Dr. Rajiv Gupta, Karnal V. ACIT, Karnal

ITA 3877/DEL/2011

• Counselvise Citation: 387720114 RSA 2011
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 17-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K MONGADR
• Assessee Lawyers: VIKRANT GUPTAAR
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI F BENC H BEFORE SHRI R.P. TOLANI, JM & SHRI A.N. PAHUJA, AM ITA NO.3877/D/2011 ASSESSMENT YEAR:2007-08 DR. RAJIV GUPTA, PROPRIETOR, HOSPITAL AMRIT DHARA, CHAURA BAZAR, KARNAL V/S . A.C.I.T., KARNAL CIRCLE, KARNAL [PAN:ABZPG 8176 D] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI VIKRANT GUPTA,AR REVENUE BY SHRI A.K. MONGA,DR DATE OF HEARING 18-10-2011 DATE OF PRONOUNCEMENT 25-10-2011 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 17.8.2011 BY THE ASSESSEE AGA INST AN ORDER DATED 18 TH APRIL, 2011 OF THE LEARNED CIT(A)-KARNAL, RAISES T HE FOLLOWING GROUNDS:- 1 THAT THE WORTHY CIT(A) ERRED IN CONFIRMING THE R EJECTION OF BOOKS OF ACCOUNTS MADE BY THE LEARNED ASSESSING OFF ICER WITHOUT POINTING OUT ANY DEFECTS IN THE MAINTAINING THE BOOKS OF ACCOUNTS OR DETECTING ANY CONCEALED INCOME BY IN VOKING THE PROVISIONS OF SECTION 145 WITHOUT APPRECIATING THE FACTS AND LAW PROPERLY. AS SUCH THE REJECTION OF BOOKS B E KINDLY DECLARED TO BE AGAINST THE LAW AND FACTS. 2 THAT THE WORTHY CIT(A) ALSO ERRED IN CONFIRMING T HE ADDITION OF ` `2,51,653/- MADE BY THE LEARNED ASSESSING OFFICER @ 5% OF GROSS RECEIPTS BY PROPOUNDING HIS OWN FORMULA AT HIS SWEET WILL AND DISCRETION AND IGNORING THE BOOKS OF ACCOUNTS MAINTAINED IN THE REGULAR COURSE OF PROFESSION AS P RESCRIBED UNDER THE INCOME-TAX ACT AND RULES OR DETECTING ANY CONCEALED RECEIPTS OR INFLATED EXPENSES. AS SUCH T HE ADDITION ALSO BE KINDLY ORDERED TO BE DELETED. 3 THAT THE APPELLANT CRAVES LEAVE TO AMEND/ADD MORE GROUNDS OF APPEAL AT THE TIME OF HEARING WITH THE PERMISSIO N. I.T.A. NO.3877/D/2011 2 2. ADVERTING FIRST TO GROUND NOS.1 & 2 IN THE APPEA L OF THE ASSESSEE, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECL ARING INCOME OF ` `9,93,223/- FILED ON 31.10.2007 BY THE ASSESSEE, A DOCTOR RUNNI NG AN HOSPITAL, AFTER BEING PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (H EREINABOVE REFERRED TO AS THE ACT), WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER (A.O. IN SHORT) NOTICED THAT THOUGH THE ASSESSEE CHARGED FOR ROOM RENT, MEDICINES CONSUMED, DOCTORS VISIT, NURSING CHARGES ETC. FROM INDOOR PATIENTS, THE RECEIPTS GENERATED ON COMPUTER MERELY MENTIONED THE NAME OF PATIENT AND THE AMOUNT CHARGED. THE RECEIPTS DID NOT CONTAIN EVEN THE PE RIOD DURING WHICH A PATIENT REMAINED ADMITTED IN THE HOSPITAL. SINCE THE RECEIP TS DID NOT FIND ANY MENTION OF NURSING CHARGES, CHARGES FOR MEDICINES, FEE OF DOCT OR, TESTING CHARGES, CLINIC CHARGES, DRESSING CHARGES AND OPERATION CHARGES ETC . NOR THE ASSESSEE WAS FOUND TO HAVE MAINTAINED QUANTITATIVE DETAILS OF ME DICINES CONSUMED OR X-RAY FILMS CONSUMED, THE AO REJECTED THE BOOK RESULTS HA VING RECOURSE TO PROVISIONS OF SECTION 145 OF THE ACT AND MADE AN ESTIMATED ADD ITION OF 2,51,653/- @5% OF THE GROSS RECEIPTS, RELYING, INTER ALIA, ON THE DE CISIONS IN THE CASE OF CIT VS. BRITISH PAINTS INDIA LTD., 188 ITR 44 (SUPREME COUR T); CIT VS. MCMILLAN & CO. (1958), 33 ITR 182 (SUPREME COURT) AND S.N. NAMASIV AYAM CHETTIAR VS. CIT (1960) 38 ITR 579 (SUPREME COURT). 2.1 ON APPEAL, THE LEARNED CIT(A) UPHELD THE FINDIN GS OF THE AO IN THE FOLLOWING TERMS:- 1.05 THE ISSUE IS CONSIDERED. AS DISCUSSED ABOVE , THAT THE APPELLANT IS A PRACTICING DOCTOR AND HAS BEEN RUNNI NG A HOSPITAL. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTED THAT COMPUTER RECEIPTS ARE ISSUED SHOWING THE TOTAL PAYMENT RECEIVED FROM THE INDOOR PATIENTS INSTEAD OF SPECIF YING THE DETAILS OF AMOUNT CHARGED ON VARIOUS SERVICES RENDERED SUCH AS ROOM RENT, VISITING CHARGES OF THE DOCTOR, LAB AND TESTING CHA RGES AND NURSING CHARGES ETC. THE APPELLANT HAS NOT BEEN ABLE TO GI VE ANY PLAUSIBLE EXPLANATION IN THIS REGARD AND FOR WANT OF THE COMP LETE DETAILS ON THE RECEIPTS ISSUED TO THE INDOOR PATIENTS, THE COR RECTNESS OF THE I.T.A. NO.3877/D/2011 3 INCOME DECLARED CANNOT BE VERIFIED. FURTHER, NO ST OCK REGISTER HAS BEEN MAINTAINED OF THE PURCHASE AND CONSUMPTION OF X-RAY FILMS AND OF MEDICINES. IN VIEW OF THESE FACTS, CORRECTN ESS OF THE PROFITS DECLARED BY THE APPELLANT IS NOT VERIFIABLE. 1.06 IT IS FURTHER NOTED THAT THERE IS DECLINE IN NET PROFITS IN THE YEAR UNDER CONSIDERATION. THE NET PROFIT IN THE YE AR UNDER CONSIDERATION HAS BEEN DECLARED AT 21.36% AS AGAINS T 26.12% DECLARED IN THE LAST YEAR. IF DECLINE IN PROFITS I S QUANTIFIED, THE SAME WORKS OUT TO RS.2,51,653/- WHICH IS MORE OR LESS EQ UIVALENT TO THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ACCO UNT. THE APPELLANT HAS NOT BEEN ABLE TO GIVE ANY PLAUSIBLE E XPLANATION OF STEEP DECLINE IN NP RATIO ALSO. 1.07 IN VIEW OF THE FACTS DISCUSSED ABOVE, IT IS H ELD THAT THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THE CORREC TNESS OF THE PROFIT DECLARED BY HIM AND HENCE REJECTION OF RESUL TS MADE BY THE ASSESSING OFFICER IS, HEREBY CONFIRMED. GROUND OF APPEAL NO.1 IS AS SUCH REJECTED. 2. THE ASSESSING OFFICER FURTHER MADE VARIOUS DISA LLOWANCES OUT OF THE EXPENSES CLAIMED, WHICH HAS BEEN CHALLEN GED VIDE GROUNDS NO.2 TO 6 OF THE APPEAL. IN THE WRITTEN SU BMISSIONS FILED ON 9.2.2011, THE APPELLANT SUBMITTED THAT THE ASSESSIN G OFFICER MADE ADDITION OF RS.`2,29,524/- ON ACCOUNT OF DISALLOWAN CES MADE OUT OF EXPENSES CLAIMED UNDER VARIOUS HEADS BESIDES THE AD DITION OF RS.`2,51,653/- I.E. 5% OF GROSS RECEIPTS, WHICH AMO UNTS TO DOUBLE ADDITION AS ALL THE EXPENSES UNDER WHICH DISALLOWAN CES WERE MADE ARE ALSO BOOKED IN THE P & L ACCOUNT. THIS PLEA OF THE APPELLANT IS TENABLE AND HENCE OTHER DISALLOWANCES/ADDITIONS OUT OF VARIOUS EXPENSES CLAIMED, MADE BY THE ASSESSING OFFICER AND WHICH ARE CHALLENGED VIDE GROUND NOS. 2 TO 6 OF APPEAL, ARE D ELETED WITHOUT DECIDING THE SAME ON MERITS. 3. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF LEARNED CIT(A). THE LEARNED AR ON BEHALF OF THE A SSESSEE WHILE REFERRING TO THEIR REPLY DATED 30 TH NOVEMBER, 2007 PLACED ON PAGE 7 & 8 OF THE PAPER B OOK BEFORE THE AO CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE FINDINGS OF THE AO, REJECTING THE BOOK RESULTS AND ESTIMATING THE PROFITS @5% OF THE GROSS RECEIPTS. THE LD. AR ADDED THAT NAME OF THE PATIENT AND AMOUNT RECEIVED FOR A PARTICULAR SERVICE WERE ENTERED IN T HE PATIENT REGISTER AND THE I.T.A. NO.3877/D/2011 4 RELEVANT DETAILS ARE PLACED ON PAGE 17 TO 26 OF THE PAPER BOOK. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE FINDINGS OF LEAR NED CIT(A). 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AT THE OUTSET, WE FIND THAT THERE IS NOTHING TO SUGGES T AS TO WHETHER OR NOT REVENUE HAVE FILED APPEAL AGAINST THE FINDINGS OF THE LD. C IT(A) ,ALLOWING PART RELIEF TO THE ASSESSEE. INDISPUTABLY, THE NET PROFIT IN THE YEAR UNDER CONSIDERATION IS 21.36% AS AGAINST 26.12% IN THE PRECEDING YEAR AND NO REAS ONS AT ALL HAVE BEEN ADDUCED BEFORE THE LOWER AUTHORITIES OR EVEN BEFOR E US, FOR DECLINE IN SUCH PROFITS WHILE THE ASSESSEE DID NOT MAINTAIN ANY QUANTITATIVE DETA ILS OF MEDICINES AND X-RAY FILMS CONSUMED NOR SUCH DETAILS HAVE BEE N REFERRED TO BEFORE US. AS POINTED OUT BY THE LOWER AUTHORITIES, THE RECEIPT S GENERATED ON COMPUTER BY THE ASSESSEE MERELY MENTIONED THE NAME OF PATIENT AND T HE AMOUNT CHARGED AND DID NOT CONTAIN EVEN THE PERIOD DURING WHICH A PATIENT REMAINED ADMITTED IN THE HOSPITAL OR THE DETAILS OF NURSING CHARGES, CHARGES FOR MEDICINES, FEE OF DOCTOR, TESTING CHARGES, CLINIC CHARGES, DRESSING CHARGES A ND OPERATION CHARGES ETC..THOUGH THE ASSESSEE REFERRED TO SOME PATIENT REGISTER IN HIS REPLY DATED 30.11.2009,THERE IS NOTHING TO SUGGEST AS TO WHETHE R OR NOT THE SAID PATIENT REGISTER WAS PRODUCED BEFORE THE AO OR THE LD. CIT( A). TO A QUERY BY US, THOUGH THE LD. AR INVITED OUR ATTENTION TO ASSESSEES S UBMISSIONS IN THE LETTER DATED 30.11.2009 ALLEGEDLY SUBMITTED BEFORE THE ACIT, KAR NAL, HOWEVER, HE DID NOT EXPLAIN NOR FURNISHED ANY EVIDENCE AS TO HOW COULD THE SAID LETTER BE FILED DURING THE ASSESSMENT PROCEEDINGS, WHEN THE ASSESSM ENT IN THIS CASE HAD ALREADY BEEN COMPLETED ON 27.11.2009. EVEN NO REF ERENCE TO THIS LETTER HAS BEEN MADE IN THE ASSESSMENT ORDER OR BY THE LD. CIT (A). THE IMPUGNED ORDER DOES NOT REVEAL THAT THE SAID PATIENT REGISTER WAS EVER PRODUCED BEFORE THE AO OR THE LD. CIT(A). AS OBSERVED BY THE LD. CIT(A), THE ASSESSEE DID NOT FURNISH ANY PLAUSIBLE EXPLANATION BEFORE HIM REGARDING NON SPE CIFICATION OF DETAILS LIKE ROOM RENT, FEES FOR VISIT OF DOCTOR AND NURSING CHARGES ETC. THE LEARNED CIT(A) FURTHER FOUND THAT THE ASSESSEE DID NOT MAINTAIN ANY PURCHA SE OR CONSUMPTION RECORDS OF X-RAY FILMS OR MEDICINES. IN THESE CIRCUMSTANCE S, THE LD. CIT(A) UPHELD THE I.T.A. NO.3877/D/2011 5 FINDINGS OF THE AO, REJECTING THE BOOK RESULTS, HA VING RECOURSE TO PROVISIONS OF SECTION 145 OF THE ACT. ONCE THE ASSESSEE FAILED TO FURNISH THE RELEVANT DETAILS AND SUBSTANTIATE THE BOOK RESULTS FOR THE RELEVANT PERIOD UNDER CONSIDERATION, IT WAS OPEN TO THE AO AND THE LD. CIT(A) TO REJECT THE BOOK RESULTS AND ESTIMATE THE PROFIT. IT IS NOT A CASE WHERE BOOKS OF ACCOUNT ARE PROPERLY MAINTAINED AND THE ASSESSING OFFICER HAS SUBSTITUTED HIS OWN ESTIMATE IGNORING THE BOOKS OF ACCOUNT, WITHOUT GIVING ANY REASONS. IT MAY BE OBSE RVED UNDER THE CIRCUMSTANCES THAT IT IS DIFFICULT TO CATALOGUE VAR IOUS TYPES OF DEFECTS IN THE ACCOUNT BOOKS OF AN ASSESSEE WHICH MAY RENDER REJEC TION OF ACCOUNTS ON THE GROUND THAT ACCOUNTS ARE NOT COMPLETE AND FROM WHIC H THE CORRECT PROFIT CANNOT BE DEDUCED. WHETHER PRESENCE OR ABSENCE OF STOCK RE GISTER IS MATERIAL OR NOT, WOULD DEPEND UPON THE TYPE OF BUSINESS. IN THE CASE UNDER CONSIDERATION, INDISPUTABLY, THE ASSESSEE DID NOT MAINTAIN ANY QU ANTITATIVE DETAILS OF MEDICINES AND X-RAY FILMS CONSUMED NOR SUCH DETAILS HAVE BEE N REFERRED TO BEFORE US .AS POINTED OUT BY THE LOWER AUTHORITIES, THE RECEIPT S GENERATED ON COMPUTER BY THE ASSESSEE MERELY MENTIONED THE NAME OF PATIENT AND T HE AMOUNT CHARGED AND DID NOT CONTAIN EVEN THE PERIOD DURING WHICH A PATIENT REMAINED ADMITTED IN THE HOSPITAL OR THE DETAILS OF NURSING CHARGES, CHARGES FOR MEDICINES, FEE OF DOCTOR, TESTING CHARGES, CLINIC CHARGES, DRESSING CHARGES A ND OPERATION CHARGES ETC..AS ALREADY STATED ,THOUGH THE ASSESSEE REFERRED TO SO ME PATIENT REGISTER IN HIS REPLY DATED 30.11.2009,THERE IS NOTHING TO SUGGEST AS TO WHETHER OR NOT THE SAID PATIENT REGISTER WAS PRODUCED BEFORE THE AO OR THE LD. CIT( A). THERE IS NO REFERENCE TO THIS LETTER IN THE ASSESSMENT ORDER OR THE IN THE I MPUGNED ORDER. IN THIS SITUATION, WE HOLD THAT THE LD. CIT(A) IS QUITE JUSTIFIED IN U PHOLDING THE FINDINGS OF THE AO, REJECTING THE BOOK RESULTS, HAVING RECOURSE TO PROV ISIONS OF SEC.145(3) OF THE ACT THIS VIEW OF OURS IS ALSO FORTIFIED BY THE DECISIO N OF HONBLE ORISSA HIGH COURT IN THE CASE OF RATANLAL OMPRAKASH VS. CIT,132 ITR 640( ORISSA), AWADHESH PRATAPSINGH ABDUL RAHEMAN & BROS VS CIT (1994) 210 ITR(ALL) AND DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. K Y PILLIAH AND SONS, 63 ITR 411(SC). IN VIEW OF THE FOREGOING, ESPECIALLY WHE N THE LD. AR HAS NOT PLACED ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, I.T.A. NO.3877/D/2011 6 WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUND NO. 1 IN THE APPEAL IS DISMISSED. 4.1 AS REGARDS ESTIMATED ADDITION OF ` `2,51,653/- @5% OF THE GROSS RECEIPTS, WE FIND THAT WHILE ESTIMATING THE PROFITS, THE AO DID NOT ALLOW ANY EXPENSES WHILE DETERMINING THE AFORESAID INCOME. THE LD. CIT(A) C ONCLUDED THAT THIS WOULD AMOUNT TO DOUBLE ADDITION. ACCORDINGLY, THE LD. CI T(A) WHILE UPHOLDING THE ESTIMATE, ACCEPTED THE CLAIM OF THE ASSESSEE FOR AL LOWANCE OF THE EXPENSES CLAIMED BY THE ASSESSEE UNDER VARIOUS HEADS. THE R EVENUE IS NOT IN APPEAL BEFORE US AGAINST THESE FINDINGS OF THE LD. CIT(A) NOR DO WE FIND ANY MISTAKE IN THE APPROACH OF THE LEARNED CIT(A) IN ESTIMATING TH E PROFITS AFTER UPHOLDING THE REJECTION OF BOOK RESULTS. . NO DOUBT THE AO/CIT(A) SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDG MENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBITRARILY, BUT THERE IS NECESSARI LY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT ASSESSMENT, AND IT IS T HE ASSESSEE HIMSELF WHO IS TO BLAME AS HE DID NOT SUBMIT PROPER ACCOUNTS AND DETA ILS.[ KACHWALA GEMS VS JCIT, 288 ITR 10 (2007)(SC) ]. SINCE THE ASSESSEE DID NOT SUBSTANTIATE THE BOOK RESULTS WITH COGENT EVIDENCE BEFORE THE AO OR THE LD. CIT(A) NOR EXPLAINED REASONS FOR DECLINE IN PROFITS AND NO MATERIAL HAS BEEN PLACED BEFORE US SO AS TO TAKE A DIFFERENT VIEW IN THE MATTER, WE DO NOT F IND ANY INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) WHILE UPHOLDING REJECTION OF BO OK RESULTS AND SUSTAINING THE ADDITION . IN THIS VIEW OF THE MATTER AND CONSIDERI NG THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE NOT INCLINED TO I NTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A). THEREFORE, GROUND NO 2 IN THE APPE AL IS ALSO DISMISSED. 5. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE U S IN TERMS OF RESIDUARY GROUND NO.3 IN THE APPEAL ,ACCORDINGLY, THIS GROUND IS DISMISSED. 6. NO OTHER PLEA OR SUBMISSION WAS MADE BEFORE US. I.T.A. NO.3877/D/2011 7 7. IN RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (R.P. TOLANI) (A.N. PAHUJA ) JUDICIAL MEMBER ACCOUNTANT MEMBER NS COPY OF THE ORDER FORWARDED TO :- 1. DR. RAJIV GUPTA, PRO. HOSPITAL AMRIT DHARA, CHA URA BAZAR, KARNAL. 2. ACIT, KARNAL CIRCLE, KARNAL. 3. CIT (APPEALS)-KARNAL. 4. THE CIT CONCERNED. 5. THE DR, ITAT,F BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI