Dr. Nitin Sharad Loharikar, Osmanabad V. ITO Wd. 3(4), Latur

ITA 29/PUN/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62731 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-05-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 06-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPUTHAMA
• Keywords: Retraction; Revised return
• Section: 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 29 & 30/PN/2011 (ASSTT.YEAR : 2004-05 & 2005-06) DR. NITIN SHARAD LOHARIKAR .. APPELLANT LOHARIKAR HOSPITAL, MAIN ROAD, OMARGA, DIST : OSMANABAD. PAN AAXPL7113L VS. ITO, WD. 3(4), LATUR .. RESPONDEN T APPELLANT BY : SHRI M.R.BHAGWAT RESPONDENT BY : MS.ANN KAPUTHAMA DATE OF HEARING : 09-05-2012 DATE OF PRONOUNCEMENT : 16 -05-2012 ORDER PER R.K. PANDA, AM THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DI RECTED AGAINST THE COMMON ORDER DATED 28-10-2010 OF THE CIT(A),AUR ANGABAD RELATING TO ASSESSMENT YEAR 2004-05 AND 2005-06 RESPECTIVELY . FOR THE SAKE OF CONVENIENCE BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO. 29 /PN/2011 (ASSTT.YEAR : 2004-05 ) 2. THE ASSESSEE IN THIS APPEAL HAS CHALLENGED THE O RDER OF THE CIT(A) IN PARTLY SUSTAINING THE PENALTY LEVIED BY THE ASSE SSING OFFICER U/S.271(1)(C) AT THE INCOME-TAX ACT FOR THE ASSESSM ENT YEAR 2004-05. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A DOCTOR BY PROFESSION AND FILED HIS RETURN OF INCOME ON 31 ST AUGUST, 2005 DECLARING ITA NO. 29 & 30/PN/2011 (ASSTT.YEAR : 2004-05 & 2005-06) DR. NITIN SHARAD LOHARIKAR 2 TOTAL INCOME OF RS.1,61,900/-. THE SAID RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961. SUBSEQUEN TLY, A SURVEY ACTION U/S.133 A (1) WAS CARRIED OUT IN THE PROFESSIONAL P REMISES OF THE ASSESSEE ON 24/08/2006. DURING THE SAID SURVEY ACTION IT W AS NOTICED THAT NO REGULAR BOOKS OF ACCOUNT AS MENTIONED IN SECTION 44 AA READ WITH RULE 6F ARE MAINTAINED BY THE ASSESSEE. FURTHER, DAILY CA SE REGISTER IN PRESCRIBED FORM NO.3-C AND INVENTORY UNDER BROAD HEAD OF STOCK OF DRUGS, MEDICINES AND OTHER CONSUMABLE ACCESSORIES USED FOR THE PURPO SE OF PROFESSION WERE ALSO NOT FOUND. HOWEVER, IT WAS SEEN THAT THE ASS ESSEE HAS MAINTAINED IPD/ OPD REGISTER AND CONSENT LETTERS OF PATIENTS/ THEIR RELATIVES WHO HAVE OPTED FOR SURGICAL PROCEDURE. THESE WERE INVENTOR ISED BY THE SURVEY PARTY. DURING THE COURSE OF SURVEY ACTION THE STA TEMENT OF THE ASSESSEE WAS ALSO RECORDED IN WHICH HE HAS ADMITTED ON OATH THAT THE AMOUNT SHOWN IN THE RECEIPT BOOK DO NOT TALLY WITH THE AMO UNT MENTIONED IN IPD REGISTER AND THERE IS SUPPRESSION OF RECEIPTS TO TH E TUNE OF 50% I.E. OUT OF EVERY RS.100 RECEIVED A SUM OF RS.50 ONLY WAS ENTER ED WHILE THE REMAINING 50% WAS NOT ENTERED IN THE IPD REGISTER. TO COVER UP THE VARIOUS DISCREPANCIES DETECTED BY THE SURVEY PARTY, THE ASSESSEE OFFERED ADDITIONAL INCOME OF RS.4,35,735/- FOR ASSESSMENT Y EAR 2004-05 AND RS.5,19,579 FOR THE ASSESSMENT YEAR 2005-06. HOW EVER, IN RESPONSE TO NOTICE U/S. 148 THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 8,18, 488/-. 4. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE R ETRACTED THE STATEMENT GIVEN DURING THE SURVEY AND SUBMITTED THA T HE HAS MADE WRONG STATEMENT DURING THE SURVEY THAT AMOUNT MENTIONED I N THE RECEIPT BILLS WERE NOT TALLYING WITH THE IPD REGISTER. IT WAS S UBMITTED THAT THE ASSESSEE ITA NO. 29 & 30/PN/2011 (ASSTT.YEAR : 2004-05 & 2005-06) DR. NITIN SHARAD LOHARIKAR 3 HAS CONSIDERED THE VARIOUS MATERIALS AVAILABLE AND FINALIZED HIS GROSS RECEIPTS FROM PROFESSION AT RS.5,03,694/- AS AGAINS T RS.4,35,735/- SHOWN IN THE ORIGINAL RETURN OF INCOME. IT WAS ALSO SUB MITTED THAT THE RECEIPT BOOK FOUND BY SURVEY PARTY WAS UTILIZED FOR OBLIGIN G THE VARIOUS PATIENTS SO AS TO CLAIM MEDICAL INSURANCE, REIMBURSEMENT OF MEDICAL EXPENSES ETC. IT WAS SUBMITTED THAT AFTER CONSIDERING THE VALUE O F VARIOUS ASSETS ACQUIRED/ADDED DURING THE YEAR AND THE SHORTFALL IN THE CAPITAL ACCOUNT, THE ASSESSEE HAS DECLARED ADDITIONAL INCOME OF RS. 6,30 ,000/- FOR ASSEESMENT YEAR 2004-05 EVEN THOUGH THE SHORTFALL IN GROSS REC EIPTS DECLARED U/S. 133A WAS ONLY RS. 4,35,735/-. IT WAS SUBMITTED THA T THE PROFESSIONAL INCOME HAS ALSO GONE UP FROM RS. 1,61,983/- IN THE ORIGINAL RETURN TO RS. 1,86,170/- IN THE REVISED RETURN. 5. THE AO IN THE ORDER PASSED U/S. 143(3)/147 ACCEP TED THE INCOME RETURNED AT RS. 8,16,170/-. AFTER DISALLOWING RS. 22,826/- ON ADHOC BASIS OUT OF EXPENSES CLAIMED, THE AO DETERMINED THE TOTA L INCOME OF THE ASSESSEE AT RS.8,39,000/- FOR A.Y. 2004-05 6. THE ASSESSEE DID NOT FILE ANY APPEAL AGAINST THE QUANTUM ADDITION. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PENAL TY PROCEEDINGS U/S.271(1)(C) OF THE INCOME-TAX ACT. REJECTING TH E VARIOUS EXPLANATION GIVEN BY THE ASSESSEE THE ASSESSING OFFICER LEVIED PENALTY OF RS. 55,443/- U/S. 271(1)(C) FOR THE ASSESSMENT YEAR 200 4-05 (AND RS . 1,17,895/- FOR THE ASSESSMENT YEAR 2005-06). WHILE DOING SO T HE ASSESSING OFFICER NOTED THAT THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE IN RESPONSE TO THE NOTICE U/S. 148 IS NOT A VOLUNTARY RETURN BUT HAS BEEN FILED AS A RESULT OF SURVEY U/S.133A DURING WHICH DISCREP ANCIES WERE ITA NO. 29 & 30/PN/2011 (ASSTT.YEAR : 2004-05 & 2005-06) DR. NITIN SHARAD LOHARIKAR 4 DETECTED AND TO OFFSET THE SAME, THE ASSESSEE HAS A GREED TO OFFER ADDITIONAL INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSEE WAS NOT ABLE TO ESTABLISH THAT THERE WAS ANY INADVERTEN T MISTAKE OR OMISSION IN THE ORIGINAL RETURN. THE ASSESSEE HAS ALSO ADMITT ED THAT THERE WAS SUPPRESSION OF RECEIPTS AND HE COULD NOT EXPLAIN TH E SOURCE OF INVESTMENT IN CONSTRUCTION OF HOSPITAL EITHER DURING THE COURS E OF SURVEY OR DURING THE ASSESSMENT PROCEEDINGS. HE ACCORDINGLY LEVIED PEN ALTY U/S. 271(1)(C) AS MENTIONED ABOVE. 7. IN APPEAL THE LEARNED CIT(A) UPHELD THE ACTION O F THE ASSESSING OFFICER IN LEVYING THE PENALTY U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961. WHILE DOING SO HE OBSERVED THAT THE ASSESSEE HAS AC CEPTED DURING THE COURSE OF SURVEY ACTION U/S.133A AS WELL AS IN THE RETURN OF INCOME FILED AFTER SURVEY ACTION IN RESPONSE TO NOTICE U/S.148 T HAT HE HAS EARNED UNDISCLOSED PROFESSIONAL RECEIPTS WHICH WERE INVEST ED IN THE CONSTRUCTION OF THE HOSPITAL. THE ASSESSEE HAS OFFERED TO TAX ADDITIONAL INCOME OF RS.6,54,190/- DURING ASSESSMENT YEAR 2004-05 AND RS .2,47,370 FOR THE ASSESSMENT YEAR 2005-06 WHICH WERE NOT DECLARED IN THE ORIGINAL RETURN OF INCOME. THEREFORE, THE ASSESSEE HAS CONCEALED THE INCOME IN THE RESPECTIVE ASSESSMENT YEARS AND DISCLOSED THE SAME IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 148 AND THAT TO AFTER THE SURVEY. IN ABSENCE OF ANY BONAFIDE EXPLANATION IN SUPPORT OF THE CLAIM, H E UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER. HOWEVER, HE OBSER VED THAT WHILE WORKING OUT THE PENALTY, THE ASSESSING OFFICER HAS NOT LEVIED PENALTY ON THE INCOME WHICH HAS BEEN HELD BY HIM AS CONCEALED INCOME. HE ACCORDINGLY DIRECTED THE AO TO RECOMPUTE THE SAME W HICH ACCORDING TO CIT(A) WAS RS. 1,96,257 FOR ASSESSMENT YEAR 2004-05 & RS. 75,695/- ITA NO. 29 & 30/PN/2011 (ASSTT.YEAR : 2004-05 & 2005-06) DR. NITIN SHARAD LOHARIKAR 5 FOR ASSESSMENT YEAR 2005-06. THE CIT(A) HOWEVER, D ELETED THE PENALTY LEVIED BY THE AO U/S. 271(1)(C) ON THE ADHOC ADDITI ON OF RS. 22,826/- AND RS. 25,000/- FOR ASSESSMENT YEARS 2004-05 AND 2005- 06 RESPECTIVELY. AGGRIEVED WITH SUCH ORDERS OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS AGAINST PROFESSIONAL RECEIPTS RS.4,35,735/- DECLARED IN TH E ORIGINAL RETURN OF INCOME, THE ASSESSEE HAS DECLARED AN AMOUNT OF RS.5 ,03,694/- ONLY AS PROFESSIONAL RECEIPTS IN THE REVISED RETURN OF INCO ME WHICH HAS BEEN ACCEPTED BY THE AO. FURTHER, THE ASSESSEE HAS DECL ARED AN AMOUNT OF RS.6,30,000/- AS INCOME FROM OTHER SOURCES TO COVER UP THE INVESTMENT IN FIXED ASSETS I.E. CONSTRUCTION OF THE HOSPITAL AND OTHER ASSETS AND THE SHORTFALL IN THE CAPITAL ACCOUNT. THE INCOME RETU RNED IS MORE THAN WHAT WAS OFFERED DURING THE COURSE OF SURVEY. THE ASSES SEE WAS NOT PREPARING ANY BALANCE SHEET AND ONLY CAPITAL ACCOUNT WAS FILE D. HE SUBMITTED THAT THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SURVEY SO AS TO LEVY PENALTY U/S.271(1)(C) OF THE INCOME-TAX ACT , 1961. HE SUBMITTED THAT OUT OF IGNORANCE AND TO BUY PEACE OF MIND, TH E ASSESSEE DECLARED THE ADDITIONAL INCOME. THEREFORE, NO PENALTY IS LEVIAB LE. REFERRING TO THE DECISIONS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. P.T. CHOKSY & SONS VIDE ITA NO. 218 PN/11 ORDER DAT ED 27/07/11 FOR THE ASSESSMENT YEAR 2000-01, HE SUBMITTED THAT UND ER IDENTICAL CIRCUMSTANCES THE TRIBUNALHAS UPHELD THE ORDER OF THE CIT(A) IN CANCELLING THE PENALTY LEVIED BY THE ASSESSING OFFI CER. ITA NO. 29 & 30/PN/2011 (ASSTT.YEAR : 2004-05 & 2005-06) DR. NITIN SHARAD LOHARIKAR 6 9. THE LEARNED DR ON THE OTHER HAND, STRONGLY SUPPO RTED THE ORDER OF THE CIT(A). SHE SUBMITTED THAT DURING THE COURSE OF SURVEY THE STATEMENT OF THE ASSESSEE WAS RECORDED AND ASSESSEE HIMSELF H AS STATED ON OATH THAT ONLY 50% OF RECEIPT HAVE BEEN ENTERED. SHE SUBMITT ED THAT THE ASSESSEE FILED THE RETURN IN RESPONSE TO THE NOTICE U/S.148 DECLARING ADDITIONAL INCOME. THE RETURN FILED IN RESPONSE TO THE NOTIC E U/S.148 AFTER SURVEY IS NOT A VOLUNTARY ONE. UNDER THESE CIRCUMSTANCES, LE VY OF PENALTY BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) SHOULD BE UPHELD. SO FAR AS THE DECISION OF THE TRIBUNAL RELIED ON BY THE LEARN ED COUNSEL FOR THE ASSESSEE IS CONCERNED, SHE SUBMITTED THAT THE FACTS IN THAT CASE ARE DIFFERENT FROM THE PRESENT CASE. IN THAT CASE THER E WAS ESTIMATED ADDITION AND THE EXPLANATION OF THE ASSESSEE WAS PARTLY ACCE PTED AND IT HAS BEEN OBSERVED THAT NO MALAFIDE WAS ATTRIBUTED ON THE PAR T OF THE ASSESSEE. SHE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY THE BOTH THE SIDES, PERUSED THE ORDERS OF THE AO & THE LD. CIT(A) AND T HE PAPERBOOK FILED ON BEHALF OF THE ASSESSEE . WE HAVE ALSO CONSIDERED T HE DECISION RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT AFTER THE SURVEY THE ASSESSEE FILED THE RETURN IN RESPONSE TO NOTICE U/S.148 WHEREIN HE HAS DECLARED ADDITIONAL INCOME OF RS. 6 ,30,000/- UNDER THE HEAD INCOME FROM OTHER SOURCES TO COVER UP THE DE FICIT TOWARDS THE INVESTMENT IN THE CONSTRUCTION OF THE HOSPITAL AND DEFICIT IN THE CAPITAL ACCOUNT. THE ASSESSEE HAS ALSO DECLARED PROFESSION AL RECEIPT OF RS. 5,03,694/- AS AGAINST RS. 4,35,735/- IN THE ORIGINA L RETURN ALTHOUGH DURING THE COURSE OF SURVEY THE ASSESSEE HIMSELF HAS ADMIT TED THAT HE IS RECORDING ONLY 50% OF THE RECEIPTS. WE FIND THE AO HAS ACCEP TED THE ADDITIONAL ITA NO. 29 & 30/PN/2011 (ASSTT.YEAR : 2004-05 & 2005-06) DR. NITIN SHARAD LOHARIKAR 7 PROFESSIONAL INCOME OF RS. 67,959/- AS AGAINST RS. 4,35,735/- OFFERED BY THE ASSESSEE DURING THE COURSE OF SURVEY. THIS OTH ERWISE INDICATES THAT THE RETRACTION OF STATEMENT BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS BEEN ACCEPTED BY THE AO. WE ALSO F IND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DISCLOSURE OF RS. 6,30,000/- AS ADDITIONAL INCOME WAS DUE TO THE DEFI CIT IN THE CAPITAL ACCOUNT IN THE BALANCE SHEET AND THE SAME WAS NOT D UE TO ANY DETECTION BY THE SURVEY PARTY ALTHOUGH THE ASSESSEE WAS NOT FIL ING ANY BALANCE SHEET. WE FURTHER FIND THE ADDITIONAL INCOME DECLARED IN T HE RETURN FILED IN RESPONSE TO NOTICE U/S. 148 AFTER THE SURVEY ON EST IMATE BASIS IS MUCH MORE THAN WHAT WAS OFFERED DURING THE COURSE OF SUR VEY. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE ARE OF THE OPI NION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE I.T. ACT. ACCORDINGLY, WE SET-ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO CANCEL THE PENALTY. THE GROUNDS RAISED BY THE ASSESSEE AR E ALLOWED. ITA 30/PN/11 11. AFTER HEARING THE BOTH THE SIDES WE FIND THE GR OUNDS RAISED BY THE ASSESSEE IN THE IMPUGNED APPEAL ARE IDENTICAL TO TH E GROUNDS RAISED BY THE ASSESSEE IN ITA NO.29/PN/11. WE HAVE ALREADY DECID ED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN ALLOWED. FOLLOWING THE SAME RATIO THE GROUNDS RAISED BY THE ASSESSEE IN THIS AP PEAL ARE ALSO ALLOWED AND THE PENALTY LEVIED BY THE AO & UPHELD BY THE CIT(A) IS CANCELLED. ITA NO. 29 & 30/PN/2011 (ASSTT.YEAR : 2004-05 & 2005-06) DR. NITIN SHARAD LOHARIKAR 8 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MAY 2012. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOU NTANT MEMBER PUNE DATED: 16 TH MAY 2012 SATISH/ASHWINI COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. ITO, WD-3(4), LATUR 3. CIT, AURANGABAD 4. ADDL.CIT, RANGE-3 NANDED 5. THE D.R, A BENCH,PUNE 6. GUARD FILE BY ORDER PRIVATE SECRETARY, ITAT, PUNE BENCH, PUNE