Shri Narinder Kumar Gupta, Mukerian V. The Asstt. Commissioner of Income-tax, Hoshiarpur

ITA 678/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0725 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMALENDU NATH MISRA
• Assessee Lawyers: J S BHASIN
• Keywords: Depreciation
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.678(ASR)/2014 ASSESSMENT YEAR:2007-08 PAN: AAPPG9499Q SH. NARINDER KUMAR GUPTA, VS. ASSTT. COMMR. OF INCO ME TAX, MUKERIAN. HOSHIARPUR CIRCLE, HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J.S. BHASIN, ADVOCATE RESPONDENT BY: SH. AMALENDU NATH MISRA, DR DATE OF HEARING: 09/05/2016 DATE OF PRONOUNCEMENT: 20/05/2016 ORDER PER A.D. JAIN, JM THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2007-08, AGAINST THE ORDER DATED 28.08.2014, PASSED BY THE LD. CIT(A), JALANDHAR. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL: 1. THAT IN THE GIVEN FACTS OF THE CASE, THE LD. CI T(A) HAS ERRED IN CONFIRMING THE REJECTION OF BOOKS UNDER SECTION 145 (3). 2. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDI NG 50% OF ADHOC ADDITIONS, AGGREGATING TO RS.11,00,000/-, AS MADE BY THE AO (RS.6,00,000/- BY DISALLOWING CONSUMPTION OF MEDICINES BY RS.2,00,000/- AND BY ENHANCING THE PROFESSIONAL RECEIPTS BY RS.4,00,000/- IN OPD ACCOU NT AND RS.5,00,000/- TOWARDS SUPPRESSION OF INDOOR RECEIPT S) WITHOUT PROPER APPRECIATION OF THE FACTS BROUGHT TO THIS NOTICE. 3. THAT DISALLOWANCE OF RS.2,00,000/- OUT OF MEDICI NE PURCHASED WAS WRONGLY MADE BY ASSUMING IT TO BE 58. 78% OF THE OPD RECEIPTS, WHEN PART OF IT WAS ALSO CONSUMED FOR 2 INDOOR PATIENTS. THE CLARIFICATION GIVEN TO CIT(A) ON THIS ISSUE, HAS BEEN WRONGLY IGNORED BY HIM. 4. THAT IN THE ALTERNATIVE, AND BY ANY RECKONING, T HE DISALLOWANCES MADE BY THE AO AND CONFIRMED BY THE L D. CIT(A) TO THE EXTENT OF 50% THEREOF, ARE HIGHLY EXC ESSIVE. 5. THAT FURTHER ADHOC DISALLOWANCES OF RS.106,800/- OUT OF EXPENSES FOR THE ALLEGED PERSONAL USER OF CAR, DEPR ECIATION, FUEL, TELEPHONE, REPAIR, LAB MAINTENANCE, PRINTING AND MISC. EXPENSES ETC. WERE UNCALLED FOR, MORESO, WHEN THE I NCOME WAS ESTIMATE AFTER REJECTION OF BOOKS U/S 145(3). E VEN OTHERWISE, THE TOTAL DISALLOWANCE, MADE BY AO AND C ONFIRMED BY CIT(A), IS HIGHLY EXCESSIVE. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOCTOR BY PROFESSION AND DERIVES INCOME FROM THE RUNNING OF A HOSPITAL U NDER THE NAME AND STYLE OF M/S. NARINDRA HOSPITAL, AS A PROPRIETOR, H AS FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION AT AN INCO ME OF RS.13,84,370/- ON 22.10.2007. THE AO NOTICED THAT THE ASSESSEE WAS ALSO CHARGING COST OF MEDICINES FROM OPD PATIENTS ALONGWITH CONSULTATI ON CHARGES FOR TREATMENT. IT WAS ALSO NOTICED BY THE AO THAT THE D ETAILS OF MEDICINES GIVEN TO PATIENTS WERE NOT VERIFIABLE FROM THE OPD RECORDS MAINTAINED BY THE ASSESSEE. THE AO ALSO NOTED THAT THE ASSESSEE HAD NOT MAINTAINED DAY TO DAY RECORDS WITH REGARD TO CONSUMPTION OF ME DICINES; THAT THE ASSESSEE HAD NOT MAINTAINED SEPARATE DETAILS WITH R EGARD TO ROOM RENT CHARGES, SURGEON CHARGES, OPERATION THEATER CHARGE S, NURSING CHARGES ETC., IN RESPECT OF INDOOR PATIENTS; THAT THE ASSES SEE HAD CHARGED LESS AMOUNT FROM INDOOR PATIENTS THAN THE SANJEEVANI PAT IENTS; AND THAT THE COST OF MEDICINES GIVEN TO THE PATIENTS IN THE OPI NION OF THE AO WAS ALSO DISPROPORTIONATE TO THE TOTAL RECEIPTS SHOWN BY THE ASSESSEE. IN VIEW OF 3 THESE DISCREPANCIES, THE AO REJECTED THE BOOKS OF A CCOUNT OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND MADE THE FOLLOWING ADDITIONS TO THE RETURNED INCOME OF THE A SSESSEE: I) ADDITION ON ACCOUNT OF DISALLOWANCE OUT OF MEDICINE EXPENSES AND ON ACCOUNT OF ALLEGED SUPPRESSION OF PROFESSIONAL RECEIPTS. RS.6 ,00,000/- II) ADDITION ON ACCOUNT OF SUPPRESSION OF RECEIPTS FROM INDOOR PATIENTS AS COMPARED TO SANJEEVANI PATIENTS. RS.5,00,000/- III) ADDITION ON ACCOUNT OF DISALLOWANCE OUT OF FUEL EXPENSES, CAR DEPRECIATION TELEPHONE EXPENSES, REPAIR EXPENSES, LAB. MAINTENANCE EXPENSES, PRINTING AND STATIONERY EXPENSES AND MISC. EXPENSES RS.1,06,8 00/- 3. THE LD. CIT(A) REDUCED THE ADDITION OF RS.11,00, 000/- TO RS.5.50 LAKHS. THE ADDITION OF RS.1,06,800/- WAS UPHELD. 4. BY WAY OF GROUND NOS. 2 TO 4, THE ASSESSEE HAS C HALLENGED THE LD. CIT(A)S ACTION OF SUSTAINING THE ADDITION MADE BY THE AO AT RS.11 LAKHS TO THE EXTENT OF RS.5.50 LAKHS. 5. THE FIRST COMPONENT OF THE ADDITION OF RS.11 LAK HS IS THE ADDITION OF RS. 6 LAKHS, I.E., DISALLOWANCE OF RS.2 LAKHS OU T OF MEDICINE EXPENSES AND SUPPRESSION OF PROFESSIONAL RECEIPTS TO THE EXT ENT OF RS.4 LAKHS. THE AO HELD THAT, WHEREAS THE COMBINED RECEIPTS OF DR. N.K. GUPTA AND DR. (MRS.) NARINDER KUMARI, BY BOTH OF WHOM, OPD WAS DO NE, AMOUNTED TO RS.40,00,116/-, THE CONSUMPTION OF MEDICINES ON THE OPD WAS OF RS.23,51,438/- WHICH WAS AT 58.78% OF THE SAID RECE IPTS WAS NOT ONLY TOO HIGH, BUT WAS ALSO WITHOUT EVIDENCE TO CO-RELAT E FROM THE REGULAR 4 OPD REGISTERS SHOWING PRESCRIPTION AND MEDICINES DI SPENSED TO THE PATIENTS AND AMOUNT CHARGED. ON THIS, THE OPD REC EIPTS WERE CONSIDERED AS TOO LOW. IT WAS ON THIS BASIS, THAT I N THE ASSESSMENT ORDER, THE CLAIM OF MEDICINES WAS DISALLOWED TO THE EXTENT OF RS.2 LAKHS AND THE OPD RECEIPTS WERE ENHANCED BY RS.4 LAKHS. 6. BEFORE THE LD. CIT(A), THE ASSESSEE MAINTAINED THAT: THE AMOUNT CHARGED FOR MEDICINES WAS NOT BIFURCATE D BUT INCLUDED IN OPD CHARGES, RECEIVED FROM THE RESPECTI VE PATIENTS. THE GROSS RECEIPTS UNDER THE HEAD OPD CHARGES, WER E THUS CREDITED TO P&L ACCOUNT, AND THE COST OF MEDICINES, NET OF STOCK LEFT AT YEAR END, (COPY OF PURCHASE A/C AND INVENTORY OF MEDICINES ENCLOSED AT PAGES 14-19 & 10-11) WAS DEBITED TO P & L A/C. OBVIOUSLY WHEN THE FACTUM OF PURCHASE OF MEDICINES AND DISPENSING OF THE SAME TO OPD PATIENTS IS NOT IN DI SPUTE, THE ADHOC DISALLOWANCE OF RS.2,00,000/- BY THE AO FOR T HE ALLEGED EXPENSE CLAIMED, IS JUST SPECULATIVE WITH NOTHING CREDIBLE BROUGHT ON RECORD, EITHER BY EXAMINING ANY OF THE PATIENTS OR BY DOUBTING ANY OF THE PURCHASE BILLS OF MEDICINES, TO EMBOLDEN THE SPECIFIC DISALLOWANCE OF RS.2,00,000/- MADE. SUCH ADHOC DISA LLOWANCE, SANS ANY COGENT MATERIAL ON RECORD, TO SAY THE LEAS T, BY ITS VERY NATURE, IS WHOLLY UNFOUNDED AND ARBITRARY AND HENCE , NOT SUSTAINABLE. 7. THIS IS ALSO THE STAND TAKEN BEFORE US ON BEHALF OF THE ASSESSEE. 8. APROPOS THE SECOND COMPONENT OF THE ADDITION OF RS.11,00,000/-, I.E., THE ADDITION OF RS.5,00,000/- ON ACCOUNT OF S UPPRESSION OF RECEIPTS FROM INDOOR PATIENTS, AS COMPARED TO THE RECEIPTS F ROM SANJEEVANI PATIENTS, THE AO OBSERVED THAT: THE ASSESSEES INDOOR RECEIPTS ALSO SHOW A VAST VA RIATION FOR TWO CLASS OF PATIENTS I.E. GENERAL PATIENTS AND PATIENT S COVERED UNDER SANJIVANI SCHEME, INSPITE OF GIVING ALMOST SIMILAR TREATMENT AND FACILITIES, ASSESSEE HAS CLAIMED THAT IT HAS KEPT C HARGES FOR NON SANJIVANI PATIENTS AT LOWER SIDE IN VIEW OF COMPETI TION AND TO MAKE THE HOSPITAL FAMOUS IS NOT BORNE OUT OF THE FACTS A ND 5 CIRCUMSTANCES AND EVIDENCES PRODUCED DURING THE ASS ESSMENT PROCEEDINGS. THERE WAS NO BIFURCATION GIVEN FOR NUR SING CHARGES. O.T. CHARGES: SURGEON FEE, ROOM RENT, MEDICINE, ETC . AND FOR THIS REASON THE BOOKS OF ACCOUNTS ARE CONSIDERED TOTALLY UNRELIABLE, INCOMPLETE AND INCORRECT AND THUS REJECTED U/S 145( 3) OF I.T. ACT ON THIS GROUND AS WELL. IT IS WORTH MENTIONING THA T SH. SHAM LAI, ACCOUNTANT HAS ADMITTED DURING THE COURSE OF ASSESS MENT PROCEEDINGS THAT BOOKS OF ACCOUNT ARE WRITTEN BY TH E ASSESSEE HIMSELF, WHO OTHERWISE IS A VERY BUSY DOCTOR. THE R EASON IS OBVIOUS THAT ASSESSEE WANT TO KEEP CONTROL OVER THE ACCOUNTING MANIPULATIONS TO BE DONE AT HIS END. SO IT IS INFER RED ON THE BASIS OF DOCUMENTARY EVIDENCES THAT INDOOR RECEIPTS ARE S UPPRESSED AND THE ROOM RENT IS NOT SHOWN ANY WHERE THAT IS WHY IT IS MENTIONED ON THE BACKSIDE OF THE RECEIPT SEPARATELY. SUPPOSED LY, IT IS CASE OF LUMPSUM PACKAGE; THERE WAS NO NEED TO MENTION THE R OOM RENT ON BACKSIDE OF RECEIPT. OBVIOUSLY, THE PATIENT IS CHAR GED SEPARATELY OVER AND ABOVE THE AMOUNTS SHOWN IN THE RECEIPT. MO REOVER, THERE IS VAST DIFFERENCE AS COMPARED TO RECEIPTS FROM SAN JEEVANI PATIENTS. LOOKING INTO THE TOTALITY OF THESE FACTS AND CIRCUM STANCES, IT IS CONSIDERED APPROPRIATE TO MAKE AN ADDITION OF RS.5 ,00,000/- ON THIS ACCOUNT. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE BEING INITIATED SEPARATELY. ADDITION RS. 5,00,000/- 9. THE STAND OF THE ASSESSEE BEFORE THE AO WAS: SANJEEVANI SCHEME IS SPONSORED BY THE GOVT. AND TH IS SCHEME WAS STARTED W.E.F. APRIL, 2006 ONWARDS. WHEN THE SCHEME WAS LAUNCHED, OURS WAS NOT KNOW AS A SURGICAL UNIT AS I T WAS IN THE BUDDING SI AGE WITH THE JOINING OF DR. RAJAT GUPTA, MBBS,MS,MCH AND AFTER GREAT EFFORTS OUR HOSPITAL GOT THE APPROV AL FOR THE SCHEME, THE SCHEME WAS TERMINATED AFTER A YEAR, THE SCHEME WAS A BLIND ENDED SCHEME TO WOO THE AGRICULTURIST, IT HAD A LI FE SPAN OF ONE YEAR ONLY, KEEPING IN VIEW, THE COMPETITIVENESS IN THE MARKET IN AND AROUND MUKERIAN AREA THE CHARGES DIFFERED WITH THAT OF GENERAL CATEGORY OF PATIENTS, AS I HAD TO MAKE SURGICAL UNI T A PERMANENT VENTURE. TO MAKE NAME AND FAME, I HAD TO FIX THE RA TES OF THE OPERATIONS LOW. FURTHER THE CHARGES OF THE SANJEEVA NI SCHEME ARE HIGHER BECAUSE IT INCLUDES ANESTHETIST FEE, INVESTI GATIONS FEE, NURSING CHARGES, DISPOSABLES, ROOM CHARGES ETC., TH E GENERAL CATEGORY FEES ONLY INCLUDE SURGERY, NURSING AND ROO M RENT. THE DETAILS OF THE SANJEEVANI SCHEME ARE DIFFERENT. THE RE IS UNIFORMITY IN THE CHARGES. AND THAT: THE SANJEEVANI IS A SCHEME OF THE GOVT; IN THIS SC HEME ANY TYPE OF SURGICAL/INDOOR PATIENT HAS TO GET HIMSELF REGISTER ED WITH A FEE OF 6 RS.400/- WITH ICICI BANK, ONLY THEN THE PATIENT UND ERGOES HIS TREATMENT. UNDER THIS SCHEME THE PATIENT GETS AN IN SURANCE COVER OF RS.2,00,000/- GOVT. GIVES THE PACKAGE IN ACCORDA NCE WITH THE HOSPITAL OURS IS B-CATEGORY HOSPITAL AND THE PAYMEN TS ARE DIRECTLY RECEIVED VIDE CHEQUES AND ACCORDING TO THE SCHEME THE BIFURCATION OF THE CHARGES ARE MADE, THEREFORE, THERE IS A DIFF ERENCE IN THE ROOM RENT. 10. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED T HAT: LIKEWISE THE OTHER ADDITION OF RS.5,00,000/- FOR T HE ALLEGED SUPPRESSION OF INDOOR RECEIPTS, WHEN COMPARED WITH THE RECEIPTS SHOWN FROM SANJEEVANI PATIENTS, IS AGAIN A MOST WHI MSICAL ACT ON THE PART OF THE AO. THE EXPLANATION OFFERED ABOVE, WHEN CONSIDERED IN CORRECT PERSPECTIVE, WOULD NOT SUBSCRIBE THE STA NDPOINT OF THE AO. FURTHERMORE, NOT EVEN A SINGLE INSTANCE ON REC ORD HAS BEEN PIN POINTED INDICATING SUPPRESSION IN CHARGING OF P ROFESSIONAL FEE. RATHER AS DISCERNIBLE FROM THE ORDER ITSELF, THERE IS NO SPECIFIC DISCUSSION AS TO HOW THE AO REACHED THIS CONCLUSION THAT THERE WAS SUPPRESSION IN INDOOR RECEIPTS WHICH COULD BE PLUGGED BY MAKING AN ADDITION OF RS.4,00,000/- ONLY, AND HOW T HIS AMOUNT IN ITSELF WAS REASONABLE AND NOT HIGHER OR LOW. BY ANY RECKONING, THE SAID ADDITION IS ONLY AN ACT OF MOST ARBITRARY AND HIGHHANDED APPROACH OF THE AO DEVOID OF ANY JUSTIFICATION AND THEREFORE, DESERVES NOT T BE SUSTAINED AT ALL. 11. THE SAME STANCE HAS BEEN MAINTAINED NOW ALSO. 12. THE LD. CIT(A) WHILE SUSTAINING THE ADDITION TO THE EXTENT OF 50%, HELD AS FOLLOWS: 8.4. I HAVE CONSIDERED THE OBSERVATIONS OF THE ASS ESSING OFFICER AS MADE BY HIM IN THE ASSESSMENT ORDER AS WELL AS I N THE REMAND REPORT. I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSI ONS FILED BY THE ASSESSEE VIDE LETTER DATED 20.05.2013 AS WELL AS HI S COUNTER COMMENTS ON THE REPORT OF THE AO IN CONNECTION WITH THE ISSUE UNDER REFERENCE. I HAVE FURTHER CONSIDERED THE JUDI CIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE AND OTHE R MATERIAL BROUGHT ON RECORD. ON CAREFULLY CONSIDERATION OF TH E RIVAL CONTENTIONS, IT HAS BEEN NOTICED THAT THE AO HAS MA DE THE IMPUGNED ADDITIONS AFTER REJECTING THE BOOKS OF ACC OUNT OF THE ASSESSEE ON WELL FOUNDED REASONS. THE ACTION OF THE A.O. IN REJECTING THE BOOKS OF ACCOUNT HAS ALSO BEEN UPHELD BY ME. IT MEANS, ADDITIONS MADE BY THE AO ARE JUSTIFIED TO SO ME EXTENT. HOWEVER, LOOKING TO THE TOTALITY OF FACTS AND SUBM ISSIONS MADE BY 7 THE ASSESSEE, I FEEL THAT THE DISALLOWANCE/ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OUT OF MEDICINE EXPENSES AND ON ACCOUNT OF SUPPRESSION OF PROFESSIONAL RECEIPTS FRO M INDOOR/INDOOR PATIENTS IS LITTLE BIT ON THE HIGHER SIDE. IN MY OP INION, IT WILL BE FAIR AND REASONABLE IF A LUMP SUM ADDITION OF RS.5,50,00 0/- IS MADE TO THE RETURNED INCOME OF THE ASSESSEE. I ALSO DO NOT FIND ANY FAULT WITH THE ASSESSING OFFICER IN MAKING MULTIPLE ADDIT IONS INSTEAD OF MAKING A LUMPSUM ADDITION. 8.5. IN VIEW OF THE ABOVE STATED FACTS AND IN THE C IRCUMSTANCES OF THE CASE, THE ADDITION OF RS.11,00,000/- (RS.6,00,0 00/- + RS.5,00,000/-) MADE BY THE ASSESSING OFFICER WHICH HAS BEEN CHALLENGED VIDE GROUNDS NO. 4 AND 5 OF APPEAL IS RE DUCED TO RS.5,50,000/- AND THE BALANCE ADDITION IS DIRECTED TO BE DELETED. IN THE RESULT, GROUNDS NO. 4 AND 5 OF APPEAL TAKEN BY THE ASSESSEE ARE PARTLY ALLOWED AND GROUND NO. 7 OF APPEAL TAKEN BY THE ASSESSEE IS REJECTED. 13. AS OPPOSED TO THE ASSESSEES AFORESAID STAND, T HE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO, WHILE MAK ING THE ADDITION OF RS.6,00,000/- MERELY OBSERVED THAT: LOOKING INTO THE MAGNITUDE OF WORK AND REPUTATION OF THE HOSPITAL, THE CLAIM OF MEDICINES VIS--VIS THE PROF ESSIONAL RECEIPTS FROM OPD IS CONSIDERED TO BE QUITE HIGH AND OPD REC EIPTS SHOWN ARE CONSIDERED AT LOWER SIDE. AS SUCH, ON ONE SIDE THE CLAIM OF MEDICINES IS DISALLOWED TO THE EXTENT OF RS.2,00,00 0/-, THE OPD RECEIPTS ARE ENHANCED BY A FIGURE OF RS.4,00,000/-. 15. THE ASSESSEES EXPLANATION TO THE FOLLOWING EFF ECT WAS NOT CONSIDERED BY THE AO: THE AMOUNT CHARGED FOR MEDICINES WAS NOT BIFURCA TED BUT INCLUDED IN OPD CHARGES, RECEIVED FROM THE RESPECTI VE PATIENTS. THE GROSS RECEIPTS UNDER THE HEAD OPD CHARGES, WER E THUS CREDITED TO P&L ACCOUNT, AND THE COST OF MEDICINES, NET OF STOCK LEFT AT YEAR END, (COPY OF PURCHASE A/C AND INVENTORY OF MEDICINES ENCLOSED AT PAGES 14-19 & 10-11) WAS DEBITED TO P & L A/C. OBVIOUSLY WHEN THE FACTUM OF PURCHASE OF MEDICINES AND DISPENSING OF THE SAME TO OPD PATIENTS IS NOT IN DI SPUTE, THE 8 ADHOC DISALLOWANCE OF RS.2,00,000/- BY THE AO FOR T HE ALLEGED EXPENSE CLAIMED, IS JUST SPECULATIVE WITH NOTHING CREDIBLE BROUGHT ON RECORD, EITHER BY EXAMINING ANY OF THE PATIENTS OR BY DOUBTING ANY OF THE PURCHASE BILLS OF MEDICINES, TO EMBOLDEN THE SPECIFIC DISALLOWANCE OF RS.2,00,000/- MADE. SUCH ADHOC DISA LLOWANCE, SANS ANY COGENT MATERIAL ON RECORD, TO SAY THE LEAS T, BY ITS VERY NATURE, IS WHOLLY UNFOUNDED AND ARBITRARY AND HENCE , NOT SUSTAINABLE. 16. LIKEWISE, THE LD. CIT(A) ALSO DID NOT TAKE INTO ACCOUNT THE ASSESSEES EXPLANATION. WITH REGARD TO ADDITION OF RS.5,00,000/- ALSO, THE STAND TAKEN BY THE ASSESSEE WAS NOT DEALT WITH BY E ITHER OF THE AUTHORITIES BELOW. 17. NOW, IT IS TRITE THAT THE WHILE ESTIMATING INCO ME U/S 144, IT IS IMPLICIT IN THE SECTION THAT THE AO SHOULD GIVE HIS REASONS FOR ARRIVING AT A PARTICULAR FIGURE OF INCOME SO THAT THE ASSESSEE MAY BE ENABLED TO APPRECIATE THE MENTAL PROCESS LEADING TO THE ASSES SMENT AND THE FIGURE ASSESSED. SUCH ORDER BEING SUBJECT TO APPEAL NEED A LSO BE A SPEAKING ORDER. IT WAS SO HELD IN CIT VS. RANICHERRO TEA CO. LTD., (1994) 207 ITR 979, 983 (CAL.). 18. THIS HAS NOT BEEN DONE BY EITHER OF THE TAXING AUTHORITIES. THEREFORE, THE MATTER IS REMITTED TO THE FILE OF TH E AO TO DECIDE IT AFRESH BY PASSING A REASONED ORDER ON CONSIDERING THE ASSE SSEES AFORESAID STAND QUA BOTH THE ADDITIONS. THE AO SHALL PROVIDE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE, NOT DOUB T, SHALL CO-OPERATE IN THE FRESH PROCEEDINGS BEFORE THE AO. GROUND NOS. 1 & 4 ARE DISPOSED OF WITH THIS DIRECTION. 9 19. COMING TO GROUND NO.5, THE ASSESSEE MADE THE FO LLOWING DISALLOWANCES CONTENDING THAT ALL THE EXPENSES WERE NOT SUPPORTED BY REGULAR BILLS AND INTERNAL VOUCHERS: OUT OF FUEL EXPENSES OF RS.67.018/- CAR DEPRECIATION OF RS.83,231/- AND TELEPHONE EXPENSES RS.49,703/- 40,000/- OUT OF REPAIR EXPENSES OF RS.1,84,792/- LAB. MAINTENANCE EXPENSESRS.1,75,950 PRINTING AND STATIONERY OF RS.60,885/- MISC. EXPENSES OF RS.1,25,720/- 66,800/- RS.1,06,800/- 20. THE LD. CIT(A) CONFIRMED THE ADDITION BY HOLDIN G AS FOLLOWS: I AM OF THE OPINION THAT THE PERSONAL USE OF CAR A ND TELEPHONE BY THE ASSESSEE AND HIS FAMILY MEMBERS CA NNOT BE RULED OUT IN THE ABSENCE OF DAY TO DAY RELEVANT DETAILS W ITH REGARD TO USE OF TELEPHONE AND CAR. I AM ALSO OF THE OPINION THAT THERE IS VERY POSSIBILITY THAT THE PERSON EXPENSES OF THE ASSESSE E AND HIS FAMILY MEMBERS ARE INCLUDED IN THE OTHER EXPENSES OUT OF W HICH DISALLOWANCE HAS BEEN MADE BY THE A.. MOREOVER, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ALSO APPEARS TO BE VE RY REASONABLE. 21. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT AD-HOC DISALLOWANCES OUT OF EXPENSES FOR THE ALLEGED PERSO NAL USER OF CAR, DEPRECIATION, FUEL, TELEPHONE, REPAIR, LAB. MAINTEN ANCE, PRINTING AND MISC. EXPENSES ETC. WERE UNCALLED FOR, MORE SO, WHE N THE INCOME WAS ESTIMATED AFTER REJECTION OF BOOKS U/S 145(3); AND THAT EVEN OTHERWISE, THE TOTAL DISALLOWANCE, MADE BY THE AO AND CONFIRME D BY THE CIT(A), IS HIGHLY EXCESSIVE. 10 22. IT IS TRITE THAT, AS CONTENDED BY THE ASSESSEE, ONCE THE BOOKS OF ACCOUNT ARE REJECTED, THE INCOME HAS TO BE ESTIMATE D ON THE BASIS OF THE MATERIAL AVAILABLE. ACCORDINGLY, THIS ADDITION IS D ELETED. 23. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/05/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 20/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. NARINDER KUMAR GUPTA, PROP. NARIND ER HOSPITAL, MUKERIAN. 2. THE ACIT, HOSHIARPUR CIRCLE, HOSHIARPUR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER