ACIT, Haridwar V. Dr. Karan Singh, Haridwar

ITA 3547/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77661 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 15-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 14-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MONGA
• Assessee Lawyers: S N BHATIA
• Keywords: Depreciation; Opportunity of being heard; Additional evidence; Non compliance; Retraction
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A.NO.3547/DEL/2011 ASSESSMENT YEAR : 2004-05 ACIT VS. KARAN SINGH CIRCLE HARDWAR, PROP. M.S DEV NURSHING HOME, D-29 & 30, INDUSTRIAL AREA, NEAR MALVIYA CHAWK, RO ORKEE HARIDWAR. HARIDWAR. PAN: ABUPS1712M. (APPELLANT) (RESPONDENT) CO.NO.307/DEL/2011 IN ITA NO.3547/DEL/2011 ASSESSMENT YEAR : 2004-05 DR. KARAN SINGH VS. ACIT PROP. M.S DEV NURSHING HOME, CIRCLE HARDWAR, NEAR MALVIYA CHAWK, ROORKEE D-29 & 30, INDUSTRIAL AREA HARIDWAR. HARIDWAR. PAN: ABUPS1712M. (APPELLANT) (RESPONDENT) APPELLANT BY : S.K. MONGA, ADV RESPONDENT BY : SHRI S. N. BHATIA, DR. O R D E R PER I. C. SUDHIR, JUDICIAL MEMBER ITA NO.3547/DEL/2011 THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS: 2 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS I N RESTRICTING THE ADDITION ONLY UP TO THE SURRENDERED AMOUNT OF RS.5,00,000/- AGAINST THE ADDITION MADE BY THE ASSE SSING OFFICER OF RS.19,61,583/- IGNORING THE FACTS GESTUR ED DURING SURVEY CONDUCTED U/S 133A OF THE INCOME TAX ACT, 19 61. 2. THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FAC TS BY HOLDING THAT THE ASSESSEE HAVING AGRICULTURAL INCOM E ON THE BASIS OF ADDITIONAL EVIDENCES WITHOUT CONFRONTATION TO THE ASSESSING OFFICER IN CONTRAVENTION OF RULE 46A OF T HE INCOME TAX RULES, 1962. 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE IS A SU RGEON AND EARNS INCOME FROM HIS PROPRIETORSHIP CONCERN (DEV NURSING HOME) AT ROORKEE. DURING THE YEAR IT WAS SUBJECTED TO SURVEY OPERATIONS U/S 133A OF THE ACT ON 21.01.2004. DURING THE COURSE OF THE SAID SURVEY TH E ASSESSEE STATED THAT HE WAS MAINTAINING OUTDOOR PATIENT REGISTER, INDOOR PA TIENT REGISTER AND INDOOR RECEIPT REGISTER ETC. HOWEVER EXCEPT FOR OUTDOOR/ I NDOOR PATIENT REGISTER NO OTHER REGISTER WAS FOUND AT THE TIME OF SURVEY PROC EEDINGS. THE OPD REGISTER WAS NOT PROPERLY MAINTAINED AND IT WAS FOUND THAT A S PER OPD REGISTER THERE WERE 27 PATIENT ON 17.01.2004 BUT THE NAMES OF ONLY 12 PATIENTS WERE ENTERED BY THE DOCTOR IN HIS REGISTER. SIMILARLY NA ME OF ONLY 01 PATIENT WAS ENTERED ON 19.01.2004 AND ON 20 TH AND 21 ST JANUARY, 2004 (I.E. ON THE DATE OF SURVEY) NOT EVEN SINGLE PATIENT NAME WAS ENTERED IN THE REGISTER. THE INDOOR PATIENT REGISTER WAS MAINTAINED UP TO 30.12.2003 AN D SINCE THAT DATE TILL THE DATE OF SURVEY I.E 21.01.2004 NONE OF THE PATIENT N AME WAS ENTERED IN THE 3 INDOOR PATIENT REGISTER. THE ASSESSEE SURRENDERED R S.5 LAC DURING THE SURVEY PROCEEDINGS AND ALSO PAID ADVANCE TAX OF RS.1,50,00 0/- ON IT. HOWEVER AT LATER STAGE ASSESSEE RETRACTED FROM THIS SURRENDERE D AMOUNT. NARRATING OTHER SURROUNDING FACTS, THE ASSESSING OFFICER ESTIMATED THE DIFFERENCE OF UNDISCLOSED RECEIPT FROM OPD PATIENTS/INDOOR PATIEN TS AT RS.19,60,583/- AND AFTER ADDING DISALLOWANCE OF AGRICULTURE INCOME AT RS.25,000/- AND EXCESS DEPRECIATION AT RS.38,122/-, THE TOTAL INCOME HAS B EEN WORKED OUT AT RS.19,30,525/- AGAINST THE DISCLOSED LOSS OF RS.93, 180/-. 3. THE LD. CIT (A) AFTER DISCUSSING THE ISSUE IN DE TAIL HAS RESTRICTED THE ADDITION AT THE INCOME OF RS.5 LAC IGNORING THE LOS S OF RS.93,180/- WITH DIRECTION TO THE ASSESSING OFFICER TO ACCEPT THE AG RICULTURE INCOME OF RS.25,000/- DECLARED IN THE RETURN OF INCOME. AGAIN ST THIS ACTION OF THE LD. CIT (A), THE REVENUE IS IN APPEAL. 4. THE GRIEVANCE OF THE REVENUE IS ALSO THAT THE LD . CIT (A) HAS ACCEPTED THE DECLARED AGRICULTURE INCOME OF RS.25,0 00/- ON THE BASIS OF ADDITIONAL EVIDENCES WITHOUT CONFRONTATION TO THE A SSESSING OFFICER, WHICH IS IN CONTRAVENTION OF RULE 46A OF THE IT RULES.196 2. 5. IN SUPPORT OF THE GROUNDS THE LD. DEPARTMENTAL R EPRESENTATIVE HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. HE REFERRED THE CONTENTS OF PARA 2 AT PAGE NO.5 OF THE ASSESSMENT ORDER. HE SUB MITTED THAT THE ASSESSING 4 OFFICER HAS ESTIMATED THE RECEIPTS UNDER THIS BACKG ROUND THAT THE ACTUAL NUMBER OF PATIENT ATTENDED BY THE DOCTOR IN THE OPD CANNOT BE QUANTIFIED AS NEITHER ANY DETAILS OF OPD PATIENT ATTENDED IN VARI OUS DAYS WERE AVAILABLE NOR ANY DATA REGARDING NUMBER OF PATIENTS ATTENDED WERE MAINTAINED BY THE DOCTOR AS THE PATIENTS DETAILS OF OPD WERE DESTROYE D BY THE DOCTOR ON THE SAME DAY. 6. ON THE ISSUE OF NON COMPLIANCE OF RULES 46A OF THE IT RULES BY THE LD. CIT (A) RAISED IN THE GROUND NO.2, THE LD. DEPA RTMENTAL REPRESENTATIVE SUBMITTED THAT IN SUPPORT OF THE CLAIMED AGRICULTUR E INCOME NEITHER ANY DETAILS OF AGRICULTURE OPERATION DONE BY THE ASSESS EE NOR ANY DETAILS OF AGRICULTURE PRODUCE WERE FILED DURING THE ASSESSMEN T PROCEEDINGS BEFORE THE ASSESSING OFFICER. HE SUBMITTED FURTHER THAT NOT A SINGLE EVIDENCE OF THIS ALLEGED AGRICULTURAL INCOME WAS FOUND DURING THE CO URSE OF SURVEY PROCEEDINGS. THUS, THE LD. CIT (A) WAS NOT JUSTIFIE D IN ACCEPTING THE ADDITIONAL EVIDENCE IN THIS REGARD WITHOUT CONFRONT ING THE SAME WITH THE ASSESSING OFFICER. 7. THE LD. AR, ON THE OTHER HAND, SUPPORTED THE FIR ST APPELLATE ORDER. HE SUBMITTED THAT THE ESTIMATION MADE BY THE ASSESSING OFFICER AT RS.36 LAC ON ACCOUNT OF TOTAL RECEIPT OF NURSING HOME AGAINST TH E DISCLOSED RECEIPT OF RS.16,39,417/- WAS WITHOUT ANY BASIS, HENCE THE LD. CIT (A) AFTER 5 MENTIONING THOSE FAULTS IN ESTIMATION BY THE ASSESS ING OFFICER HAS RIGHTLY RESTRICTED THE ADDITION TO RS.5 LAC ONLY. HE SUBMIT TED FURTHER THAT THE LD. CIT (A) HAS ACCEPTED AGRICULTURE INCOME OF RS.25,000/- DECLARED IN THE RETURN OF INCOME, ON THE BASIS OF SUBMISSION OF THE ASSESSEE THAT HE OWNED 113 BIGHA OF KACCHA AGRICULTURE LAND IN VILLAGE SHERPUR LUHAR A, DISTT, BAGHPAT, THE LAND IS FERTILE AND IRRIGATED, IN SUPPORT OF WHICH THE ASSESSEE HAD FILED KHASRA AND KHATOUNI SHOWING AGRICULTURE LAND AND AGRICULTU RE OPERATION. CONSIDERING THESE MATERIAL FACTS AS WELL AS THAT TH E ASSESSING OFFICER HAD ACCEPTED THE AGRICULTURE INCOME IN THE ASSESSMENT Y EARS 2003-04 & 2005-06, THE LD. CIT (A) HAS ACCEPTED THE DECLARED AGRICULTU RAL INCOME. 8. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE ASSESSING OFFICER HAD ESTIMATED THE TOTAL RECEIPT OF NURSING HOME AT RS.36 LAC AGAINST THE DECLARED RECEIPT OF RS.16,39,417/-, ON THE BASIS TH AT NUMBER OF PATIENT ATTENDED BY THE DOCTOR PER DAY IN OPD CAN SAFELY BE TAKEN AS 40, CHARGING FEE OF RS.50/- PER PATIENT WHICH COMES TO RS.2000 P ER DAY FROM AND EXCLUDING ALL THE HOLIDAYS AND OFF DAYS, HE ESTIMAT ED THE NUMBER OF EFFECTIVE DAYS AT 300 IN A YEAR AND MULTIPLIED IT BY RS.2000/ - I.E. OF OPD PER DAY, HE WORKED OUT THE FIGURE OF RS.6,00,000/- AS A RECEIPT FROM OPD FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 6 9. SIMILARLY HE ESTIMATED INDOOR PATIENT RECEIPT AT RS.10,000/- PER DAY ON AVERAGE BASIS, WHICH WAS ALSO INCLUDED THE RECEIPT OF HIS WIFE, A GYNECOLOGIST. THUS BY MULTIPLYING THIS FIGURE OF RS .10,000/- BY 300 WORKING DAYS, HE WORKED OUT THE RECEIPT FROM INDOOR PATIENT DURING THE YEAR AT RS.30,00,000/-. THE TOTAL ESTIMATED RECEIPTS BY THE ASSESSING OFFICER ACCORDINGLY CAME TO RS.36,00,000/- AND AFTER DEDUCT ING THE DECLARED RECEIPT OF RS.16,39,417/-, THE AMOUNT OF RS.19,60,583/- IN DIFFERENCE HAS BEEN ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 10. THE LD. CIT (A) HAS HELD THE SAID ESTIMATION BY THE ASSESSING OFFICER WITHOUT ANY JUST AND PROPER BASIS. THERE IS NO DISP UTE THAT BOOKS OF ACCOUNT WERE NOT BEING PROPERLY AND REGULARLY MAINTAINED AN D HAD NOT BEEN MAINTAINED FOR SOME DAYS BEFORE THE SURVEY OPERATIO N. 11. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW, WE CONCUR WITH THE VIEW OF THE LD. CIT (A) THAT THERE WAS NO JUST AND PROPER BASIS FOR MAKING ESTIMATION OF RECEIPT AT RS.36,000/- BEFORE THE ASSESSING OFFICER. IT WAS PURE AND SIMPLE GUESS WORK. THE OBSERVATION OF THE LD. CIT (A), IN THIS REGARD HAS NOT BEEN SATISFACTORILY REBUTTED BY THE REVENUE BEFORE US. THE LD. CIT (A) HAS OBSERVED THAT THE ASSESSING OFFICER EST IMATED 40 PATIENTS PER DAY FOR OPD CHARGING RS. 50 PER PATIENT WITHOUT TAK ING INTO ACCOUNT THE FACT 7 THAT PATIENTS WHEN COME FOR RECHECK ARE, NORMALLY, NOT CHARGED. EVEN IN THE ABSENCE OF PROPER RECORDS WITH THE ASSESSEE, THE AS SESSING OFFICER COULD HAVE DONE BETTER ESTIMATION OF RECEIPT BY USING PAP ERS AND DOCUMENTS IDENTIFIED DURING SURVEY OPERATION. SUCH PAPERS CON SISTED OF A REGISTER DATED 17.01.2004 SHOWING THE NUMBER OF PATIENTS AT 27 ON THAT DATE. IT REFLECTS THAT OUT OF 27 PATIENTS AN AMOUNT OF RS.50/- WAS MENTION ED AGAINST 12 PATIENTS ONLY. THE ONLY PIECE OF EVIDENCE THAT THE SURVEY TE AM HAS LAID ITS HAND ON IS THE SAID PAPER AND THE TOTAL COLLECTION OF THE ASSE SSEE PER DAY FROM THE OPD DOES NOT WORK OUT TO MORE THAN RS.600/- AND NOT RS. 2,000/- AS ESTIMATED BY THE ASSESSING OFFICER. SIMILARLY, FROM THE INDOOR P ATIENTS, THE ASSESSING OFFICER HAS ESTIMATED RECEIPTS OF RS.10,000/- PER D AY BUT AS PER THE STATEMENTS OF THE PATIENTS RECORDED BY THE SURVEY T EAM IT WORKS OUT TO RS.3,662.50/- PER DAY. EVEN WITH REGARD TO THE NUMB ER OF DAYS ON WHICH THE DOCTOR WORKED IN THE NURSING HOME, THE SURVEY TEAM HAD NOT GATHERED AND VERIFIED THE BASIC INFORMATION AS TO WHEN THE NURSI NG HOME REMAINS CLOSED AND WHEN OPENED. THE SUBMISSION OF THE ASSESSEE ALS O REMAINED THAT PHYSICIAN TAKES 15 TO 30 MINUTES TO SEE AND EXAMINE A PATIENT AND FOR CONSULTATION OF 40 PATIENTS HE WOULD NEED 10 TO 12 HOURS PER DAY. IT WAS ALSO SUBMITTED THAT SINCE THE NURSING HOME HAS SURGERY F ACILITIES ETC. FOR WHICH INDOOR PATIENTS ARE ADMITTED, THE PHYSICIAN/SURGEON WOULD NOT BE ABLE TO 8 SPARE MORE THAN FIVE HOURS OR AT LEAST SIX HOURS FO R OPD, WHICH IS NOT POSSIBLE. 12. CONSIDERING THESE MATERIAL ASPECTS AND IN ABSEN CE OF ANY REFERENCE IN THE ASSESSMENT ORDER OR IN THE REPORT OF THE ASSESS ING OFFICER IF ANY STATEMENT OF A PATIENT WAS RECORDED AND WHETHER THE ASSESSEE WAS CROSS EXAMINED WITH REFERENCE TO THAT ANY CASH WAS FOUND OR ANY BANK ACCOUNTS WERE ASCERTAINED IN ORDER TO KNOW THE DEPOSITS THER EIN AND ALSO KEEPING IN MIND THIS ADMITTED FACT THAT ASSESSEE WAS NOT MAINT AINING A PROPER NURSING HOME RECORDS AND BOOKS OF ACCOUNT, THE LD. CIT (A), IN OUR VIEW, HAS RIGHTLY CAME TO THE CONCLUSION THAT THE ESTIMATION MADE BY THE ASSESSING OFFICER REGARDING THE RECEIPT FROM THE PATIENT AND WORKING DAYS IS HAVING NO BASIS AND IS BASED ON SURMISES ONLY. IT IS HOWEVER AN ADMITTED FACT THAT THE ASSESSEE WHEN CONFRONTED CERTAIN RELEVANT QUERIES B Y THE SURVEY TEAM, HE COULD NOT CORROBORATE HIS REPLIES WITH SUPPORTING E VIDENCES. 13. CONSIDERING ABOVE FACTS IN ITS TOTALITY, WE ARE OF THE VIEW THAT THE LD. CIT (A) HAS RIGHTLY COME TO THE CONCLUSION THAT ASS ESSEE WAS HAVING NO OPTION AND THUS HE HAD VOLUNTARILY OFFERED RS.5 LAC FOR TAX TO BUY THE PEACE OF MIND FROM THE DEPARTMENT DURING THE COURSE OF SU RVEY PROCEEDINGS. IN ABSENCE OF ANY PLAUSIBLE REASON RETRACTING FROM THE SAID SURRENDER, WE ARE OF THE VIEW THAT THE LD. CIT (A) HAS RIGHTLY REJECTED THE RETRACTION MADE BY THE 9 ASSESSEE FROM THE ABOVE SURRENDER MADE VOLUNTARILY DURING THE COURSE OF SURVEY, HAVING BEING NO SATISFACTORY ANSWER TO THE QUERIES RAISED BY THE SURVEY PARTY. THE LD. COMMISSIONER OF INCOME TAX (A PPEALS), IN OUR VIEW HAS RIGHTLY RESTRICTED THE ADDITION OF RS.5LAC IGNO RING THE LOSS OF RS.93,190/- DECLARED IN THE RETURN OF INCOME SINCE THE LOSS DEC LARED WAS NOT BASED ON ANY BOOKS OF ACCOUNT. 14. THE FIRST APPELLATE ORDER ON THE ISSUE IS UPHEL D. IN RESULT GROUND NO.1 IS REJECTED. 15. SO FAR AS, GROUND NO.2 IS CONCERNED, WE FIND TH AT THE ASSESSEE HAD FURNISHED COPIES OF KHASRA AND KHATOUNI IN SUPPORT OF THE CLAIMED CONCERN LAND OF THE AGRICULTURE OPERATION ON THE CLAIMED OW NED LAND OF 113 BIGHAS BEFORE THE LD. CIT (A), ON WHICH THE LD. CIT (A) HA D NOT SOUGHT ANY RE- ACTION FROM THE ASSESSING OFFICER AND HAS ENTERTAIN ED IT FOR ACCEPTING THE CLAIMED INCOME OF RS.25,000/- THAT ALSO ON THE BASI S THAT THE AGRICULTURE INCOME IN THE ASSESSMENT YEARS 2003-04 & 2005-06 HA S BEEN ACCEPTED BY THE ASSESSING OFFICER. THUS THERE IS VIOLATION OF R ULE 46A OF THE IT RULES BY THE LD. CIT (A). WE THUS IN THE INTEREST OF JUSTICE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THOSE EVI DENCE I.E KHASRA AND KHATOUNI FILED BY THE ASSESSEE BEFORE THE LD. CIT ( A) IN SUPPORT OF THE CLAIMED AGRICULTURAL LAND AND AGRICULTURAL OPERATIO N AND DECIDE THE ISSUE 10 AFRESH, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND KEEPING IN MIND THE SHOWN AND ACCEPTED AGRICULTURAL INCOME IN THE ASSESSMENT YEARS 2003-04 & 2005-06. THE GROUND NO.2 IS THUS ALLOWED FOR STATISTICAL PURPOSES. CONSEQUENTLY, APPEAL IS PARTLY ALLOWED. CO NO. 307/DEL/2011 THE ASSESSEE HAS PREFERRED THIS CROSS OBJECTION ONL Y IN SUPPORT OF THE FIRST APPELLATE ORDER, WHICH HAS BECOME INFRUCTUOUS IN VIEW OF THE ABOVE DECISION ON AN IDENTICAL ISSUE IN APPEAL PREFERRED BY THE REVENUE. THE CROSS OBJECTION IS ACCORDINGLY DISMISSED. IN SUMMARY THE APPEAL FILED BY THE REVENUE IS PARTL Y ALLOWED AND THE CROSS OBJECTION PREFERRED BY THE ASSESSEE IS DISMIS SED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH .04.2014. SD/- SD/- (SHAMIM YAHYA) (I. C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH APRIL, 2014. *S. SINHA* COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 11 5. DR BY ORDER DEPUTY REGISTRAR, ITAT.