Dr.Hiteshbhai Amichand Patel, Himatnagar V. The Income Tax Officer, S.K.Ward-3, Himatnagar

ITA 2526/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6062 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S N DIVETIA
• Section: 40A(3); 143(3); 131

Judgement Text

ITA NO. 2526 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO. 2526 /AHD/201 3 ASSESSMENT Y EAR : 20 0 9 - 10 DR. HITESHBHAI AMICHAND PATEL, ..... .......... .APPELLANT HARSH HOSPITAL, UMIYA COMPLEX, NEAR MEHTA PETR OL PUMP, HIMMATNAGAR 383 001. [PAN: A BEPP 1040 J ] VS. INCOME TAX OFFICER , S.K. WARD 3 , HIMMATNAGAR. .. ......... RESPONDENT APPEARANCES BY: S.N. DIVETIA, FOR THE APPELLANT D INESH SINGH , FOR THE RESPONDENT D ATE OF CONCLUDING T HE HEARING : FEBRUARY 14, 201 7 DATE OF PRONOUNCING THE ORDER : APRIL 28 , 2017 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 13 TH AUGUST 201 3 , PASSED BY THE LEARNED CIT(A) , IN TH E MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME T AX ACT 1961 , FOR THE ASSESSMENT YEAR 200 9 - 10 . 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: ADDITION ON ACCOUNT OF APPLYING SEC.40A(3) FOR FOLLOWING CASH PURC HASES AMOUNT TO RS.75,725/ - A) VAIBHAV SURGICAL ON 25/07/2008 RS.27,169/ - B) VAIBHAV SURGICAL ON 05/11/2008 RS.26,726/ - C) VIKAS ENTERPRISE ON 20/01/2008 RS.27,169/ - RS.75,725/ - THE HON'BLE CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS B Y CONFIRMING ADDITION OF RS.75,725/ - MADE BY LAO IN CASE OF PURCHASES OF MEDICINES MADE IN CASH FOR AND ON BEHALF OF PATIENTS. ITA NO. 2526 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 2 OF 5 3. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, INTER ALIA, NOTED THAT THE ASSESSEE HAS MADE CERTAIN CASH PAYMENTS EXCEEDING RS 20,000 IN CASH, AGGREGATING TO RS 75,725, AND REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THESE PAYMENTS NOT BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT. THE EXPLANATION OF THE ASSESSEE WAS THAT SECTION 40A(3) IS IN SERTED WITH THE INTENTION OF DISCOURAGING THE UNACCOUNTED TRANSACTIONS AND THERE IS NO SUCH UNACCOUNTED TRANSAC TION INVOLVED THOUGH THE SAID TRANSACTION IS TRANSACTED IN CASH . IT WAS FURTHER CONTENDED THAT THE PARTIES FROM WHOM PURCHASES ARE MADE ARE G ENUINE, THEY ARE ASSESSED TO INCOME TAX AND THEY HAVE CONFIRMED THE TRANSACTION . THE ASSESSEE WAS OF THE VIEW THAT THEREFORE, THOUGH THE SAID TRANSACTION IS MADE IN CASH, IT CANNOT BE TREATED AS NON GENUINE TRANSACTION AND, UNDER THIS SET OF CIRCUMSTAN CES, THE SAID AMOUNT SHOULD NOT BE DISALLOWED AS IT IS INCURRED FOR CARRYING ON OF BUSINESS AND DOES NOT INVOLVE ANY NON GENUINE TRANSACTION . THIS EXPLANATION WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT THERE IS CLEARLY A VIOLATION OF SECTION 40A(3), AND THERE IS NO EXPLANATION FOR THE SAME. IN APPEAL, LE ARNED CIT(A) CONFIRMED THE DISALLOWANCE, AND SPECIFICALLY OBSERVED THAT THE APPELLANT HAS NOT BEEN EXPLAIN THE REASONS AS TO WHY THE PAYMENTS WERE MADE IN CASH . NOT SATISFIED, THE ASSESSEE I S IN SECOND APPEAL BEFORE US. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUS ED THE MATERIAL ON RECORD AND D ULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. I HAVE NOTED THAT BASIC CONTENTION OF THE ASSESSEE IS T HAT GOODS LIKE MEDICINES AND SURGICAL DISPOSABLES, THAT TO IN VERY SMALL END USE QUANTITIES, IS INHERENTLY AN EMERGENCY PURCHASE AND NO SHOPKEEPER IS WILLING TO ACCEPT THE CASH FOR SUCH SMALL PU RCHASES. I QUITE AGREE WITH THIS CLAIM OF THE ASSESSEE AND AM OF THE CON SIDERED VIEW THAT IN TODAY S WORLD, RS 20,000 IS TOO SMALL AN AMOUNT FOR PURCHASE OF THINGS LIKE EMERGENCY MEDICINES AND SURGICAL DISPOSABLES BY CASH. WHILE LOOKING AT, AND INTERPRETING, THE STATUTORY PROVISIONS, WE CANNOT BE SO PEDANTIC IN APPROACH SO AS TO BE COMPLETELY DIVORCED FROM THE GROUND REALITIES AND SO AS TO OVERLOOK THE GLARING FACTUAL SCENARIO. THESE REALITIES ARE STARING AT US AND WE CAN CANNOT BE LIVING IN DENIAL JUST BECAUSE SOMEONE HAS NOT STATED SO IN SO MANY WORDS. THE PURCHASE OF THESE S MALL QUANTITIES OF SURGICAL DISPOSABLES AND EMERGENCY MEDICINES, IN CASH EVEN THOUGH THE BILLING AMOUNTS ARE MAR GINALLY MORE THAN RS 20,000 IN EACH INSTANCE - ARE QUITE UNDERSTANDABLE AND ARE COMPULSIONS OF NORMAL PRACTICES. IN THE LIGHT OF THIS FACTUAL P OSITION, AND IN THE LIGHT OF LAW LAID DOWN BY HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF A NUPAM T ELE SERVICES VS ITO [ (2014) 366 ITR 122 (GUJ)] WHICH PERMITS DEDUCTION OF EVEN CASH PURCHASES IN EXCESS OF RS 20,000 IN DESERVING CASES WHERE THE ASSESSE E HAD NO OTHER CHOICE IN THE MATTER, I AM OF THE CONSIDERED VIEW THAT THE IMPUGNED DISALLOWANCE INDEED DESERVES TO BE DELETED. 6. GROUND NO. 1 IS THUS ALLOWED. 7. IN GROUND NO. 2, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: ITA NO. 2526 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 3 OF 5 2. ADDITION OF RS.480 00/ - STATING AS UNACCOUNTED RENT RECEIVED FROM TENANT DR. MANOJ SUTHAR. THE LEARNED CIT HAS ERRED IN LAW AND ON FACTS BY CONFIRMING THE AMOUNT RECEIVED FROM DR. MANOJ SUTHAR AS A REIMBURSEMENT OF EXPENSES FOR MAINTENANCE OF BUILDING AND WHICH IS RECEIVED BY FATHER AMICHAND S. PATEL AND NOT BY THE APPELLANT. 8. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CONCERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE S BUSINESS PREMISES WAS SUBJECTED TO A SURVEY PROCEEDINGS UNDER SECTION 133A. DURING T HE COURSE OF THIS SURVEY, DR MANOJ SUTHAR, TENANT OF THE ASSESSEE, SUBMITTED THAT HE IS PAYING THE ASSESSEE RS 8,000 PM BY CHEQUE AND, IN ADDITION THERETO, PAYING A FURTHER SUM OF RS 3,000 TO RS 4,000 FOR MAINTENANCE OF THE HOSPITAL BUILDING. WHEN ASSESSE E WAS CONFRONTED WITH THIS FACT, WHILE HE DID NOT DISPUTE CORRECTNESS OF THE STATEMENT, HE SUBMITTED THAT THE AMOUNT OF RS 4,000 IS PAID TO HIS FATHER WHO TAKES CARE OF GENERAL MAINTENANCE OF THE BUILDING BY ENGAGING SWEEPER ETC. THIS EXPLANATION WAS REJEC TED BY THE ASSESSING OFFICER AS AN AFTERTHOUGHT, AND DEVOID OF ANY BASIS, AND, ACCORDINGLY, AN ADDITION OF RS 48,000 WAS MADE TO THE INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. NOT SA TISFIED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 9. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 10. I AM UNABLE TO SEE ANY MERITS IN THE STAND OF THE ASSESSEE. NO ONE WOULD, AS LEARNED DEPARTMENTAL REPRESENTATIVE, RIGHTLY SUBMITS PAY AN AMOUNT PER MONTH UNDER HE IS AN OBLIGATION TO DO SO. THE PAYMENT OF RS 4,000 PER MONTH WAS THUS VERY MUCH PART OF THE ARRANGEMENT WITH DR SUTHAR, AND , WHETHER THIS AMOUNT IS GIVEN TO ASSESSEE S FARTHER OR NOT, EVEN ASSUMING THE STORY OF THE ASSESSEE HAS SOME ELEMENT OF TRUTH, IT WOULD NOT AFFECT TAXABILITY OF THAT AMOUNT IN THE HANDS OF THE ASSESSEE. THERE IS NO EVIDENCE OF EXPENSES IN THIS REGARD. IN VIEW OF THESE FACTS, I AM IN CONSIDERED AGREEMENT WITH THE STAND OF THE AUTHORITIES BELOW. THE PLEA OF THE ASSESSEE IS REJECTED, AND THE ORDER OF THE CIT(A) IS CONFIRMED ON THIS POINT. 11. GROUND NO. 2 IS DISMISSED. 12. IN GROUND NO. 3, GRIEVANCE RAISED BY THE ASSESSEE IS AS FOLLOWS: 3. ADDITION ON ACCOUNT OF DISCLOSURE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF RS.6,12,500/ - THE LEARNED CIT HAS ERRED IN LAW AND ON FACTS BY CONFIRMING THE ADDITION OF RS.6,12,500/ - AND GRANTING RELIEF OF RS . 1,6 1,840/ - AND RS.44,300/ - ON VERIFICATION BY THE A.O. AND NOT FULLY DELETING T HE ADDITION. ITA NO. 2526 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 4 OF 5 13. AS FOR THIS GRIEVANCE OF THE ASSESSEE , THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. DURING THE COURSE OF THE SURVEY OPERATION CARRIED OUT AT THE ASSESEE S PREMISES, STATEMENT UNDER SECTION 131 WAS RECORDED AND, BASED ON THE STATEMENT SO RECORDED, AN ADDITION OF RS 6,12,500 WAS MADE FOR THE SUPPRESSED RECEIPTS. THIS STATEMENT WAS, HOWEVER, LATER RETRACTED AS HAVING BEEN GIVEN UNDER DURESS. THE ASSESSING OFFICER, NEVER THELESS, PROCEEDED TO MAKE THE ADJUSTMENT. IN APPEAL, LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BUT GAVE THE ASSESSEE PARTIAL RELIEF IN RESPECT OF SOME AMOUNTS WHICH WERE BOOKED SEPARATELY FOR OPD AND ULTRASONOGRAPHY. NOT SATISFIED, TH E ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 14. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 15. IT IS BY NOW A SETTLED LEGAL POSITION TH AT THE STATEMENT RECORDED DURING THE SURVEY PROCEEDINGS CANNOT BE USED AS AN EVIDENCE, AND THUS, FOR THE REASON OF STATEMENT ALONE, THE ADDITION CANNOT BE MADE. THE MATERIAL GATHERED DURING THE SURVEY, HOWEVER, CAN BE USED AGAINST THE ASSESSEE ON MERITS. O N THESE FUNDAMENTAL PRINCIPLES, THERE IS NO DISPUTE. IN THIS VIEW OF THE MATTER, AND HAVING NOTED THAT THE ADDITION IS CONFIRMED ON THE BASIS OF STATEMENT RECORDED, I DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER, FOR ADJU DICATION DE NOVO, IN THE LIGHT OF THE ABOVE OBSERVATIONS, IN ACCORDANCE WITH THE LAW, AFTER GIVING YET ANOTHER OPPORTUNITY OF HEARING TO THE ASSESSEE, AND IN ACCORDANCE WITH THE LAW. ORDERED, ACCORDINGLY. 16. GROUND NO. 3 IS THUD ALLOWED FOR STATISTICAL P URPOSES IN THE TERMS INDICATED ABOVE. 17. IN GROUND NO. 4, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: 4. ADDITI O N OF RS.5,247/ - ON ACCOUNT OF ADHOC DISALLOWANCE @ 10% OF RS. 52,470; - . THE HON'BLE CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS BY M AKING ADDITION OF RS.5,247/ - ON ACCOUNT OF ADHOC DISALLOWANCE @ 10% OF HOSPITAL GENERAL EXPENSES OF RS . 52,470/ - . 18. LEARNED COUNSEL FOR THE ASSESSEE DOES NOT PRESS THE ABOVE GROUND OF APPEAL, ON ACCOUNT OF SMALLNESS OF THE AMOUNT INVOLVED. 19. GROUN D NO. 4 IS THUS DISMISSED. ITA NO. 2526 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 5 OF 5 20. NO OTHER GRIEVANCE WAS RAISED BEFORE US. 21. IN THE RESULT, APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF APRIL , 2017 . SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 28 TH DAY OF APRIL , 2017 . PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD