M/s Matrika Hospital, Hyderabad V. DCIT, Hyderabad

ITA 382/HYD/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3143 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-06-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 18-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VASUNDHARA SINHAR
• Assessee Lawyers: B SATYANARAYANA MURTHY; Y RATNAKER
• Keywords: Unexplained investment; Additional evidence; Reasonable cause; Valuation report; Set aside
• Section: 153A; 251; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NOS.382, 383, 384,385,386 & 387/ A.Y. 2000-01, 2 001-02, 2002 HYD/2009 -2003, 2003-04, 2004-05 & 2005-06 M/S MATRIKA HOSPITAL, HYDERABAD (PAN AAFFM 6403L) (APPELLANT) VS DCITY, CIRCLE 6 (1), HYDERABAD (RESPONDENT) APPELLANT BY : SHRI. Y. RATNAKER & SHRI B. SATYANARAYANA MURTHY RESPONDENT BY : SMT. VASUNDHARA SINHAR, DR O R D E R PER: CHANDRA POOJARI, ACCOUNTANT MEMBER THESE SIX APPEALS PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF THE CIT(A) IV, HYDE RABAD AND PERTAINS TO THE ASSESSMENT YEARS 2000-01, 2001-02, 2002-03, 2003- 04, 2004- 05 AND 2005-06. SINCE CERTAIN COMMON ISSUES ARE INVOLVE D IN THESE APPEALS, THEY ARE CLUBBED TOGETHER, HEARD TOGETHER AN D DISPOSED OFF VIDE THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FIRST GROUND IN ITA NOS.382/HYD/2009 IS WITH REGARD TO THE DIFFERENCE IN THE COST OF CONSTRUCTION BETWEEN COST OF CONSTRUCTION RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE VA LUATION DETERMINED BY THE DVO AT RS.26,93,352/-. THE ASSESSEE I S A PARTNERSHIP FIRM RUNNING MATERNITY CARE HOSPITAL. A SE ARCH AND SEIZURE ACTION U/S 132 OF THE IT ACT HAS BEEN CONDUCTED IN THE ASSE SSEES ON 3/11/2004. CONSEQUENT TO THIS, NOTICE U/S 153A DATED 29.3.2005 WAS ISSUED AND THE ASSESSEE FILED RETURN OF INCOME DECLARING LO SS AT RS.6,37,989/-. THE ASSESSMENT WAS COMPLETED DETERMINING T HE TOTAL ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 2 2 INCOME FOR THE ASSESSMENT YEARS 2000-01 AT RS.20,55,263/-. THE ASSESSEE FURNISHED THE COST OF CONSTRUCTION INCURRED FOR THE CONSTRUCTION OF HOSPITAL BUILDING FROM THE ASSESSMENT YEAR 1996-97 TO 2002-03 AT RS.72,10,626/-. TO ASCERTAIN THE COST OF CONSTRUCTION, THE CASE WAS REFERRED TO THE DVO WHO HAS DETERMINED THE COST OF CON STRUCTION AT RS.99,03,878/-. THE ASSESSING OFFICER DETERMINED THE UNE XPLAINED INVESTMENT OF CONSTRUCTION OF BUILDING AT RS.26,93,252/- . THE ASSESSEE CARRIED ON THE APPEAL TO THE CIT(A) WHO HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE. FURTHER AGGRIEVED, THE ASSE SSEE IS IN APPEAL BEFORE US. 3. THE MAIN CONTENTION OF THE ASSESSEES COUNSEL BEFORE U S IS THAT THE CONSTRUCTION WAS SPREAD OVER FROM THE ASSESSMENT Y EAR 1996- 97 TO THE ASSESSMENT YEAR 2002-03 AND THE ASSESSING OFFICER HAS CONSIDERED THE ENTIRE UNEXPLAINED INVESTMENT IN ONE ASSE SSMENT YEAR WHICH IS NOT CORRECT. THE VALUATION OFFICER APPLIED THE CPWD RATE INSTEAD STATE PWD RATE. THOUGH THE VALUATION OFFICER MENTIONED THAT SUITABLE ADDITIONS AND DEDUCTIONS HAVE BEEN MADE TO BR ING THE RATE AT PARITY WITH THE LOCAL RATES, THE VALUATION OFFICER HAS NOT GIVEN THE BASIS OF SUCH ADJUSTMENTS, AS SUCH, IT CANNOT BE VERIFIED. ACCO RDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE VALUATION DETERMINE D BY THE DVO IS HAVING VARIOUS DISCREPANCIES LIKE IN APPLICATION OF COST OF INDEX, APPLICATION OF FLOOR HEIGHT, HEIGHT OF PLINTH, HEIGH T OF ROOF, FOUNDATIONS, DETAILS OF CALCULATION AS GIVEN BY THE DVO HAS NO RELA TIONSHIP TO THE DISCREPANCIES GIVEN BY HIM IN THE VALUATION REPORT. ACCORDING TO THE ASSESSEE, THE STATE PWD RATE TO BE APPLIED AND THEREAFT ER DEDUCTION TOWARDS SELF-SUPERVISION CHARGES TO BE GIVEN AND AS SUCH THE RE IS NO DIFFERENCE BETWEEN THE COST RECORDED AS PER BOOKS AND COST DETERMINED BY DVO. HE ALSO DREW OUR ATTENTION TO THE REGISTERED OF VALUER ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 3 3 CERTIFICATE AS PER WHICH COST OF CONSTRUCTION IS AT RS.70,02, 000/-. HE RELIED ON THE FOLLOWING JUDGEMENTS: 1. VINOD KUMAR VS. ACIT 257 ITR 65 (AT) 2. SALMA A MEHDI VS. ITO 3. GHANSHAMDAS BUNG VS. ITO IN ITA NO.1403-1404 OF 200 8 DATED OF HYDERABAD BENCH 28.8.2009 4. JUDSON ABRAHAM VS ACIT IN ITA NO.1460 OF 2008 OF HYDERABAD BENCH, DATED 28.8.2009 4. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE O RDER OF THE CIT(A) AND ALSO SUBMITTED THAT DR. KALPANA ALEXANDER IS A VERY BUSY DOCTOR (AS PER GROUNDS OF APPEAL AT SL.NO.NO.16 SUBMITT ED BY THE ASSESSEE). SHE WORKS ALMOST 16 HOURS A DAY FOR SEVEN DAY S IN A WEEK IN HER CLINIC AND FIND VERY LITTLE TIME TO DO ANY O THER WORK AS SHE IS HAVING HIGH FLYING ACTIVITY, AS STATED BY THE CIT(A). ACCORDING TO THE DEPARTMENTAL REPRESENTATIVE, THE ASSESSEE HAS NO TIME TO SUPERVISE THE CONSTRUCTION OF BUILDING AND EVEN IF SHE VISITS FEW TIM ES IN A MONTH, THAT DOES NOT HELP TO REDUCE THE COST OF CONSTRUCTION. SH E CANNOT CONTRIBUTE ANYTHING FOR THE CONSTRUCTION OF THE BUILDIN G. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATER IAL AVAILABLE ON RECORD. THE TRIBUNAL HAS BEEN CONSISTENTLY HOLDING THAT THE STATE PWD RATE TO BE APPLIED INSTEAD CPWD RATE WHEN THE CONSTRUCTION TOOK PLACE OUTSIDE THE METROPOLITAN CITY. HOWEVER, IN THE PRESENT CASE, THE CONSTRUCTION TOOK PLACE WITHIN HYDERABAD AND AS SUCH IN OUR OPINION, CPWD RATE IS MORE APPROPRIATE THAN THE STATE PWD. HOWEVER, AS ALLEGED BY THE ASSESSEES COUNSEL, CERTAIN ADJUSTMENTS HAVE T O BE MADE TO THE COST OF CONSTRUCTION AS DETERMINED BY THE DVO. TH E ASSESSING OFFICER SHOULD HAVE CONSIDERED THE VARIOUS OBJECTIONS MADE BY THE ASSESSEE AND RE-WORK THE COST OF CONSTRUCTION. THE ASSESSEE OB JECTIONS ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 4 4 ARE IN HER LETTER DATED 12.12.2006. ONE MORE ARGUM ENT OF THE ASSESSEES COUNSEL IS THAT THIS ADDITION TOWARDS COST OF CONSTRUCT ION CANNOT BE FOR ONE SINGLE ASSESSMENT YEAR I.E., 2000-01 SIN CE THE ASSESSEE HAS CARRIED ON THE CONSTRUCTION FROM ASSESSMENT YEAR 1 996-97 TO 2002-03. WE FIND FROM THE RECORD THAT THE ASSESSEE H AS NOT TOOK THIS GROUND BEFORE THE LOWER AUTHORITIES AND ALSO NOT SHOWN ANY REASONABLE CAUSE FOR NOT RAISING THIS ISSUE BEFORE THE LOWER AUTHOR ITIES, HENCE, WE DECLINE TO CONSIDER THIS ARGUMENT OF THE ASSESSEES COUNSEL A T THIS POINT. FURTHER, REGARDING DEDUCTION TOWARDS SELF SUPERVISION, W E ARE UNABLE TO APPRECIATE THE ARGUMENT OF THE ASSESSEES COUNSEL AND THERE IS NO GENERAL RULE THAT EVERY ASSESSEE WHO CONSTRUCTS ANY BUILDI NG IS ENTITLED FOR DEDUCTION TOWARDS SELF SUPERVISION CHARGES. IN THE PR ESENT CASE, AS SEEN FROM THE FACTS OF THE CASE, THE ASSESSEE IS A BUSY DOCTOR WORKING 16 HOURS A DAY FOR SEVEN DAYS IN A WEEK IN HER HOSPITAL AND WE CANNOT FIND ANY REASON HOW SHE IS ABLE TO DEVOTE ANY TIME IN THE CONSTRUCTION OF THE BUILDING. MORE SO, SHE IS A DOCTOR AND HAVING NO T ECHNICAL COMPETENCY TO CARRY OUT THE SUPERVISION OF CONSTRUCTION BU ILDING. HER VISIT TO THE CONSTRUCTION PLOT ONCE IN A WHILE IN A WEE K DOES NOT HELP ANY WAY IN REDUCTION OF THE COST OF CONSTRUCTION. FOR HER PE RSONAL SATISFACTION SHE MIGHT HAVE VISITED THE CONSTRUCTION SITE FEW TIMES IN A WEEK AND THAT DOES NOT MEAN THAT SHE PURCHASED HERSELF A LL MATERIALS REQUIRED FOR THE CONSTRUCTION OF THE BUILDING. BY CONS IDERING THE FACTS OF THE CASE AND HER PERSONAL BACKGROUND, WE ARE NO HESITATI ON TO HOLD THAT SHE IS NOT ENTITLED FOR ANY DEDUCTION TOWARDS SELF SUPER VISION CHARGES. SUBJECT TO THIS OBSERVATION, FOR DETERMINATION OF THE COST OF CONSTRUCTION, WE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSIN G OFFICER TO CONSIDER THE OBJECTION OF THE ASSESSEE IN ITS LETTER DATED 12.12.2006. ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 5 5 6. THE NEXT COMMON GROUND IN ALL THESE APPEALS IS WIT H REGARD TO ALLEGED SUPPRESSED INCOME AT RS.9.60,000/- FOR EACH ASSE SSMENT YEARS. THE CIT(A) SUSTAINED THE FOLLOWING ADDITIONS O N THIS COUNT: ASSESSMENT YEARS ADDITION CONFIRMED 2000-01 RS.7,25,220 2001-02 RS.8,35,015 2002-03 RS.9,46,800 2003-04 ADDITION ENHANCED FROM 9.60,000 TO RS.11,45,940 2004-05 RS.9.60,000 2005-06 RS.8,32,200 7. BRIEF FACTS OF THE CASE ARE THAT ON SEARCH ACTION, TH ERE WERE 60 CASE RECORDS FOUND AND SEIZED IN THE HOSPITAL PREMISES O F THE ASSESSEE INVENTORISED AS A/AAA/MNH/26 ON 24.12.2004 BEARI NG THE ENTIRE BILL AMOUNTS WERE NOT REFLECTED IN THE BOOKS O F ACCOUNTS. THE ASSESSING OFFICER CONSIDERED THE TOTAL RECEIPTS FOR THE ASSESSM ENT YEAR 2003-04 AT RS.80 LAKHS AND ESTIMATED THE TOTAL CASE SHEET S FOR THE FINANCIAL YEAR 2003-04 AT 500 DETERMINING AVERAGE R ECEIPTS PER SHEET AT RS.16,000/-. ON THAT BASIS HE DETERMINED THE SUPPRESSED TURNOVER AT RS.9.6 LAKHS AND 60 CASES WERE NOT ENTERED IN THAT YEAR. THE SAME AMOUNT OF RS.9.60,000/- WAS ADOPTED AS SUPPRESSED RECEIPTS FROM THE ASSESSMENT YEARS 1999-2000 TO 2005-06. SIMILARLY, ON TH E BASIS OF DISCREPANCIES IN THE 9 CASES RELATING TO THE YEAR 2003-04 , THE AMOUNT OF SUPPRESSION ON ACCOUNT OF PARTLY REFLECTED RECEIPTS WAS ESTIMATED AT 4% AT DISCLOSED RECEIPTS ON THE BASIS, THE SUPPRESSED RECEI PTS OR PARTLY REFLECTED BILLS WERE ESTIMATED AT RS.1,20,875/ FOR THE ASSESSMENT 2000- 01. THE ADDITION FOR THE OTHER ASSESSMENT YEARS WHICH A RE MADE BY ASSESSING OFFICER AND CONFIRMED BY CIT(A) ARE AS FOLLOWS: ASSESSMENT YEARS AD DITION 2001-02 1,55,169 2002-03 1,57,797 ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 6 6 2003-04 1,90,992 2004-05 2,24,886 2005-06 1,38,683 8. AGGRIEVED AGAINST THIS, THE ASSESSEE IS IN APPEAL BEF ORE US. THE CONTENTION OF THE ASSESSEES COUNSEL IS THAT: 1. THE ASSUMPTION THAT THE SUM OF RS.80 LAKHS WHICH ARE THE TOTAL RECEIPTS FOR THE ASSESSMENT YEARS 2004-05 ARE THE RECEIPTS ONLY TOWARDS CASE SHEETS IS WRONG. THEY INCLUDE OTHER RECEIPTS A LSO. THE CORRECT AMOUNT IS 73.84 LAKHS WHICH AGAIN INCLUDES ME DICINE SALES AND SCANNING CHARGES FORMING PART OF THE RECEIPTS. 2. THE ASSUMPTION THAT THE CASE SHEETS FOR THE ASSESSMENT YEAR S 2004-05 ARE 500 IS WRONG. THE NUMBER IS MORE THAN 60 0 CASE SHEETS OUT OF WHICH 60 ARE IN THE POSSESSION OF THE DEPAR TMENT. 3. THE ASSUMPTION THAT THE AVERAGE RECEIPT PER CASE SHEET IS RS.16,000/- IS WRONG. OUT OF THE 60 CASE SHEETS INVETORI SED, MORE THAN 65% TO 70% OF THE CASE SHEETS ARE BELOW RS.2,500/- THE AVERAGE OF RS.16,000/- PER CASE SHEET IS WHOLLY INCORRECT. 4. OUT OF 60 CASE SHEETS IN RESPECT OF 40 CASE SHEETS, THE RECEIP T OF MONEYS ARE RECORDED IN THE BOOKS OF ACCOUNTS. THEREFORE , THE ASSUMPTION THAT RECEIPTS FOR 60 CASES SHEETS ARE NOT RECORD ED IS WRONG. 5. EVERY YEAR THE RECEIPTS DIFFER SCHEDULE OF CHARGES DIFFE R AND COST OF TREATMENT DIFFERS. THE COST OF MEDICINES UNDERGO A CH ANGE. IT CANNOT BE PRESUMED THAT THE AVERAGE BILL PER CASE SHEET EVERY YEAR IS THE SAME REGARDLESS OF EFFLUX OF TIME AND MUCH L ESS RS.16,000/- PER CASE SHEET ON THE BASIS OF THE FIGURES IN THE ASSESSMENT YEARS 2004-05. 6. IN ANY EVENT, THE AVERAGE TAKEN AT RS.16,000 FOR ASSE SSMENT YEARS 2004-05 IS IN CORRECT AND EXCESSIVE. 7. THERE CANNOT BE ANY AVERAGE METHOD OF ESTIMATION FOR MAKING ADDITION. THE ADDITION WAS MADE ON PRESUMPTION BASIS WH ICH IS NOT CORRECT. ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 7 7 8. THE ASSESSING OFFICER MADE THE ADDITION ON THE PRESUMPTI ON THAT EVERY YEAR 60 CASE SHEETS ON AN AVERAGE ARE DEEMED TO H AVE NOT BEEN ENTERED IN THE ACCOUNTS. 9. IN ALL 3118 CASE SHEETS OF ALL THE YEARS WERE VERIFIED A LONG WITH RECORDS ON DIFFERENT DATES DURING THE PERIOD 3.11.2004 TO 24.12.2004. THE DATE 3.11.2004 WAS THE ACTUAL DATE O F SEARCH AND NOT THE CLOSURE OF VERIFICATION OF RECORDS. 10. THE CONCLUSION ARRIVED AT BY THE CIT(A) THAT THE VERI FICATION DONE IS ONLY RANDOM VERIFICATION, IS ERRONEOUS. THIS CO NCLUSION IS ARRIVED AT A BASED ON THE STATEMENT RECORDED ON 3.11.2 004 WHICH WAS THE DATE OF SEARCH. THERE WAS FULL SCRUTINY OF SEARCH MATERIAL ALTER AND NOT MERELY SAMPLE SCRUTINY. 11. THERE CANNOT BE ANY SAMPLE SCRUTINY WHEN ALL THE CASE SHEETS ARE AVAILABLE. ANY ADDITION TO BE MADE WILL H AVE TO BE WITH REFERENCE TO THE ACTUAL DIFFERENCE NOTICED IN EVERY CASE SHEET THAT IS AVAILABLE AND NOT A MERELY SAMPLE VERIFICATION. TH E ASSESSING OFFICER CANNOT IGNORE THE MATERIAL AVAILABLE AND MAKE ESTIMATED ADDITION IGNORING THE MATERIAL. 12. IN ANY EVENT THERE WAS FULL SCRUTINY OF ENTIRE MATERIA L AND THE CIT(A) DREW ERRONEOUS CONCLUSION AT PARA 15.4. AND 15.5. OF HIS ORDER FOR THE ASSESSMENT YEARS 2000-01. 13. THE CASE SHEETS WERE SEIZED ON 4.11.2004. THEY WERE RETAINED TILL 24.12.2004. THERE WAS VERIFICATION OF 3118 CASE SHEETS FOR ALL THE YEARS BY THE SEARCH PARTY FOR A TOTAL NUMBER OF SEVEN FULL DAYS. 60 CASE SHEETS ERE RETAINED AND THE BAL ANCE RETURNED. 14. IN THE ASSESSMENT ORDER, IT IS STATED THAT 60 BILLS WERE NOT REFLECTED IN THE BOOKS. AFTER CONCLUSION OF ASSESSMENT PROCEEDINGS, THE DETAILS OF 60 CASE SHEETS WERE FURNISHED. BASED ON THE INFORMATION SUPPLIED AFTER THE ASSESSMENT, THE DE TAILS OF PATIENTS NAMES IN THE CASE SHEETS WERE TAKEN OUT WITH TH E CORRESPONDING BILLS AND TALLIED WITH THE ACCOUNTS. 15. OUT OF 60 CASE SHEETS, CORRESPONDING BILLS OF 41 CASE SHEETS WERE TAKEN OUT AND TALLIED WITH ACCOUNTS. DETAILS OF T HE SAME WERE PLACED BEFORE THE CIT(A). THIS EXERCISE COULD NOT BE DONE ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 8 8 EARLIER BECAUSE NO DETAILS OF THE 60 CASE SHEETS WERE FUR NISHED BEFORE THE COMPLETION OF THE ASSESSMENT. 16. THE BOOKS OF ACCOUNTS ARE SEIZED AND ARE WITH THE DEPARTMENT. THE 60 CASE SHEETS ARE ALSO SEIZED AND ARE W ITH THE DEPARTMENT. THE COMPUTER SEIZED IS STILL WITH THE DEPA RTMENT. THE BILLS AVAILABLE IN 41 CASE SHEETS TALLY WITH THE DEPARTM ENT. 17. WHEN ALL THE RECORDS ARE WITH THE DEPARTMENT AND THE ASSESSEE EXPLAINED THE ENTRIES IN RECORD BY SUMMARIZING TH EM IN THE FORM OF A CHART, THE CIT(A) REJECTS THE EXPLANATIO N AS ADDITIONAL EVIDENCE OF THE CIT(A) ORDER FOR THE ASSESSME NT YEARS 2000-01. 18. IT IS RATHER STRANGE THAT INFORMATION IN THE FORM OF RECORDS SEIZED BY THE DEPARTMENT BECOMES ADDITIONAL EVIDENCE. THE CIT(A) ERRED IN NOT GOING INTO THESE DETAILS. EVEN I F IT IS ADDITIONAL EVIDENCE, THE CIT(A) CANNOT REJECT THE SAME WITHOUT APP LYING HIS MIND. HE IS DUTY BOUND TO CONSIDER THE EXPLANATION F URNISHED. 19. THE ADDITION BASED ON ASSUMPTIONS EACH YEAR AT RS.9,60,000 IS NOT JUSTIFIED. EVEN IF ANY ADDITION IS WARRANTED, IT SHOULD ONLY BE RESTRICTED TO THOSE CASE SHEETS OUT OF THE 60 NUMBERS WHERE THE RECEIPTS ARE NOT RECORDED. 20. THE DETAILS OF AMOUNT RECEIVED IN RESPECT OF 60 CASE SHEET S AND THE CORRESPONDING BILLS ARE FURNISHED AT PAGES 214 T O 217 OF VOL.II 21. IN RESPECT OF 60 CASE SHEETS THE ASSESSEE CONTENDS THAT ALL RECEIPTS WERE ENTERED IN THE ACCOUNTS AND ONLY IN RESPECT OF 19 CASE SHEETS, THE CORRESPONDING BILLS COULD NOT BE FOUN D THOUGH THE RECEIPTS WERE INCLUDED IN THE ACCOUNTS. 22. THE ABSENCE OF BILL MAKES NO DIFFERENCE AS LONG AS THE RECEIPT RELATABLE TO THE CASE SHEET IS RECORDED IN THE BOOKS OF ACCOUNT. 9. FOR THE ALLEGED PARTIAL SUPPRESSION OF INCOME, TH E ASSESSEE COUNSEL MADE THE SAME ARGUMENTS AND PRAYED TO DELETE T HE ADDITION. ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 9 9 10. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE CIT(A). 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE MAIN CONTENTION OF THE ASSESSEE COUNSEL IS THAT THE ADDITION CANNOT BE MADE FOR ALL THE ASSESSMENT YEARS ON THE BASIS OF DISCREPANCIES FOUND IN ONE PARTICULAR ASSESSMENT YEAR AND THE JUDGEMENT OF JURISDICTIONAL HIGH COURT (AP) IN THE CASE OF RAJNIK & CO. (251 ITR 561) HAS NO APPLICATION. ACCORDING TO THE ASSE SSEES COUNSEL, IN THE PRESENT CASE, THE INFORMATION OF SUPPRESSION IS AVA ILABLE ONLY TO ONE ASSESSMENT YEAR AS SUCH ADDITION OF INCOME IF ANY, SHOU LD BE PERTAINED TO THAT ASSESSMENT YEAR ONLY AND THAT CANNOT BE EXTENDED TO OTHER ASSESSMENT YEARS. THIS ARGUMENT OF THE ASSESSEES COUNSEL HOLDS NO MERIT. IN THE CASE OF JURISDICTIONAL HIGH COURT (AP) IN THE CASE OF RAJNIK & CO. 251 ITR 561 WHEREIN IT WAS HELD THAT: THAT THE ASSESSEE WAS NOT ABLE TO DISPUTE THE FINDI NGS OF THE ASSESSING OFFICER AS WELL AS THE TRIBUNAL WHERE THE SEIZED MA TERIAL HAD SHOWN THAT THERE WAS SUPPRESSION FOR A PERIOD OF 24 DAYS DURING THE ASSESSMENT YEAR 1996-97 AND 15 DAYS FOR 1997-98 AND ALSO THAT THE SUPPRESSION WERE ON A DAY TO DAY BASIS AND THE EVID ENCE RECORDED FROM THE PARTNER HAD SHOWN THAT THE SAME METHOD WAS ADOP TED THROUGHTOUT THE ASSESSMENT YEAR YEARS FOR THE ENTIRE BLOCK PERI OD. WHERE THE ASSESSEE HAD CARRIED ON THE BUSINESS FOR THE FULL YEAR, THE ADDITION WAS MADE AT SIX TIMES THE SUPPRESSION FOUND DURING THAT YEAR AND FOR THE ASSESSMENT YEAR 1997-98 THE ADDITION WAS RESTRICTED TO ONLY THREE TIMES, AS THE ASSESSEE HAD CARRIED ON THE BUSINESS ONLY FOR HALF OF THE PERIOD WITH REFERENCE TO THE EARLIER YEAR, WHERE SI X TIMES ADDITION WAS MADE. IT WS CLEAR FROM THE ORDER OF THE TRIBUNAL T HAT THE ESTIMATIONS OF THE UNDISCLOSED INCOME MADE WERE BASED ON RELEVANT MATERIAL AND THERE WAS ABSOLUTELY NO UNREASONABLENESS OR ARBITRA RINESS WHILE MAKING SUCH ADDITION. THOUGH THERE WAS NO MATERIAL WITH REFERENCE TO THE ADDITION MADE FOR THE ASSESSMENT YEAR YEARS 198 6-87 TO 1995-96, YET IT WAS ADMITTED BY THE PARTNER OF THE ASSESSEE FIRM THAT THE ASSESSEE HAD PRACTICED SUPPRESSION OF SALES TURNOVE R EVEN IN THOSE YEARS AND TAKING THE QUANTUM OF BUSINESS THE SUPPRE SSION WAS ESTIMATED AT 20% AND THE GROSS PROFIT RATE RETURNED BY THE ASSESSEE WAS ACCEPTED. THE TRIBUNAL HAD RIGHTLY FOUND THAT THE ESTIMATION OF THE SUPPRESSED TURNOVER AS WELL AS UNDISCLOSED INCOME B Y THE ASSESSING ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 10 10 OFFICER WAS ON THE HIGHER SIDE AND THE TRIBUNAL ON CONSIDERATION OF THE MATERIAL ON RECORD RE-DETERMINED THE SUPPRESSED TUR NOVER AS WELL AS THE UNDISCLOSED INCOME WHICH WAS REASONABLE AND PRO PER. 12. IN VIEW OF THE JUDGEMENT, WE ARE OF THE OPINI ON THAT WHEN DISCREPANCIES FOUND IN ANY ONE ASSESSMENT YEAR, THE INCOM E OF OTHER ASSESSMENT YEAR COULD BE DETERMINED ON THE BASIS OF THAT DISCREPANCIES AND THE ASSESSING OFFICER IS AT LIBERTY TO ESTIMATE THE SUPPRESSED INCOME OF OTHER ASSESSMENT YEARS ALSO ON THAT BASIS. FOR TH IS PURPOSE WE TAKE SUPPORT FROM THE JUDGEMENT OF HONBLE SUPRE ME COURT IN THE CASE OF COMMISSIONER OF SALES TAX VS. H.M. ESUFALI HM ABDUL ALI (90 ITR 271) (SC) WHEREIN IT WAS HELD THAT: THE REASSESSMENT WERE VALID. FROM THE CIRCUMSTANCE THAT THE ASSESSEE HAD DEALINGS OUTSIDE THE ACCOUNTS OF THE V ALUE OF RS.31,171.28 FOR 19 DAYS IT WAS OPEN TO THE OFFICER TO INFER THAT THE ASSESSEE HAD LARGE SCALE DEALINGS OUTSIDE THE ACCOU NTS. IN SUCH A SITUATION, IT WAS NOT POSSIBLE FOR THE OFFICER TO F IND OUT PRECISELY THE TURNOVER SUPPRESSED AND HE COULD ONLY MAKE AN ESTIM ATE OF THE SUPPRESSED TURNOVER ON THE BASIS OF THE MATERIAL BE FORE HIM. SO LONG AS THE ESTIMATE MADE BY HIM WAS NOT ARBITRARY AND H AD A REASONABLE NEXUS WITH THE FACTS DISCOVERED, IT COULD NOT BE QU ESTIONED. IT WAS WRONG TO HOLD THAT THE OFFICER MUST HAVE MATERIAL B EFORE HIM TO PROVE THE EXACT TURNOVER SUPPRESSED. IN ESTIMATING ANY ESCAPED TURNOVER, IT IS INEVITABL E THAT THERE IS SOME GUESS WORK. THE ASSESSING OFFICER WHILE MAKING THE BEST JUDGEMENT ASSESSMENT NO DOUBT, SHOULD ARRIVE AT HIS CONCLUSIO N WITHOUT ANY BIAS AND ON A RATIONAL BASIS. THAT AUTHORITY SHOULD NOT BE VINDICTIVE OR CAPRICIOUS. IF THE ESTIMATE MADE BY THE ASSESSING AUTHORITY IS A BONA FIDE ESTIMATE AND IS BASED ON A RATIONAL BASIS, THE FACT THAT THERE IS NO GOOD PROOF IN SUPPORTING OF THAT ESTIMATE IS IMMATE RIAL. PRIMA FACIE, THE ASSESSING OFFICER IS THE BEST JUDGE OF THE SITU ATION. IT IS HIS BEST JUDGEMENT AND NOT ANY ONE ELSES. THE HIGH COURT CANNOT SUBSTITUTE ITS BEST JUDGEMENT FOR THAT OF THE ASSESSING OFFICE R. 13. FURTHER, THE ASSESSEES COUNSEL MADE AN ARGUMENT THA T THE SUPPRESSED CASE RECORDS ARE NOT AT 60 NOS. INSTEAD OF THER E ARE ONLY 41 CASE RECORDS WHICH ARE NOT RECORDED AS RECEIPTS IN THE RE GULAR BOOKS OF ACCOUNTS AND HE IS IN A POSITION TO RECONCILE THE ENTIR E RECEIPTS/CASE RECORDS WITH THE BOOKS OF ACCOUNTS AND PRAYED BEFORE US T O GIVE AN ITA NOS.382 TO 387/HYD/2009 M/S MATRIKA HOSPITALS, HYDERABAD 11 11 OPPORTUNITY TO PLACE THE RECONCILIATION BEFORE THE ASSE SSING OFFICER. WE ACCEDE TO THE REQUEST OF THE ASSESSEES COUNSEL. ACCORDINGLY, WE DIRECT THE ASSESSEE TO RECONCILE THE ENTIRE RECEIPTS/CASE RECORDS WI TH THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER ONLY THOSE CASE RECORDS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT FOR THE PURPOSE OF DETERMINING THE INCOME OF THE ASSESSEE AND THEREAFTER HE USE THAT SUPPRESSION AS A BASIS TO DETERMINE THE INCOME OF THE OTHE R ASSESSMENT YEARS AS HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJ VS. ACIT 251 ITR 561. THE ASSESSING OFFICER ALSO DIRECTED TO DETER MINE PARTIAL SUPPRESSION RECEIPTS ALSO IN SIMILAR MANNER. 14. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 30 .6.2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 30 TH THE JUNE, 2010 COPY FORWARDED TO: 1. M/S MATRIKA HOSPITAL, H.NO.6-3-1100/2, SOMAJIGUDA, HYDERABAD. 2. THE DCIT, CIRCLE 6(1), HYDERABAD 3. CIT(A)-IV, HYDERABAD. 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP