Dr V.Ravinder Reddy(Huf), Hyderabad V. ITO, Hyderabad

ITA 622/HYD/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3124 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-05-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 06-06-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Gift; Depreciation; Source of fund
• Section: 133A; 68; 69; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NOS. 618 & 621, 623/HYD/2006 A.Y. 1999-2000, 01 -02 2002-03 DR. RAVINDRA REDDY (HUF), WARANGAL (PAN AAHHR 8094 N) (APPELLANT) VS ITO, WARD 2, WARANGAL (RESPONDENT) ITA NOS.674, 675, 676, 677/HYD/2006 A.Y. 1999-2000, 2000-01 2001-02, 2002-03 ITO, WARD 2, WARANGAL (APPELLANT) VS DR. RAVINDRA REDDY (HUF), WARANGAL (PAN AAHHR 8094 N) (RESPONDENT) (APPELLANT) ITA NO.619, 620,622,624 /HYD/2006 A.Y.1999-2000, 2000-01, 01-02, 02-03 DR. RAVINDRA REDDY, WARANGAL (PAN AANPV0324 K) (APPELLANT) VS ITO, WARD 2, WARANGAL (RESPONDENT) ITA NOS.670, 671, 672, 673/H/06 A.Y. 1999-2000, 200 0-01, 2001-02, 2002-03, ITO, WARD 2, WARANGAL (APPELLANT) VS DR. RAVINDRA REDDY, WARANGAL (RESPONDENT) ITA NO.678, 679 & 680/HYD/2006 A.Y. 2000-01, 01-02, 02-03 ITO, WARD 2, WARANGAL SMT. V. SHOBA, W/O DR. RAVINDRA REDDY, WARANGAL (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI K.V.N. CHARYA, D R ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 2 2 O R D E R PER: BENCH THESE APPEALS ARE PREFERRED BY DIFFERENT ASSESSEES AS WELL AS THE REVENUE ARE DIRECTED AGAINST THE DIFFERENT ORDERS PASSED BY THE CIT(A)IV, HYDERABAD IN RESPECT OF THE ABOVE ASSESSEE S FOR THE ASSESSMENT YEARS 1999-2000, 2000-01, 2001-02, 2002-03. SINCE CERTAIN ISSUES ARE INTER RELATED AND COMMON IN NATURE, T HESE APPEALS ARE CLUBBED TOGETHER, HEARD TOGETHER AND DISPOSED OFF VIDE THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE WILL TAKE UP THE CROSS APPEALS IN ITA NOS.674/618/675/621/676/677 & 623/HYD/2006 (DR. RAVIN DRA REDDY HUF). 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A HUF CONSISTING OF HIMSELF, HIS SONS, DAUGHTER AND WIFE. THE HU F POSSESSES AGRICULTURAL LANDS IN ITS NAMES AND OTHER MEMBERS. THE TOTAL AGRICULTURAL LANDS HELD BY THE HUF WAS 55 ACRES AND 17 G UNTAS. A SURVEY OPERATION U/S 133A WAS CONDUCTED AT THE PROFESSION AL PREMISES DR. RAVINDRA REDDY ON 8.3.2002, CONSEQUENT TO WHICH T HE ASSESSEE FILED ITS RETURNS OF INCOME ADMITTING THE FOLLOWING I NCOMES FOR ALL THE ASSESSMENT YEARS 1999-00 TO 2002-03 ON 12.2.2004 AS FOLLO WS: ASSESSMENT YEAR INCOME FROM HOUSE PROPERTY (RS.) AGRICULTURAL INCOME (RS.) 1999-2000 90,000 7,90,000 2000-01 1,05,650 8,30,000 2001-02 3,41,000 8,60,000 2002-03 2,63,810 8,90,000 3.1. THE ASSESSING OFFICER ISSUED NOTICE U/S 148 FOR THE ASSESSMENT YEARS 1999-2000, 2000-01 AND 2001-02 TO BRING TO TAX THE ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 3 3 ESCAPED INCOME AND TO REGULARIZE THE BELATED RETURNS. THE ASSESSEE FIELD A LETTER REQUESTING TO TREAT THE ORIGINAL RETU RNS AS IN RESPONSE TO THE NOTICE ISSUED U/S 148. AS THE ASSESSEE HAS NOT MAINTAIN ED PROPER BOOKS OF ACCOUNT FOR AGRICULTURAL INCOME, THE ASSESSING OFFI CER PROPOSED TO ESTIMATE THE INCOME FROM AGRICULTURE AND ARRIVED A T THE DIFFERENCE TO BE INCLUDED FOR ASSESSMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS CALLED FOR INFORMATI ON SUBSTANTIATING THE ACQUISITION OF VARIOUS ASSETS AND THE CAPITAL BALANCE ADMITTED AT RS.44,67,137/- AND AGRICULTURAL INCOME AT RS.7,90,000 ESIDES PROPERTY INCOME. IN REPLY THE ASSESSEE FILED STATEM ENT OF AFFAIRS AS AT 31.3.1998 EXPLAINING THE SOURCES OF ACQUISITION OF VARIOUS ASSETS AND ALSO FILED THE RECEIPTS AND PAYMENTS ACCOUNT, THE DET AILS OF WHICH ARE AS UNDER: S.NO. PARTICULARS 1999-2000 2000-01 2001-02 2002-03 1 RENT FROM MAMATA NURSING HOME 1,20,000 1,20,000 1,20,000 1,80,000 2 BID FROM CHIT FUND 4,49,830 5,71,225 3,12,000 6,4 0,000 3 AGRICULTURAL INCOME 7,90,000 8,30,000 8,60,000 8, 90,000 4 REFUND FROM DEBTORS 7,50,000 NIL 15.00,000 NIL 5 GIFTS 1,00,000 70,000 NIL NIL 6 RENT FROM HOUSE AT WARANGAL NIL 24,000 68,000 1,99,200 7 ADVANCE TO ITS LOANS/AGAINST PURCHASE OF HOUSE NIL NIL 1,00,000 NIL 8 LOAN FROM V. SHOBHA NIL NIL NIL 6,80,000 9 REFUND FROM INDIVIDUAL NIL NIL NIL 7,76,408 10 HAND LOAN FROM V. RAMACHANDRA REDDY NIL NIL NIL 77,900 3.2. THE ASSESSING OFFICER DID NOT ACCEPT THE OPENING CA PITAL AS ON 1.4.1998 OF RS.44,67,137/-. HE ALSO DID NOT ACCEPT T HE EXISTENCE OF AGRICULTURAL INCOME TO THE EXTENT CLAIMED BY THE ASSESSEE . THE RECEIPTS FROM BIDDING OF THE CHIT AMOUNTS, THE GIFTS RECEIVED, T HE LOANS RECEIVED AND THE INTERNAL TRANSACTION BETWEEN THE INDIVIDUAL A ND HUF WERE ALSO NOT ACCEPTED BY THE ASSESSING OFFICER. ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 4 4 4. ON APPEAL, CIT(A) DELETED CERTAIN ADDITIONS AS FOL LOWS: SL. NO. NATURE OF ADDITIONS A.Y 99-00 ITA NO. 674/H/06 (D) ITA NO. 619/H/06 (A) A.Y 00-01 ITA NO. 675/H/06 (D) ITA NO. 621/H/06 (A) A.Y 01-02 ITA NO. 676/H/06 (D) NO APPEAL OF THE ASSESSEE A.Y 02-03 ITA NO. 677/H/06 (D) ITA NO. 623/H/06 (A) 1 OPENING BALANCE ADDED U/S 69 4467137 CIT(A) DELETED - - - 2 AGRICULTURAL INCOME RETURNED 790000 ASSESSING OFFICER ALLOWED NIL) ENTIRE DISALLOWANCE DELETED BY CIT(A) RETURNED 830000 ASSESSING OFFICER ALLOWED 102300 DISALLOWANCE DELETED RETURNED 860000 ASSESSING OFFICER ALLOWED 291850 200000+65000+18000+8850 DISALLOWANCE DELETED RETURNED 890000 ASSESSING OFFICER ALLOWED 362740 DISALLOWANCE DELETED 3 BID AMOUNT RECEIVED FROM MARGADARSI 174830 CIT(A) DELETED - - - 4 - DO - 275000 CIT(A) DELETED - - - 5 GIFT FROM FATHER V RAMI REDDY 100000 CIT(A) UPHELD - - - 6 GIFT FROM FATHER IN LAW - 70000 CIT(A) UPHELD - - 7 CHIT FROM KAPIL CHIT FUNDS - 406150 CIT(A) DELETED - - 8 CHIT FROM SRILIGHT CHIT FUNDS - - - 100000 DELETED 9 - DO - - - 100000 DELETED 10 REFUND OF LOAN FROM SMT. SHOBHA - - - 680000 DELETED 11 DEPOSIT IN WARANGAL CO-OPERATIVE BANK - - - 77900 UPHELD 12 INVESTMENT IN WIMS HOSPITAL - - - 1400000 UPHELD ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 5 5 5. AGAINST THIS DELETION, THE REVENUE IS IN APPEAL B EFORE US AND SUSTAINING THE ADDITION THE ASSESSEE IS IN APPEAL BEFORE U S. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THE OPENING BALANCE OF RS.44,67,137/- RELEVANT TO ASSESSMENT YEAR 1999- 2000 WAS REFLECTED AS ON 31.3.1999 IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1999-2000. THE ASSESSEE WAS OWNING AN AGRICULTURAL PROPERTY BEFORE 1998 AND T HE ASSESSEE PURCHASED THE ASSETS REFLECTED IN THE BALANCE SHEET AS ON 31 .3.1999 WHICH COULD NOT HAVE ACQUIRED BY THE ASSESSEE IN EARLIER YEARS SINCE THERE IS NO SOURCES OF INCOME FOR PURCHASE OF THESE ASSETS A ND THESE ASSETS ARE NOT AT ALL REFLECTED IN THE BALANCE SHEET IN E ARLIER YEARS. HE SUBMITTED THAT AS SUCH THESE ASSETS ARE INCLUDED IN THE BAL ANCE SHEET AS ON 31.3.1998, 31.3.1999, 31.3.2000, 31.3.2001 AND 3 1.3.2002 FILED ALONG WITH THE RESPECTIVE RETURN OF INCOME ON 12.2.20 04. HE SUBMITTED THAT NO CREDIT SHOULD BE GIVEN TOWARDS OPENING BALANCE AND THE SAME IS TO BE CONSIDERED AS INCOME OF THE ASSESSEE. 7. ON THE OTHER HAND, THE AUTHORISED REPRESENTATI VE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS AN HUF POSSESSES INHERITE D AGRICULTURAL LANDS TO THE EXTENT OF 55 ACRES AND 17 GUN TAS IN ITS NAME AND IN ITS MEMBERS NAME. OUT OF THE TOTAL AGRICULT URAL LANDS, 45 ACRES AND 36 GUNTAS WAS COVERED BY MANGO GARDENS AND THE BALA NCE IS USED FOR CULTIVATION OF PADDY. THE CULTIVATION OF MANGO G ARDEN WAS CARRIED ON BY THE ASSESSEE ITSELF TILL JULY, 99 AND THEREAFTER THE Y WERE GIVEN ON LEASE TO SHRI KOMARAIAH, SHRI U. CHANDRAMOULI AND S HRI M. SRINIVAS. BESIDES MANGO GARDEN, THERE ARE COCONUT TREES, NEEM TREE S, JAM TREES ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 6 6 ETC. AS PER THE AGREEMENT, THEY WERE PAYING RENT OF RS.3 LAKHS AND RS.2.5 LAKHS PER YEAR. HE DREW OUR ATTENTION TO THE L AND RECORDS SPECIFICALLY IN THE PAHANI AND SUBMITTED THAT IT SHOWS T HE CULTIVATION OF MANGO GARDEN WAS CARRIED ON BY THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HUF WAS INVESTING THE AGRICULTURAL RETURNS IN VA RIOUS CHIT FUNDS AND DREW OUR ATTENTION TO VARIOUS DETAILS FURNISHED IN THE PAPER BOOK AS ANNEXURE. 7.1. HE SUBMITTED THAT THE FIXED ASSETS WERE RELATED T O THE PERIOD PRIOR TO 1.4.1989. HE DREW OUR ATTENTION TO THE DETAILED LIST OF THE LOANS GIVEN WHICH WERE OUTSTANDING AS ON 1.4.1998. THE ASSESSEE ADOPTED THE AGGREGATE OF RS.45,38,766/- AS THE CAPITA L AS ON 31.3.1998. THESE ASSETS WERE ACQUIRED PRIOR TO 1.1.1998 , THEY DO NOT REPRESENT THE ACQUISITIONS MADE DURING THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR 1999-2000 I.E., UNDER CONSIDERATION. THE OPENING BALANCE DOES NOT REPRESENT CASH INTRODUCTION BY ASSESSEE IN THE ASSESSMENT YEAR 1999-2000. IT ACQUIRED VARIOUS PROPERTI ES WITH THE INCOME DERIVED FROM AGRICULTURE. HE DREW OUR ATTENTION TO THE BALANCE SHEET WHICH WAS SUBMITTED BEFORE THE LOWER AUTHORITIES . FURTHER HE SUBMITTED THAT A BUILDING WAS CONSTRUCTED AT WARDHANNA PET WHICH WAS LEASED OUT TO DR. R. REDDY, KARTHA OF THE FAMILY FOR RUNNING NURSING HOME AND SUBMITTED THAT THE ASSESSING OFFICER HAS NOT TAKE N INTO CONSIDERATION THE EVIDENCES PRODUCED FOR ALL THE FOUR YE ARS. ACCORDING TO HIM FOR THE ASSESSMENT YEAR 1999-2000 AGRICULTURAL IN COME WAS ADMITTED AT RS.7,90,000. UPTO JULY, 1999 THE ASSESSEE I TSELF CARRIED ON THE AGRICULTURAL ACTIVITY AND DERIVED INCOME. AN AMOU NT OF RS.1,74,830/- WAS RECEIVED ON BID FROM MARGADARSHI CHIT FUNDS VIDE CHIT NO.LTO010BW/16 AND AN AMOUNT OF RS.2,75,000 WAS R ECEIVED ON BID VIDE CHIT NO.LT007TW/50 THROUGH CHEQUE. FOR THE ASSESSMENT 2000-01 AGRICULTURAL INCOME WAS ADMITTED AT RS.8,30,000 . DURING THE ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 7 7 YEAR, THE AGRICULTURAL INCOME WAS EARNED BY LEASING THE MANGO GARDEN TO SHRI KOMARAIAH AND OTHERS. AN AMOUNT OF RS.4,06,1 50/- WAS REALIZED ON BIDDING THE CHIT OF KAPIL CHIT FUNDS. FOR THE ASSESSME NT 2001-02 AGRICULTURAL INCOME WAS ADMITTED AT RS.8,60,000/- . TH IS AMOUNT IS DERIVED FROM LEASE RENTALS OF MANGO GARDEN AND BY SELL ING THE PADDY CROP. FOR THE ASSESSMENT YEAR 2002-03 AGRICULTURAL WAS AD MITTED AT RS.8,90,000/- EARNED ON LEASE RENTALS OF MANGO GARDEN AND SELLING PADDY CROP ETC. THE CHIT AMOUNT OF RS.2 LAKHS WAS RECEIV ED FROM SRI LIGHT CHIT FUND COMPANY. AN AMOUNT OF RS.6,88,000 W AS ADVANCED BY SMT. V. SHOBA BY BIDDING A CHIT FROM MARGADARSHI CHIT FUND. AN AMOUNT OF RS.77,900/- DEPOSITED IN WARANGAL URBAN COO PERATIVE BANK WAS RECEIVED FROM SRI. V. RAMACHANDRA REDDY OF RAJA RA JESWARI CHIT FUND FOR WHICH A CONFIRMATION LETTER WAS RECEIVED. 8. HE DREW OUR ATTENTION TO THE COPIES OF PATTA, OF LAND AND LEASE AGREEMENT. 9. WE HAVE HEARD BOTH THE PARTIES. WE HAVE GO NE THROUGH THE LETTER FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ON 13.2.2004 WHEREIN STATEMENT OF AFFAIRS DATED 31.3.1998 REFLECTS A S FOLLOWS: DESCRIPTION OF ASSET YEAR OF PURCHASE CONSTRUCTION VALUE IS AS PER B/S SOURCES EXPLAINED IN ASSESSEES LETTER DT. 13.2.04 PLOT AT WADDEPALLI (300 SQ. YARDS) AUGUST 1998 17,506 PURCHASED OUT OF AGRICULTURAL INCOME 9.22 ACRES AT WARDHANNAPET 3.10.88 42,866 PURCHASED OUT OF AGRICULTURAL INCOME PLOT AT REC 1019 SQ. Y.) 30.12.88 45,900 PURCHASED OUT OF AGRICULTURAL INCOME 719 ACRES AT WARDHANNAPET 19.7.89 49,820 PURCHASED OUT OF AGRICULTURAL INCOME NURSING HOME CONSTRUCTED IN 88 AND COMPLETED IN 90 8,70,000 CONSTRUCTED AND EXPANDED OUT OF AGRICULTURAL INCOME AND BIDDING CHITS ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 8 8 EXPANDED FROM 96 TO 98 6,40,000 15,50,000 AS ADMITTED (TOTAL RS.15,10,000) HOWEVER ADMITTED IN THE BALANCE SHEET AT RS.15,50,000 PLOT AT ENUMAMULA 413 SQ.Y. 12.9.90 23,181 PURCHASED OUT OF AGRICULTURAL INCOME HOUSE AT ADVOCATES COLONY, WARANGAL 1990-91 7,00,000 PAYMENT MADE IN 3 YEARS OUT OF AGRICULTURAL INCOME 15 ACRES (1/6 AT WARDHANNAPET 6.9.91 20,118 PURCHASED OUT OF AGRICULTURAL INCOME HOUSE AT KUMARPALLI 22.4.92 1,46,771 PURCHASED OUT OF AGRICULTURAL INCOME AND CHIT WITHDRAWAL PLOT AT FORT, WARANGAL 12.9.94 1,17,116 PURCHASED OUT OF AGRICULTURAL INCOME PLOT AT NALLAGANDLA, HYD 1321 SQ,YDS. 30.3.95 82,118 PURCHASED OUT OF AGRICULTURAL INCOME AND CHIT WITHDRAWAL PLOT AT SHYAMPET, WARANGAL 2000 SQ.Y. 30.3.95 1,91.147 PURCHASED OUT OF AGRICULTURAL INCOME AND CHIT WITHDRAWAL PLOT AT HUNTER ROAD, WARANGAL 2070.53 SQ.Y. 27.6.96 4,63,284 PURCHASED OUT OF AGRICULTURAL INCOME AND CHIT WITHDRAWAL PLOT AT ZAFARGUDA 400 SQ.Y. 7.9.96 22,421 PURCHASED OUT OF AGRICULTURAL INCOME 1,08 ACRES AT WARDHANNAPET 1.5.97 20,213 PURCHASED OUT OF AGRICULTURAL INCOME BUILDING AT FORT 97-98 2,10,000 PURCHASED OUT OF AGRICULTURAL INCOME MARGADARSHI CHITS 22.2,97 TO 21.2.98 43,600 SUKHIBHAVA CHITS CHIT NO.LTIC-2 13.6.97 TO 20.2.98 31,000 SUNDRY PERSONS LOAN - 7,50,000 SBH SB A/C - 1,186 CASH ON HAND - 10,200 TOTAL 45,38,766 9.1. OUT OF THIS, THE ASSESSEE EXPLAINED THAT THERE WA S A LOAN FROM DR. RAMI REDDY AT RS.7,61,629 AND THE BALANCE AM OUNT WAS AT RS.44,67,137/-. NOW THE CONTENTION OF THE DEPARTMENT IS THAT THE ASSESSEE HAS NOT FURNISHED THE DATE ON WHICH THESE ASSETS CAME INTO EXISTENCE. AS SEEN FROM THE ABOVE STATEMENT, THE ASSES SEE FURNISHED THE DETAILS OF ACQUISITION OF THE ABOVE ASSETS EXCEPT IN T HE CASE OF SUNDRY DEBTORS TO THE TUNE OF RS.7,50,000/- . THE EXP LANATION FROM THE ASSESSEE IS THAT THE ASSESSEE BEING OWNING SUBSTANTIAL AGRICULT URAL ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 9 9 PROPERTY, IT HAS ADVANCED LOANS TO VARIOUS PERSONS A SUM OF RS.7,50,000/- IS RELATES TO EARLIER ASSESSMENT YEARS. THE FACT OF THE ASSESSEE OWNING SUBSTANTIAL AGRICULTURAL PROPERTY CANNOT B E DOUBTED AND BEING SO, DERIVING OF AGRICULTURAL INCOME IS NATUR AL THAT THE ASSESSEE DERIVED SUBSTANTIAL INCOME FROM THE AGRICULTURE FROM T HE ABOVE MENTIONED LAND. THE ASSESSEE SUBMITTED VARIOUS EVIDENCES F ROM THE REVENUE AUTHORITIES WHICH ARE PLACED IN PAPER BOOK WIT H REGARD TO THE OWNING OF AGRICULTURAL LAND AND CARRIED OUT THE AGRICU LTURAL OPERATION. THE ASSESSEE HAS ALSO ENTERED INTO VARIOUS AGREEMENTS BETWE EN THE CULTIVATORS FOR CARRYING OUT THE AGRICULTURAL OPERAT ION. WITH REGARD TO MANGO GARDEN, IT IS ALSO ADMITTED FACT THAT THE ASSESSING OFFICER EXAMINED THESE CULTIVATORS AND IT WAS STATED BY THEM TH AT THE ASSESSEE HAS DERIVED INCOME FROM THE MANGO GARDENS. THERE IS AL SO INSPECTOR REPORT DATED 4/3/2005 ON RECORD AS PER WHICH THE MANGO CULTIVATION WAS CARRIED ON IN THE LAND TO THE EXTENT TO 21 ACRES AND 3 0 GUNTAS AND PADDY 12.23 ACRES OF LAND. THE INSPECTORS REPORT SAYS T HAT THE INCOME WOULD BE AROUND 8 LAKHS PER ANNUM. IT WAS ALSO STAT ED BY THE ASSESSEE IN ITS LETTER DATED 22.2.2004 THAT THERE WAS CULT IVATION AS FOLLOWS: A. MANGO GARDEN AT JAGGIPET I) S.NO.1204, JAGGIPET 6.22 ACRES II) S.NO.1207 7.19 III) S.NO.1206 7.29 9.2 THE MANGO GARDEN IS GIVEN ON LEASE TO CH. KOMRA IAH AND OTHERS FROM 20.10.1999 FOR A YEARLY LEASE RENTAL. T HE DETAILS ARE AS FOLLOWS: ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 10 10 ASSESSMENT YEAR : 1999 - 2000 RS.3,30,000 2000 - 2001 RS.3,50,000 2001 - 2002 RS.3,80,000 2002 - 2003 RS.4,00,000 9.3. MANGO GARDEN AT KADARIGUDEM I) S.NO.252, B.269A, 269C, 269E, 273B. 273C 273D, 273E, 276, 278, 279A, 283, 284, 311A 311B, KARIGUDEM VILLAGE 7.00 ACRES II) S.NO.274, KADARIGUDEM VILLAGE 1.02 ACRES ------------ 8.02 ACRES ======= 9.4. THE MANGO GARDEN IS GIVEN ON LEASE TO U. CHAND RAMOULI AND M. SRINIVAS FROM 15.3.99 FOR A YEARLY LEASE RENTAL. THE DETAILS ARE AS FOILOWS: 1999 2000 RS.2,50,000 2000 2001 RS.2,80,000 2001 2002 RS.3,10,000 2002 2003 RS.3,50,000 9.5. THE ABOVE FACTS FURNISHED BY THE ASSESSEE WAS NOT A T ALL CONTROVERTED BY THE ASSESSING OFFICER AND IT IS TO BE INFE RRED THAT THE ASSESSEE HAS BEEN OWNING THE AGRICULTURAL LAND EARLIER TO THESE ASSESSMENT YEARS UNDER CONSIDERATION AND DERIVING SUBSTANTIA L AGRICULTURAL INCOME FROM THE SAME AND THE OPENING BALA NCE SHOWN BY ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 11 11 THE ASSESSEE CANNOT BE TREATED AS INCOME IN THE ASSESSMENT YEA R UNDER CONSIDERATION. ACCORDING TO OUR HUMBLE OPINION, THE DELETION BY CIT(A) IS JUSTIFIED. THIS GROUND TAKEN BY THE REVENUE IN IT A NO.674/HYD/2006 IS DISMISSED. 10. THE NEXT COMMON GROUND IN ITA NOS. 674/675/676 & 677/HYD/ 2006 IN ALL THE REVENUE APPEALS IS WITH REGAR D TO DELETION OF AGRICULTURAL INCOME. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THE ASSESSEE HAS RECEIVED THESE INCOMES ON ACCOUNT OF LEASING MANGO GARDEN, PADDY AND MAIZE. SINCE THE ASSESSEE HAS NOT EXPL AINED ANY AGRICULTURAL INCOME PRIOR TO 31.3.1999, THE INCOME CANN OT BE TREATED AS AGRICULTURAL INCOME AND THE SAME TO BE TREATED AS INCOME FROM OTHER SOURCES. THOUGH THE ASSESSEE HAS PRODUCED NOTE BOOK SHOWING THE AGRICULTURAL INCOME, IT CANNOT BE ACCEPTED AS VALID EVIDE NCE SINCE ALLEGED TRANSACTIONS ARE WRITTEN AT A STRETCH BY USING DIFFERENT PENS TO SUIT ITS REQUIREMENTS. FURTHER HE SUBMITTED THAT ON E ARLIER OCCASION, THE ASSESSEE HAS FILED XEROX COPY OF THE NOTE BOOK. LATER, T HE ASSESSEE FILED ORIGINAL NOTE BOOK BUT THERE ARE DISCREPANCIES W HEN COMPARED TO THE ORIGINAL WITH THE XEROX. THE ORIGINAL NOTE BOO K CONTAINED CERTAIN ENTRIES WHICH ARE NOT IN THE XEROX COPY PRODUCED BY THE ASSESSEE. SO, IT MEANS THAT IT IS A FABRICATED ONE. FURTHER, AS PER THE ALLEGED LEASE DEED FILED BY THE ASSESSEE, LEASE AGREEMENTS WERE ENTERED INTO WITH SHRI KOMURAIAH ON 20.10.1999 AND SHRI V. CHANDRA MO ULI, SHRI M. SRINIVAS ON 15.8.1999 WHEREAS IN THE ABOVE SAID NOTE B OOK, PART OF LEASE RENTALS ARE ENTERED AS RECEIVED ON 15.4.1999, 20. 4.1999 BY WHICH TIME THERE IS NO LEASE AGREEMENT. HE SUBMITTED THAT TH IS SHOWS THE INTENTION OF THE ASSESSEE TO FABRICATE THE EVIDENCE AS AN D WHEN REQUIRED ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 12 12 AND ACCORDINGLY, HE SUBMITTED THAT THESE AGREEMENTS CANNO T BE ACTED UPON AND IT IS NOT RELIABLE. 12. ON THE OTHER HAND, THE AUTHORISED REPRESENTATIV E RELIED ON THE ORDER OF THE CIT(A). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATE RIAL AVAILABLE ON RECORD. AS DISCUSSED IN EARLIER PARAS, THE A SSESSEE OWNS SUBSTANTIAL AGRICULTURAL PROPERTY WHICH IS SUBJECTED TO CUL TIVATION AND THE ASSESSEE IS HAVING NO OTHER SOURCE OF INCOME AND IT IS VERY DIFFICULT TO HOLD THAT THE ASSESSEE HAS DIVERTED ITS TAXABLE INCOME AS AGRICULTURAL INCOME. THE ASSESSING OFFICER EXAMINED THE LESSEE REGARDI NG THE AGRICULTURAL INCOME WHO IS CONFIRMED THE SAME WHICH IS PLA CED ON RECORD AT PAGE NO.55 OF THE PB. THE CONTENTION OF THE DEPA RTMENT IS THAT THESE AGREEMENTS ARE ON PLAIN PAPER AND IT IS NOT A GENUINE ONE, AND THE DEPARTMENTAL REPRESENTATIVE WANTED THE EVIDENCE FOR T HE AREA OF LAND SUBJECT TO CULTIVATION AND SALE OF CROP. HOWEVER, THE FA CT OF LEASING THE AGRICULTURAL PROPERTY FOR CULTIVATION IS EVIDENCED BY T HE AGREEMENT AND ALSO CONFIRMED BY THE LESSEES. THE FACT OF CULTIVATION CAN NOT BE DOUBTED. ACCORDING TO THE DEPARTMENTAL REPRESENTATIVE , THE DOCUMENTS PROCURED AFTER THE DATE OF SURVEY I.E. AGRICULTURAL PA SS BOOK CANNOT BE CONSIDERED AS GENUINE. THIS ARGUMENT OF THE DEPARTMEN TAL REPRESENTATIVE HOLDS NO MERIT. TO SUBSTANTIATE THE CLA IM OF OWNING THE LAND, THE ASSESSEE HAS PRODUCED PASS BOOK AND LEASE AGREEME NT FOR CARRYING ON THE AGRICULTURAL OPERATION AND IN OUR OPI NION, THE FINDINGS OF THE CIT(A) IS TO BE CONFIRMED. FURTHER, OUR VIEW IS SUPPORTED BY JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT VS. NOO RJAHAN (237 ITR 570). ACCORDINGLY, WE CONFIRM THE DELETION OF ADDITI ON ON ACCOUNT OF AGRICULTURAL INCOME BY CIT(A) . ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 13 13 14. THE NEXT GROUND IN ITA NO.674/HYD/2006 IS WITH REGARD TO DELETION OF ADDITION ON ACCOUNT OF CHITS AT RS.174,830/ - + 2,75,000/- FROM M/S MARGADARSHI CHIT FUNDS. 14.1. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESEN TATIVE, THE ASSESSEE RECEIVED THE ABOVE AMOUNT FROM M/S MARGADARSHI C HIT FUND DEPOSITED IN DR. RAVINDRA REDDYS INDIVIDUAL BANK ACCO UNT. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE H AS NO SOURCE OF INCOME OTHER THAN RENTAL INCOME FROM NURSING HOME FO R THE ASSESSMENT YEAR UNDER CONSIDERATION. 14.2. THE AUTHORISED REPRESENTATIVE OF ASSESSEE SUBMIT TED THAT AN AMOUNT OF RS.174,830/- AND RS.2,75,000/- IS THE MA TURED VALUE OF CHITS RECEIVED FROM M/S MARGADARSHI CHIT FUNDS. HE SUBMI TTED THAT THE ASSESSEE HAS FILED PASS BOOK BEFORE THE LOWER AUTHORITIES I N SUPPORT OF ITS CLAIM. HE SUBMITTED THAT THE ORIGINALLY THERE WAS AN OPENING SUNDRY DEBTORS AT RS.7.50,000 AND THE SAME WAS REALIZED FROM T HOSE PARTIES AND USED FOR CHIT CONTRIBUTIONS. HE SUBMITTED THAT THE ASSESSEE HAS FILED BEFORE THE LOWER AUTHORITIES A LIST OF SUNDRY DE BTORS FROM WHOM REFUNDS WERE RECEIVED. THIS EXPLANATION OF THE ASSESSEE W AS PROPERLY CONSIDERED BY THE CIT(A) AND ON THE BASIS OF EVIDENCE TH E ADDITION WAS DELETED. HE RELIED ON THE ORDER OF THE CIT(A). 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS SEEN FROM THE STATEMENT OF AFF AIRS DT.31.3.1998, THE ASSESSEE HAS BEEN SUBSCRIBING CHITS. THE RECEIPT AND P AYMENT ACCOUNT SUBMITTED BY THE ASSESSEE IN THE YEAR UNDER CONSIDE RATION ALSO SHOWS CONTRIBUTION TO THE CHIT FUNDS. THE AMOUNT HAVE BEEN RECEIVED ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 14 14 FROM THE CHIT FUNDS FROM THE CHIT COMPANY IN THE FORM OF CHEQUE AND DETAILS OF CHEQUES ALSO FURNISHED BY THE ASSESSEE TO THE L OWER AUTHORITIES. ACCORDING TO THE DEPARTMENTAL REPRESENTATI VE IT IS AFTER THOUGHT TO EXPLAIN SOURCES FOR VARIOUS CONTRIBUTION AND INVESTMENTS. THESE AMOUNTS ARE STATED TO BE OF HUF AND CREATED A RECEI PT AND PAYMENT ACCOUNT BY TAKING ADVANTAGE OF FILING RETURN S IN THE STATUS AS HUF AFTER THE SURVEY OPERATIONS. THESE FINDINGS OF THE ASSESSING OFFICER ARE ONLY BASED ON CONJUNCTURES AND SURMISES WITHOUT ANY E VIDENCE. ON THE OTHER HAND, EVIDENCE FURNISHED BY THE ASSESSEE SHOWS TH AT THE ASSESSEE HAS SUBSCRIBED CHITS AND RECEIVED BACK MONEY. IN VIE W OF THIS, WE DECLINE TO INTERFERE WITH THE ORDER OF THE CIT(A) AND THE SAME IS CONFIRMED. 16. THE NEXT GROUND IN ASSESSEES APPEAL IN ITA NO.618/HYD/2006 IS RELATING TO SUSTAINING OF ADDITION OF RS.1 LAKH ON ACCOUNT OF GIFT FROM SHRI B. RAMI REDDY. THE AUTHORI SED REPRESENTATIVE SUBMITTED THAT THERE IS OTHER SOURCES OF INCOME FOR THE A SSESSMENT YEAR AS SUCH NEITHER ADDITION U/S 68 OR 69 SHOULD HAVE BEEN M ADE. 17. ON THE OTHER HAND, THE DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE REGARDING THE RECEIPT OF GIFTS AS SUCH IT IS TO BE CONFIRMED. 18. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE US, NO EVIDENCE HAS BEEN F URNISHED REGARDING RECEIPT OF GIFTS FROM SHRI RAMI REDDY. IN THE ABSENCE OF ANY EVIDENCE, WE DECLINE TO INTERFERE WITH THE ORDER OF T HE CIT(A) ON THIS ISSUE AND THE SAME IS CONFIRMED. THUS THE ITA NO.618/HYD/ 2006 IS DISMISSED. ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 15 15 19. THE NEXT GROUND IN ITA NO.621/HYD/2006 IN ASSE SSEES APPEAL IS WITH REGARD TO RECEIPT OF GIFT OF RS.70,000 /- FROM SHRI RAMI REDDY. AFTER HEARING BOTH THE PARTIES ON THE SAME R EASONS AS GIVEN IN EARLIER PARAS IN ITA NO.618/HYD/ THIS ADDITION IS CONFI RMED. 20. THE NEXT GROUND IN THE REVENUE APPEAL IN ITA NO.675/HYD/2006 IS WITH REGARD TO BID AMOUNT RECEIVED FROM M/S KAPIL CHITS. THIS DELETION OF ADDITION IS CONFIRMED ON TH E SAME REASON AS GIVEN IN ITA NO.674/HYD/2006 FOR THE ASSESSMENT YEAR 199 9-2000. 21. THE NEXT GROUND IN REVENUE APPEAL IN ITA NO.6 77/HYD/2006 IS WITH REGARD TO DELETION OF ADDITION ON ACCOUNT OF C HIT AMOUNT AT (RS.1 LAKH + 1 LAKH) 2 LAKHS FROM SRI LIGHT CHIT FUNDS. THE DELETION OF ADDITION IS CONFIRMED ON THE SAME REASON AS GIVEN IN ITA NO.674/HYD/2006. 22. THE NEXT GROUND IN REVENUE APPEAL IN ITA NO.6 77/HYD/2006 IS WITH REGARD TO REFUND OF THE AMOUNT TAKEN BY SMT. SHOBHA AT RS.6.80,000 WHO WAS ALSO SEPARATELY ASSESSED TAX. SHE ALSO FILED RECEIPTS AND PAYMENTS ACCOUNT AND AS PER RECEIPTS AND PAYME NT ACCOUNT, THE PAYMENT OF RS.6.80,000 IS SHOWN. IN THE R ETURN OF INCOME FILED BY HER, SHE EXPLAINED THE SOURCES FOR PROVIDING T HE AMOUNT AT RS.6.80,000 /- TO THE HUF. AS SUCH IT WAS DELETED BY THE CIT(A). AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINION THAT HUF IS HAVING ONLY AGRICULTURAL INCOME AND IT WAS ADMITTED AGRICULTURAL I NCOME AT RS.8,90,000/- AND THE AGRICULTURAL INCOME IN ITS HAND H AS BEEN CONFIRMED BY US. HENCE, WE ARE OF THE OPINION THAT TH E ASSESSEE IS ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 16 16 HAVING SOURCES TO REPAY THE SAID AMOUNT TO THE SMT. SHO BHA. ACCORDINGLY, DELETION OF ADDITION BY CIT(A) IS CONFIRM ED. 23. THE NEXT GROUND OF THE ASSESSEE IN ITA NO.623/HYD/ 2006 IS WITH REGARD TO CONFIRMING THE ADDITION AT RS.77,900/- . 24. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE MADE THE DEPOSITS OUT OF AGRICULTURAL I NCOME IN WARANGAL COOPERATIVE BANK FROM BIDDING OF CHITS AND I T WAS MADE OUT OF AVAILABLE SOURCES. 25. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE IS NO EVIDENCE TO SUBSTANTIATE THIS INVESTMENT AND THE SAME IS TO BE CONFIRMED. 26. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATE RIAL AVAILABLE ON RECORD. THE RECEIPTS AND PAYMENTS OF ACCOUNT FILED WHICH IS PLACED ON ON RECORD AT PAPER BOOK AT PAGE NO.45 SHOWS THIS INVESTMENT. THE ASSESSEE HAS EXPLAINED THE SOURCES OF INVESTMENTS I.E. F ROM AGRICULTURAL INCOME AND BIDDING OF CHITS AND THE SOURCE OF FUND SHOWN IN THE RECEIPT SIDE IS ENOUGH TO MEET THIS APPLICATION OF FUND, AS SUCH ADDITION CANNOT BE SUSTAINED AND THE SAME IS DELETED. 27. THE NEXT GROUND IN ASSESSEES APPEAL IN ITA NO.623/HYD/2006 IS WITH REGARD TO SUSTAINING OF ADDITI ON AT RS.14 LAKHS TOWARDS INVESTMENTS IN WIMS HOSPITALS. THE ADDITION WAS M ADE ON ACCOUNT OF ASSESSEE FAILURE TO EXPLAIN SOURCES OF INCOME. ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 17 17 28. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IN THE ASSESSMENT YEAR UNDER CONSIDERATION, AS PER RECEIPTS AND PAY MENTS ACCOUNT PLACED AT PAPER BOOK NO.45. THE ASSESSEES TOTAL R ECEIPTS IS AT RS.38,95,798/. THIS INCLUDES AGRICULTURAL INCOME, REPAYM ENT RECEIVED FROM LOAN FROM SMT. SHOBHA AND AMOUNT RECEIVED FROM BIDDING CHITS. AFTER CONSIDERING THE TOTAL RECEIPTS AND PAYMENTS STILL THERE IS SURPLUS AT RS.3,579/- IN THE FORM OF CASH. FURTHER IN THIS CASE, TH E ASSESSING OFFICER ON THE ONE HAND CONSIDERED THE RECEIPT AS UNDI SCLOSED INCOME AND ON THE OTHER HAND, HE CONSIDERED THE INVESTMENTS AS UNDISCLOSED INVESTMENT. THE ASSESSING OFFICER CANNOT ISOLATED THE RECEI PTS AND PAYMENTS AND HE SHOULD SEE THE CUMULATIVE EFFECT OF RECE IPTS AND PAYMENTS. OTHERWISE, IT AMOUNTS TO DOUBLE ADDITION. IN OUR OPINION, THE INVESTMENTS ARE PROPERLY EXPLAINED FROM THE EXPLA INED SOURCES AND THE ADDITION CANNOT BE SUSTAINED. THE ADDITION IS DELE TED. 29. IN THE RESULT, ALL THE REVENUE APPEALS IN ITA NOS.674/675/676/677 /HYD ARE DISMISSED AND THE ASSESSEES AP PEALS IN ITA NO.618/HYD IS DISMISSED AND THAT OF ITA NOS.621 AND 6 23/HYD/ ARE PARTLY ALLOWED. 30. NOW WE WILL TAKE UP CROSS APPEALS IN ITA NO.670 /HY/2006, 619/HYD/2006, 671/HYD/2006, 620/HYD/2006, 672/HYD/2006, 622/HYD/2006, 673/HYD/2006 AND 624/HYD/2006.(DR. RAVIN DRA REDDY, INDIVIDUAL) 31. THE FIRST GROUND IN THESE APPEALS IS WITH REGARD TO DETERMINATION OF PROFESSIONAL INCOME. BRIEF FACTS OF TH E CASE ARE THAT DR. RAVINDRA REDDY IS AN INDIVIDUAL DERIVING INCOME F ROM MEDICAL PROFESSION. ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 18 18 31.1. FOR THE ASSESSMENT YEAR 1999 2000 THE APPELLAN T FILED THE RETURN OF INCOME ON 22.7.2004 ADMITTING AN INCOME OF RS. 1,38,420/- FROM MEDICAL PROFESSION. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 144 READ WITH SEC.148 ON 23.3.2005 DETERMI NING THE TOTAL INCOME AT RS. 9,18,370/-. WHILE DOING SO, THE ASS ESSING OFFICER ESTIMATED THE INCOME FROM PROFESSION AT RS. 7 LAKHS AS AGA INST THE ADMITTED INCOME OF RS. 1,38,421/- AND ALSO ADDED RS. 2, 68,371/- AS INCOME U/S 68 OF THE IT ACT. IN MAKING THE ADDITION, THE ASSESSING OFFICER CONCLUDED THAT THE REFUND FROM SRI RAM NARAYAN WAS NOT GENUINE. 32. THE ASSESSING OFFICER ESTIMATED THE PROFESSIONAL INCO ME ON THE BASIS OF STATEMENT RECORDED AT THE TIME OF SURVEY. A CCORDING TO THE ASSESSING OFFICER, THE INCOME FROM PROFESSION FOR THE ASSESSME NT YEAR 2002-2003 IS ESTIMATED AT RS. 10,38,243/- AND THEREFOR E, THE INCOME FOR THE ASSESSMENT YEAR 1999-2000 WOULD BE RS. 7 LAKHS. I N SO FOR AS THE ASSESSMENT YEAR 2002-03 IS CONCERNED THE ASSESSING OFFICER IS OF THE VIEW THAT THE TOTAL FEES FROM INPATIENTS WORKS OUT TO RS.23,78,550/-. THE ASSESSING OFFICER ESTIMATED THE FEES COLLECTED FOR EACH O F THE OPERATION AND ESTIMATED THE NO. OF OPERATION CONDUCTE D. SIMILAR ESTIMATION HAS BEEN RESORTED TO IN RESPECT OF POISON CASES, SCANNING, ETC. THE ASSESSING OFFICER ESTIMATED THE INCOME AS UNDER: NAME OF THE PROCEDURE NO. OF CASES RATE FEES ESTIMATED RS. TREATMENT OF POISON CASES 115 4000 4,60,000 SCANNING 1090 175 1,90,750 CESARIAN DELIVERY 101 1500 1,51,500 NORMAL DELIVERY 303 350 1,06,050 LSC PAH & 1134 1500 17,01,000 ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 19 19 APPENDICITIS OTHERS 600 500 TO 700 4,20,000 33. THE ASSESSING OFFICER OBSERVED THAT THE EXPENDITUR E ON THE SAID OPERATION WOULD BE 60% AND THEREFORE THE NET IN COME WOULD BE 40% BEFORE DEPRECIATION. THUS THE ASSESSING OFFICER ARRIV ED AT THE PROFESSIONAL INCOME AT RS.10,38,343/-. 34. IN SO FAR AS PROFESSIONAL INCOME IS CONCERNED, THE A SSESSEE SUBMITTED THAT THE PLACE OF PROFESSION IS WARDHANNAPET W HICH IS ABOUT 25 KMS FROM WARANGAL AND 30KMS FROM NARSAMPET. IT IS A SMALL VILLAGE AND THE ASSESSEE CATERS THE NEEDS OF THE POOR PEOPLE OF TH E AREA. IT IS SUBMITTED THAT EACH OF THE SURGERY CASE HAS TO BE ATTENDE D TO BY A TEAM OF 1 SURGEON, A JR. DOCTOR AND ANESTHETIST. AS THE SURGE ON ETC. IS NOT AVAILABLE AT WARDHANNAPET, THEY ARE TO BE CALLED FRO M WARANGAL OR NARSEMPET FOR CONDUCTING THE SURGERY AND ATTENDING EME RGENCY CASES LIKE POISON CASES. THE ANESTHETIST IS PAID A FEE OF RS.350 /- THE VISITING SURGEONS AND TECHNICIANS ARE TO BE PAID BASED ON THE TIME SPENT BY THEM. OUT OF THE FEES COLLECT FROM EACH SURGERY ABOUT 60 % HAS TO BE PAID TO THE DOCTORS ATTENDING THE CASE. OUT OF THE BAL ANCE 40% HALF OF THE AMOUNT IS TO BE SPENT ON KITS TECHNICIANS ETC. THEREF ORE OUT OF THE TOTAL RECEIPT ONLY ABOUT 20% WOULD BE THE RECEIPT FOR THE ASSESSEE. AND AFTER THE NORMAL EXPENDITURE OF RUNNING A HOSPITAL T HE INCOME WOULD BE ABOUT 5 TO 10%. 35. ACCORDING TO THE ASSESSEE COUNSEL, MANY A TIMES THE ASSESSEE HAS TO EXTENT REBATE IN THE PRESCRIBED FEES TO THE POOR PATIENTS. IT IS FURTHER SUBMITTED THAT THE HOSPITAL CON SISTS OF 30 BEDS. IT IS NOT POSSIBLE TO ACCOMMODATE AS MANY PATIENTS AS MENTI ONED BY THE ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 20 20 ASSESSING OFFICER. THEREFORE, THE ESTIMATION RESORTED T O BY THE ASSESSING OFFICER IS UNREASONABLE AND UNREALISTIC. THE GRO SS RECEIPTS OF RS.32,21,3000 FOR THE ASSESSMENT YEARS ARE OVER STATED BY THE ASSESSING OFFICER. THEREFORE, THE ASSESSEE DOES NOT AGREE WI TH THE GROSS RECEIPTS ESTIMATED BY THE ASSESSING OFFICER. EVEN IF IT WE RE TO BE AGREED, THE AMOUNT T THAT FALLS TO THE SHARE OF THE A SSESSEE WOULD BE ONLY 40% OR RS.12,88,520/- AS AGAINST WHICH THE EXPENDI TURE WOULD BE INCURRED BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER I S NOT JUSTIFIED IN DETERMINING THE PROFESSIONAL INCOME AT RS.1 0,38,243/- FOR THE ASSESSMENT YEARS 2002-03 AND RS.7 LAKHS FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION. 36. THE ASSESSING OFFICER ALSO ADDED RS. 2,68,371/- BY APPLYING THE PROVISIONS OF SECTION 68 OF THE IT ACT. IT IS SUBMIT TED THAT THIS AMOUNT REPRESENTS LOAN REPAID BY SRI RAM NARAYAN. TO THIS EFFECT A LETTER OF CONFIRMATION WAS FILED BEFORE THE ASSESSING OFF ICER. THE ASSESSEE BRIEFLY STATED THE FACT AND ARGUMENTS FOR THESE A SSESSMENT YEAR S AS FOLLOWS: ASSESSMENT YEAR 2000-2001 37. FOR THE ASSESSMENT YEAR 2000-2001, THE ASSESSEE FILED THE RETURN OF INCOME ON 13.01.2003 ADMITTING AN INCOME OF RS. 1,51,020/- REPRESENT THE INCOME FROM MEDICAL PROFESSION. THE ASSESSEE FILED INCOME & EXPENDITURE ACCOUNT AND THE BALANCE SHEET. THE RECEIPTS AND PAYMENTS ACCOUNT ALSO WAS SUBMITTED. THE ASSESSING OFFICE COMPL ETED THE ASSESSMENT U/S 144 R.W.S. 148 ON 23.03.2005 DETERMIN ING THE TOTAL INCOME AT RS. 12,75,260/-. WHILE DOING SO, THE ASSESSING O FFICER ESTIMATED THE NET INCOME FROM PROFESSION AT RS. 8 LAKHS A ND TREATED RS. ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 21 21 4,75,259/- INVESTED BY APPELLANTS WIFE SMT. V. SHOBH A AS THE INCOME OF THE ASSESSEE. 38. IN SO FAR AS THE PROFESSIONAL INCOME IS CONCERNED, TH E ASSESSEE ALREADY SUBMITTED THE EXPLANATION IN DETAIL F OR THE ASSESSMENT YEAR 1999-2000. IN VIEW OF THE SAME, THE ASSESSING OFFI CER IS NOT JUSTIFIED IN ESTIMATING THE INCOME AT RS. 8 LAKHS. IN SO FAR AS INCOME OF SMT. V. SHOBHA IS CONCERNED, SHE SEPARATELY FILED THE RE TURN OF INCOME ON 12.2.2004 ADMITTING AN INCOME OF RS.70,600. SHE A LSO FILED RECEIPTS AND PAYMENTS ACCOUNTS, CAPITAL ACCOUNT AND THE BALANCE SHEET . THE CAPITAL ACCOUNT INCLUDES OPENING BALANCE OF RS.3,19,897 N ET INCOME FROM PATHOLOGICAL LAB. OF RS.40,000 AND INTEREST FROM SUNDRY DEBTORS OF RS.30,600. IN SO FAR AS THE OPENING BALANCE IS CONCERNED THEY REPRESENT THE COST OF LAND AT JAFFERGUDA COST OF AGRICULTURE LAND AT WARDHANNAPET AND INVESTMENT MADE WITH MARGADARSHI CHIT FUND, VAISH NAVI CHIT FUND ETC. FURTHER, THERE IS EVIDENCE TO SHOW THAT THE FOLLOW ING ASSETS WHICH CONSTITUTE THE OPENING BALANCE OF RS.3,19,897 WERE ACQUI RED PRIOR TO 1.4.99. 1. PLOT AT JEFFERGUDA RS.42,621 2. AGRICULTURE LAND AT WARDHANAPET RS.34,776 3. MARGADARSHI CHIT FUND RS.40,000 4. SUNDRY DEBTORS RS.1,70,00 5. CASH ON HAND RS.32,500 TOTAL RS.3,19,897 39. THE ASSESSING OFFICER HOWEVER IS OF THE VIEW THAT T HE OPENING BALANCE AND THE RECEIPTS DURING THE REPRESENTS I NCOME OF THE ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 22 22 ASSESSEE FOR THE ASSESSMENT YEARS AND ADDED THE SAME PROTECTIV ELY IN THE ASSESSMENT OF SMT. V. SHOBA. 40. THE ASSESSEE SUBMITTED THAT THERE IS NO DISPUTE ABOU T THE FACT THAT SMT. V.SHOBA WAS HOLDING AGRICULTURAL LANDS O F 7 ACRES AND 30 GUNTAS PURCHASED ON 3.10.88. ANY OF THE EARLIER YEAR S SHE WAS NOT FILING THE RETURNS OF INCOME AND THEREFORE SHE DID NOT ADMIT ANY AGRICULTURAL INCOME. THE AGRICULTURAL LANDS AND THE PLOT ACQUIRED AT JEFFERGUDA DO NOT PERTAIN TO THE YEAR OF ACCOUNT. THEY ADMITTEDLY REPRESENT THE ASSETS ACQUIRED DURING 88 AND THEREFORE THE VALUE OF THE ASSE TS SHOULD NOT HAVE BEEN ADDED AS THE INCOME FOR THE YEAR UNDER CONSI DERATION. SIMILARLY, THE INVESTMENTS WITH MARGADARSI CHIT FUNDS AN D WERE MADE PRIOR TO THE PREVIOUS YEAR UNDER CONSIDERATION AND THE REFORE THE SAME SHOULD NOT HAVE BEEN ADDED. THE ASSESSEE SUBMITTED THAT SMT. V. SHOBA IS RUNNING A PATHOLOGICAL LAB. IN THE NAME OF RAJA MAMAMATA CLINICAL AND PATHOLOGICAL LAB. AT WARDHANNAPET. SHE D ERIVED INCOME BESIDES THE AGRICULTURAL INCOME AND, THEREFORE, SHE HAS G OT INDEPENDENT SOURCE OF INCOME AND HENCE THE SAME SHOULD NOT BE INCLUDED AS THE INCOME OF THE ASSESSEE. IT ALSO SUBMITTED THAT THE COST OF THE ASSETS WHICH WERE NOT ACQUIRED DURING THE YEAR CANNOT BE TRE ATED AS THE INCOME OF SMT. SHOBA AND CONSEQUENTLY THE SAME CANNOT BE ADDED IN THE ASSESSMENT OF THE ASSESSEE. ASSESSMENT YEARS 2001-02. 41. FOR THE ASSESSMENT YEARS 2001-02 THE ASSESSEE FILED TH E RETURN OF INCOME ON 13.1.2003 ADMITTING AN INCOME OF RS.2,14,140 FROM MEDICAL PROFESSION. THE SAID RETURN WAS REGULARIZED BY ISSUE OF NOTICE U/S 148. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 14 4 R.W.S. ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 23 23 148 ON 23.3.2005 DETERMINING THE TOTAL INCOME AT RS.1 3,56,790. WHILE DOING SO, THE ASSESSING OFFICER ESTIMATED THE INCOME FROM PROFESSION AT RS.9 LAKH AND TREATED THE INVESTMENT MADE BY THE ASSESSEE S WIFE SMT. V. SHOBA OF RS.4,56,786 AS THE INCOME OF THE ASSESSEE. IN SO FAT AS THE PROFESSIONAL INCOME IS CONCERNED, THE ASE SUBMITTED A DETAI LED TO THE ASSESSING OFFICER IS NOT JUSTIFIED IN ESTIMATING INCOME AT R S.9 LAKHS. IN SO FAR AS THE INCLUSION OF INCOME AT RS.4,56,786 BELONGING TO SMT. V. SHOBA IS CONCERNED, THE ASSESSEE SUBMITTED AS FOLLOWS: 41.1 SMT. V. SHOBA WIFE OF THE ASSESSEE IS RUNNING A P ATHOLOGICAL LAB UNDER THE NAME AND STYLE OF RAJA MAMATA CLINICA L PATHOLOGICAL LABORATORY AT VARDANNAPET. FOR THE ASSESSMENT YEARS 20 01-02 SHE FILED HER RETURN OF INCOME ADMITTING AT RS.90,000 FRO M THE SAID BUSINESS AND RS.12,600 TOWARDS INTEREST FROM SUNDRY DEBTORS. SHE ALSO FILED RECEIPTS AND PAYMENTS ACCOUNT. IN HER ASSESSMENT, THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME AT RS.4,56,786 BY INCLUDING ALL THE PAYMENTS MADE EXCEPT THE CLOSING CASH BALANCE AS UNEXPLA INED INVESTMENT. THE ASSESSING OFFICER DID NOT CONSIDER THE FO LLOWING AVAILABLE SOURCES. A) OPENING CASH BALANCE 35,941 B)INCOME ADMITTED IN RETURN OF INCOME (THIS AMOUNT IS TAXED BY ASSESSING OFFICER ) 1,02,600 B) REFUND FROM THE SUNDRY DEBTORS 70,000 C) CHIT REALIZATION FROM CHIT STA-6-241 WITH VAISHNAV I CHITS 74,000 D) LOAN FROM DR. RAVINDRA REDDY, HUF 80,000 ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 24 24 41.2. IN SO FAR AS THE OPENING BALANCE IS CONCERNED, S MT. V. SHOBHA IS ASSESSED TO INCOME TAX FOR THE IMMEDIATELY PRECE DING YEAR ALSO AND THIS REPRESENTS THE CLOSING BALANCE OF THE EARLI ER YEAR. 41.3. THE INCOME AT RS.1,02,600 IS SEPARATELY TAXED BY THE ASSESSING OFFICER AND IS AVAILABLE FOR THE ASSESSEE FOR INVEST MENT. IN SO FAR AS THE REFUND OF THE SUNDRY DEBTORS IS CONCERNED, IT IS SUBMITTED THAT THE ASSESSING OFFICER ACCEPTED THE INTEREST ON DEBTORS FOR T HE IMMEDIATELY PRECEDING YEAR AND FOR THE YEAR UNDER CON SIDERATION ALSO. THE ASSESSEE FILED DETAILS OF THE PERSONS FROM WHOM THE SUN DRY DEBTORS WERE REALIZED. 41.4. IN SO FAR AS THE REALIZATION OF CHIT AMOUNT FROM VAISHNAVI CHIT IS CONCERNED, THE PAYMENT OF RS.74,000 IS RECORDED DURING THE YEAR. FOR THE IMMEDIATELY PRECEDING YEAR, AN AMOUNT OF RS.16,000 WAS PAID AND THEREFORE THE ASSESSING OFFICER IS NOT CORRECT IN DOUBTING THE RECEIPT OF REALIZATION OF THE CHIT. 41.5. IN SO FAR AS THE LOAN FROM V. REDDY HUF IS CONCE RNED, THE AMOUNT OF RS.80,000 IS RECORDED ON THE PAYMENT SIDE OF THE HUF ACCOUNT. THE HUF IS ALSO SEPARATELY ASSESSED TO TAX. THE SO URCES OF THE HUF FOR ALL THE ASSESSMENT YEARS WERE EXAMINED BY THE ASSE SSING OFFICER. THEREFORE THE ASSESSEE SUBMITTED THAT THE INVES TMENTS MADE SHOULD NOT HAVE BEEN TREATED AS THE INCOME U/S 69 IN TH E ASSESSMENT OF SMT. V. SHOBHA AND SHOULD HAVE BEEN ADDED IN THE ASSES SMENT OF THE ASSESSEE. ASSESSMENT YEARS 2002-03 ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 25 25 41.6 FOR THE ASSESSMENT YEARS 2002-03 THE ASSESSEE FILED R ETURN OF INCOME ON 17.1.2003 ADMITTING AS INCOME OF RS.2,43,4 30/- THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 144 ON 23.3.20 05 DETERMINE THE TOTAL INCOME AT RS.24,40,430/- WHILE DO ING SO, THE ASSESSING OFFICER ESTIMATED THE PROFESSIONAL RECEIPTS AT RS.10 ,38,243 AND ALSO ADDED RS.14,02,191 BEING THE INCOME DETERMINE D IN THE ASSESSMENT OF ASSESSEE WIFE SMT. V. SHOBHA AS THE INCOME OF T HE ASSESSEE. 41.7 IN SO FAR AS THE ASSESSMENT OF SMT. V. SHOBHA IS CO NCERNED, SHE FILED THE RETURN OF INCOME ON 12.2.2004 ADMITTING AN INCOME OF RS.1,49,500 FROM RAJA MATA CLINICAL AND PATHOLOGICAL L ABORATORY. THE ASSESSING OFFICER FOUND THAT SHE MADE PAYMENT OF RS.12,52 ,661/- AND THEREFORE HE IS OF THE VIEW THAT THE ENTIRE AMOUNT R EPRESENTS THE INCOME OF THE ASSESSEE. IN THIS REGARD THE ASSESSEE SUBMITTED THAT SMT. V. SHOBA FILED RECEIPTS AND PAYMENTS ACCOUNT. THE RECEIPTS INCLUDE THE FOLLOWING: OPENING CASH BALANCE 8,355 INTEREST FROM SB ACCOUNT 30 INCOME FROM PL 1,49,500 AMOUNT REALIZED ON FROM BIDDING CHIT FROM MARGADARSHI CHID FUND 7,88,900 41.8 IN SO FAR AS CASH IN HAND IS CONCERNED, IT REPRESENTS CLOSING BALANCE OF THE PRECEDING YEAR AND CANNOT BE TREATED AS NOT AVAILABLE FOR THE ASSESSEE. ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 26 26 41.9. THE INCOME FROM PATHOLOGICAL LABORATORY OF RS. 1,49,500 IS ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME AND TH E ASSESSING OFFICER HELD THAT EVEN THIS AMOUNT IS NOT AVAILABLE. 41.10 IN SO FAR AS THE CHIT AMOUNT OF RS.7,88,900 IS CON CERNED, THE ASSESSEE FILED ACCOUNT COPY OF MARGADARSHI CHIT FUND WI TH CHIT NO.LT 001XW/32 WHEREIN THE ASSESSEE REALIZED RS.7,88,900 /- ON BIDDING THE CHIT. THIS AMOUNT WAS PAID BY MARGADARSHI CHIT FUND THROUGH CHEQUE AND THE SAME IS RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAS NO INFORMATION TO THE CONTRARY. 41.11. SIMILARLY THE AMOUNT OF RS.3,19,000 WAS RECEIV ED FROM SHRI RAM CHIT AGAINST CHIT NO.WLX-4/19. THIS AMO UNT WAS ALSO RECEIVED BY BIDDING THE CHIT. ACCOUNT COPY OF SHRI RAM CHIT IS SUBMITTED, ACCORDING TO WHICH THE AMOUNT WAS RECEIVED FR OM THE SAID CHIT FUND COMPANY. 41.12. THE ASSESSEE EFFECTED THE PAYMENTS WITH THE FUN D AVAILABLE, THE DETAILS OF WHICH ARE SUBMITTED ABOVE. THEREFORE, THE ASSESSING OFFICER OUGHT NOT TO HAVE TREATED THE AMOUNT O F RS.12,52,661/- AS THE INCOME OF THE ASSESSEE U/S 69 OF THE IT ACT. 42. IN VIEW OF THE ABOVE, THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITION S AS MENTIONED ABOVE. ACCORDING TO ASSESSEES COUNSEL CIT(A) SHALL HAVE DEL ETED ENTIRE ADDITION INSTEAD OF SUSTAINING AS FOLLOWS: ASSESSMENT YEAR 1999-2000 : PROFESSIONAL INCOME OF RS.7 LAKHS REDUCED TO 4 LAKHS 2000-2001 : PROFESSIONAL INCOME OF RS.8 LAKHS REDUCED T O 5 LAKHS ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 27 27 INCOME OF SMT. SHOBA ASSESSED IN THE ASSESSEES HANDS AT RS.475,250 DELETED . 2001-2002 PROFESSIONAL INCOME ESTIMATED. PROFESSIONAL INCOME OF OF RS.9 LAKHS REDUCED TO 6 LAKHS INCOME OF SMT. SHOBA ASSESSED IN THE HANDS OF ASSESSEE AT RS.456,786 DELETED. 2002-2003 ESTIMATED PROFESSIONAL INCOME AT RS.10,38,243 REDUCED AT RS.7.5 LAKHS DELETED INCOME OF SMT. SHOBA CLUBBED IN THE HANDS OF THE ASSESSEE AT RS.14,02,191/-. 42.1. THE ASSESSEES PLEA IS THAT THE ESTIMATION OF INCOM E IS AT HIGHER SIDE AND INCOME MAY BE ESTIMATED AT 15% OF THE GROSS RECEIPTS AS DECIDED BY HYDERABAD B BENCH OF THE TRIBUNAL IN IT S ORDER DATED 26/6/2009 IN THE CASE OF DR. T. RAVIKUMAR, NELLOR E & OTHERS IN ITA NOS.790/2008 & OTHERS. 43. ON THE OTHER HAND, THE CONTENTION OF THE DEPAR TMENT IS THAT THE ASSESSING OFFICER ESTIMATED THE RECEIPTS BASED ON THE N UMBER OF PATIENTS AND THE FEES COLLECTED FOR EACH TREATMENT AND I T IS BASED ON THE INFORMATION COLLECTED DURING THE COURSE OF SURVEY. 44. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATE RIAL AVAILABLE ON RECORD. IN THIS CASE, IT IS ADMITTED FAC T THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS NOT AT ALL PRODUCED FOR THE PUR POSE OF ASSESSMENT AND AS SUCH, REASONABLE ESTIMATION OF INCOME TO B E DONE AFTER GIVING PROPER DEDUCTION TOWARDS EXPENDITURE INC URRED BY THE ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 28 28 ASSESSEE TOWARDS ASSISTANT DOCTORS, REMUNERATION TO TECHNICIAN S AND OTHER DAY TO DAY EXPENSES. BEING THERE IS NO CONCRETE E VIDENCE FOR THE COLLECTION, THE ASSESSING OFFICER MADE ESTIMATION OF INCOME AT RS.7 LAKHS FOR THE ASSESSMENT YEAR 1999-2000 ON THE BASIS OF INCOME ESTIMATED FOR THE ASSESSMENT YEAR 2002-03 WHICH IS AT RS.10,38,243 /-. IN OUR OPINION, THE ASSESSING OFFICER NOT AT ALL CORRECT IN DETE RMINING THE INCOME OF THIS ASSESSMENT YEAR ON THE BASIS OF ESTIMATION OF INCOME OF SUBSEQUENT ASSESSMENT YEAR 2002-03. ADMITTEDLY, THE ASSESSEE STATED IN THE SWORN STATEMENT RECORDED FROM HIM ON 8/3/2002 A S FOLLOWS: QN: AS NOTICED BY ME, YOU HAVE GOT VERY GOOD MEDICA L PRACTICE AT WARDHANNAPET, BUT AS PER YOUR PAST INCOME TAX RECOR D IT IS SEEN THAT YOU HAVE NOT DECLARED INCOME PROPORTIONATE TO YOUR PRAC TICE. PLEASE EXPLAIN? ANS: MY PRACTICE PICKED UP DURING THE LAST 2-3 YEA RS. PREVIOUSLY IT WAS VERY POOR. HOWEVER, I AM OFFERING INCOME DISCLOSURES AS FOLLOWS WHICH IS ALMOST PROPORTIONATE TO MY ACTUAL INCOME: 1. FOR THE AY 2000-01 RS.4,00,000 2. FOR THE AY 2001-02 RS.4,75,000 3. FOR THE AY 2002-03 RS.4,75,000 TOTAL DISCLOSURE RS.13,50,000 (RUPEES THIRTEEN LAKHS FIFTY THOUSAND ONLY) AND I A M ISSUING POST DATED CHEQUES FOR RS.1 LAKH FOR 2000-01 RS.1.25 FOR THE A Y 2001-02 AND RS.1.25 FOR THE AY 2002-03 AS ADVANCE TAX. I WILL PRODUCE THE CHALLANS ON 15.3.2002 ON 25.3.2002 AND 28.3.2002 AND FILE THE RETURNS SIMULT ANEOUSLY. QN: WHAT ARE THE BOOKS OF ACCOUNTS YOU ARE MAINTAI NING. ANS: RECEIPT REGISTER, ACQUAINTANCE ROLL, MEDICAL EXPENSES REGISTER, SURGERY REGISTER, FP OPERATION REGISTER, IN PATIENT AND OUT PATIENT REGISTER IN THE PRESCRIBED FORMS AS PER IT RULES. 45. THE ABOVE STATEMENTS BY THE ASSESSEE NOT RETRACTED BY EITHER PARTIES. SINCE THE OFFER MADE BY THE ASSESSEE VO LUNTARILY AND IN THE ABSENCE OF ANY EVIDENCE CONTRARY TO THIS, THIS IS TO B E CONSIDERED AS ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 29 29 TRUE AND CORRECT AND THE ASSESSING OFFICER IS REQUIRED TO CO NSIDER THE SAME AS INCOME OF THE ASSESSEE INSTEAD OF ESTIMATION OF INCOM E WITHOUT PROPER BASIS. ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE DIRECT THE ASSESSING OFFICER TO DETERMINE THE INCOME OF THE ASSESSEE AS P ER SWORN STATEMENT RECORDED BY HIM FOR THE ASSESSMENT YEAR 2000-0 1, 2001-02 AND 2002-03 SINCE THERE IS NO EXTERNAL EVIDENCE TO SUPPO RT, THE ESTIMATION MADE BY THE ASSESSING OFFICER. HOWEVER, FOR THE ASSESSMENT YEAR WE HAVE NO OTHER OPTION TO ACCEPT THE RETURN IN COME IN THE ABSENCE OF ANY MATERIAL TO SUGGEST THE INCOME OF THE ASSES SEE AT HIGHER AMOUNT. ACCORDINGLY, THIS GROUND IN REVENUE APPEALS IN ITA NO.670, 671, 672 & 673/HYD/2006 AND ASSESSEE APPEALS IN ITA NO.61 9/HY/2006 IS DISMISSED. IN ASSESSEE APPEALS IN ITA NO.620, 622, 624 /HYD/2006, THIS GROUND IS PARTLY ALLOWED. 46. THE NEXT GROUND IN THE ASSESSEES APPEAL IN ITA NO.619/HYD/2006 IS WITH REFERENCE TO SUSTAINING OF ADDIT ION OF RS.2,68,371/- BEING REFUND OF LOAN FROM RAM NARAYANA N. ACCORDING TO ASSESSING OFFICER THE AMOUNT RETURNED BY SHRI RAM NARAYA NAN RECEIVED BY THE ASSESSEE IN CASH AND CREDITED IN THE BOOKS OF ACCOUNTS FOR WHICH THE ASSESSEE HAS NOT OFFERED EXPLANATION. THE ASSESSING OFF ICER TREATED THIS AS UNEXPLAINED CREDIT U/S 68 OF THE IT ACT. THE CON TENTION OF THE ASSESSEE IS THAT THIS AMOUNT WAS ADVANCED TO SHRI RAM NARAY ANAN IN EARLIER FINANCIAL YEAR AND NOT IN THE ASSESSMENT YEAR UNDER CONSIDERATION ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 30 30 AND IT WAS REFUNDED IN THE ASSESSMENT YEAR UNDER CONSIDE RATION AND NO LETTER OF CONFIRMATION COULD BE FILED FROM SHRI RAM NARAYANAN AS HE WAS PASSED AWAY BEFORE THE ASSESSMENT PROCEEDINGS AND THE RE FUND OF AMOUNT CANNOT BE CONSIDERED AS UNEXPLAINED CREDIT. 47. THE DR RELIED ON THE ORDER OF THE CIT(A). 48. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE REVENUE IS NOT DISPUTED THE FACT OF ADVANCE OF MONEY IN EARLIER ASSESSMENT YEAR AND ALSO NOT DISPUTED TH E DEATH OF LATE SHRI RAMNARAYAN. WHEN RAMNARAYAN IS NO MORE, I T IS IMPOSSIBLE TO PRODUCE CONFIRMATION LETTER FROM A DEAD PERSON SO I T IS NATURAL TO BELIEVE THE VERSION OF THE ASSESSEE UNLESS THE DEPARTMENT IS HAVING EVIDENCE TO SHOW THAT THE ASSESSEE HAS ADVANCED MONEY IN TH E ASSESSMENT YEAR UNDER CONSIDERATION. IN VIEW OF THIS, WE ARE DELETING THE ADDITION MADE ON THIS COUNT. 49. REGARDING THE ADDITION MADE ON ACCOUNT OF CLUBBI NG OF THE INCOME OF SMT. V. SHOBHA FOR THE ASSESSMENT YEAR 2000-0 1, 2001-02 AND 2002-03, IT WAS SUBMITTED BY THE DEPARTMENTAL RE PRESENTATIVE THAT SMT. V. SHOBHA HAS NO SOURCE OF INCOME. THERE IS NO EV IDENCE THAT THE PATHOLOGICAL LABORATORY WAS OWNED BY THE ASSESSEES WIFE A ND THERE WAS NO EVIDENCE THAT THE ASSETS OF THE PATHOLOGICAL LABORATO RY WAS OWNED BY HER AND SHE IS NOT QUALIFIED TO MANAGE THE SAME AS SUCH T HE ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 31 31 PATHOLOGICAL LABORATORY IS NOT AT ALL BELONG TO ASSESSEE S WIFE. ACCORDING TO DR, THE INCOME WAS RIGHTLY ASSESSED IN HER HAND. 50. ON THE OTHER HAND, THE AR SUBMITTED THAT THE A SSESSEE IS NOT STATING THAT THE PATHOLOGICAL LABORATORY IS OWNED BY SMT. SHOBHA I.E., ASSESSEES WIFE. THE CONTENTION OF THE ASSESSEE IS THA T THE ASSESSEES WIFE IS ONLY CARRYING ON THE BUSINESS OF THE PATH OLOGICAL LAB. THOUGH THE EQUIPMENT WAS NOT ACQUIRED BY THE ASSESSEES W IFE, THE LABORATORY WAS RUN BY HER AND INCOME WAS EARNED BY HER AND IT IS NOT THE CASE OF ACQUISITION OF ASSET BY HER. HE SUBMITTED THAT THE DOCTOR IS VERY BUSY IN HIS MEDICAL PROFESSION AND HE COULD NOT DEVO TE MUCH ATTENTION TO THE PATHOLOGICAL LABORATORY AS SUCH THE LA B. WAS MANAGED BY SMT. SHOBHA. SHE WAS IN POSSESSION OF 7.3 ACRES OF AGR ICULTURAL LAND AT WARDHAPET AND INVESTING IN CHIT FUNDS AND AS SUCH, IT WAS NOT CORRECT FOR THE ASSESSING OFFICER TO MENTION THAT SHE HAS NO SOURCE OF INCOME. SHE SUBSCRIBED CHITS IN HER OWN NAME. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT DR. RAVIND RA REDDY HAS CARRIED ON THE BUSINESS OPERATION OF THE PATHOLOGICAL LA B. IN THE ABSENCE OF ANY EVIDENCE, IT IS NOT POSSIBLE TO FASTEN THE ADDITIONAL TAX LIABILITY IN THE HANDS OF DR. RAVINDRA REDDY. ACCORDI NGLY, IN OUR OPINION, THE INCOME OF SMT. V. SHOBHA CANNOT BE ASSESSED IN THE HA NDS OF DR. V. RAVINDRA REDDY. THIS GROUND IN THE REVENUE APPEALS I N ITA NO.671, 672 & 673/HYD/2006 IS DISMISSED. ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 32 32 51. ITA NOS.678/06, 679/06 AND 680/HYD/2006 (SMT. V . SHOBHA). ALL THESE APPEALS ARE DEPARTMENT APPEALS. I N THESE APPEALS, THE GRIEVANCE OF THE DEPARTMENT IS THAT THE ASSESSEE IS HA VING NO SOURCE OF INCOME IN THESE ASSESSMENT YEARS AND THE INVESTMENT MAD E BY HER TO BE ASSESSED AS UNDISCLOSED INCOME OF HER. THE FACTS OF TH E CASE ARE THAT THE ASSESSEES HUSBAND DR. RAVINDRA REDDY IS RUNNING A HOSPITAL AT WARDHANNAPETA, WARANGAL DISTRICT. THE HOSPITAL BUILDI NG IS OWNED BY THE HUF. THE ASSESSEE IS RUNNING A PATHOLOGICAL LABORATO RY IN THE NAME OF RAJA MAMATHA CLINICAL & PATHOLOGICAL LABORATORY W ITHIN THE HOSPITAL BUILDING. SHE FILED THE RETURNS OF INCOME FORT THE A SSESSMENT YEAR 2000-01 AND ONWARDS ADMITTING INCOME FROM THE SAID PA THOLOGICAL LABORATORY AND INTEREST FROM SUNDRY DEBTORS. SHE ALSO OWNS AGRICULTURAL LANDS OF ABOUT 7 ACRES. WHILE FILING THE RETURN OF IN COME FOR THE ASSESSMENT YEAR 2000-01, THE ASSESSEE SHOWED OPEN CAPITAL O F RS.3,19,897/- AND ALSO SHOWN THE PAYMENTS DURING THE YE AR OF RS.1,62,159/-. THE ASSESSING OFFICER DISBELIEVED THAT THE ASSESSEE COULD HAVE RUN THE PATHOLOGICAL LABORATORY AND DERIVED ANY INCOME THEREFROM. THE ASSESSING OFFICER IS OF THE VIEW THAT ALL THE INCOME DERIVED BY THE ASSESSEE REALLY BELONGS TO DR. RAVINDRA REDDY, HER HUSBAN D. ACCORDINGLY, HE MADE PROTECTIVE ASSESSMENTS IN THE CASE OF TH E ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 33 33 ASSESSEE AND SUBSTANTIVE ASSESSMENTS IN THE CASE OF DR. RAVIND RA REDDY. 52. WE HAVE PERUSED ON THIS ISSUE. WE HAVE ALREADY H ELD IN ASSESSEE HUSBANDS CASE THAT INCOME OF PATHOLOGICAL LABORATO RY CANNOT BE ASSESSED IN THE HANDS OF DR.V. RAVINDRA REDDY AND TO BE ASSESSED IN THE HANDS OF SMT. V. SHOBHA. THE VARIOUS ADDITIONS M ADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED SINCE THE ASSESSEE IS HAVING AGRICULTURAL LAND WHICH IS SUBJECT TO CULTIVATION UPTO 1 .4.1999 AND THEREAFTER IT WAS SUBJECT TO CULTIVATION BY HUF. THE A SSESSEE ALSO SUBSCRIBED VARIOUS CHITS IN HER NAME AND ALSO SHE RECEIVED B ACK MONEY. THE SUBSCRIPTION WAS MADE BY HER OWN SOURCE OF INCOME. AS DISCUSSED IN EARLIER PARAS, IN ASSESSEES HUSBAND CASE, WE ARE OF THE OPINION THAT THE INCOME DECLARED BY THE ASSESSEE IS SUFFICIENT TO MEET HE R INVESTMENTS. AS SUCH, NO ADDITION IS CALLED FOR. ACCORDI NGLY, THE DELETION OF ADDITION MADE BY CIT(A) IS JUSTIFIED. T HE ORDER OF CIT(A) IS CONFIRMED ON THIS ISSUE. ACCORDINGLY, THE APPEALS IN ITA NO.678, 679 AND 680/HYD/2006 FILED BY THE REVENUE ARE DISMISSED. 53. IN THE RESULT, REVENUE APPEALS IN ITA NO.674, 6 75, 676, 677, 678, 679, 680, 670, 671, 672 AND 673/HYD/2006 A RE DISMISSED. THE ASSESSEE APPEALS IN ITA NO.619/HYD/2006 IS ALLOWED AND IN ITA ITA NOS.618, 619 AND OTHER 16 CASES SHRI RAVINDRA REDDY, WARANGAL 34 34 NOS. 621 & 623/HYD/2006, 620, 622 & 624/HYD/2006 ARE PARTLY ALLOWED AND ITA NO.618/HYD/2006 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 18 TH JUNE, 2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE JUNE 2010 COPY FORWARDED TO: 1. SHRI RAVINDRA REDDY,(INDIVIDUAL), SHRI RAVINDRA REDDY (HUF) & SMT. V. SHOBHA, WARANGAL C/O SHRI S. RAMA RAO, ADVOCATE, FLAT NO.103, H.NO.3-6 - 542/4, INDIRADEVI NILAYAM, ST. NO.7, HIMAYATNAGAR, HYDERABAD 2. ITO, WARD NO.2, WARANGAL 3. CIT(A)-IV, HYDERABAD. 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP