Navneet Memorial Hospital, Ahmedabad V. The Income tax Officer,Ward-9(3), Ahmedabad

ITA 2683/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67678 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-09-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 15-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P JANGID
• Assessee Lawyers: P M PATEL
• Keywords: Rejection of books of accounts
• Section: 143(3); 147; 145; 148

Judgement Text

ITA NO 268 3/AHD/2010 . A.Y. 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL CH ATURVEDI, A.M.) I.T. A. NO. 2683AHD/2010 (ASSESSMENT YEAR:2003-04) NAVNEET MEMORIAL HOSPTIAL SUSHRUSHA, OPP TELEPHONE EXCHANGE, NR. SARDAR PATEL SEVA SAMAJ, NAVRANGPURA, AHMEDABAD (APPELLANT) VS. ITO WARD 9(3) NEW AAYKAR BHAVAN OPP. POLYTECHNIC PANJARAPOLE, AHMEDABAD (RESPONDENT) PAN: AACFN 4811 E APPELLANT BY : SHRI P.M. PATEL. A.R. RESPONDENT BY : SHRI J.P. JANGID. SR. D.R. ( )/ ORDER DATE OF HEARING : 04-09-201 3 DATE OF PRONOUNCEMENT : 20-09-2013 PER SHRI ANIL CHATURVEDI,A.M. 2. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-XV, AHMEDABAD DATED 28.01.2009 FOR A.Y. 2003-04. 3. THE FACTS AS CULLED OUT FROM THE LOWER AUTHORITIES ARE AS UNDER. ITA NO 268 3/AHD/2010 . A.Y. 2003-04 2 4. ASSESSEE IS A FIRM WHICH RUNS HOSPITALS AT TWO PLAC ES AT AHMEDABAD. ASSESSEE FILED RETURN OF INCOME FOR A.Y. 2003-04 ON 29.11.2003 DECLARING TOTAL INCOME OF RS. 2,70,425/-. THE CASE WAS REOPENED BY ISSUING NOTICE DATED 18.12.2007 UNDER SECTION 148 O F THE ACT AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT VIDE ORDER DATED 26.12.2008 AND THE TOTAL INCOME WAS DETERMINED AT RS. 12,41,850/-. AGGRIEVED BY TH E ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 4 TH AUGUST, 2010 GRANTED PARTIAL RELIEF TO THE ASSESSE E. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) THE ASSESSEE IS NO W IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. LD. ASSESSING OFFICER WAS COMPLETELY UNJUSTIFIED AN D WRONG IN REJECTING BOOKS OF ACCOUNTS AND ESTIMATING ON THE B ASIS OF NET PROFIT RATION OF PRECEDING YEAR FOR MERE DIFFERENCE OF RS. 23,900/- IN CASE PAPERS AND FORM 3C REGISTER. 2. LD. ASSESSING OFFICER WAS INCORRECT TO MAKING ADDIT ION OF RS. 6,99,335/- ON ACCOUNT OF NET PROFIT ESTIMATION BASE D ON PERCENTAGE OF NET PROFIT OF THE PRECEDING YEAR. BOTH THE GROUNDS ARE INTERCONNECTED AND HENCE CONSI DERED TOGETHER. 5. IN THIS CASE, THE SURVEY OPERATION UNDER SECTION 13 3A OF THE ACT WAS CARRIED OUT ON 25.10.2002 AT THE PREMISES OF THE AS SESSEE. DURING THE COURSE OF SURVEY PROCEEDINGS, ASSESSEE MADE DISCLOS URE OF RS. 12.5 LACS WITH REGARD TO POSSIBLE VARIATION IN THE INCOME REC ORDED IN THE DAILY CASE ITA NO 268 3/AHD/2010 . A.Y. 2003-04 3 REGISTER AND IN CASH/BANK BOOK FOR F.Y. 2001-02 REL EVANT TO A.Y. 2002- 03. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PER USAL OF 3C REGISTER WITH THE CASE PAPERS, ASSESSING OFFICER NOTICED DIS CREPANCY IN THE AMOUNTS RECEIVED AS PER CASE PAPERS AND THE AMOUNTS SHOWN IN 3C REGISTER. THE ASSESSEE WAS ASKED TO PRODUCE THE CA SE PAPERS OF THE PATIENTS, IN RESPONSE TO WHICH ASSESSEE PRODUCE THE CASE PAPERS UP TO DECEMBER, 2002 ONLY. ASSESSING OFFICER ALSO NOTED THAT DURING THE COURSE OF SURVEY CONDUCTED ON 25.10.2007, THE BOOK S OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION WERE NOT WRITTEN. CONSIDE RING THE AFORESAID FACT AND THE FACT THAT THE ASSESSEE HAD MADE DISCLOSURE OF RS. 12.5 LACS FOR F.Y. 2001-02 ON ACCOUNT OF SUPPRESSION ON RECEIPTS, ASSESSING OFFICER CONCLUDED THAT THE BOOK RESULTS SHOWN BY THE ASSESS EE WAS NOT ACCEPTABLE. HE FURTHER NOTED THAT FOR THE YEAR UND ER CONSIDERATION THE NET PROFIT RATIO WORKED OUT TO 1.18% AS AGAINST THE NET PROFIT RATIO OF 6.1% IN THE PRECEDING YEAR IN WHICH THE DISCLOSURE WAS MADE BY THE ASSESSEE. HE ACCORDINGLY ADOPTED THE NET PROFIT RATIO OF THE ASSESSEE AT 6.1% AND WORKED OUT THE NET PROFIT OF THE ASSESSEE AT RS. 8, 67,430/- (ADMISSION CHARGES RS. 1,42,20,173/- X 6.1%) AGAINST WHICH THE ASSESSEE HAD SHOWN THE NET PROFIT OF RS. 1,68,095/-. HE ACCORDINGLY A DDED THE DIFFERENCE OF RS. 6,99,335/- TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MA TTER BEFORE CIT(A). CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HO LDING AS UNDER:- THE ADDITION OF ESTIMATION OF PROFIT HAS BEEN MADE AS PER NARRATION GIVEN IN PARA-5 OF THE ASSESSMENT ORDER. ITA NO 268 3/AHD/2010 . A.Y. 2003-04 4 THE CRUX OF THE ARGUMENT IS THAT ON MERE DISCREPANC Y OF RS. 23,900 NOTICED IN THE ACCOUNTS THE A.O. SHOULD NOT HAVE AP PLIED THE PROVISIONS OF SECTION 145 SPECIALLY WHEN AGGREGATE TURNOVER OF RS . 1,42,20,173/- HAD BEEN DECLARED. IT IS SEEN THAT A SURVEY OPERATION WAS CONDUCTED IN THE CASE OF THE APPELLANT AND ON THE BASIS OF THE DISCLOSURE MADE O N ACCOUNT OF SUPPRESSION OF RECEIPTS ASSESSMENT OF A.Y. 2002-03 WAS FINALIZED IN WHICH NET PROFIT RATIO OF 6.1% CAME. AFTER GOING THROUGH RIVAL SUBMISSION I AM OF THE VIEW THAT NET PROFIT RATIJO OF 6.1% CAME IN A.Y. 2002-03 BECAUSE OF THE DISCLOSURE IN THAT YEAR BUT IN THE YEAR UNDER C ONSIDERATION THERE IS NO DISCLOSURE AND DISCLOSURE OF A.Y. 2002-03 CANNOT BE PASTED IN A.Y. 2003- 04. HERE IT IS IMPORTANT TO MENTION THAT IN PARA 6. 3 OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS MENTIONED THAT DESP ITE HAVING LARGE BANK BALANCES IN LACS AND PAYING INTEREST ON UNSECURED L OANS THE APPELLANT EXTENDED INTEREST FREE LOAN TO DR. AJAY SHAH OF RS. 1,50,000 AND TO HOPE FERTILITY PVT. LTD. OF RS. 3,05,406/- AND THE ASSES SING OFFICER PROCEEDED TO DISALLOW INTEREST EXPENSE CLAIMED OF RS. 1,87,35 2/-. THE REPLY GIVEN ON THIS POINT DURING THE COURSE OF APPELLATE PROCEE DINGS IS NOT CONVINCING. THEREFORE TO BE FAIR TO REVENUE I UPHO LD THE REJECTION OF BOOKS OF ACCOUNTS U/S. 145 BUT TO BE FAIR TO THE AP PELLANT THE N P RATE IS DIRECTED TO BE ESTIMATED AT 3% INSTEAD OF 6.1% ESTI MATED BY THE ASSESSING OFFICER. THE INTEREST ADDITION OF RS. 1,8 7,352/- GETS TELESCOPED IN NET PROFIT ESTIMATION. 7. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE IS NO W IN APPEAL BEFORE US. BEFORE US, THE LEARNED A.R. SUBMITTED THAT THE ASSESSING OFFICER HAS WRONGLY PROCEEDED TO REJECT THE BOOKS OF ACCOUNT ON THE BASIS OF VERIFICATION OF 3C REGISTER. HE FURTHER SUBMITTED THAT 3C REGISTER IS NOT PRESCRIBED AS BOOKS OF ACCOUNT UNDER RULE 6F OF THE I.T. RULES. WITH RESPECT TO THE TABLE OF DISCREPANCY LISTED BY THE A SSESSING OFFICER, THE LEARNED A.R. POINTED OUT THAT THE RESPECTIVE PATIEN TS WERE EITHER GIVEN CONCESSION OR LESS AMOUNT WAS RECOVERED AND FOR WHI CH HE PLACED ON RECORD THE COPY OF THE CASH RECEIPTS AT PAGE 35 TO 40 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ALLEGED TOTAL ITA NO 268 3/AHD/2010 . A.Y. 2003-04 5 DISCREPANCY OF RS. 23,900/- AND FOR WHICH THE ASSES SEE HAS GIVEN EXPLANATION WITH RESPECT TO 15,100/-. IN VIEW OF TH E AFORESAID FACTS, HE SUBMITTED THAT CONSIDERING THE SMALL DISCREPANCY AS COMPARED TO THE TOTAL RECEIPTS OF THE ASSESSEE, THE ENTIRE BOOKS OF ACCOU NTS SHOULD NOT BE REJECTED. HE ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF CIT VS. RAJNIKANT DAVE (2006) 281 ITR 06 ALLAHABAD. 8. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF ASSESSING OFFICER. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT SURVEY WAS CONDUCTED AT THE PREMISES WAS CONDUCTED ON 25.10.2002 AND THE ASSESSEE HAD MADE D ISCLOSURE OF 12.5 LACS FOR F.Y. 2001-02 RELEVANT TO A.Y. 2002-03. TH E ASSESSMENT FOR A.Y. 2002-03 IS STATED TO HAVE BEEN FINALIZED ON 30 .03.2005. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT AT THE TIME OF SURVEY THE BOOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERATION WERE NOT WRITTEN. IT IS ALSO A FACT WHICH HAS BEEN NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE WAS ASKED TO PRODUCE THE PATIENTS CASE PAPERS BUT THE A SSESSEE PRODUCED THE CASE PAPERS ONLY UP TO DECEMBER, 2002 FOR VERIFICAT ION AND ON THE BASIS OF EXAMINATION OF THE CASE PAPERS, THE TOTAL DISCRE PANCY NOTED BY THE ASSESSING OFFICER IS WITH RESPECT TO RS.23,900/- AN D OF WHICH THE ASSESSEE HAS EXPLAINED THE DISCREPANCY WITH THE RES PECT TO 15,100/-. THE COPY OF THE ORDER FOR A.Y. 2002-03 IN WHICH THE DIS CLOSURE OF RS. 12.5 LACS MADE AT THE TIME OF SURVEY WAS MADE BY THE ASS ESSEE IS NOT BEFORE US. ASSESSING OFFICER HAS REJECTED THE BOOKS OF AC COUNT UNDER SECTION 145(3) AND HAD MADE ADDITION @ 6.1% WHICH WAS RESTR ICTED TO 3% OF THE NET PROFIT FOR THE YEAR BY CIT(A). CONSIDERING THE TOTALITY OF THE FACTS AND ITA NO 268 3/AHD/2010 . A.Y. 2003-04 6 IN THE PECULIAR CIRCUMSTANCES OF THE CASE, WE ARE O F THE VIEW THAT THE ENDS OF JUSTICE SHALL BE MET IF THE ADDITION IS RESTRICT ED TO 2% OF THE NET PROFIT. WE THUS DIRECT ACCORDINGLY. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 20 - 09 - 2013. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT ,AHMEDABAD