LACS AS AGAINST DECLARED SALES OF RS. 12,67,290/- AND A TRADING ADD ITION OF RS. 92,987/- WAS MADE. HE HELD THAT SINCE THE ENHANCEMENT OF SALES IS MORE TH AN THE UNDISCLOSED PURCHASES FOUND, THE ADDITION WAS UNWARRANTED. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUN TS AND THE RETURN WAS FILED AFTER PREPARATION OF TRADING AND PROFIT & LOSS ACCOUNT BY ESTIMATING THE PURCHASES, SALES AND OTHER ITEMS ON THE BASIS OF MATERIAL AVAILABLE WITH HIM. THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS HAS ALREADY ENHANCE D THE SALES FROM RS. 12,67,290/- TO 15,00,000/- AND MADE A TRADING ADDITION. IN SUCH CI RCUMSTANCES WHEN THE SALES & PURCHASES WERE DECLARED ON ESTIMATES BASIS AND THER EAFTER THE ASSESSING OFFICER ESTIMATED 3 THE TRADING RESULTS BY ENHANCING THE SALES BY AN AM OUNT OF RS. 2,22,710/-, THE FURTHER ADDITION OF RS. 1,35,441/- IS UNWARRANTED. IN OUR C ONSIDERED OPINION THE CIT (A) HAS RIGHTLY DELETED THE ADDITION AND WE FIND NO INFIRMI TY IN HIS ORDER ON THIS ACCOUNT. THE GROUND OF APPEAL IS ACCORDINGLY REJECTED. 7. GROUND NO. 2 IS AGAINST DELETING OF ADDITION RS. 6,88,687/- ON ACCOUNT OF FEES. 8. THE ASSESSING OFFICER HAS MADE AN ESTIMATION OF THE TOTAL RECEIPTS ON THE BASIS OF SLIPS OF PATIENTS SEEN BY THE ASSESSEE DOCTOR ON TH E DATE OF SURVEY. HE HAS TAKEN A SAMPLE OF 13 PATIENTS OUT OF TOTAL 45 PATIENTS AND FOUND T HAT THE ASSESSEE COLLECTS ABOUT RS. 40 OF FEES ON RS. 60 OF MEDICINES GIVEN TO THE PATIENT. T HE ASSESSEE HAS SHOWN SALE/TRANSFER OF MEDICINES OF RS. 14,33,140/- AND INCLUDING THE UNDI SCLOSED PURCHASES OF RS. 1,35,441/- THE TOTAL SALES COMES TO RS. RS. 15,68,851. ON THIS BASIS THE ASSESSING OFFICER COMPUTED THE TOTAL OF SALES AND FEES AT RS. 26,14,251 (15688 51 X 100/60) AND COMPUTED GROSS PROFIT AT RS. 10,45,700 BEING 40 % OF TOTAL RECEIPTS. OUT OF THIS, THE ASSESSING OFFICER HAS REDUCED THE AMOUNT OF GROSS PROFIT OF RS. 3,57,013/ - SHOWN BY THE ASSESSEE AND MADE AN ADDITION OF RS. 6,88,687/-. THE CIT(A) FOUND THAT T HE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF CALCULATION MADE ON ESTIMATE BASIS. THE TR ADING ADDITION HAS ALREADY BEEN MADE IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND FURTHER NO MATERIAL IS FOUND SHOWING SUCH RECEIPTS FOR THE YEAR UNDER CONSIDERATION. ACCORDIN GLY HE HAS DELETED THE ADDITION. 9. BEFORE US THE LD. DR SUBMITTED THAT THE SLIPS FO UND DURING THE COURSE OF SURVEY GIVES A CLEAR PICTURE OF THE PRACTICE OF FEES AND C OST OF MEDICINES COLLECTED BY THE ASSESSEE AND THEREFORE ASSESSING OFFICER HAS MADE A REASONABLE ESTIMATE OF THE GROSS PROFIT OF THE ASSESSEE WHICH IS WRONGLY BEING DELETED BY T HE CIT(A). 4 10. ON THE OTHER HAND, THE LD. A/R SUBMITTED THAT T HE CALCULATIONS MADE BY THE ASSESSING OFFICER ARE INCORRECT AND ON WRONG BASIS AND GIVES VERY HIGH AMOUNT OF RECEIPTS WHICH IS NOT JUSTIFIED. HE REFERRED PAGE NO. 44 OF HIS PAPER BOOK WHEREIN THE GROSS MARGIN ON THE BASIS OF THE PATIENTS SLIPS IS CALCUL ATED AT 25.72%. THE LD. A/R SUBMITTED THAT TOTAL OF GROSS SUM CHARGED BY THE ASSESSEE FRO M THE PATIENTS AS FOUND WRITTEN ON THE SLIPS IS SHOWN AT RS.12,67,290/- FOR THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THE GROSS RECEIPTS CHARGED INCLUDES THE COST OF MEDICIN E AS WELL AS THE CONSULTATION CHARGES WHICH IS PRESENTED AS SALE IN THE PROFIT AND LOSS A CCOUNT AS STATED BY THE ASSESSEE DURING THE COURSE OF SURVEY IN ANSWER TO QUESTION NO. 11 P LACED AT PAPER BOOK PAGE 27 OF THE DEPARTMENTAL PAPER BOOK FOR THE ASSESSMENT YEAR 200 6-07. THE TOTAL SUM CHARGED IN THE 24 CASES IS RS.6445 GIVING AVERAGE CHARGES PER CUST OMER OF RS.145 (APPROX). ACCORDING TO HIM, THE TOTAL SALES OF RS.12,67,290/- AS SHOWN BY HIM IS SUFFICIENT TO COVER THE TOTAL RECEIPTS IF ESTIMATED TAKING INTO CONSIDERATION THE FACT THAT THE AVERAGE NUMBER OF PATIENTS PER WORKING DAY AND THE AVERAGE FEE CHARGED FROM EA CH PATIENT WOULD BE MUCH LESS IN THE YEAR UNDER CONSIDERATION AS COMPARED TO THE YEAR OF SURVEY. HE ALSO SUBMITTED THAT IN THE ASSESSMENT PROCEEDINGS U/S 143(3), THE SALES HAVE B EEN ENHANCED TO RS.15 LACS AND THEREFORE ALSO, NO FURTHER ADDITION WAS REQUIRED TO BE MADE ON THIS COUNT. WE HAVE HEARD THE RIVAL PARITIES AND PERUSED THE MA TERIAL ON RECORD. THE ASSESSING OFFICER HAS TRIED TO MAKE A CALCULATION O F GROSS PROFIT ON THE BASIS OF SUM CHARGED FROM 45 PATIENTS ON THE DATE OF SURVEY. TH E PERUSAL OF SUCH SLIPS AS APPENDED IN THE DEPARTMENTAL PAPER BOOK FOR THE ASSESSMENT YEAR 2006-07 SHOW THAT THE ASSESSEE MENTIONED THE TOTAL SUM CHARGED FROM THE PATIENTS O N THE SLIP. THE TOTAL OF THE SUM SO CHARGED FROM 45 CUSTOMERS IS RS.6445/- AS PER THE S UMMARY ON PAPER BOOK PAGES 1 & 2 5 OF THE SAID DEPARTMENTAL PAPER BOOK GIVING AN AVERA GE OF APPROXIMATELY RS.145 CHARGED FROM EACH PATIENT. THE ASSESSEE HAS SHOWN TOTAL OF SUCH RECEIPTS AS SALES AT RS.12,67,290/- IN THE PROFIT AND LOSS ACCOUNT WHICH INCLUDE THE TOTAL SUM CHARGED FROM THE PATIENT INCLUDING SALE OF MEDICINE AND THE CONS ULTANCY FEE. THE SUM CHARGED AS CONSULTANCY FEE OVER AND ABOVE THE COST OF MEDICINE IS REPRESENTED BY GROSS PROFIT OF RS.3,57,013/- SHOWN DURING THE YEAR UNDER CONSIDERA TION. THE ASSESSEE STATED THIS POSITION DURING THE COURSE OF SURVEY IN ANSWER TO Q UESTION NO. 11. THE CALCULATION MADE BY THE ASSESSING OFFICER IS GIVING THE TOTAL RECEIP TS AT RS.26,14,251/- WHICH IS VERY HIGH LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THERE IS A GAP OF 4 YEARS IN THE ASSESSMENT YEAR IN QUESTION AND THE SURVEY YEAR AND THEREFORE, THE TOTAL RECEIPTS SHOWN BY THE ASSESSEE LOOKS REASONABLE CONSIDERING THE ESTIM ATED CHARGES OF RS.120/- PER PATIENT FOR AVERAGE 35 CUSTOMERS PER DAY FOR 300 WORKING DA YS. MOREOVER, THE A O HAS ALREADY ENHANCED THE GROSS RECEIPTS AT RS.15 LACS IN THE PR OCEEDINGS U/S 143(3) AND MADE TRADING ADDITION BY APPLYING G P RATE OF 30%. THEREFORE, W E FIND NO REASON TO MAKE ANY INTERFERENCE IN THE ORDER OF CIT (A) ON THIS GROUND . 11. GROUND NO. 3 IN THE DEPARTMENTAL APPEAL IS TAKE N AGAINST DELETION OF ADDITION OF RS.40,61,361/- ON ACCOUNT OF UNEXPLAINED FACTORY AN D HOSPITAL EXPENDITURE. 12. THE ASSESSING OFFICER MADE THE ADDITION IN RESP ECT OF VARIOUS AMOUNTS FOUND WRITTEN AS PAYMENTS MADE AT HOSPITAL & FACTORY IN A NNEXURE 18 & 19. THE LD. CIT (A) HAS DELETED THE ADDITION. HE FOUND THAT THE TOTAL E XPENDITURE AT FACTORY ARE OF RS. 24,19,021/-, OUT OF WHICH M/S SUSMA GRANITE RS. 8,8 3,310/-, M/S. DOLLY GRANITE RS. 8,10,825/- AND M/S. SURESH GRANITE RS. 6,48,744/-. THE WIFE OF ASSESSEE IS THE PROPRIETOR OF M/S SUSHMA GRANITE AND M/S DOLLY GRANITE IS A PR IVATE LTD. COMPANY. AFFAIRS OF ALL 6 THESE CONCERNS ARE BEING MANAGED BY THE ASSESSEE AN D PAYMENTS ARE NOTED IN THE COMMON NOTE BOOK. OUT OF THE PAYMENT OF RS. 16,42,832/- AT HOSPITAL A SUM OF RS. 6,75,535/- ARE DEPOSITS IN RAJASTHAN BANK ACCOUNT OF M/S SHARMA NU RSING HOME AND BALANCE RS. 10,21,297/- ARE BUSINESS EXPENDITURE AND OTHER BANK DEPOSITS OF M/S SHARMA NURSING HOME. HE FOUND THAT ALL THESE TRANSACTIONS ARE PART OF THE REGULAR BALANCE SHEET FILED BY THE RESPECTIVE ASSESSEE AND NO PART OF THESE EXPEND ITURES CAN BE SAID AS UNEXPLAINED. HE ALSO FOUND THAT IN THE CASE OF BOTH THE CONCERNS OF ASSESSEE I.E M/S SHARMA NURSING HOME AND M/S SURESH GRANITE INCOME HAS BEEN COMPUTED BY ESTIMATING THE RECEIPTS AND NO BOOKS OF ACCOUNTS WERE MAINTAINED IN REGULAR COURSE . ON THE BASIS OF THESE FINDINGS HE HAS DELETED THE ENTIRE ADDITION. 13. THE LD. DR RELIED UPON THE FINDINGS GIVEN BY TH E ASSESSING OFFICER AND OBJECTED THE DELETION. 14. THE LD. A/R ON THE OTHER HAND SUPPORTED THE FIN DINGS GIVEN BY THE CIT(A) BY MAKING REFERENCE TO VARIOUS ENTRIES WHICH ARE VERIF IABLE FROM THE BANK ACCOUNTS OF THE ASSESSEE ON THE BASIS OF WHICH THE ASSESSING OFFICE R HAD COMPLETED THE ASSESSMENT U/S 143(3). HE ALSO SUBMITTED THAT THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS ON DAY TO DAY BASIS AND PREPARED HIS ANNUAL ACCOUNTS ON THE B ASIS OF THESE NOTEBOOKS. HE ALSO REFERRED THE ENTRIES IN THE NOTEBOOK RELATING TO M/ S SUSHMA GRANITE (PROP. SMT. SUSHMA SHARMA) AND M/S DOLLY GRANITE PVT. LTD. THE LD. A/R ALSO SUBMITTED THAT THE EXPENDITURES AS PER THESE NOTEBOOKS ARE COVERED BY THE EXPENDITURE SHOWN IN THE RESPECTIVE BALANCE SHEETS OF M/S. SUSHMA GRANITE, M /S SURESH GRANITE, M/S DOLLY GRANITE PVT. LTD. AND M/S SHARMA NURSING HOME. THEREFORE, T HE ADDITION HAS RIGHTLY DELETED BY THE CIT(A). 7 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE ASSESSING OFFICER AND LD. CIT (A) AND THE RELEVANT PAGES OF THE PAPER BOOK REFERRED BY THE LD. AR OF THE ASSESSEE. WE FOUND THAT THE ENTRIES NOTED IN THESE DIARIES ARE DETAILS OF SUMS PAID BY THE ASSESSEE FOR HOSPITAL AND THE FACTORY. THE AMOUNT S O PAID INCLUDES THE AMOUNT DEPOSITED IN THE BANK ACCOUNTS, WHICH ARE PART OF REGULAR ASS ESSMENT PROCEEDINGS. THE AMOUNT ALSO INCLUDES PAYMENTS MADE FOR M/S SUSHMA GRANITE WHICH IS PROPRIETOR CONCERN OF WIFE OF THE ASSESSEE AND M/S DOLLY GRANITE PVT. LTD. THE PA YMENTS MADE RELATING TO BOTH THE CONCERNS OF THE ASSESSEE I.E. M/S SURESH GRANITE AN D M/S SHARMA NURSING HOME ARE NOT EXCEEDING THE TRANSACTIONS AS REFLECTED IN THEIR PR OFIT & LOSS A/C AND BALANCE SHEETS. BY PERUSING THE SAID NOTEBOOK IT APPEARS THAT THE DAIL Y PAYMENTS MADE BY THE ASSESSEE FOR EXPENDITURE OR FOR DEPOSITING IN THE BANK ARE NOTED IN THESE NOTEBOOKS. THE ASSESSEE HAS NOT MAINTAINED ANY SET OF BOOKS OF ACCOUNTS. ON TH E CONTRARY THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE PAYMENTS NOTED IN THESE NOT EBOOKS ARE OVER AND ABOVE THE AMOUNT OF EXPENDITURES/ DEPOSITS MADE IN THE BANK ACCOUNTS / OTHER PAYMENTS MADE BY THE ASSESSEE DURING THE YEAR. IN THESE FACTS & CIRCUMST ANCES OF THE CASE WE ARE IN THE AGREEMENT WITH THE FINDING GIVEN BY THE CIT(A). THI S GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 16. THE LD. AR OF THE ASSESSEE HAS NOT PRESSED BOTH THE GROUNDS IN THE CROSS OBJECTION AND REQUESTED TO WITHDRAW THE SAME. BOTH THE GROUND S IN THE CROSS OBJECTION NO. 28/JU/09 ARE ACCORDINGLY DISMISSED. 17. IN THE RESULT, APPEAL OF THE DEPARTMENT IN ITA NO. 659/JODH/08 AND CO NO. 28/JU/09 OF THE ASSESSEE ARE DISMISSED. 8 ITA NO. 652/JODH/2008 & CO NO. 25/JU/08 AY 2003-04 : 18. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUND S IN THE APPEAL:- (I) DELETING THE ADDITION OF RS. 204310 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED PURCHASE OF MEDICINE. (II) DELETING THE ADDITION OF RS. 663250 MADE BY TH E AO ON ACCOUNT OF FEES. (III)DELETING THE ADDITION OF RS. 5985443 MADE BY T HE AO ON ACCOUNT OF UNEXPLAINED FACTORY AND HOSPITAL EXPENDITURE. 19. ALL THE THREE ISSUES ABOVE ARE EXACTLY THE SAME AS THE THREE ISSUES DEALT BY US IN APPEAL NO. 659/JODH/08 FOR A.Y. 2002-03. THE ASSESS ING OFFICER HAS GIVEN THE SIMILAR FINDING FOR MAKING THE ADDITIONS AND CIT(A) HAS GIV EN THE SIMILAR FINDINGS FOR DELETING THE ADDITIONS IN THIS YEAR ALSO. BOTH THE LD. DR AN D LD. AR AGREED THAT FACTS OF THE CASE ARE SIMILAR TO ASSESSMENT YEAR 2002-03 AND THEREFORE, F OLLOWING THE ORDER PASSED ABOVE IN APPEAL NO.659/JODH/08, WE DISMISS ALL THE THREE GRO UNDS OF APPEAL OF THE DEPARTMENT. 20. SIMILARLY THE LD. AR HAS WITHDRAWN THE CROSS OB JECTION FILED BY THE ASSESSEE AND THE SAME IS ALSO DISMISSED. 21. IN THE RESULT, BOTH THE APPEAL OF THE DEPARTMEN T IN ITA NO. 652/JODH/08 AND CROSS OBJECTION NO. 25/JODH/08 ARE DISMISSED. ITA NO. 653/JODH/08 AND CO NO. 27/JODH/08 FOR A.Y. 2004-05. 22. GROUND NO. 1 IN THE DEPARTMENTAL APPEAL IS AGAI NST THE DELETION OF ADDITION OF RS. 6,71,668/- ON ACCOUNT OF ALLEGED UNACCOUNTED FACTOR Y EXPENSES. 23. THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS S HOWN AN EXPENDITURE OF RS.6,71,668/- UNDER THE HEAD FACTORY AND RS.23,95,4 79/- UNDER THE HEAD HOSPITAL IN NOTE 9 BOOK NO. 18. HE HAS MENTIONED THAT THE ASSESSEE HAD ALREADY CLOSED HIS GRANITE BUSINESS IN THE NAME OF M/S SURESH GRANITE AS HE HAD DISCONN ECTED THE ELECTRICITY CONNECTION, M/S SUSHMA GRANITE HAD NOT FILED ITS RETURN OF INCOME A ND THE ENTRIES HAVE BEEN WRONGLY MENTIONED IN THE NAME OF DOLLY GRANITE THOUGH THEY PERTAIN TO HOSPITAL. BY GIVING THIS FINDING HE ALLEGED THAT THE ENTIRE EXPENDITURE REPR ESENT THE RECEIPTS OF HOSPITAL OF RS.30,67,147 AS AGAINST RECEIPTS SHOWN BY THE ASSES SEE AT RS.15,75,076/- AND THE ENTIRE EXPENDITURE SHOWN AS FACTORY EXPENDITURE OF RS.6,71 ,668/- IS INCURRED OUT OF UNACCOUNTED INCOME OF THE ASSESSEE. ON THIS BASIS HE HAS MADE THE ADDITION OF RS.6,71,668/-. 24. THE LD. CIT (A) DELETED THE ADDITION. HE FOUND THAT M/S SUSHMA GRANITE IS PROPRIETORSHIP CONCERN OF WIFE OF ASSESSEE AND M/S DOLLY GRANITE IS PVT. LTD. COMPANY AND ASSESSEE IS THE PROPRIETOR OF M/S SURESH GRANIT E. THESE ALL SISTER CONCERNS ARE BEING MANAGED BY THE ASSESSEE AND PAYMENTS ARE NOTED IN T HE COMMON NOTE BOOK. THESE EXPENSES ARE IN SOME WAY OR OTHER CO-RELATED WITH T HE RESPECTIVE CONCERNS. HE ALSO FOUND THAT RETURN OF M/S SUSHMA GRANITE WAS FILED IN TIME . AS REGARDS CLOSURE OF BUSINESS BY M/S SURESH GRANITE, HE FOUND THAT MERELY DISCONNECT ION OF POWER SUPPLY DOES NOT MEAN THAT THE BUSINESS HAS BEEN CLOSED. HE FOUND THAT JO B WORK WAS BEING DONE BY M/S SURESH GRANITES ALONG WITH M/S SUSHMA GRANITE WITH THE HEL P OF COMMON DG SET PURCHASED IN THE NAME OF M/S SUSHMA GRANITE. HE HAS FOUND THAT T HE ASSESSEE HAS SHOWN THE FOLLOWING RECEIPTS HAVE BEEN SHOWN BY VARIOUS CONCERNS OF THE ASSESSEE GROUP : SHARMA NURSING HOME : 1575076 SURESH GRANITES : 355682 SUSHMA GRANITES (SALES) : 563470 SUSHMA GRANITES (JOB CHARGES) : 282360 DOLLEY GRANITE PVT. LTD. (JOB CHARGES) : 509414 DOLLEY GRANITE PVT. LTD. (SALES) : 409560 _____________ 3695562 10 25. THE LD. CIT (A) FOUND THAT TOTAL EXPENDITURE AN D BANK DEPOSITS OF RS. 30,67,147/- ARE OUT OF THESE TOTAL RECEIPTS ONLY AND ACCORDINGL Y DELETED THE ADDITION. 26. BEFORE US, THE LD. D/R AND LD. A/R SUPPORTED TH E ORDER OF ASSESSING OFFICER AND CIT(A) RESPECTIVELY. 27. WE HAVE CONSIDERED THE FINDINGS GIVEN BY THE AU THORITIES BELOW. WE HAVE ALREADY CONSIDERED THE SIMILAR ISSUE IN THE ORDER FOR THE A SSESSMENT YEAR 2002-03. WE FIND THAT ASSESSEE HAS SHOWN RECEIPTS IN THE NAME OF SURESH G RANITE AND THERE ARE TRANSACTIONS IN THE SEPARATE BANK ACCOUNT OF M/S SURESH GRANITE. F URTHER THE SAID NOTE BOOK NO. 18 ALSO CONTAINS TRANSACTIONS RELATING TO SURESH GRANITE. THE RETURN OF INCOME OF THE WIFE OF ASSESSEE MRS. SUSHMA SHARMA HAS BEEN FILED IN TIME INCLUDING THE INCOME FROM M/S SUSHMA GRANITE. THE FINDINGS GIVEN BY ASSESSING OF FICER ARE NOT CORRECT AND THE EXPENDITURE INCURRED AND THE BANK DEPOSITS MADE BY THE ASSESSEE FROM THE REGULAR SOURCES OF RECEIPTS SHOWN BY THE ASSESSEE FAMILY FROM VARIO US CONCERNS. THEREFORE, FOLLOWING THE FINDINGS GIVEN BY US FOR ASSESSMENT YEAR 2002-03 IN RESPECT OF THE SIMILAR NOTING OF EXPENDITURE, WE UPHOLD THE FINDINGS GIVEN BY THE CI T (A) AND DISMISS THIS GROUND OF THE DEPARTMENTAL APPEAL. 28. GROUND NO. 2 IN THE DEPARTMENTAL APPEAL HAS BEE N TAKEN AGAINST THE DELETION OF ADDITION OF RS. 60,438/- ON ACCOUNT OF UNACCOUNTED EXPENSE OF M/S SURESH GRANITE. 29. THE ASSESSING OFFICER MADE AN ADDITION IN RESPE CT OF PAYMENT RECORDED IN NOTEBOOK NO. 12 RELATING TO M/S SURESH GRANITE AND M/S SUSHMA GRANITE ON THE BASIS OF OBSERVATION THAT M/S SURESH GRANITES HAS BEEN CLOSE D AND NO RETURN OF M/S SUSHMA GRANITE WAS FILED. THE CIT(A) DELETED THE ADDITION FINDING THAT SMT. SUSHMA SHARMA, PROPRIETOR OF M/S SUSHMA GRANITE HAS REGULARLY FILE D RETURN AFTER INCLUDING THE INCOME 11 FROM M/S SUSHMA GRANITE. HE ALSO FOUND THAT MERELY DISCONNECTION OF POWER SUPPLY DOES NOT MEAN THAT THE CLOSURE OF BUSINESS OF M/S SURESH GRANITE. HE ALSO FOUND THAT JOB WORK WAS BEING DONE BY M/S SURESH GRANITES ALONG WITH M/ S SUSHMA GRANITE WITH THE HELP OF COMMON DG SET PURCHASED IN THE NAME OF M/S SUSHMA G RANITE. ON THE BASIS OF THESE FINDINGS HE DELETED THE ADDITION. 30. WE HEARD THE RIVAL PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE ASSESSEE DOES NOT MAINTAIN THE REGULAR BOOKS OF ACCOUNT AND ACCOU NT FOR THE MONEY IN VARIOUS NOTE BOOKS AND THEN PREPARE THE PROFIT & LOSS ACCOUNT ET C. ON ESTIMATED BASIS. IN SUCH CIRCUMSTANCES, WHEN THE OVER ALL RECEIPTS COVERS AL L THESE EXPENDITURES, NO ADDITION CAN BE MADE ON THE BASIS OF NOTING IN THE DIARY. WE FI ND THAT THE ISSUE IS SIMILAR TO GROUND NO. 1 DEALT WITH ABOVE AND THE FINDINGS GIVEN BY US IN THAT RESPECT WILL APPLY EVEN IN RESPECT OF THIS ISSUE. WE ACCORDINGLY UPHOLD THE OR DER OF CIT (A) ON THIS ISSUE ALSO AND THE GROUND OF APPEAL IS REJECTED. 31. GROUND NO. 3 IN THE DEPARTMENTAL APPEAL HAS BEE N TAKEN AGAINST THE DELETION OF ADDITION OF RS. 1,01,292/- ON ACCOUNT OF UNACCOUNTE D EXPENSE OF M/S SHARMA NURSING HOME. 32. THE ASSESSING OFFICER MADE AN ADDITION ON THE B ASIS OF STATEMENT OF EMPLOYEES RECORDED DURING THE SURVEY AND SALARY EXPENSES RECO RDED IN NOTEBOOK. HE ESTIMATED TOTAL SALARY EXPENSES OF RS. 235495 OUT OF WHICH ASSESSEE HAVE SHOWN RS. 1,33,200/- IN THE PROFIT AND LOSS ACCOUNT SUBMITTED ALONGWITH HIS RET URN OF INCOME. HENCE HE MADE AN ADDITION OF RS. 1,01,292/- BEING EXPENDITURE OUT OF UNDISCLOSED SOURCES. THE CIT(A) DELETED THE ADDITION FINDING THAT SALARY AS STATED BY THE EMPLOYEES WAS RELATED WITH THE YEAR OF SURVEY AND NOT WITH THE ASSESSMENT YEAR IN QUESTION. FURTHER, THE STATEMENTS WERE 12 NOT CONFRONTED TO THE ASSESSEE DURING THE APPELLATE PROCEEDINGS AND NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN TO HIM. THEREFORE CIT(A ) DELETED THE ADDITION IN ITS ENTIRETY. 33. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE STATEMENTS WERE RECORDED DURING THE COURSE OF S URVEY IN 2006 AND THE CAPTIONED YEAR IS ALMOST 2 YEARS EARLIER. THE DIFFERENCE IN THE S TATEMENTS AND THE AMOUNT SHOWN AS SALARY IS NOT MUCH I.E. AS PER THE STATEMENTS THE S ALARY IN THE YEAR 2006 IS RS.1,50,000/- AS AGAINST WHICH THE ASSESSEE HAS RECORDED 1,33,200/-. AS FAR AS THE EXPENDITURE IN THE NAME OF LALIT SINGH, GOVIND SINGH AND RAMESH HARIJAN ARE CONCERNED, THE SAME ARE FOUND NOTED IN THE NOTE BOOKS MAINTAINED BY ASSESSEE FOR RECORDED VARIOUS DAY TO DAY PAYMENTS. WE HAVE EARLIER FOUND IN THIS ORDER THAT THE ASSESS EE IS NOT MAINTAINING REGULAR BOOKS OF ACCOUNT AND NOTES THE EXPENDITURES IN VARIOUS NOTE BOOKS AND AT THE END OF THE YEAR, PREPARES THE PROFIT & LOSS ACCOUNT ON ESTIMATED BAS IS. IN SUCH CIRCUMSTANCES, THERE ARE ALL POSSIBILITIES OF ACCOUNTING OVERALL EXPENDITURE IN DIFFERENT HEADS, HOWEVER, THE OVERALL PAYMENTS NOTED IN THESE DIARIES ARE NOT EXCEEDING T HE OVERALL RECEIPTS SHOWN BY THE ASSESSEE IN ALL THE PROFIT & LOSS ACCOUNTS OF THE G ROUP CONCERNS. THEREFORE, NO ADDITION IN RESPECT OF THE UNACCOUNTED EXPENDITURE ON THE BASIS OF SUCH NOTING CAN BE MADE. WE ACCORDINGLY UPHOLD THE DELETION OF ADDITION ON ACCO UNT OF UNEXPLAINED SALARY EXPENDITURE. THIS GROUND OF DEPARTMENTAL APPEAL IS ALSO REJECTED . 34. GROUND NO. 4 IN THE APPEAL OF THE DEPARTMENTAL APPEAL IS AGAINST THE DELETION OF ADDITION OF RS. 50,070/- ON ACCOUNT OF LOW GP RATE OF M/S SHARMA NURSING HOME. 35. THE ASSESSEE HAS SHOWN TRANSACTIONS OF RS. 23,9 5,479/- IN THE NOTE BOOK FOUND DURING THE SURVEY OF WHICH RS. 5,08,420/- ARE FOR D EPOSITS IN BANK, RS. 10,58,200/- ARE FOR BANK ACCOUNT OF M/S SHARMA NURSING HOME AND RS. 8,2 9,159/- FOR HOSPITAL EXPENSES. IN 13 CONTRARY ASSESSEE HAS SHOWN RECEIPT OF RS. 1575076 ONLY. THEREFORE, HE ESTIMATED THE INCOME CONSIDERING THE TOTAL RECEIPTS AT RS.23,95,4 79/-. HE ALSO FOUND RATIO OF 60:40 BETWEEN SALE OF MEDICINE AND CONSULTANCY FEES. HE A LSO OBSERVED GROSS PROFIT RATE OF 75% IN ONE OF THE CASE WHERE COST PRICE OF MEDICINE WAS WRITTEN BY THE ASSESSEE WAS RS.400/- WHILE MRP AS PER MEDICINE DEALER WAS RS. 1800. ACCO RDINGLY, HE CONSIDERED 40% OF THE TOTAL RECEIPTS AS FEE INCOME AND ESTIMATED GROSS PR OFIT @75% ON THE BALANCE 60% AND CALCULATED THE INCOME AS UNDER : FEES (2395479 X 40 %) : 9,58,191/- PROFIT ON SALE OF MEDICINES (2395479 X 60 % X 75 %) : 10,77,966/- ___________ 20,36,157/- OUT OF THIS AMOUNT, HE REDUCED THE TOTAL ADDITIONS MADE IN RESPECT OF VARIOUS INVESTMENTS AND EXPENDITURES OF RS.1766335/- AND COMPUTED BALAN CE INCOME AT RS.2,69,822/- (2036157 1766335). REDUCING THE TOTAL PROFIT SHOW N BY THE ASSESSEE AT RS.2,19,752/- HE MADE ADDITION OF RS.50070 (269822 219752). 36. THE LD. CIT (A) DELETED THE ADDITION FINDING TH AT ADDITION HAS ALREADY BEEN MADE ON THE BASIS OF DAY TO DAY EXPENSES INCURRED BY THE ASSESSEE FOR M/S SUSHMA GRANITE AND M/S DOLLY GRANITE PVT. LTD. AND DEPOSITS IN BANK AC COUNT TOO. HE ALSO FOUND THAT UNEXPLAINED PURCHASES AND EXCESS PAYMENT ON ACCOUNT OF PURCHASE HAVE ALREADY BEEN TAKEN CARE OF, CONSEQUENTLY THE SAME MATERIAL HAS B EEN USED FOR MAKING THIS ADDITION TOO. HE HAS ALSO GIVEN THE FINDING THAT THE EXPENDITURES / BANK DEPOSITS IN THESE NOTE BOOKS ARE SUPPORTED BY THE OVERALL RECEIPTS SHOWN IN ALL THE CONCERNS OF THE ASSESSEE FAMILY. 14 37. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE FINDINGS GIVEN BY THE ASSESSING OFFICER FOR COM PUTING THE TOTAL INCOME OF THE ASSESSEE ARE WITHOUT ANY BASIS AND FAR FROM REALITY. IN THE EARLIER GROUNDS, WE HAVE ALREADY NOTED THAT THE OVER-ALL RECEIPTS OF ALL GROUP CONCERNS AR E SUFFICIENT TO COVER THE EXPENDITURES NOTED IN NOTE BOOKS AND THEREFORE, THE ESTIMATION O F TURNOVER OF THE HOSPITAL ON THAT BASIS IS NOT CORRECT. THE ASSESSEE HAS SHOWN THE SALE OF MEDICINE DURING THE YEAR AT RS.12,28,530/- AND THE GROSS MARGIN OF SALE AND X-R AY RECEIPTS HAS BEEN SHOWN AT ABOUT 33% (P B PAGE 139). THOUGH THE SALE IN THIS YEAR A RE LOWER THAN THE SALES OF RS.13,53,340/- IN THE PRECEDING YEAR, ALREADY ADDIT IONS OF RS.2,66,252/- AND RS.1,61,003/- HAVE BEEN SUSTAINED BY THE CIT(A) IN RESPECT OF CERTAIN PURCHASES WHICH COVER UP ALL POSSIBILITIES OF SHOWING THE LOWER SAL ES DURING THE YEAR. WE HAVE DEALT UP THIS ISSUE IN DETAIL FOR THE ASSESSMENT YEAR 2002-0 3 AND IN VIEW OF THE FINDINGS GIVEN IN THAT RESPECT AND THE FACTS AND CIRCUMSTANCES OF THE CASE OBSERVED ABOVE, WE HEREBY DECLINE TO INTERFERE WITH THE ORDER OF THE CIT(A) O N THIS GROUND ALSO. THE GROUND OF APPEAL OF THE DEPARTMENTAL APPEAL IS REJECTED. 38. GROUND NO. 5 IN THE APPEAL OF THE DEPARTMENTAL IS AGAINST THE DELETION OF ADDITION OF RS. 5,05,682/- ON ACCOUNT OF INCOME FROM UNDISCL OSED SOURCES. 39. ON THE BASIS OF CERTIFICATE OF DISCONNECTION OF POWER CONNECTION AT M/S SURESH GRANITE IN 2002, THE ASSESSING OFFICER OBSERVED THA T THE ASSESSEE DISCONTINUED THIS BUSINESS. THE RECEIPTS SHOWN FROM JOB WORK IN THE NAME OF M/S SURESH GRANITE OF RS.5,05,682/- WERE ACCORDINGLY ADDED BY THE ASSESSI NG OFFICER BY HOLDING THEM AS UNDISCLOSED INCOME OF HOSPITAL DIVERTED IN THE NAME OF M/S SURESH GRANITE TO CLAIM THE INTEREST EXPENDITURE ETC. THE LD. CIT(A) HOWEVER FO UND THAT MERE DISCONNECTION OF POWER 15 IS NOT CONCLUSIVE EVIDENCE OF DISCONTINUATION OF BU SINESS. THE ASSESSEE IS CARRYING ON JOB WORK ACTIVITIES WITH THE HELP OF D G SET PURCHASED IN THE NAME OF M/S SUSHMA GRANITE AND THERE ARE EVIDENCES OF EXPENDITURE INCURRED FOR M/S SURESH GRANITES. HE THEREFORE HELD THAT THE ADDITION WAS NOT ON CORRECT FINDINGS AND DELETED THE SAME. 40. THE LD. D/R PLACED RELIANCE ON THE ASSESSMENT O RDER WHILE THE LD. A/R SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THERE AR E MANY EVIDENCES OF INCURRING VARIOUS DAY TO DAY EXPENDITURE OF M/S SURESH GRANITE FOUND NOTED IN THE NOTE BOOKS. THERE ARE DEPOSITS IN THE BANK ACCOUNT OF M/S SURESH GRANITES AND THE ASSESSEE HAS SHOWN THE JOB RECEIPTS ALSO. THE ASSESSEE HAS ALL PLANT AND MACHI NERIES WITH HIM AND CHARGING DEPRECIATION ON THE SAME. IN SUCH CIRCUMSTANCES, ON LY ON THE BASIS OF DISCONNECTION OF POWER, IT CANNOT BE SAID THAT THE ASSESSEE IS NOT D ISCONTINUING THE BUSINESS WHEN THE ASSESSEE HAS PROVIDED EVIDENCES AS TO AVAILABILITY OF POWER FROM THE D G SET OF SISTER CONCERN M/S SUSHMA GRANITE. 41. AFTER HEARING THE RIVAL PARTIES AND THE PERUSIN G THE ORDERS OF AURTHORITIES BELOW AND ALSO THE MATERIAL AVAILABLE IN THE PAPER BOOKS FILED BY THE ASSESSEE WE ARE OF THE CONSIDERED VIEW THAT LD. AO WAS NOT JUSTIFIED IN HO LDING THAT THE BUSINESS OF M/S SURESH GRANITES HAS BEEN DISCONTINUED ONLY ON THE BASIS OF DISCONNECTION OF POWER. THE ASSESSEE HAS SHOWN THE AVAILABILITY OF POWER FROM T HE D G SET OF M/S SUSHMA GRANITE THE PROPRIETORSHIP CONCERN OF THE WIFE OF ASSESSEE WHIC H IS OPERATING IN THE SAME PREMISES. THEREFORE, THE ADDITION MADE ON THIS COUNT CANNOT B E UPHELD. WE FIND NO REASON TO INTERFERE THE FINDINGS GIVEN BY THE CIT(A) ON THIS COUNT. THIS GROUND OF APPEAL OF THE DEPARTMENTAL APPEAL IS ACCORDINGLY REJECTED. 16 42. IN GROUND NOS. 1 & 2 OF THE CROSS OBJECTION, TH E ASSESSEE HAS CHALLENGED ADDITION IN RESPECT OF UNACCOUNTED PURCHASES OF MEDICINES OF RS.2,66,252/- & RS. 1,61,003/-. 43. IN VIEW OF OUR FINDINGS IN RESPECT OF GROUND NO . 4 OF THE DEPARTMENTAL APPEAL, BOTH THESE GROUNDS ARE REJECTED. 44. GROUND NO. 3 OF THE CROSS OBJECTION IS AGAINST THE DISALLOWANCE OF DEPRECIATION OF RS.1,76,003/-. THE RELATED GROUND OF APPEAL IS N OT DECIDED BY THE CIT(A). THE DISALLOWANCE IS MADE CONSEQUENT TO THE FINDING THAT THE BUSINESS OF M/S SURESH GRANITE HAD BEEN DISCONTINUED. IN VIEW OF OUR FINDINGS ABO VE IN GROUND NO. 5 OF THE DEPARTMENTAL APPEAL, THIS GROUND OF CROSS OBJECTION IS ALLOWED. DEPARTMENTAL APPEAL NO. 251/JU/08 FOR A.Y. 2005-06 45. GROUND NO. 1 IN THE APPEAL OF THE DEPARTMENT IS AGAINST THE DELETION OF ADDITION OF RS. 8,66,316/- ON ACCOUNT OF FEE RECEIPTS. 46. THE ASSESSING OFFICER HAS MADE AN ESTIMATION OF THE TOTAL RECEIPTS ON THE BASIS OF SLIPS OF PATIENTS SEEN BY THE ASSESSEE DOCTOR ON TH E DATE OF SURVEY. HE HAS TAKEN A SAMPLE OF 13 PATIENTS OUT OF TOTAL 45 PATIENTS AND FOUND T HAT THE ASSESSEE COLLECTS ABOUT RS. 40/- OF FEES ON RS. 60/- OF MEDICINES GIVEN TO THE PATIE NT. THE ASSESSEE HAS SHOWN SALE/TRANSFER OF MEDICINES OF RS. 11,87,585/- AND INCLUDING THE U NDISCLOSED PURCHASES OF RS. 467202 THE TOTAL SALES COMES TO RS. RS. 16,54,787/-. ON TH IS BASIS THE ASSESSING OFFICER COMPUTED THE TOTAL OF SALES AND FEES AT RS. 27,57,978/- (165 4787 X 100/60) AND COMPUTED GROSS PROFIT AT RS. 11,03,191/- BEING 40 % OF TOTAL RECEI PTS. OUT OF THIS THE ASSESSING OFFICER HAS REDUCED THE AMOUNT OF GROSS PROFIT OF RS. 2,36,875/ - SHOWN BY THE ASSESSEE AND MADE AN ADDITION OF RS. 8,66,316/-. THE CIT(A) CONSIDERING THE TOTAL SALES SHOWN BY THE ASSESSEE 17 AT RS.11,87,585/- AND THE ADDITION SUSTAINED FOR UN DISCLOSED PURCHASES OF RS.4,67,202/- HAS DELETED THE ADDITION. CONSIDERING THIS, HE FOU ND THAT NO FURTHER ADDITION ON THIS COUNT IS REQUIRED AND ACCORDINGLY DELETED THE ADDITION. 47. THE FACTS OF THE CASE ARE SIMILAR TO THAT FOR T HE ASSESSMENT YEAR 2004-05. DURING THE YEAR THE RECEIPTS OF RS.11,87,585/- APPEARS TO BE ON LOWER SIDE, HOWEVER, ADDITION OF RS.4,67,202 HAS BEEN SUSTAINED AGAINST WHICH NO APP EAL/ CROSS OBJECTION IS FILED BY THE ASSESSEE. THIS COVERS THE POSSIBILITY OF UNDERESTIM ATION OF THE SALES. ACCORDINGLY, IN VIEW OF THE DETAILED FINDINGS ABOVE IN THE ORDER FOR THE ASSESSMENT YEAR 2002-03 AND 2004-05, WE UPHELD THE FINDINGS GIVEN BY THE CIT (A). THE GR OUND OF APPEAL IS ACCORDINGLY REJECTED. 48. GROUND NO. 2 IN THE DEPARTMENTAL APPEAL IS AGAI NST THE DELETION OF ADDITION OF RS. 1,34,545/- ON ACCOUNT OF ALLEGED UNACCOUNTED EXPEND ITURE. 49. THE ASSESSING OFFICER MADE AN ADDITION OF THE L OSS CLAIMED BY M/S SURESH GRANITE AS THE BUSINESS OF M/S SURESH GRANITE HAS ALREADY B EEN CLOSED SINCE LAST 3-4 YEARS AND THE ASSESSEE WAS CLAIMING THE EXPENSES TO REDUCE THE TA X LIABILITY OF M/S SHARMA NURSING HOME. THE LD. CIT(A) HAS DELETED THE ADDITION GIVIN G THE SIMILAR FINDINGS AS GIVEN IN THE ORDER FOR ASSESSMENT YEAR 2004-05. 50. AS THE FACTS AND CIRCUMSTANCES OF THE CASE ARE SIMILAR, IN VIEW OF OUR FINDINGS ABOVE IN THE ORDER FOR ASSESSMENT YEAR 2004-05, WE UPHOLD THE ORDER OF THE LD. CIT (A) ON THIS GROUND ALSO. THE GROUND OF APPEAL IS ACCOR DINGLY REJECTED. 51. GROUND NO. 3 IN THE DEPARTMENTAL APPEAL HAS BEE N TAKEN AGAINST THE DELETION OF ADDITION OF RS. 475000 ON ACCOUNT OF OPERATION RECE IPTS. 18 52. THE ASSESSING OFFICER HAS OBSERVED THAT DURING THE COURSE OF SURVEY CERTAIN PAPERS WERE FOUND ACCORDING TO WHICH, FROM 17.12.2004 TO 2 8.01.2005 I.E. IN 46 DAYS, 24 PATIENTS CAME FOR OPERATION. THUS HE ESTIMATED 190 PATIENTS FOR WHOLE OF THE YEAR AND ESTIMATED INCOME OF RS. 5000/- FROM EACH PATIENT. A S ASSESSEE HAS NOT SHOWN ANY INCOME FROM OPERATIONS, HENCE HE ADDED RS. 4,75,000/- TO T HE TOTAL INCOME OF THE ASSESSEE BEING UNDISCLOSED RECEIPT FROM OPERATIONS AFTER ALLOWING 50 % AS EXPENDITURE. LD. CIT(A) DELETED THE ADDITION FINDING THAT THE ASSESSING OFF ICER HAS NOT COLLECTED ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS RECEIVED SUCH AMOUNTS AND NOT SHOWN IN THE TOTAL RECEIPTS. THE CONCLUSION DRAWN BY ASSESSING OFFICER IS BASED ON HIS PRESUMPTION ONLY. MOREOVER, NO SUCH DOCUMENTS WERE FOUND DURING THE C OURSE OF SURVEY WHICH COULD SUPPORT THE PRESUMPTION OF ASSESSING OFFICER. HENCE CIT(A) DELETED THE ADDITION. 53. BEFORE US, THE LD. D/R OBJECTED THE DELETION OF ADDITION AND SUPPORTED THE FINDINGS GIVEN BY THE ASSESSING OFFICER. ON THE OTHER HAND THE LD. A/R SUBMITTED THAT THE ASSESSEE IS A MBBS DOCTOR AND NOT A SURGEON. THE SURGERIES ARE CONDUCTED BY HIS SON AND DAUGHTER IN LAW WHO RESIDES AT NIMAHEDA AND NOT AT THE STATION OF THE ASSESSEE I.E. BADI SADRI. THEY VISIT THE HOSPITAL SOMETIMES AND THE E NTIRE PAYMENT IS MADE TO THEM. THE CONSULTATION FEE IS ALREADY INCLUDED IN THE OVERALL RECEIPTS. HE THEREFORE, SUBMITTED THAT NO ADDITION ON THE BASIS OF FEW PAPERS OF 24 PATIEN TS CAN BE MADE IN THE ASSESSEES CASE. ACCORDINGLY TO HIM THE ASSESSING OFFICER IS NOT JUS TIFIED IN SPREADING THE REVENUE FOR THE ENTIRE YEAR ON THE BASIS OF 46 DAYS AS THIS IS NOT A REGULAR ACTIVITY OF THE ASSESSEE. THE LD. A/R ALSO RELIED ON THE STATEMENTS MADE BY THE ASSES SEE DURING THE COURSE OF SURVEY IN ANSWERS TO QUESTION NO. 6. 19 54. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE IS MBBS DOCTOR AND CANNOT CARRY OUT OP ERATIONS. AS PER STATEMENTS MADE BY HIM THE OPERATIONS ARE CONDUCTED OUT BY HIS SON AND DAUGHTER IN LAW WHO RESIDES AT A DIFFERENT PLACE. THEREFORE, WE ARE OF THE OPINION THAT THE REVENUE OF OPERATIONS CANNOT BE SPREAD OVER THE YEAR ON THE BASIS OF CERTAIN PAPERS FOR FEW DAYS FOUND DURING THE COURSE OF SURVEY. FURTHER, AS THE OPERATIONS ARE CONDUCTE D BY THE SON AND DAUGHTER IN LAW OF THE ASSESSEE AND NOT BY THE ASSESSEE. IN SUCH CIRCUMST ANCES, IT IS NOT APPROPRIATE TO ASSESS ANY PART OF INCOME IN THE HANDS OF THE ASSESSEE. M OREOVER, IN ORDER FOR GROUND NO. 1 ABOVE, WE HAVE FOUND THAT THE ADDITION MADE FOR RS. 4,67,202/- COVERS ALL POSSIBILITIES OF LEAKAGES IN THE REVENUE. ACCORDINGLY, NO FURTHER AD DITION ON THIS ACCOUNT IS SUSTAINABLE AND WE UPHELD THE ORDER OF CIT(A) ON THIS GROUND. THE GROUND OF APPEAL IS ACCORDINGLY REJECTED. 55. IN THE RESULT THE DEPARTMENTAL APPEAL NO. 251/J U/08 IS DISMISSED. DEPARTMENTAL APPEAL NO. 494/JODH/09 FOR A.Y. 2006-0 7 56. GROUND NO. 1 IN THE DEPARTMENTAL APPEAL IS AGAI NST THE DELETION OF ADDITION OF RS. 5,47,500/- ON ACCOUNT OF CONSULTATION FEES RECEIPTS . 57. THE ASSESSING OFFICER HAS MADE AN ESTIMATION OF THE TOTAL RECEIPTS ON THE BASIS OF SLIPS OF PATIENTS SEEN BY THE ASSESSEE DOCTOR ON TH E DATE OF SURVEY. HE HAS TAKEN A SAMPLE OF 13 PATIENTS OUT OF TOTAL 45 PATIENTS AND FOUND T HAT THE ASSESSEE COLLECTS ABOUT RS. 40/- OF FEES ON RS. 60/- OF MEDICINES GIVEN TO THE PATIE NT. THE ASSESSEE HAS SHOWN SALE/TRANSFER OF MEDICINES OF RS. 15,91,750/-. ASSESSING OFFICER FOUND THAT THERE WAS NO CRITERIA OF FEE CHARGED BY THE ASSESSEE. IN THE ABSENCE OF BOOKS OF ACCOUNTS AND DOCUMENTS, HE ESTIMATED THE TOTAL INCOME FROM FEE RECEIPTS OF RS. 5,47,500/- ASSUMING 50 PATIENTS PER 20 DAY AND AVERAGE FEE @ RS. 30/- PER PATIENT. HE FOUN D THAT THE FEE FOR CONSULTATION IS PART OF THE OVERALL CONSIDERATION CHARGED AS WRITTEN ON THE SLIPS FOUND DURING THE COURSE OF SURVEY AND THE SAME IS SHOWN AS SALE OF MEDICINE IN THE PROFIT AND LOSS ACCOUNT. HE FOUND THAT ASSESSING OFFICER HAS NOT BROUGHT ANY MA TERIAL ON RECORD TO SHOW THAT THE ASSESSEE IS CHARGING FEE SEPARATELY. THE CALCULATIO N MADE BY ASSESSING OFFICER ARE NOT JUSTIFIED AND ON ESTIMATE BASIS. HE FURTHER FOUND THAT THE ADDITION HAS ALREADY BEEN MADE ON ACCOUNT OF PURCHASE FROM UNDISCLOSED SOURCES AND INCOME FROM UNDISCLOSED SOURCES WHICH WILL COVER DISCREPANCY, IF ANY. HENCE CIT(A) ENTIRELY DELETED THE ADDITION. 58. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE SHOWED RECEIPTS OF RS. 11,87,585/- IN A.Y. 2005-06 AND THIS YEAR RECEIPTS ARE RS. 15,91,750/- WHICH IS QUITE REASONABLE. MOREOVER ADDITIONS OF RS. 1,27,475/- AND RS. 67,950/- IN RESPECT OF UNDISCLOSED PURCHASE AND INC OME FROM UNDISCLOSED SOURCES RESPECTIVELY HAVE ALSO BEEN MADE AND SUSTAINED WH ICH COVERS ALL POSSIBILITIES OF DISCREPANCIES IN THE OVERALL RECEIPTS/GROSS PROFIT SHOWN BY THE ASSESSEE IN ABSENCE OF REGULAR BOOKS. IN SUCH CIRCUMSTANCES, IT IS NOT APP ROPRIATE TO MAKE A FURTHER ADDITION OF RS. 5,47,500/- TO THE TOTAL INCOME OF THE ASSESSEE. FOLLOWING OUR FINDINGS GIVEN ABOVE IN THIS ORDER FOR THE EARLIER YEARS, WE UPHOLD THE ORD ER OF CIT (A) ON THIS GROUND. THE GROUND OF APPEAL IS ACCORDINGLY REJECTED. 59. GROUND NO. 2 IN THE DEPARTMENTAL APPEAL HAS BEE N TAKEN AGAINST THE DELETION OF ADDITION OF RS. 475000 ON ACCOUNT OF OPERATION RECE IPTS. 60. AS THE ISSUE INVOLVED IS EXACTLY THE SAME AS TH E ISSUE DEALT BY US IN APPEAL NO. 251/JODH/08 IN A.Y. 2005-06, THE FINDINGS GIVEN IN THAT RESPECT WOULD ALSO APPLY IN THIS YEAR ALSO. THIS GROUND OF APPEAL IS ACCORDINGLY REJ ECTED. 21 61. IN THE RESULT, APPEAL OF THE DEPARTMENT IN ITA NO. 494/JODH/09 IS DISMISSED. 63. IN SUMMARY, APPEALS OF THE DEPARTMENT AND CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED, EXCEPT C.O. NO. 27/JODH/2008 WHICH IS PA RTLY ALLOWED. 64. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 .12.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- THE ITO WARD-3, CHITTORGARH. DR. SURESH SHARMA, BADI SADRI THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 251(8)/JODH/2009) BY ORDER, AR ITAT JODHPUR.