I.T.O., Ward-2(1), Farrukhabad V. Dr. Hari Dutt Dwivedi, Farrukhabad

ITA 565/AGR/2012

• Counselvise Citation: 56520314 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: WASEEM ARSHAD
• Assessee Lawyers: SAHIB P SATSANGEE
• Keywords: Unexplained investment; Question of law; Valuation report
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO. 565/AGRA/2012 ASSTT. YEAR : 2009-10 INCOME-TAX OFFICER, VS. DR. HARI DUTT DWIVEDI, WARD 2(1), FARRUKHABAD. PROP. M/S. BRAHM DUTT DW IVEDI HOSPITAL, SAHAB GANJ NARAIN DAS, FARRUKHABAD. (PAN: AAYPD 0817 A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. DR RESPONDENT BY : SHRI SAHIB P. SATSANGEE, C.A. DATE OF HEARING : 02.04.2014 DATE OF PRONOUNCEMENT OF ORDER : 25.04.2014 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), GHAZIABAD DATED 17.09.2012 FOR THE ASSESSMENT YEAR 2009-10. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE MATERIAL ON RECORD. 3. ON GROUND NO. 1, THE REVENUE STATED IN GENERAL T HAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, WHICH CALLS FOR NO ITA NO. 565/AGRA/2012 2 SPECIFIC FINDING AS NO ARGUMENTS HAVE BEEN ADVANCED ON THE SAME. THEREFORE, THE SAME IS REJECTED. 4. ON GROUND NO. 2, THE REVENUE CHALLENGED THE ORDE R OF THE LD. CIT(A) IN DELETING THE ADDITION U/S. 69 OF THE IT ACT OF RS.1 ,33,17,372/- BEING UNEXPLAINED INVESTMENT IN CONSTRUCTION OF GUEST HOUSE. 5. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME AT RS.5,89,950/- PLUS AGRICULTURAL INCOME AT RS.80,000 /-.THE ASSESSEE DERIVES INCOME FROM RUNNING OF NURSING HOME / AMBULANCE, CONSULTAN CY, DISPENSARY, X-RAY ETC. THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT AND THE SAME WERE AUDITED. THE AO CONSIDERING THE COMPARATIVE CHART AND HISTORY OF TH E ASSESSEE FOUND THAT THE ASSESSEES RECEIPTS ARE INCREASING YEAR BY YEAR AND EXPENSES ARE ALSO INCREASING, BUT THE NET PROFIT RATIO IS GOING DOWN EACH YEAR. IN TH E ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE HAS SHOWN NET PROFIT RATIO OF 29.90% WHERE AS IN PRECEDING ASSESSMENT YEARS 2007-08 AND 2008-09, THE SAME WAS SHOWN AT 34.85% A ND 32.83%. THE AO OBSERVED IN THE ASSESSMENT ORDER THAT THERE WAS INF ORMATION WITH THE DEPARTMENT THAT THE ASSESSEE HAS CONSTRUCTED A GUEST HOUSE IN THE N AME AND STYLE OF VANDHAN GUEST HOUSE (IN SHORT GUEST HOUSE), FARRUKHABAD IN FINANC IAL YEAR 2007-08 AND 2008- 09.THE INSPECTOR WAS DEPUTED TO VISIT THE HOSPITAL PREMISES OF THE ASSESSEE AND THE ITA NO. 565/AGRA/2012 3 BUILDING OF GUEST HOUSE. THE INSPECTOR GAVE HIS REP ORT, WHICH WAS CONFRONTED TO THE ASSESSEE, IN WHICH IT WAS INTIMATED THAT THE GUEST HOUSE IS SITUATED ON THE LAND PURCHASED FROM DIFFERENT PERSONS AND IS CONSTRUCTED UPTO SECOND FLOOR AND DETAILS OF THE INVESTMENT HAVE BEEN SHOWN IN BOOKS/BALANCE SHE ET IN CONSTRUCTION OF GUEST HOUSE AS ON 31.03.2011 AT RS.23,84,742/- OUT OF WHI CH RS.18,70,744/- HAS BEEN FINANCED THROUGH LOAN TAKEN FROM BANK OF INDIA, FAT EHGARH. NO BREAK-UP OF CONSTRUCTION WAS FILED. THE MAP OF THE GUEST HOUSE WAS PASSED ON 24.06.2008 AND WAS VALID UPTO 23.06.2011.THE INSPECTOR ESTIMATED T HE COST OF CONSTRUCTION IN THE GUEST HOUSE APPROXIMATELY RS.1.00 CRORE AS ON 31.10 .2011 (PB-39 REPORT OF INCOME-TAX INSPECTOR DATED 31.10.2011). THE AO WAS OF THE VIEW THAT THE ASSESSEE SHOULD HAVE SHOWN INVESTMENT IN GUEST HOUSE IN THE YEAR UNDER CONSIDERATION, IN WHICH NO FIXED ASSET AND CONSTRUCTION HAVE BEEN SHO WN. THEREFORE, EXPLANATION OF THE ASSESSEE WAS CALLED FOR AFTER CONFRONTING THE R EPORT OF THE INSPECTOR. THE ASSESSEE SUBMITTED REPLIES BEFORE THE AO, BUT THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT NO INVESTMENT WAS MADE IN THE GUEST H OUSE IN THE YEAR UNDER CONSIDERATION AND ACCORDINGLY, THE AO WAS OF THE VI EW THAT THE INVESTMENT IN GUEST HOUSE REMAINED UNEXPLAINED U/S. 69 OF THE ACT AND I NVESTMENT IN LAND WAS ESTIMATED AT RS.25,53,372/- AND IN CONSTRUCTION APPROXIMATELY RS.1,07,64,000/- HAVE BEEN INVESTED. THEREFORE, TOTAL ADDITION OF RS.1,33,17,3 72/- WAS MADE IN THE ASSESSMENT ORDER. ITA NO. 565/AGRA/2012 4 5.1 THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND DETAILED SUBMISSIONS OF THE ASSESSEE ARE INCORPORATED IN THE APPELLATE ORDER, IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT THE AO HAS IGNORED THAT DURING THE YEAR UNDER CONSIDERATION, THE LAND OF RS.3,17,790/- WAS ONLY P URCHASED BY DEBITING TO THE CAPITAL ACCOUNT IN THE BOOKS AND BALANCE DID NOT RE LATE TO THE YEAR. THEREFORE, WHOLE ADDITION IS UNJUSTIFIED. THE INCOME-TAX INSPECTOR H AS IGNORED THAT NO AMOUNT HAS BEEN SPENT IN THE CONSTRUCTION OF THE SAID PROPERTY IN THE YEAR UNDER APPEAL AND NO EVIDENCE HAVE BEEN BROUGHT ON RECORD TO ESTABLISH T HAT ANY CONSTRUCTION WAS DONE DURING THE YEAR UNDER CONSIDERATION. THE CONSTRUCTI ON COMMENCED DURING THE YEAR 2010-11 ONWARDS, WHICH IS SHOWN IN THE BOOKS OF ACC OUNTS. THE REPORT OF THE INCOME-TAX INSPECTOR IS NOT CORRECT BECAUSE HE HAS NO TECHNICAL KNOWLEDGE. IT WAS, THEREFORE, SUBMITTED THAT THE AO REFERRED THE MATTE R TO THE DVO FOR VALUATION OF THE GUEST HOUSE BUILDING U/S. 142A.THE REPORT OF THE DV O WAS NOT PROVIDED TO THE ASSESSEE AND TO THE KNOWLEDGE OF THE ASSESSEE, THER E IS NO SUBSTANTIAL DIFFERENCE IN THE REPORT OF THE DVO AND THE EXPENSES REPORTED BY THE ASSESSEE ON CONSTRUCTION. THEREFORE, THERE IS NO BASIS, WHATSOEVER, TO MAKE A NY ADDITION AGAINST THE ASSESSEE. ITA NO. 565/AGRA/2012 5 5.2 THE LD. CIT(A) CONSIDERING THE EXPLANATION OF T HE ASSESSEE AND THE MATERIAL ON RECORD DELETED THE ADDITION. HIS FINDINGS IN PARA 5 .10 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 5.10. G.O.A.NO.12 THIS IS THE MAIN GROUND. THE A.O. HAS ADDED A SUM OF RS.1,33,17,372/- ON THE GROUND OF UNEXPLAINED INVES TMENT U/S 69 OF THE ACT. THE A.O. DISCUSSES REGARDING INVESTMENT MADE B Y ASSESSEE IN VANDHAN VATIKA AND THEN GOES ON TO ESTIMATE NOT ONL Y THE REGISTRATION EXPENSES REGARDING THE PLOTS PURCHASED BY THE ASSES SEE, BUT ALSO THE A.O. TABULATES THE VALUE OF PLOTS, STAMP DUTY PAID AND ESTIMATED REGISTRATION EXPENSES IN RESPECT OF PLOTS PURCHASED BY OTHER PERSONS. THE TOTAL OF VARIOUS AMOUNTS OF PURCHASES, STAMP D UTY PAID AND ESTIMATED REGISTRATION EXPENSES AS ON PAGE 14 OF AS SESSMENT ORDER COMES TO RS.25,53,372/-. THERE-AFTER THE A.O. HELD, ESTIMATED ON BASIS OF INSPECTORS REPORT THAT CONSTRUCTION EXPENSES WO ULD BE APPROXIMATELY RS.1,07,64,000/-. THESE AMOUNTS AGGRE GATING TO RS.1,33,17,372/- HAVE BEEN ADDED BY THE A.O. AS ASS ESSEES UN- EXPLAINED INVESTMENT. THE APPELLANT HAS VEHEMENTLY CONTESTED THE ENTIRE BASIS OF TABULATION AS WELL AS THE BASIS OF THE ESTIMATIONS REGARDING REGISTRATION CHARGES AND MORE SO REGARDING CONSTRUCTION EXPENSES . THE APPELLANT VEHEMENTLY CONTESTS THAT NOT ONLY SOME OF THESE PLO TS ARE, AS ADMITTED BY A.O., IN NAMES OF OTHER PARTIES AND TO THAT EXTE NT NO ADDITION/ESTIMATION CAN BE MADE IN APPELLANTS HAND ; BUT ALSO THE APPELLANT CLAIMS THAT NO CONSTRUCTION WAS MADE DURI NG THE YEAR UNDER CONSIDERATION, WHICH CONTENTION WAS REPEATEDLY PUT FORTH BEFORE A. O. ALSO. THE APPELLANT ALSO GRIEVES THAT ALTHOUGH A.O. HIMSELF REFERRED THE MATTER TO DVO, AND THE DVO HAS ALREADY FURNISHED A VALUATION REPORT TO THE A.O., BUT THE A.O. IS NOT PROVIDING THE VALU ATION REPORT TO THE ASSESSEE. AS MENTIONED IN PARA 4.1 ABOVE, THIS VALUATION REPORT HAS NOW BEEN OBTAINED FROM THE A.O. IMMEDIATELY THE PICTURE BECOMES CLEAR, AS CONTENDED BY THE APPELLANT; THAT NO CONSTRUCTION HA S BEEN MADE IN THE YEAR UNDER CONSIDERATION. THUS THERE IS NO BASIS FO R ADDITION ON THE BASIS OF UN-EXPLAINED CONSTRUCTION EXPENSES, IN THI S YEAR. FURTHER MORE, AS PER DVOS REPORT, THERE IS IN-SUBSTANTIAL DIFFER ENCE BETWEEN THE ITA NO. 565/AGRA/2012 6 VALUE OF CONSTRUCTION AS CLAIMED BY THE APPELLANT A ND THE VALUE OF CONSTRUCTION AS ESTIMATED BY THE DVO. ALSO, THERE IS SUBSTANTIAL FORCE ALSO IN APPELLANT S FURTHER CONTENTION THAT ONLY FOUR PLOTS WERE PURCHASED DURI NG THE YEAR UNDER CONSIDERATION, AS PER DETAILS HERE UNDER: PURCHASE DATE AMOUNT VALUE STAMP PAID REGISTRY EX PENSES ON ESTIMATE BASIS 25.02.2009 24,000 1,960 2,500 19.02.2009 96,000 7,850 6,000 02.03.2009 48,000 3,920 6,500 17.02.2009 1,20,000 9,800 6,500 TOTAL 2,88,000 23,530 21,500 THE ABOVE INVESTMENTS ARE AS PER ACCOUNTS AND RECOR DS AND ARE ALSO FOUND DEBITED, IN THE CAPITAL ACCOUNT OF THE A SSESSEE. THUS, IT IS FOUND THAT THERE IS NEITHER ANY UN-EXPL AINED INVESTMENT IN REGISTRY EXPENSES, NOR THERE IS ANY CONSTRUCTION AT ALL DURING THE YEAR AND THAT WHAT-EVER INVESTMENTS HAVE MADE ARE DULY A CCOUNTED FOR AND ARE PART OF ACCOUNTS. HENCE ENTIRE EXERCISE OF A.O. ESTIMATE VARIOUS AMOU NTS OF REGISTRY EXPENSES AND OF CONSTRUCTION EXPENSES IS H ELD TO BE FUTILE, IRRELEVANT AND IMPROPER. THE ENTIRE ADDITION OF RS. 1,33,17,372/- HAS NO LOGICAL BASIS AND REASONING AND THUS REQUIRES TO BE DELETED. 6. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT THE LD. CIT(A) DID NOT EXAMINE THE FACTS OF THE CASE. THE LD. DR R EFERRED TO THE ORDER SHEET OF DATED 16.12.2011 RECORDED BY THE AO TO SHOW THAT THE AO H AS INVESTIGATED THE ISSUE OF UNEXPLAINED INVESTMENT IN THE BUILDING. HE HAS ALSO REFERRED TO THE REPORT OF INCOME- TAX INSPECTOR DATED 31.10.2011 TO SHOW THAT THE ASS ESSEE HAS MADE UNEXPLAINED INVESTMENT IN BUILDING. THE LD. DR REFERRED TO THE REPORT OF DVO DATED 23.05.2012, IN WHICH THE DVO HAS NOT EXAMINED THE ISSUE OF YEAR OF CONSTRUCTION. PB-63 IS REPLY ITA NO. 565/AGRA/2012 7 OF THE ASSESSEE IN WHICH THE ASSESSEE EXPLAINED THA T CONSTRUCTION WAS NOT RAISED IN THE YEAR UNDER CONSIDERATION, WHICH IS ACCEPTED BY THE LD. CIT(A). THE LD. DR, THEREFORE, SUBMITTED THAT THE LD. CIT(A) WAS NOT JU STIFIED IN DELETING THE ADDITION. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE REPORT OF THE INCOME-TAX INSPECTOR IS FILED AT PAGE 39 OF THE PAPER BOOK DAT ED 31.10.2011 AND THE AO DID NOT REJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE REGARDI NG COST OF CONSTRUCTION MAINTAINED. THEREFORE, THE WHOLE ADDITION IS UNJUST IFIED AND RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SARGAM CINE MA VS. CIT, 328 ITR 513, IN WHICH IT WAS HELD AS UNDER : SECTION 142A OF THE INCOME-TAX ACT, 1961 ASSESSM ENT ESTIMATE BY VALUATION OFFICER IN CERTAIN CASES WH ETHER AN ASSESSING AUTHORITY CAN REFER ANY MATTER TO DEPARTMENTAL VALU ATION OFFICER WITHOUT BOOKS OF ACCOUNT BEING REJECTED HELD, NO. 7.1 HE HAS REFERRED TO PB 43, WHICH IS DVOS REPORT DATED 23.05.2012, IN WHICH THE REFERENCE TO THE DVO WAS MADE TO ESTIMATE THE C OST OF CONSTRUCTION OF THE GUEST HOUSE ON 20.12.2011 AT THE FAG END OF ASSESSMENT OR DER, IN WHICH THE DVO HAS REPORTED THE PERIOD OF CONSTRUCTION FROM THE YEAR 2 009 TO 2012 AND HAS ESTIMATED THE COST OF CONSTRUCTION FROM F.Y. 2009-10 TO 2011-12 I N A SUM OF RS.58,22,018/- AS AGAINST THE INVESTMENT REPORTED BY THE ASSESSEE IN A SUM OF RS.56,30,551/-. HE HAS, ITA NO. 565/AGRA/2012 8 THEREFORE, SUBMITTED THAT THERE IS NO SUBSTANTIAL D IFFERENCE IN THE COST OF CONSTRUCTION ESTIMATED BY THE DVO AND THAT REPORTED BY THE ASSES SEE. THEREFORE, NO ADDITION SHOULD BE MADE IN THE MATTER AND ALSO RELIED UPON T HE DECISION OF M.P. HIGH COURT IN THE CASE OF CIT VS. ABEESON HOTELS (P) LTD., 191 CT R (MP) 263, IN WHICH IT WAS HELD AS UNDER : TRIBUNAL HAVING ACCEPTED THE LOWER VALUATION OF PRO PERTIES SHOWN BY THE ASSESSEE IN PREFERENCE TO VALUATION MA DE BY DVO WITH THE REASONING THAT 10 PER CENT DIFFERENCE IN THE VALUAT ION MADE BY TWO VALUERS IS USUAL AND NOT UNREASONABLE, THE FINDINGS OF THE TRIBUNAL CANNOT BE FAULTED WITH AND NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED. 7.2 HE HAS ALSO RELIED UPON THE DECISION OF ALLAHABAD H IGH COURT IN THE CASE OF CIT VS. TULSIANI CONSTRUCTIONS & DEVELOPERS LTD., 4 2 TAXMAN .COM 410, IN WHICH IT WAS HELD AS UNDER : SECTION 142A OF THE INCOME-TAX ACT, 1961 ASSESSME NT ESTIMATION BY VALUATION OFFICER [CONDITIONS PRECEDE NT] ASSESSMENT YEAR 2006-07 WHETHER REFERENCE MADE TO DVO WAS NO T PROPER WHERE ASSESSING OFFICER DID NOT RECORD ANY FINDINGS ON EN TRIES RECORDED IN BOOKS OF ACCOUNT, NOR REJECTED ACCOUNT BOOKS BEFORE MAKING SUCH REFERENCE HELD, YES. 7.3 HE HAS REFERRED TO CAPITAL ACCOUNT OF THE ASSES SEE ENDING 31.03.2009 (PB-26), IN WHICH THE VALUE OF THE PLOT PURCHASED IN THE YEA R UNDER APPEAL WAS MENTIONED AT RS.3,17,790/-. PB-89 IS ACKNOWLEDGEMENT OF RETURN F ILED FOR SUBSEQUENT ASSESSMENT YEAR 2010-11 ON 20.09.2011 PRIOR TO COMPLETION OF A SSESSMENT ORDER, IN WHICH THE ASSESSEE HAS MENTIONED THE SAME VALUE OF PLOT RECTI FICATION ENTRY (PB-102) IN A SUM ITA NO. 565/AGRA/2012 9 OF RS.3,17,790/- AND THE VALUE OF CONSTRUCTION IN A SSESSMENT YEAR 2010-11 (PB-103). PB-106 IS ACKNOWLEDGEMENT OF FILING OF RETURN FOR T HE ASSESSMENT YEAR 2011-12, IN WHICH ALSO AT PAGE 122, LAND AND CONSTRUCTION HAVE BEEN MENTIONED OF GUEST HOUSE. PB-139 IS BALANCE SHEET OF ASSESSMENT YEAR 2012-13, IN WHICH ALSO NET INCOME FROM GUEST HOUSE HAS BEEN SHOWN AND IN THE SAME YEAR, TH E INSPECTOR HAS VISITED THE PREMISES ON 31.10.2011. HE HAS, THEREFORE, SUBMITTE D THAT THERE WAS NO BASIS, WHATSOEVER, TO MAKE ANY ADDITION ON THE BASIS OF RE PORT OF THE INSPECTOR. HE HAS SUBMITTED THAT THE LD. CIT(A) WAS JUSTIFIED IN DELE TING THE ADDITION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. THE AO ADMITTEDLY DID NOT RE JECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE PRIOR TO DIRECTING THE INSPECTOR TO VISIT THE GUEST HOUSE PREMISES AND TO MAKE ESTIMATE OF CONSTRUCTION. SIMILARLY, NO BOOKS OF ACCOUNTS HAVE BEEN REJECTED PRIOR TO MAKING REFERENCE TO THE DVO TO ESTIMATE TH E COST OF CONSTRUCTION. THEREFORE, THE WHOLE BASIS FOR MAKING THE ADDITION WAS UNJUSTI FIED. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA) AND THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. TULSIANI CONSTRUC TIONS & DEVELOPERS LTD. (SUPRA) SQUARELY APPLY IN FAVOUR OF THE ASSESSEE. FURTHER, THE INCOME-TAX INSPECTOR IS NOT A TECHNICAL PERSON TO MAKE ESTIMATE OF COST OF CONSTR UCTION. HE HAS NOT GIVEN ANY BASIS ITA NO. 565/AGRA/2012 10 AS TO HOW HIS REPORT WAS WORTH RELIANCE AND NO EVID ENCE HAS BEEN BROUGHT ON RECORD AS TO WHETHER THE CONSTRUCTION WAS RAISED IN THE AS SESSMENT YEAR UNDER APPEAL 2009- 10. THE AO WAS ALSO NOT JUSTIFIED IN OBSERVING THAT THE CONSTRUCTION WAS STARTED IN THE EARLIER TWO FINANCIAL YEARS TO THE ASSESSMENT Y EAR UNDER APPEAL BECAUSE WHEN THE MAP WAS SANCTIONED BY THE MUNICIPAL AUTHORITIES ON 24.06.2008, THERE WAS NO QUESTION OF RAISING ANY CONSTRUCTION PRIOR TO IT. T HE REPORT OF THE INSPECTOR IS ALSO FALSIFIED BY THE REPORT OF DVO DATED 23.05.2012 IN WHICH THE DVO HAS SPECIFICALLY MENTIONED THE PERIOD OF CONSTRUCTION FROM THE YEAR 2009 TO 2012 AND HAS ESTIMATED THE COST OF CONSTRUCTION FROM FINANCIAL YEAR 2009-1 0 TO 2011-12 IN A SUM OF RS.58.22 LACS AS AGAINST COST OF CONSTRUCTION DECLARED BY TH E ASSESSEE IN A SUM OF RS.56.30 LACS. THERE IS, THUS, NO SUBSTANTIAL DIFFERENCE BET WEEN THE VALUE OF CONSTRUCTION ESTIMATED BY THE DVO AND THAT REPORTED BY THE ASSES SEE. THE LD. CIT(A) WAS, THEREFORE, JUSTIFIED IN HOLDING THAT NO CONSTRUCTIO N WAS RAISED IN THE YEAR UNDER CONSIDERATION AND THAT THE RECORD WOULD ALSO REVEAL THAT ONLY PART OF THE LAND WAS PURCHASED IN THE YEAR UNDER CONSIDERATION, WHICH HA VE BEEN DULY SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. CONSIDERING THE TOTALI TY OF FACTS AND CIRCUMSTANCES IN THE LIGHT OF ABOVE CASE LAWS, WE DO NOT FIND ANY JUSTIF ICATION TO INTERFERE WITH THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION. GROUND NO. 2 OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. ITA NO. 565/AGRA/2012 11 9. ON GROUND NO. 3, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.2,27,935/- ON ACCOUNT OF DISCOUNT ALLOWED TO THE PATIENTS. THE AO NOTED THAT THE ASSESSEE HAS DEBITED THE AMOUNT OF RS.4,55,870/- UN DER THE HEAD REBATE AND DISCOUNT. ON VERIFICATION OF BOOKS OF ACCOUNT AND BILLS ETC., IT WAS FOUND THAT SAME ARE NOT VERIFIABLE AS TO WHETHER THE BILLS HAVE BEEN GIVEN TO ALL THE CONCERNED PERSONS. THE AO OBSERVED THAT HE CANNOT BELIEVE THE ACCOUNTS OF THE ASSESSEE. THE AO NOTICED THAT THE ASSESSEE HAS EARNED INCOME DURING THE YEAR AT RS.6,72,555/- AND HAS GIVEN DISCOUNT OF RS.4,55,870/-. THEREFORE, IT WAS NOTHIN G BUT ADJUSTMENT OF PROFIT / INCOME OF THE YEAR. 50% OF THE EXPENSES WERE, ACCOR DINGLY, DISALLOWED. BEFORE THE LD. CIT(A), THE ASSESSEE CLAIMED THAT IT IS A CONSI STENT PRACTICE TO GIVE REBATE AND DISCOUNT TO THE PATIENTS. THE LD. CIT(A) FINDING TH AT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AND SIMILAR ACCOUNTING SYSTEM IS MAINTAINED IN EARLIER YEARS, IN WHICH NO DISCREPANCIES HAVE BEEN POINTED OUT, DELET ED THE ENTIRE ADDITION. 10. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THE LD. CIT(A) FAILED TO TAKE NOTE OF THE FINDING OF THE AO ON THIS ISSUE. THE AO HAS SPECIFICALLY NOTED IN THE ASSESSMENT ORDER THAT THO UGH THE RECEIPTS OF THE ASSESSEE ARE INCREASING AND EXPENSES ARE ALSO INCREASING, BUT TH E NET PROFIT RATIO IS GOING DOWN IN THE YEAR. IN THE ASSESSMENT YEAR UNDER APPEAL, THE NET PROFIT RATIO OF THE ASSESSEE WAS FOUND AT 29.90% AS AGAINST NET PROFIT RATE DISCLOSE D IN THE PRECEDING ASSESSMENT YEAR ITA NO. 565/AGRA/2012 12 34.85% AND 32.83%. THE AO SPECIFICALLY NOTED THAT T HE ASSESSEE HAS EARNED INCOME DURING THE YEAR AT RS.6,72,555/- AND HAS GIVEN DISC OUNT OF RS.4,55,870/-. IT WOULD MEAN THAT SUBSTANTIAL INCOME IS RETURNED BACK TO TH E PATIENTS ON ACCOUNT OF REBATE AND DISCOUNT, WHICH IS HIGHLY IMPROBABLE. CONSIDERI NG THE FACT THAT NET PROFIT RATIO OF THE ASSESSEE IS DECREASING WOULD STRENGTHEN THE FIN DING OF THE AO THAT THE ASSESSEE HAS ADJUSTED THE PROFIT / INCOME IN THIS YEAR AND T HE ACCOUNTS ARE NOT VERIFIABLE ON THIS ISSUE. THE LD. CIT(A) WAS, THEREFORE, NOT JUST IFIED IN DELETING THE ADDITION. THE LD. COUNSEL FOR THE ASSESSEE LASTLY CONTENDED THAT THE PERCENTAGE AS COMPARED TO THE EARLIER YEAR WAS LESSER AND REFERRED TO PB-3 TO SHO W THAT IN ASSESSMENT YEAR UNDER APPEAL THE PERCENTAGE OF DISCOUNT WAS 20.27% AS AGA INST 21% OF PRECEDING ASSESSMENT YEAR 2008-09. HOWEVER, IN VIEW OF THE SP ECIFIC FINDING OF FACT RECORDED BY THE AO AGAINST THE ASSESSEE OF NON-VERIFIABILITY OF EXPENSES, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ENTIRE ADDITION IGNOR ING THE FINDING OF FACT RECORDED BY THE AO AGAINST THE ASSESSEE. WE ACCORDINGLY SET ASI DE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ORDER OF THE AO IN MAKING THE ADDIT ION. GROUND NO. 3 OF APPEAL OF THE REVENUE IS ALLOWED. 11. ON GROUND NO. 4, THE REVENUE CHALLENGED THE ORD ER OF THE LD. CIT(A) IN DELETING THE ADDITION MADE UNDER THE HEAD CONSULTA NCY AND DISPENSARY CHARGES. THE AO NOTED THAT THE ASSESSEE HAS SHOWN INCOME FROM CO NSULTANCY AND DISPENSARY AT ITA NO. 565/AGRA/2012 13 RS.65,162/-, WHICH APPEARED NOT TO BE TRUE BECAUSE DURING THE COURSE OF VERIFICATION OF PATIENT REGISTER AND VISITING REGISTER, IT IS FO UND THAT NO TRUE PICTURE HAS BEEN REFLECTED IN THE BOOKS OF ACCOUNT. THE REPETITION O F THE SAME NAMES WAS FOUND REGULARLY AND DIFFERENT NAMES WERE NOT FOUND IN WHO LE OF THE YEAR. THIS FACT WAS ALSO MENTIONED IN THE REPORT OF THE INSPECTOR, WHICH WAS CONFRONTED TO THE ASSESSEE ALSO. THE AO, THEREFORE, ESTIMATED THE INCOME UNDER THIS HEAD AT RS.1,65,162/- AND MADE ADDITION OF RS.1,00,000/-. THE LD. CIT(A) AGREED TO THE SUBMISSIONS OF THE ASSESSEE THAT MANY OF THE PATIENTS CAME REPEATEDLY FOR FOLLO W UP TREATMENT. THEREFORE, THE ADDITION WAS DELETED. 12. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THE LD. CIT(A) WITHOUT ANY JUSTIFICATION SHOULD NOT HAVE DE LETED THE ADDITION. THE AO HAS ALSO NOTED THAT THE NET PROFIT RATE OF ASSESSEE IS DECREASING. THE AO HAS GIVEN SPECIFIC FINDING AGAINST THE ASSESSEE THAT THE PATI ENT REGISTER AND VISITING REGISTER IS NOT DISCLOSING TRUE PICTURE BECAUSE OF THE REPETITI ON OF THE SAME NAMES WERE FOUND REGULARLY AND DIFFERENT NAMES WERE NOT FOUND IN WHO LE OF THE YEAR. THE FINDING OF THE AO THAT NAMES ARE REPEATED DURING WHOLE OF THE YEAR IS NOT REBUTTED BY THE ASSESSEE THROUGH ANY MATERIAL ON RECORD BECAUSE IT IS DIFFICULT TO BELIEVE THAT IN THIS TYPE OF BUSINESS RUN BY THE ASSESSEE, THE SAME PATI ENTS WOULD COME REGULARLY FOR WHOLE OF THE YEAR . NO NEW PERSONS HAVE BEEN MENTIONED IN THE PATIENT REGISTER AND ITA NO. 565/AGRA/2012 14 AS SUCH, THE AO WAS JUSTIFIED IN ESTIMATING THE INC OME UNDER THIS HEAD PARTICULARLY WHEN THE PROFIT RATE IS DECREASING AND NO PLAUSIBLE EXPLANATION HAS BEEN GIVEN TO THE AO. THE ORDER OF THE LD. CIT(A) IS, THEREFORE, SET ASIDE AND THE ORDER OF THE AO IS RESTORED IN MAKING THE ADDITION. GROUND NO. 4 OF TH E REVENUE IS ACCORDINGLY ALLOWED. NO OTHER POINT IS ARGUED OR PRESSED. 13. IN THE RESULT, THE DEPARTMENTAL APPEAL IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY