Dr. B. Narsaiah, Hyderabad V. DCIT, Central Circle-2, Hyderabad

ITA 814/HYD/2014

• Counselvise Citation: 81422514 RSA 2014
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 24-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2014
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Gift; Depreciation; Search and seizure; Salary income; Document seized; Documents seized; Reassessment proceedings
• Section: 143(3); 153A; 37(1); 32; 147; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 812/HYD/2014 2004-05 DR. B. NARSAIAH, KHAIRATABAD, HYDERABAD [PAN: ABXPB9225A] THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, HYDERABAD 813/HYD/2014 2005-06 814/HYD/2014 2006-07 815/HYD/2014 2007-08 816/HYD/2014 2008-09 817/HYD/2014 2009-10 818/HYD/2014 2010-11 FOR ASSESSEE : SHRI P. MURALI MOHAN RAO, AR FOR REVENUE : SHRI RAJAT MITRA, DR DATE OF HEARING : 25-06-2015 DATE OF PRONOUNCEMENT : 02-09-2015 O R D E R PER BENCH : THESE APPEALS ARE AGAINST COMMON ORDER OF COMMISSI ONER OF INCOME TAX (APPEALS)-I, HYDERABAD FOR AYS. 2004-05 TO 2008-09 DATED 07-02-2014 AND SEPARATE ORDER FOR AYS. 2009-10 & 20 10-11 DT. 03-02- 2014. ASSESSEE IS AGGRIEVED ON VARIOUS AMOUNTS CONF IRMED BY THE LD. CIT(A). REVENUE, HOWEVER, HAS NOT COME IN APPEAL O N THE RELIEF GRANTED BY THE CIT(A). WE HAVE HEARD LD COUNSEL AND LD.DR O VER A PERIOD OF TIME AND ALSO SOUGHT CLARIFICATIONS. THESE ARE CONS IDERED ALONG WITH THE PAPER BOOK PLACED ON RECORD AND WRITTEN SUBMISSIONS . I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 2 -: 2. BRIEFLY STATED, THERE WAS A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE INCOME TAX ACT [ACT] AT M/S. ADITYA HOS PITAL, HYDERABAD AND ALSO RESIDENTIAL PREMISES OF ASSESSEE ON 25-03-2010 . ASSESSEE IS A VISITING CONSULTANT GENERAL SURGEON TO M/S. ADITYA HOSPITAL. FOR THE IMPUGNED FINANCIAL YEARS RELEVANT FOR AYS. 2009-10 AND 2010-11, THE SEARCH YIELDED SOME INCRIMINATING MATERIAL IN THE F ORM OF INFORMATION IN HMS PACKAGE MAINTAINED BY M/S. ADITYA HOSPITAL, HYD ERABAD, WHEREIN THE ENTRIES DIFFERED FROM ANOTHER TALLY PACKAGE MAI NTAINED BY THEM. IN THE COURSE OF SEARCH ITSELF, ASSESSEE WAS ASKED TO EXPLAIN WHETHER THE ENTRIES IN THE HMS PACKAGE PERTAIN TO HIM? ASSESSE E REPLIED THAT HE WAS NOT AWARE ABOUT THE HMS PACKAGE BEING MAINTAINE D BY THE SAID FIRM AND STATED THAT HE HAS RECEIVED MONEYS BY WAY OF CHEQUE ONLY AND HE REQUIRES TIME TO EXAMINE OTHER DOCUMENTS. CONSE QUENT TO SEARCH, PROCEEDINGS U/S. 153A WERE INITIATED FOR THE IMPUGN ED ASSESSMENT YEARS AND APART FROM CERTAIN DISALLOWANCES AND ADDITIONS U/S. 68 IN OTHER YEARS, MAJOR ADDITIONS WERE MADE IN AY. 2009-10 AND 2010-11 ON THE BASIS OF THE SAID HMS PACKAGE, WHEREIN ASSESSING OF FICER (AO) WAS OF THE OPINION THAT ASSESSEE WAS PAID SUBSTANTIAL AMOUNTS WHICH WERE NOT ACCOUNTED BY ASSESSEE. AO, AFTER GIVING DUE OPPORT UNITY TO ASSESSEE, MADE VARIOUS DISALLOWANCES IN OTHER YEARS FROM 2004 -05 TO 2008-09 AND MAJOR ADDITIONS IN AY. 2009-10 AND 2010-11. IN AY. 2009-10, AN ADDITION OF RS. 96,73,154/- WAS MADE. IT WAS THE O PINION OF THE AO THAT ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 1,15,86,331/ - AS PER THE HMS PACKAGE WHEREAS ASSESSEE HAS ACCOUNTED PROFESSIONAL RECEIPTS IN THE RETURN OF INCOME AT RS. 19,13,177/-. THE DIFFERENC E WAS ADDED AS INCOME IN THIS YEAR. LIKE-WISE, IN AY. 2010-11, HM S PACKAGE INDICATED PAYMENT OF RS. 1,74,01,698/-, WHEREAS ASSESSEE ADMI TTED RS. 42,21,831/-. THE DIFFERENCE OF RS. 1,31,79,867/- W AS BROUGHT TO TAX. IN OTHER YEARS, THERE WERE DISALLOWANCES OF SALARIES, VEHICLES MAINTENANCE ETC., MADE BY THE AO WHICH ARE PARTLY CONFIRMED BY THE LD. CIT(A). I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 3 -: APART FROM THAT, CERTAIN UN-SECURED LOANS OBTAINED BY ASSESSEE WERE ALSO BROUGHT TO TAX AS UN-EXPLAINED CREDITS IN AY.2 004-05 WHICH ARE PARTLY CONFIRMED BY THE CIT(A). IN ALL THE ABOVE I SSUES, ASSESSEE IS AGGRIEVED. 3. ASSESSEE HAS RAISED VARIOUS GROUNDS ON THE ADDI TIONS MADE IN THE ORDER ALONG WITH ADDITIONAL GROUNDS ON THE S AME ADDITIONS BUT DIFFERENTLY CONTESTED. THERE ARE CERTAIN GROUNDS WH ICH ARE PERTAINING TO JURISDICTION OF COMPLETING ASSESSMENTS U/S 153A. G ROUND NO. 2 IN ALL THE YEARS IS AS UNDER: AO ERRED IN MAKING THE VARIOUS ADDITIONS, WHEN NO I NCRIMINATING MATERIAL OR DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH AND ASSESSMENT ORDER BEING PASSED U/S. 153A OF THE ACT AND MORE SO, WHEN ASSESSMENTS WERE NOT PENDING AS ON THE DATE OF SEAR CH . APART FROM THE ABOVE COMMON GROUND, ASSESSE E HAS RAISED ADDITIONAL GROUNDS AND THE MATERIAL GROUND OUT OF T HE ADDITIONAL GROUNDS 9 IS AS UNDER: LD. CIT(A) OUGHT TO HAVE DELETED ALL THE ADDITIONS WHICH ARE GENERAL IN NATURE IN THE ASSESSMENT ORDER U/S. 143(3) R.W.S . 153A MADE IN THE ABSENCE OF ANY SEIZED OR INCRIMINATING MATERIAL OR DOCUMENTS FOUND IN THE SEARCH CONDUCTED U/S. 132 OF THE ACT ON 25-03-2010 AND WHEN THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS NOT ABATED AS ON THE DATE OF SEARCH. 4. THUS, AS CAN BE SEEN FROM THE ABOVE TWO GROUNDS , THE ADDITIONAL GROUND IS NOT MATERIALLY DIFFERENT FROM THE ORIGINAL GROUND RAISED. THE ISSUE WHICH ASSESSEE IS CONTESTING IS THAT AO DID NOT GET I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 4 -: JURISDICTION TO MAKE VARIOUS ADDITIONS IN THE ABSEN CE OF ANY SEIZED OR INCRIMINATING MATERIAL OR DOCUMENTS FOUND IN THE SE ARCH. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PER USING THE DOCUMENTS ON RECORD, IT IS TO BE NOTED THAT THE SEA RCH WAS CONDUCTED IN THE PREMISES OF ASSESSEE AND CERTAIN INCRIMINATING MATERIALS AS WELL AS CASH AND JEWELLERY WERE SEIZED. CONSEQUENTLY, PROC EEDINGS U/S. 153A ARE MANDATORY AND ACCORDINGLY, NOTICES WERE ISSUED FOR ALL THE IMPUGNED ASSESSMENT YEARS. THE PROVISIONS OF SECTION 153A A RE AS UNDER: 153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SE CTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER T HE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOM E IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROV ISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING T O ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS REFERRED TO IN THIS SUB-SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE : PROVIDED ALSO THAT THE CENTRAL GOVERNMENT MAY BY RU LES 8 MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE (EXCEPT IN CASES WHERE ANY ASSESSMENT OR I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 5 -: REASSESSMENT HAS ABATED UNDER THE SECOND PROVISO), SPECIFY THE CLASS OR CLASSES OF CASES IN WHICH THE ASSESSING OFFICER SHALL NOT BE R EQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX A SSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASS ESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN ANNULLED IN APPEAL O R ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SEC TION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSME NT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB-SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE 9 [PRINCIPAL COMMISSIONER OR COMMISSIONER: PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFE CT, IF SUCH ORDER OF ANNULMENT IS SET ASIDE. EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY DECLARED THAT, (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SE CTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASS ESSMENT MADE UNDER THIS SECTION; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RES PECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR.. 6. THUS, AS PER THE PROVISIONS, ISSUANCE OF NOTICE S FOR SIX ASSESSMENT YEARS AND COMPLETION OF ASSESSMENTS ARE MANDATORY. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RAJKUMA R ARORA [367 ITR 517], HAS HELD THAT NO INCRIMINATING MATERIAL WAS N ECESSARY FOR COMPLETING THE ASSESSMENTS. IT WAS HELD THAT : SEARCH AND SEIZUREASSESSMENT IN CASE OF SEARCHUN DISCLOSED INCOMEADDITIONVALIDITYASSESSEE FILED REGULAR RET URN OF INCOME SHOWING INCOMEIN REGULAR RETURN OF INCOME, ASSESSEE SHOWED INCOME FROM SALARY DERIVED FROM 'X' COMPANY IN WHICH ASSESSEE HIMSELF SUBMITTED TO BE DIRECTORRETURN OF INCOME WAS PROCESSED U/S. 143(1) AO ISSUED NOTICE U/S. 153ADURING COURSE OF ASSESSMENT PROCEEDINGS AO FOU ND THAT GIFT RECEIVED BY MINOR CHILDREN FROM VARIOUS PERSONS WAS SHAM TRA NSACTION AND THAT ASSESSEE FAILED TO PROVE GENUINENESS OF THOSE GIFTS AO MADE ADDITION WHILE COMPLETING ASSESSMENT U/S. 153ACIT(A) ALLOWED APPE AL OF ASSESSEE ON GROUND THAT TRANSACTION OF GIFT HAD TAKEN PLACE THR OUGH BANKING CHANNEL I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 6 -: WHERE DATE, MODE OF PAYMENT AND OTHER DETAILS WAS D ULY RECORDEDITAT HELD THAT SINCE NO INCRIMINATING MATERIALS IN RELAT ION TO GIFT DEEDS WERE FOUND IN SEARCH, NO ADDITION ON SUCH GIFT COULD BE MADE I N ASSESSMENT PROCEEDINGS U/S. 153AHELD, U/S 153A AO HAD BEEN GIVEN POWER TO ASSESS OR REASSESS TOTAL INCOME OF ASSESSMENT YEARS IN QUESTION IN SEP ARATE ASSESSMENT ORDERSCONSEQUENTLY, EVEN THOUGH ASSESSMENT ORDER H AD BEEN PASSED U/S 143(1) (A) OR U/S 143(3), AO WOULD BE REQUIRED TO R EOPEN THOSE PROCEEDINGS AND REASSESS TOTAL INCOME TAKING NOTICE OF UNDISCLO SED INCOME FOUND DURING SEARCH AND SEIZURE OPERATIONWHERE ASSESSMENT OR RE ASSESSMENT PROCEEDINGS HAD ALREADY BEEN COMPLETED AND ASSESSME NT ORDERS PASSED, THEN AO WOULD BE COMPETENT TO REOPEN ASSESSMENT PRO CEEDING ALREADY MADEREASONS GIVEN BY ITAT THAT NO MATERIAL WAS FOU ND DURING SEARCH COULD NOT BE SUSTAINEDADDITION MADE BY AO FOUND TO BE PROPERREVENUE'S APPEAL ALLOWED. HELD ONLY THE UNDISCLOSED INCOME FOUND DURING THE SEARCH AND SEIZURE OPERATION WERE REQUIRED TO BE ASSESSED AND THE REGU LAR ASSESSMENT PROCEEDINGS WERE PRESERVED. THE INTRODUCTION OF SEC TION 153A OF THE ACT PROVIDES A DEPARTURE FROM THIS PROCEEDING . UNDER SECTION 153A OF THE ACT, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO A SSESS OR REASSESS THE TOTAL INCOME OF THE ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. CONSEQUENTLY, THERE WOULD BE ONLY ONE ASSES SMENT ORDER IN RESPECT OF SIX ASSESSMENT YEARS IN WHICH TOTAL DISCLOSED OR UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. CONSEQUENTLY, EVEN THOUGH AN ASS ESSMENT ORDER HAS BEEN PASSED UNDER SECTION 143(1) (A) OR UNDER SECTION 14 3(3) OF THE ACT, THE ASSESSING OFFICER WOULD BE REQUIRED TO REOPEN THESE PROCEEDINGS AND REASSESS THE TOTAL INCOME TAKING NOTICE OF UNDISCLO SED INCOME EVEN FOUND DURING THE SEARCH AND SEIZURE OPERATION. THE FETTER IMPOSED UPON THE ASSESSING OFFICER UNDER SECTIONS 147 AND 148 OF THE ACT HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE UNDER SECTION 153A OF TH E ACT. 6.1 CONSEQUENTLY, HIGH COURT ARE OF THE OPINION TH AT IN CASES WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS HA VE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED, W HICH WERE SUBSISTING WHEN THE SEARCH WAS MADE, THE ASSESSING OFFICER WOULD BE COMPETENT TO REOPEN THE ASSESSMENT PROCEEDING ALREA DY MADE AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. THE ASS ESSING OFFICER, WHILE EXERCISING THE POWER UNDER SECTION 153A OF THE ACT, WOULD MAKE ASSESSMENT AND COMPUTE THE TOTAL INCOME OF THE ASSE SSEE INCLUDING THE I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 7 -: UNDISCLOSED INCOME, NOTWITHSTANDING THE ASSESSEE HA D FILED THE RETURN BEFORE THE DATE OF SEARCH WHICH STOOD PROCESSED UND ER SECTION 143(1)(A) OF THE ACT. 7. KEEPING THE PRINCIPLES LAID DOWN ON THE SUBJECT AND THE PROVISIONS OF LAW, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN ASSESSEES CONTENTIONS RAISED IN THE ABOVE GROUNDS. ACCORDINGLY, THE GROUNDS ARE REJECTED. APPEALS IN AYS. 2004-05 TO 2008-09: 8. IN ALL THE ABOVE APPEALS, THE ASSESSMENT ORDERS WERE PASSED BY THE AO IN PURSUANCE OF THE NOTICES AND THE RETUR NS OF INCOME ARE FILED IN RESPONSE TO NOTICE U/S. 153A, EVEN THOUGH NO INC RIMINATING MATERIAL WAS FOUND. ASSESSEE HAS FILED RETURNS OF INCOME DE CLARING SAME INCOMES WHICH WERE ORIGINALLY FILED IN RESPECTIVE YEARS. T HE DETAILS OF WHICH ARE AS UNDER: ASST. YEAR DATE OF FILING THE ORIGINAL RETURN INCOME ORIGINALLY RETURNED (RS) AGRICULTURAL INCOME (RS) DATE OF FILING RETURN IN RESPONSE TO NOTICE U/S. 153A INCOMES ASSESSED RS. 2004-05 03-11-04 4,41,770 1,47,910 11-11-10 11,77,770 2005-06 25-10-05 17,47,692 1,28,750 11-11-10 28,98,319 2006-07 31-10-06 22,78,770 80,000 11-11-10 31,91,788 2007-08 02-11-07 19,74,380 2,89,950 11-11-10 29,86,074 2008-09 30-09-08 13,99,560 4,64,425 11-11-10 54,10,223 I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 8 -: 8.1 AO AS BRIEFLY STATED HAS MADE ADDITIONS OF CER TAIN CASH CREDITS AND DISALLOWANCES OF SALARY, DEPRECIATION O N VEHICLES AND MAINTENANCE IN ABOVE ASSESSMENT YEARS. UN-EXPLAINED LOANS: 9. IN AYS. 2004-05 AND 2005-06 AN AMOUNT OF RS. 7 LAKHS LOANS RECEIVED EACH WERE CONSIDERED AS UN-EXPLAINED CASH CREDITS. LD CIT(A) GAVE RELIEF IN AY 2005-06 WHERE AS THE ADDIT ION IN AY 2004-05 WAS CONFIRMED. ASSESSEE IS AGGRIEVED IN AY 2004-05 ONLY. 9.1 THE AO STATED IN HIS ASSESSMENT ORDER THAT ASS ESSEE DR. B. NARSAIAH, HAD RECEIVED LOANS OF AN AMOUNT OF RS. 6, 00,000/- FROM TANDU SRINIVAS AND RS. 1,00,000/- FROM D. VENU MADHAV. I N ASSESSMENT PROCEEDINGS ASSESSEE HAS ASKED TO EXPLAIN ABOUT THE SE LOANS. ASSESSEE EXPLAINED THAT SRI TANDU SRINIVAS IS A CONTRACTOR B Y PROFESSION AND HAS ALREADY FILED HIS RETURN OF INCOME ADMITTING LOAN O F THE SAID SUM TO ASSESSEE. COPY OF THE RETURN FILED BY THE CREDITOR HAS BEEN FURNISHED IN PROOF. IT IS OBSERVED THAT THE CONTRACTOR HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND NOT INFORMED TO THE DEPARTMENT ABOUT THE LOAN AND ALSO NOT EXPLAINED THE MODE OF RECEIPT I.E., WHETHER BY CASH OR THROUGH BANK. STATING SO THE LOAN WAS NOT ACCEPTED BY AO. IN RES PECT OF A LOAN FROM D. VENU MADHAV, AO WAS OF THE OPINION THAT ASSESSEE HA S NOT PROVED THE CREDITWORTHINESS I.E., AS PER THE RETURNS OF INCOME OF MR. VENU MADHAV, THE INCOME RETURNED IS RS. 78,120/- IN AY. 2002-03 AND RS. 49,580/- IN AY. 2003-04. IT IS NOT CLEAR AS TO HOW A PERSON WI TH A MEAGER INCOME OF RS. 1,27,700/- IN TWO YEARS CAN EXTEND A LOAN OF RS . 1,00,000/- WITHOUT INTEREST. HENCE, THE SAME WAS ADDED TO THE INCOME U/S. 68 OF THE ACT. I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 9 -: 9.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, AS SESSEE STATED IN HIS WRITTEN SUBMISSIONS THAT HE HAD RECEIVED A L OAN FROM T. SRINIVAS AND FILED CONFIRMATION LETTER, ACKNOWLEDGMENT OF RE TURN OF INCOME FOR RESPECTIVE ASSESSMENT YEAR TOGETHER WITH STATEMENT OF AFFAIRS AS FILED ALONG WITH THE RETURN OF INCOME WITH THE INCOME TAX DEPARTMENT BY THE LOAN CREDITOR. FURTHER, ASSESSEE STATED THAT THE S AID LOAN CREDITOR HAD FURTHER ADVANCED A SUM OF RS. 5,00,000/- TO HIM IN THE SUBSEQUENT ASSESSMENT YEAR WHICH HAS BEEN ACCEPTED BY THE SAME AO. 9.3 FURTHER, ASSESSEE STATED THAT HE HAD TAKEN A L OAN OF RS. 1,00,000/- FROM D. VENU MADHAV AND SUBMITTED COPIES OF RETURNS OF INCOME OF THE LOAN CREDITOR FOR THE ASSESSMENT YEAR S 2001-02, 2002-03 AND 2003-04 EVIDENCING TAXABLE INCOME OF RS. 76,500 /-, RS. 78,120/- AND RS. 92,910/- (GROSS RS. 1,14,576/-) RESPECTIVEL Y AND ALSO STATED THAT LOAN CREDITOR AND HIS WIFE WERE IN JAMAICA BEFORE R ETURNING TO INDIA. OUT OF HIS SAVINGS FROM JAMAICA, HIS CURRENT INCOME AND FROM REALIZATION OF AMOUNTS, HE HAS ADVANCED RS. 1,00,00 0/- TO ASSESSEE. SINCE, ASSESSEE HAS FURNISHED ALL THE RELEVANT DOCU MENTS, HE PRAYS TO DELETE THE ADDITION MADE BY THE AO. 9.4 LD. CIT(A) CONFIRMED THE ABOVE RS. 7 LAKHS IN AY. 2004-05 AGREEING WITH AOS CONTENTIONS. 10. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PE RUSING THE PAPER BOOK, WE ARE OF THE OPINION THAT LOAN CREDITS FROM TANDU SRINIVAS AND D. VENU MADHAV ARE TO BE ACCEPTED AS GENUINE. IN FACT AS SEEN FROM THE IMPOUNDING ORDERS U/S. 132(3) OF THE ACT ISSUED ON 24-03-2010 TO THE MANAGER SBI, CHIKKADAPALLY BRANCH BY THE DY. DI RECTOR OF INCOME TAX, (INVESTIGATION) PLACED AT PAGE 3 OF THE PAPER BOOK, IT INDICATES THAT TANDU SRINIVAS HAS A BANK ACCOUNT NO.3185 IN THE SA ID BANK AND I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 10 - : PROHIBITORY ORDERS WERE ISSUED FOR ANY LOCKERS AVAI LABLE IN THAT NAME. THIS INDICATE THAT THE SAID TANDU SRINIVAS IS AN EX ISTING PERSON AND IS AVAILABLE IN THE ADDRESS OF ASSESSEE ONLY. THEREFO RE, THE CONTENTIONS OF THE CIT(A) THAT THE SAID PERSON IS HAVING THE SAME ADDRESSES AS THAT OF ASSESSEE WHILE REJECTING ASSESSEE CONTENTIONS CAN N OT BE ACCEPTED. IN FACT THIS SUPPORTS ASSESSEE CONTENTIONS. THEREFORE THE LOAN FROM THE SAID T SRINIVAS HAS TO BE ACCEPTED AS A GENUINE CLAIM CO NSIDERING THAT BANK ACCOUNT OF THE SAID PERSON WERE ALSO AVAILABLE IN T HE SEARCHED PREMISES I.E., RESIDENTS OF ASSESSEE. AS FAR AS THE CREDIT IS CONCERNED, ASSESSEE HAS FILED NECESSARY CONFIRMATIONS, STATEMENT OF RET URN OF INCOME FOR RESPECTIVE ASSESSMENT YEARS TOGETHER WITH STATEMENT OF FACTS. IT IS ALSO A CONTENTION THAT A FURTHER LOAN OF RS. 5 LAKHS ADVAN CED BY THE SAME PERSON IN THE SUBSEQUENT YEAR HAS BEEN ACCEPTED BY THE AO AS GENUINE CREDIT. CONSIDERING THESE FACTS, WE ARE OF THE OPI NION THAT THE CREDIT RECEIVED LONG BACK HAS TO BE ACCEPTED AS GENUINE ON E. LIKE-WISE, IN THE CASE OF D VENUMADHAV ALSO THERE IS NO DISPUTE WITH REFERENCE TO THE IDENTITY OF THE PERSON AND EMPLOYMENT WITH M/S. ADI TYA HOSPITAL. AO CANNOT BASE HIS SATISFACTION WHY ASSESSEE HAS TO BO RROW FROM ONE OF THE EMPLOYEES IN FINANCIAL YEAR 2003-04. AO HAS TO EXA MINE WHETHER THE CREDIT IS GENUINE OR NOT. THE FACT THAT SAID PERSON HAS CONFIRMED THE ADVANCE AND IS A GENUINE PERSON HAS TO BE CONSIDERE D IN VERIFYING THE CREDITWORTHINESS OF THE PERSON. CONSIDERING THE FA CTS OF THE CASE AND AMOUNT INVOLVED, WE ARE OF THE OPINION THAT CREDIT FROM SHRI D. VENU MADHAV ALSO HAS TO BE CONSIDERED AS GENUINE ONE. AO ALSO DID NOT MAKE ANY ENQUIRIES WITH THE SAID PERSONS NOR HAVING ANY INCRIMINATING MATERIAL IN THE COURSE OF SEARCH PROCEEDINGS. IN V IEW OF THIS, AO IS DIRECTED TO DELETE THE ADDITIONS SO MADE. ASSESSEE S GROUNDS ON THIS ISSUE IN AY. 2004-05 ARE ALLOWED. I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 11 - : DISALLOWANCE OF EXPENDITURE: 11. IN THE RETURNS OF INCOME ORIGINALLY FILED, ASS ESSEE HAS CLAIMED VARIOUS EXPENDITURES AGAINST PROFESSIONAL R ECEIPTS. OUT OF THE SAME, AO DISALLOWED SALARY OF RS. 36,000/- IN AY. 2 004-05 RS. 4,50,627/- IN AY. 2005-06 RS. 5,44,430/- IN AY. 200 6-07 AND RS. 5,80,538/- IN AY. 2007-08 AND RS. 6,24,135/- IN AY. 2008-09 BEING 50% OF THE CLAIM. AO STATED THAT IN HIS ASSESSMENT ORDER ASSESSEE DR. B. NARSAIAH PAID SALARIES TO SEVERAL PERSONS IN EAC H YEAR AND THE NAMES OF THE PERSONS ARE CONSTANTLY CHANGING. WHILE EXPLA INING THE REASONABLENESS OF THE EXPENDITURE, IT HAS BEEN CLAI MED THAT ASSESSEE IS A SURGEON AND REQUIRES A TEAM OF DOCTORS TO SUPPORT H IM FOR AFTER CARE IN THE HOSPITALS. AO DID NOT AGREE STATING THAT EVEN IF THE CONTENTION OF ASSESSEE IS ACCEPTED, THE OTHER FACTORS HAVE ALSO T O BE TAKEN INTO CONSIDERATION. THOSE FACTORS ARE THAT ASSESSEE IS R ENDERING HIS SERVICE IN WELL ESTABLISHED CORPORATE HOSPITALS AND ALSO PROVI DES AFTER CARE BY THE HOSPITAL ITSELF. SINCE, THEY ARE CORPORATE HOSPITA LS, THERE WILL BE NO DEARTH OF ASSISTANTS AS CLAIMED BY ASSESSEE. MOST O F THE PAYMENTS MADE BY ASSESSEE ARE IN CASH AND NUMBER OF PERSONS PAID IS MANY. THERE ARE AT LEAST 10 TO 20 NAMES MENTIONED IN THE SALARIES A CCOUNT FURNISHED BY HIM. THIS IS HIGHLY IMPROBABLE, HENCE, KEEPING IN VIEW THE ABOVE FACTORS, 50% OF THE SALARIES PAID BY ASSESSEE ARE D ISALLOWED I.E. 50% OF RS. 72,000/- = RS.36,000/- FOR AY. 2004-05; 50% OF RS.9,01,254/- = RS. 4,50,627/- FOR AY.2005-06; 50% OF RS.10,88,861=RS.5 ,44,430/- FOR AY. 2006-07; 50% OF RS. 11,61,076 = RS.5,80,538/- FOR A Y. 2007-08 AND 50% OF RS.12,48,270 = RS.6,24,135/- FOR AY. 2008-09 AND ADDED TO THE RETURNED INCOME. 12. ASSESSEE BEFORE THE CIT(A) STATED THAT HE IS A SURGEON BY PROFESSION AND REQUIRES ENTIRE TEAM CONSISTING OF M EDICAL, PARA-MEDICAL, I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 12 - : SUPPORT STAFF ETC. FOR PERFORMANCE OF SURGERY AND R ELATED MATTERS FOR WHICH HE HAS TO PAY SALARY. THIS IS APART FROM THE EXPENDITURE INCURRED TOWARDS SALARY TO DRIVER ETC. FURTHER, ASSESSEE ARG UED THAT THE AO HAS DISALLOWED 50% OF THE SALARIES STATING THAT AFTER C ARE IS PROVIDED BY THE HOSPITAL ITSELF AND SINCE THEY ARE CORPORATE HOSPIT ALS THERE WILL BE NO DEARTH OF ASSISTANTS AS CLAIMED BY ASSESSEE. AND WI THOUT THE SUPPORT OF HIS TEAM, ASSESSEE CANNOT CARRY OUT HIS PROFESSION. ASSESSEE FURTHER ARGUED THAT ON WHAT BASIS THE DISALLOWANCE HAS BEEN WORKED OUT IS NOT EXPLAINED BY THE AO. MOREOVER, ASSESSEE STATED THAT HE HAD DULY RECORDED ALL THE PAYMENTS IN THE BOOKS OF ACCOUNTS AND IT IS HIS PREROGATIVE TO DECIDE THE QUANTUM OF SALARIES TO HI S STAFF. IN THIS CONNECTION, ASSESSEE RELIED UPON ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DHANRAJGIRJI RAJA NARS INGH GIRJI (1973) [91 ITR 544] SC. 13. LD. CIT(A) CONSIDERED THE ISSUE AS UNDER: 12.0 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS OF THE APPELLANT. IT MAY BE NOTED THAT THE APPELLANT SUBMITTED DURING THE SEARCH AND ALSO THEREAFTER THA T HE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT. EVEN THOUGH IT IS TH E PREROGATIVE OF THE APPELLANT TO DECIDE THE QUANTUM OF SALARIES, TH E ONUS IS ON HIM TO ESTABLISH THAT HE HAD ENGAGED THE SERVICES OF OT HER DOCTORS OR ANY OTHER EMPLOYEES INCLUDING DRIVER ETC. WITH SUPPORTI NG EVIDENCES. BUT, THE APPELLANT FAILED TO DISCHARGE THIS DUTY. A S PER THE CERTIFICATE ISSUED BY THE ADITYA HOSPITAL, IT IS CONFIRMED THAT THE APPELLANT HAS HIS OWN TEAM OF DOCTORS AND PARA-MEDICAL STAFF WHO ASSIST HIM IN SURGERIES, EMERGENCIES WHO WERE PAID EXCLUSIVELY BY THE APPELLANT. BUT, CONSIDERING THE RECEIPT OF PROFESSIONAL FEE SH OWN BY THE APPELLANT, THE AMOUNT OF SALARIES PAID APPEARS TO B E ON HIGHER SIDE AND AT THE SAME TIME THE DISALLOWANCE MADE BY THE A SSESSING OFFICER ALSO APPEARS TO BE UNREASONABLE. CONSIDERIN G THE NATURE OF EXPENSES AND NONPRODUCTION OF ANY CONFIRMATIONS FRO M THE THIRD PARTIES BY THE APPELLANT, SOME DISALLOWANCE IS NEED ED AND TO MEET THE ENDS OF THE JUSTICE DISALLOWANCE OF 20% APPEARS TO BE REASONABLE. ACCORDINGLY, THE DISALLOWANCE IS RESTRI CTED TO THAT EXTENT. I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 13 - : 14. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PE RUSING THE MATERIAL PLACED ON RECORD AND EXPLANATIONS GIVEN BY ASSESSEE, WE ARE OF THE OPINION THAT THERE IS NO NEED TO DISALLOW ANY E XPENDITURE CLAIMED IN THE COURSE OF ASSESSEES PROFESSION. CONSIDERING T HAT ASSESSEE IS A CONSULTANT SURGEON AND THE HOSPITAL ALSO CERTIFIED THAT ASSESSEE IS EMPLOYING HIS OWN PARA-MEDICAL STAFF, WHICH FACTOR IS ALSO AGREED BY THE LD. CIT(A) WE ARE OF THE OPINION THAT THERE IS NO NEED TO DISALLOW ANY EXPENDITURE WHICH WAS CLAIMED IN THE ORIGINAL RETUR NS OF INCOME. THERE IS NO INCRIMINATING MATERIAL FOUND AND ASSESSEE CAN NOT BE EXPECTED TO PRODUCE THE VOUCHERS AND PERSONS AFTER LAPSE OF SU FFICIENT TIME WHEN ASSESSEES RETURNS ORIGINALLY FILED WERE ACCEPTED W ITHOUT ANY SCRUTINY. IN VIEW OF THIS, WE ARE OF THE OPINION THAT NO EXPENDI TURE CAN BE DISALLOWED OUT OF THE SALARY CLAIMED AND ACCORDINGLY, ASSESSEE S GROUNDS ARE ALLOWED. AO IS DIRECTED TO DELETE THE DISALLOWANCE SO MADE IN ALL THE IMPUGNED ASSESSMENT YEARS. DISALLOWANCE OF VEHICLE MAINTENANCE AND DEPRECIATIO N : 15. ANOTHER ISSUE CONTESTED BY ASSESSEE IN AYS. 20 06-07 TO 2010-11 IS WITH REFERENCE TO DISALLOWANCE OF DEPREC IATION ON VEHICLES AND VEHICLE MAINTENANCE. AO WAS OF THE OPINION THAT IN AY. 2006-07, THE VEHICLES WERE PURCHASED IN A LATER HALF OF THE YEAR AND SO DEPRECIATION OF 50% OF THE ELIGIBLE AMOUNT IS ONLY ALLOWABLE. FURT HER, HE WAS OF THE OPINION THAT ASSESSEES PROFESSIONAL WORK REQUIRES TO MOVE AROUND IN VERY REASONABLE AREA AS HE IS RESIDING VERY CLOSE T O THE HOSPITALS IN WHICH HE IS PROVIDING CONSULTANCY AND DOES NOT REQU IRE SO MANY VEHICLES AND MAINTENANCE. WITH THAT REASON, HE DISALLOWED 5 0% OF DISALLOWANCE CLAIMED IN RESPECT YEARS AND 50% OF VEHICLE MAINTEN ANCE IN THE IMPUGNED YEARS. THE LD. CIT(A) WITH REFERENCE TO C LAIM OF 50% DEPRECIATION IN THE FIRST YEAR DIRECTED THE AO TO E XAMINE THE PURCHASE I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 14 - : BILLS AND ALLOW DEPRECIATION BUT IN PRINCIPLE, SHE AGREED WITH 50% DISALLOWANCE OF DEPRECIATION AS WELL AS THE VEHICLE MAINTENANCE. 16. IT WAS CONTENDED BEFORE US THAT AO WAS NOT CLE AR WHETHER HE HAS DISALLOWED BECAUSE EXPENDITURE WAS ON HIGHER SI DE OR WHETHER EXPENSES ARE PERSONAL IN NATURE. HE REFERRED TO TH E ORDER OF THE AO TO SUPPORT THAT AO HIMSELF WAS NOT CLEAR AND ON WHAT R EASON THE SAME WERE DISALLOWED AND WITHOUT DISCLOSING THE REASONS MENTIONED LD. CIT(A) ALSO UPHELD THE DISALLOWANCE STATING THAT ASSESSEE S REASONS WERE GENERAL IN NATURE AND SHE FOUND NO MERIT IN THE ARG UMENT. 17. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE AR E OF THE OPINION THAT ACTIONS OF AO AND CIT(A) CANNOT BE SUP PORTED. AS FAR AS DEPRECIATION IN AY. 2006-07 IS CONCERNED, SINCE THE DATE OF PURCHASE IS REQUIRED TO BE EXAMINED FOR ALLOWING DEPRECIATION I N THAT YEAR AS DIRECTED BY THE CIT(A), AO IS DIRECTED TO EXAMINE THE DATE O F PURCHASE AND ALLOW DEPRECIATION AS PER LAW EITHER AT 100% OF THE CLAIM OR 50% OF THE CLAIM IF IT IS PURCHASED AND USED FOR LESS THAN 180 DAYS IN THAT YEAR. TO THAT EXTENT, CIT(A) DIRECTION IS UPHELD. HOWEVER, WITH REFERENCE TO DISALLOWANCE OF 50% OF DEPRECIATION CLAIM IN RESPEC TIVE ASSESSMENT YEARS, THE SAME CANNOT BE UPHELD. AS FAR AS DEPREC IATION IS CONCERNED, EVEN IF VEHICLE IS USED FOR ONE SINGLE DAY, THE ENT IRE DEPRECIATION AS PER THE RULES HAS TO BE ALLOWED. SINCE ASSESSEES VEHI CLES ARE USED FOR THE PROFESSION ON WHICH THERE IS NO DISPUTE, DISALLOWAN CE OF DEPRECIATION U/S. 32 CANNOT BE CONSIDERED EXCEPT ON THE BASIS OF USAGE IN THE YEAR- WHETHER USE OF FULL YEAR OR PART OF THE YEAR AS PER THE PROVISIONS OF SECTION 32. SINCE DEPRECIATION IS ALLOWABLE U/S. 3 2, THE GENERAL PROVISION OF 37(1) CANNOT BE INVOKED. IN VIEW OF T HIS, DISALLOWANCE OF 50% OF DEPRECIATION FOR PERSONAL USE CANNOT BE DON E AS PER THE I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 15 - : PROVISIONS OF THE ACT. THEREFORE, THE GROUNDS OF A SSESSEE ARE ALLOWED ON THIS ISSUE. 17.1 NOW COMING TO THE DISALLOWANCE OF 50% OF THE VEHICLE MAINTENANCE THE REASONS FOR DISALLOWANCE AS MADE OUT BY THE AO ARE NOT CLEAR. AO EXPRESSES OPINION THAT IT APPEARS THAT THE EXPENSES CLAIMED ON MAINTENANCE OF VEHICLES IS ON HIGHER SIDE AND HE NCE 50% OF THE EXPENSES ON MAINTENANCE ARE DISALLOWED AS RELATABLE TO PERSONAL USE. HE STATED BOTH REASONS BEING HIGHER SIDE AS WELL AS PERSONAL USE. THERE IS NO CLARITY IN THE OPINION OF THE AO AND NO COMPA RABLE EXPENDITURE WAS MADE OUT. THERE IS NO INCRIMINATING MATERIAL ALSO IN THE SEARCH. WE ARE OF THE OPINION THAT EXPENDITURE CLAIMED IS REASONAB LE COMPARED TO THE RECEIPTS DISCLOSED BY ASSESSEE FROM VARIOUS HOSPITA LS. THE AO CANNOT SIT IN JUDGMENT ON THE NATURE OF EXPENDITURE UNLESS HE EXAMINE THE EXPENDITURE ON A DAY TO DAY BASIS FROM THE VOUCHERS MAINTAINED. HOWEVER, CONSIDERING THAT ASSESSEE IS A DOCTOR AND ALSO A PUBLIC FIGURE SOME USE OF VEHICLES FOR PERSONAL USE CANNOT BE RUL ED OUT. CONSISTENT WITH THE VIEW TAKEN BY CO-ORDINATE BENCHES IN NUMBE R OF CASES, WE ARE OF THE OPINION THAT THE DISALLOWANCE FOR PERSONAL U SE CAN BE RESTRICTED TO 10% OF THE VEHICLE MAINTENANCE CLAIMED IN RESPECTIV E ASSESSMENT YEARS. EVEN THOUGH WE ARE AWARE THAT THESE ARE RE-ASSESSME NTS, WE ARE OF THE OPINION THAT AO CAN RE-EXAMINE THE ISSUES WHICH ARE NOT EXAMINED IN THE ORIGINAL ASSESSMENT AND IN THIS CASE, THERE SEE MS TO BE NO ASSESSMENTS U/S. 143(3) EARLIER. FOLLOWING THE PRI NCIPLES LAID DOWN BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RA JKUMAR ARORA [367 ITR 517] (SUPRA), WE ARE OF THE OPINION THAT AO CAN EXAMINE THE VEHICLE MAINTENANCE CLAIMED IN THE RE-ASSESSMENT. ACCORDIN GLY, WE RESTRICT THE EXPENDITURE DISALLOWANCE TO 10% BEING PERSONAL IN N ATURE U/S. 37(1). BALANCE OF THE EXPENDITURE IS ALLOWABLE. GROUNDS A RE ACCORDINGLY PARTIALLY ALLOWED IN ALL ASSESSMENT YEARS. I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 16 - : ADDITIONS MADE ON THE BASIS OF HOSPITAL MANAGEMENT SYSTEM PACKAGE: 18. AS BRIEFLY STATED, ON THE BASIS OF THE HOSPITA L MANAGEMENT SYSTEM PACKAGE (HMS PACKAGE) MAINTAINED BY M/S. ADI TYA HOSPITAL, AO CONSIDERED THAT RECEIPTS TO THE EXTENT OF RS. 96,73 ,154/- IN AY. 2009-10 AND RS. 1,31,79,867/- IN AY. 2010-11 NOT ACCOUNTED AND WERE BROUGHT TO TAX. LD. CIT(A) ACCEPTING THE AOS REASONING HA S CONFIRMED THE ADDITIONS SO MADE. LD. COUNSEL MADE VARIOUS SUBMIS SIONS AND DETAILED WRITTEN SUBMISSIONS WERE ALSO PLACED ON RECORD ALON G WITH THE RELIANCE ON VARIOUS CASE LAW. CO-ORDINATE BENCH DECISION IN THE CASE OF DR. N. PAWAN KUMAR, IN ITA NOS. 1568 AND 1569/HYD/2013, DT . 06-06-2014, WHEREIN ON SIMILAR FACTS, ITAT DID NOT AGREE WITH THE ADDITIONS SO MADE IN THAT CASE. THE CONTENTIONS TO SUMMARIZE ARE AS UNDER: I. THAT THE CD CONTAINING HMS PACKAGE SEIZED FROM M/S. ADITYA HOSPITAL CANNOT BE CONSIDERED AS INCRIMINATI NG MATERIAL FOR THE PURPOSE OF MAKING ASSESSMENT IN AS SESSEES CASE, AS THE CD DOES NOT BELONG TO ASSESSEE AND IT IS A DUMB MATERIAL. II. ASSESSEE RECEIVED SUMS AGGREGATING TO RS. 19,32,240 /- MINUS TDS OF RS. 1,99,021/- FOR AY. 2009-10 AND RS. 58,24,105/- MINUS TDS OF RS. 6,14,016/- FOR THE AY. 2010- 11 BY WAY OF CHEQUES AND NOT THE SUMS AS STATED IN THE ASSESSMENT ORDERS. III. THAT FOR AY. 2010-11, TDS CERTIFICATE WAS ISSUED ON 24-07- 2010 AFTER THE SEARCH AND ACCORDING TO TDS CERTIFIC ATE, SO MUCH OF AMOUNT WAS NEVER RECEIVED BY ASSESSEE. I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 17 - : IV. THE CONTENTION THAT ASSESSEE RECEIVED AMOUNT OF RS. 96,73,154/- BY WAY OF CASH AND RS. 1,31,79,867/- IN AY. 2009-10 AND 2010-11 AS MADE OUT BY THE AO IS NOT CO RRECT AND THE EXHIBIT 1 FROM HMS PACKAGE RELIED ON BY THE AO INDICATE THE FOLLOWING AMOUNTS AS CHEQUE AND CASH: ASST. YEAR 2009-10 ASST. YEAR 2010-11 (AS PER EXHIBIT I) DATE CHEQUE (RS) DATE CHEQUE (RS) 18.07.2008 7,87,527 15.04.2009 11,66,770 07.08.2008 12,64,283 30.04.2009 10,75,446 19.08.2008 2,01,300 11.06.2009 13,91,923 10.09.2008 08,83,468 08.07.2009 14,21,245 04.11.2008 02,51,955 09.08.2009 2,58,840 28.11.2008 01,89,150 25.08.2009 10,17,833 31.12.2008 1,27,715 02.09.2009 16,22,835 24.01.2009 33,000 24.09.2009 34,000 26.01.2009 01,96,700 08.10.2009 12,98,684 09.03.2009 01,35,780 29.10.2009 10,00,011 09.03.2009 09,07,266 13.11.2009 29,000 01.12.2009 12,20,512 12.12.2009 25,600 01.01.2010 4,62,949 01.01.2010 6,63,584 13.01.2010 43,000 25.01.2010 4,09,119 29.01.2010 8,98,730 06.02.2010 73,500 20.02.2010 1,11,900 20.02.2010 3,33,780 03.03.2010 7,67,944 12.03.2010 1,29,000 TOTAL BY CHEQUES 49,78,144 TOTAL BY CHEQUES 1,54,56,205 BALANCE BY CASH 66,08,187 BALANCE BY CASH 19,70,493 TOTAL 1,55,86,331 TOTAL 1,74,26,698 I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 18 - : AS CAN BE SEEN FROM THE ABOVE, THE AMOUNT OF TOTAL CHEQUES OF RS. 49,78,144/- AND RS. 1,54,56,205/- WERE NEVER RECEIVED BY ASSESSEE AND THE ACTUAL AMOUNTS RECEIVED IN BANK AC COUNT WERE VERIFIED BY THE AO WHICH TALLIES WITH THE TDS CERTI FICATE. V. THAT AO WHILE ADMITTING THAT THE CHEQUES ARE NOT VE RIFIABLE, HOWEVER, RELIED ON THE HMS PACKAGE WITHOUT ESTABLIS HING THAT ASSESSEE HAS RECEIVED THOSE PAYMENTS FROM ADIT YA HOSPITAL, MORE PARTICULARLY REPRESENTED AS CHEQUE PAYMENTS. VI. THAT AO ADOPTED RS. 19,13,177/- FOR AY. 2009-10 AND RS. 42,21,831/- FOR AY. 2010-11 BY WAY OF CHEQUES ITSEL F IS CONTRARY AS ASSESSEE RECEIVED RS. 19,32,240/- IN AY . 2009- 10 AND RS. 58,24,105/- IN AY. 2010-11. THEREFORE, NEITHER THE FIGURES OF CHEQUES FROM THE ALLEGED HMS PACKAGE ARE VERIFIABLE NOR WITH THE FIGURES FROM TALLY PACKAGE, THE ASSESSMENTS WERE FULL OF FALLACIES AND ARE BASED ON DATA WHICH IS NOT VERIFIABLE, AS ADMITTED BY THE AO IN H IS REMAND REPORT (VIDE PAGE 173 TO 176 OF THE PAPER BOOK). VII. ALL THE BANK ACCOUNTS WERE VERIFIED BY THE SEIZED P ARTY AND ARE AVAILABLE WITH THE AO AND NO SUCH PAYMENTS AS C HEQUES AS ALLEGED IN HMS PACKAGE WERE RECEIVED OTHER THAN THOSE ADMITTED IN THE TDS CERTIFICATES AS PAID TO ASSESSE E. VIII. THAT ASSESSEE GIVES CONSULTATION IN VARIOUS HOSPITA LS AND THE MODUS OPERANDI IS THAT PATIENTS WHO COME THROUGH HIM OR OTHERS ARE RECOMMENDED TO THE HOSPITAL OR ADMITT ED IN HIS NAME IN THE HOSPITAL, EVEN THOUGH HE MAY NOT RE NDER ANY CONSULTATION TO THE PARTICULAR PATIENT. MOREOV ER, THE I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 19 - : CASE SHEETS DOES NOT CONTAIN ANY FINANCIAL ASPECT A ND CRITICALLY THE DOCTOR CANNOT MENTION ANY FEE OR EXP ENDITURE ETC., IN THE CASE SHEET. THEREFORE, THE AOS CONTE NTION THAT CASE SHEET CONTAINS DETAILS OF PATIENTS AND FEE CAN NOT BE CORRECT. CASE SHEET MAY CONTAIN REFERRAL DOCTOR AS WELL AS CONSULTING DOCTORS NAME BUT NEVER CONSIST OF FINAN CIAL PART. IX. THAT ADITYA HOSPITAL MAY HAVE ADMITTED BEFORE THE SETTLEMENT COMMISSION CERTAIN ADDITIONAL INCOMES WH ICH MAY PROVE AGAINST THAT HOSPITAL, BUT THERE IS NO EV IDENCE THAT ASSESSEE HAS RECEIVED SO MUCH OF THE AMOUNTS N EITHER IN THE HOSPITAL RECORDS NOR IN THE SEIZED MATERIAL. X. THAT AS LATE AS NOVEMBER, 2012, M/S. ADITYA HOSPITA L HAS CERTIFIED THAT THEY HAVE MADE PAYMENTS TO ASSESSEE ONLY BY CHEQUES. THEREFORE, THE ALLEGED PAYMENTS BY HOSPIT AL CANNOT BE ACCEPTED AS GENUINE PAYMENTS. XI. ULTIMATELY IT WAS SUBMITTED THAT: (1) IT IS FURTHER SUBMITTED THAT IT IS NOT DISPUTED THAT THE SEIZED MATERIAL IS NOTHING BUT AN ACCOUNT MAINTAINE D BY THE HOSPITAL AND THAT CERTAIN AMOUNTS SUPPOSED TO HAVE BEEN RECEIVED FROM INDIVIDUAL PATIENTS ARE RECORDED AGAINST THE N AME OF THE ASSESSEE. THE ASSESSING OFFICER AND THE COMMISSIONE R OF INCOME TAX (APPEALS) ARE OF THE VIEW THAT THESE PAYMENTS M ADE IN CASH WERE ACTUALLY RECEIVED BY THE ASSESSEE OVER AND ABO VE WHAT IS SHOWN IN THE BOOKS OF ACCOUNTS OF THE HOSPITAL. IT IS SUBMITTED THAT PART FROM THE AFORESAID SEIZED MATERIAL, THERE IS N O OTHER DOCUMENTARY EVIDENCE OR ANY OTHER MATERIAL TO CONCL USIVELY PROVE THAT THE AMOUNTS MENTIONED IN THE SEIZED DOCUMENTS WERE ACTUALLY PAID TO THE ASSESSEE BY THE HOSPITAL. IN FACT WHEN THE ASSESSEE WAS CONFRONTED WITH THE SEIZED MATERIAL AND SPECIFICALL Y ASKED ABOUT THE PAYMENTS MENTIONED IN THE SEIZED MATERIAL, THE ASSE SSEE DENIED OF HAVING RECEIVED THE AMOUNTS MENTIONED THEREIN AND A SSERTED THAT WHATEVER AMOUNTS HAVE BEEN RECEIVED BY HIM ARE MENT IONED IN THE TDS CERTIFICATE AND NOTHING MORE HAS BEEN RECEIVED BY HIM FROM THE I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 20 - : HOSPITAL FOR BOTH THE ASST. YEARS. THE SO CALLED SE IZED MATERIAL ALSO REVEALS THAT IN MANY PLACES PATIENTS' NAMES HAVE NO T BEEN MENTIONED. THEREFORE, THE ENTRIES MADE IN THE SEIZE D MATERIAL CANNOT BE CONSIDERED TO BE AUTHENTIC. FURTHER, IT I S SUBMITTED THAT THE HOSPITAL MIGHT HAVE RECEIVED THE AMOUNTS FROM T HE PATIENTS BUT MIGHT NOT HAVE PAID FULLY THE AMOUNT RECEIVED FROM PATIENTS TO THE ASSESSEE ALSO CANNOT BE BRUSHED ASIDE LIGHTLY. IT I S QUITE POSSIBLE THAT THE HOSPITAL MIGHT HAVE RECEIVED THE AMOUNTS A S MENTIONED IN THE SEIZED DOCUMENT BUT HAS REMITTED ONLY PART OF I T TO THE ASSESSEE AND NOT THE ENTIRE AMOUNT. UNLESS THERE IS SOME OTH ER EVIDENCE ON RECORD TO SHOW THAT THE AMOUNTS MENTIONED IN THE SE IZED MATERIAL WERE ACTUALLY PAID TO THE ASSESSEE, IT CANNOT BE SA ID WITH CERTAINTY THAT THE ASSESSEE HAS ACTUALLY RECEIVED THE AMOUNTS AS MENTIONED IN THE SEIZED DOCUMENT. MORE SO, WHEN THE HOSPITAL HAS ISSUED A TDS CERTIFICATES FOR BOTH THE YEARS UNDER CONSIDERA TION MENTIONING THE AMOUNTS ACTUALLY PAID TO THE ASSESSEE. THE BANK ACCOUNT OF THE ASSESSEE ALSO REFLECTED ONLY THOSE PAYMENTS AS MENT IONED IN THE TDS CERTIFICATES FOR BOTH THE YEARS. IT IS A FACT O N RECORD THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY OR BROUG HT ANY OTHER MATERIAL ON RECORD TO PROVE THAT THE AMOUNTS MENTIO NED IN THE SEIZED MATERIAL WERE ACTUALLY PAID TO THE ASSESSEE. AS SUCH, IT IS SUBMITTED THAT CIRCUMSTANCES, ONLY BECAUSE SOME OF THE DOCTORS HAVE ADMITTED OF RECEIVING THE PAYMENTS MENTIONED I N THE SEIZED MATERIAL OR THE FACT THAT THE HOSPITAL'S APPLICATIO N BEFORE THE SETTLEMENT COMMISSION HAS BEEN ADMITTED IN NO WAY P ROVES THAT THE ASSESSEE HAS ACTUALLY RECEIVED THE AMOUNTS MENT IONED IN THE SEIZED DOCUMENT, UNLESS THERE ARE OTHER CORROBORATI VE MATERIAL TO PROVE SUCH FACT. NO ADDITION CAN BE MADE ONLY ON TH E BASIS OF PRESUMPTIONS AND SURMISES. 19. LD. DR WHILE ADMITTING THAT AO HAS EXPRESSED H IS INABILITY TO VERIFY THE SO CALLED CHEQUE PAYMENTS STATED TO H AVE BEEN PAID BY ADITYA HOSPITAL IN HMS PACKAGE, HOWEVER, PLACED ON RECORD THE ORDER OF THE SETTLEMENT COMMISSION, COPIES OF THE PRINT OUT OF INCRIMINATING MATERIAL TO SUBSTANTIATE THAT ON THE BASIS OF THE E NTRIES OF HMS PACKAGE BY M/S. ADITYA HOSPITAL AND VARIOUS AMOUNTS THEREIN , IT CAN BE DEDUCED THAT ASSESSEE HAS RECEIVED SO MUCH AMOUNTS. HE SUP PORTED THE ORDERS OF THE ACIT AND CIT(A). I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 21 - : 20. WE HAVE EXAMINED THE CONTENTIONS AND PERUSED T HE PAPER BOOKS PLACED ON RECORD. FIRST OF ALL, IT IS TO BE NOTED THAT THE PROCEEDINGS INITIATED AGAINST ASSESSEE ARE U/S. 153 A AND NOT U/S. 153C AS WAS THE CASE IN THE CASE OF DR. N. PAWAN KUMAR, IN ITA NOS. 1568 AND 1569/HYD/2013, DT. 06-06-2014 (SUPRA). THE JUDI CIAL PRINCIPLES ON JURISDICTION DOES NOT APPLY TO ASSESSEE IN WHOSE CA SE PROCEEDINGS ARE U/S 153A. HOWEVER, ON MERITS, IT IS TO BE NOTED TH AT THE CO-ORDINATE BENCH HAS EXAMINED SIMILAR SITUATION AND HAS THIS TO STATE HAVING HELD SO, LET US NOW EXAMINE WHETHER THE ADDITION CAN BE SUSTAINED ON MERITS. IT IS NOT D ISPUTED THAT THE SEIZED MATERIAL IS NOTHING BUT AN ACCOUNT MAINTAINED BY THE HOSPITAL. A PERUSAL OF THE SEIZE D MATERIAL COPIES OF WHICH HAVE BEEN PLACED ON RECORD, WOULD S HOW THAT CERTAIN AMOUNTS SUPPOSED TO HAVE BEEN RECEIVE D FROM INDIVIDUAL PATIENTS ARE RECORDED AGAINST THE NAME O F THE ASSESSEE. IT IS THE CASE OF THE DEPARTMENT THAT TH ESE PAYMENTS MADE IN CASH WAS ACTUALLY RECEIVED BY THE ASSESSEE OVER AND ABOVE WHAT IS SHOWN IN THE BOOKS OF ACCOUNTS OF THE HOSPITAL. HOWEVER, APART FROM THE AFORESAID SEIZED MATERIAL, THERE IS NO OTHER DOCUMENTARY EVID ENCE OR ANY OTHER MATERIAL TO CONCLUSIVELY PROVE THAT THE A MOUNTS MENTIONED IN THE SEIZED DOCUMENTS WAS ACTUALLY PAID TO THE ASSESSEE BY THE HOSPITAL. IN FACT WHEN THE ASSESS EE WAS CONFRONTED WITH THE SEIZED MATERIAL AND SPECIFICALL Y ASKED ABOUT THE PAYMENTS MENTIONED IN THE SEIZED MATERIAL , THE ASSESSEE DENIED OF HAVING RECEIVED THE AMOUNTS MEN TIONED THEREIN AND ASSERTED THAT WHATEVER AMOUNT HAS BEEN RECEIVED BY HIM IS MENTIONED IN THE TDS CERTIFICA TE AND NOTHING MORE HAS BEEN RECEIVED BY HIM FROM THE HOSP ITAL. A PERUSAL OF THE SEIZED MATERIAL ALSO REVEALS THAT IN MANY PLACES PATIENTS NAMES HAVE NOT BEEN MENTIONED. THEREFORE, THE ENTRIES MADE IN THE SEIZED MATERIAL CANNOT BE CONSIDERED TO BE AUTHENTIC. FURTHER, THE CONTENTI ON OF THE ASSESSEE THAT THE HOSPITAL MIGHT HAVE RECEIVED THE AMOUNTS FROM THE PATIENTS BUT MAY NOT HAVE PAID FULLY THE A MOUNT RECEIVED FROM PATIENTS TO THE ASSESSEE ALSO CANNOT BE BRUSHED ASIDE LIGHTLY. IT IS QUITE POSSIBLE THAT T HE HOSPITAL MIGHT HAVE RECEIVED THE AMOUNTS AS MENTIONED IN THE SEIZED DOCUMENT BUT HAS REMITTED ONLY PART OF IT TO THE ASSESSEE AND NOT THE ENTIRE AMOUNT. UNLESS THERE IS SOME OTH ER I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 22 - : EVIDENCE ON RECORD TO SHOW THAT THE AMOUNT MENTIONE D IN THE SEIZED MATERIAL WAS ACTUALLY PAID TO THE ASSES SEE IT CANNOT BE SAID WITH CERTAINTY THAT THE ASSESSEE HA S ACTUALLY RECEIVED THE AMOUNT0 AS MENTIONED IN THE S EIZED DOCUMENT. MORE SO, WHEN THE HOSPITAL HAS ISSUED A T DS CERTIFICATE MENTIONING THE AMOUNT ACTUALLY PAID TO THE ASSESSEE. THE BANK ACCOUNT OF THE ASSESSEE ALSO RE FLECTED ONLY THOSE PAYMENTS AS MENTIONED IN THE TDS CERTIFI CATE. IT IS A FACT ON RECORD THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY OR BROUGHT ANY OTHER MATERIAL ON RECORD TO PROVE THE FACT THAT THE AMOUNT MENTIONED IN THE SEIZED MA TERIAL WAS ACTUALLY PAID TO THE ASSESSEE. IN THE AFORESAI D CIRCUMSTANCES, ONLY BECAUSE SOME OF THE DOCTORS HAV E ADMITTED OF RECEIVING THE PAYMENTS MENTIONED IN THE SEIZED MATERIAL OR THE FACT THAT THE HOSPITALS APPLICATIO N BEFORE THE SETTLEMENT COMMISSION HAS BEEN ADMITTED IN NO WAY PROVES THAT THE ASSESSEE HAS ACTUALLY RECEIVED THE AMOUNT MENTIONED IN THE SEIZED DOCUMENT, UNLESS THERE ARE OTHER CORROBORATIVE MATERIAL TO PROVE SUCH FACT. SUSPICI ON HOWEVER STRONG CANNOT BE A SUBSTITUTE FOR EVIDENCE. NO ADDITION CAN BE MADE ONLY ON THE BASIS OF PRESUMPT IONS AND SURMISES. IN THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT ADEQUATE EVIDENCE OR MATERIAL HAV E NOT BEEN BROUGHT ON RECORD TO CONCLUSIVELY PROVE THE F ACT THAT THE ASSESSEE HAS RECEIVED CASH PAYMENTS AS MENTIO NED IN THE SEIZED MATERIAL. 21. MOST OF THE CONTENTIONS BEFORE US IN ASSESSEE S CASE ARE ALSO SIMILAR TO THE ABOVE CASE. BOTH ARE BASED ON HMS P ACKAGE AND BOTH ARE BASED ON THE SO CALLED PAYMENTS TO DOCTORS AS RECOR DED IN HMS PACKAGE AS AGAINST TALLY PACKAGE. IN THAT CASE ALSO, SETTL EMENT COMMISSION ADMITTED THE PETITION OF M/S. ADITYA HOSPITAL AND T HERE WERE REFERENCES TO THE PAYMENTS TO DR. PAWAN KUMAR IN THOSE OBJECTI ONS. HOWEVER, ASSESSEES NAME NEITHER FIGURED IN SETTLEMENT COMMI SSION APPLICATION NOR THERE IS ANY INDICATION THAT PAYMENTS TO ASSESS EE WERE ALSO INCLUDED THEREIN. BE THAT AS IT MAY, FUNDAMENTAL PRINCIPLE TO EXAMINE IN THIS CASE IS WHETHER THE HMS PACKAGE CAN BE RELIED UPON AS PROVING THE PAYMENTS TO ASSESSEE. I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 23 - : 22. AS CONTENDED, ASSESSEES NAME MIGHT HAVE BEEN USED AS A REFERRAL NAME RATHER THAN A FEE PAYMENT CONSULTANCY . DOCTOR IS VERY POPULAR AND MANY OF THE KNOWN PATIENTS FROM HIS ARE A COULD HAVE BEEN ADMITTED IN THE HOSPITAL BY REFERRING TO HIS NAME A ND HOSPITAL COULD HAVE ADMITTED THE PATIENT IN DOCTORS NAME. THAT ALONE DOES NOT MEAN THAT DOCTOR HAS CONSULTED THE PATIENT OR PERFORMED SURGE RY. 23. NEXT ISSUE TO BE CONSIDERED IS WHETHER CASE SH EET CONTAINS ANY FINANCIAL PART? IT IS WELL KNOWN THAT DOCTORS PROFESSIONAL ACTIVITY IS COVERED BY MEDICAL ETHICS AND NO CASE SHEET CAN CON TAIN ANY OTHER DATA EXCEPT THE DISEASE/INJURY/PROBLEM WITH THE PATIENT AND THE PRESCRIPTION OF TREATMENT/MEDICINES/SURGERIES CONDUCTED ETC. ON LY THE TREATMENT DETAILS MAY BE AVAILABLE IN THE CASE SHEET AND ULTI MATELY WHEN HE IS DISCHARGED, A CERTIFICATE OF HEALTH MAY ALSO BE AVA ILABLE. BEYOND THAT, THERE CAN BE NO INFORMATION ABOUT FINANCIAL PART. IN CASE HOSPITAL MAINTAINS ANYTHING FOR ITS OWN INTERNAL PURPOSES, T HAT CANNOT BE ATTRIBUTED TO THE DOCTOR, UNLESS THERE IS A PROOF O F PAYMENTS AVAILABLE IN THE SEIZED MATERIAL. 24. FURTHER, IT IS TO BE NOTED THAT AS PER HMS PAC KAGE, SUBSTANTIAL AMOUNT HAS BEEN PAID BY WAY OF CHEQUES. AS ASSESSEE MENTIONED IN THE WRITTEN SUBMISSIONS, AN AMOUNT OF RS. 49,78,144/- WAS SUPPOSED TO HAVE BEEN PAID IN AY. 2009-10 AND A N AMOUNT OF RS. 1,54,56,205/- WAS SUPPOSED TO HAVE BEEN PAID IN AY. 2010-11 BY CHEQUES. BALANCE AMOUNT OF CASH AT RS. 66,08,187/- IN AY. 2009-10 AND CASH RS. 19,70,493/- WAS SUPPOSED TO HAVE BEEN PAID IN AY. 2010- 11. LEAVE ALONE THE CASH PART, EVEN THE ALLEGED CH EQUE PAYMENTS WERE ALSO NOT VERIFIABLE, OTHER THAN THOSE ADMITTED BY A SSESSEE IN THE TDS CERTIFICATES CERTIFIED BY ADITYA HOSPITA. EVEN IN THE REMAND REPORT, AO EXPRESSES HIS INABILITY TO MAKE THE VERIFICATION. IF THE HMS PACKAGE I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 24 - : RELIED ON BY THE REVENUE INDICATES PAYMENTS BY CHEQ UES IT IS VERY EASY TO VERIFY THE PAYMENTS THROUGH THE BANKS. THERE IS NO EVIDENCE WHAT- SO-EVER OF EITHER PAYMENT BY CHEQUE TO ASSESSEE OR BY CLEARANCE IN ASSESSEES BANK AMOUNT. THIS ITSELF INDICATE THAT THE ENTRIES IN HMS PACKAGE CANNOT BE RELIED UPON. IT IS ALSO TO BE NO TED THAT ASSESSEE HAS FURNISHED RE-CONCILIATION OF THE AMOUNTS RECEIVED O N THE BASIS OF THE TDS CERTIFICATES AND ACTUALLY RECEIVED IN BANKS AS UNDE R: B. NARASAIAH STATEMENT OF RECONCILIATION F.Y. 2 008-09 PARTICULARS PAGE NO. AMOUNT OPENING BALANCE AS PER BOOKS 178 3,12,968 ADD: AMOUNT NET OFF OF TDS RECEIVABLE FROM ADITYA HOSPITALS (1932240-199021) 160 17,33,219 LESS: INCOME ACTUALLY RECEIVED FROM BANKS 17,33,077 (AS PER ANNEXURE 1) CLOSING BALANCE AS PER LEDGER 178 3,13,110 ANNEXURE I DATE AMOUNT RECEIVED FROM BANKS PAGE NO. AMOUNT 11-06-08 ABN AMRO BANK 1,40,783 12-08-08 ICICI BANK LTD 262 3,41,344 14-08-08 SBI (MASAB TANK) 255 1,02,258 01-10-08 SBI (MASAB TANK) 255 1,42,500 01-10-08 SBI (MASAB TANK) 255 2,86,480 30-10-08 SBI (MASAB TANK) 255 2,26,044 01-12-08 ICICI BANK LTD 263 1,69,668 28-12-09 ICICI BANK LTD 263 1,14,560 04-02-09 ICICI BANK LTD 263 1,76,440 04-02-09 ICICI BANK LTD 263 33,668 TOTAL: 17,33,077 I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 25 - : B. NARASAIAH STATEMENT OF RECONCILIATION F.Y. 2 009-10 PARTICULARS PAGE NO. AMOUNT OPENING BALANCE AS PER BOOKS 180 3,13,110 ADD: AMOUNT NET OFF OF TDS RECEIVABLE FROM ADITYA HOSPITALS (5824105-614016) 161 52,10,089 LESS: INCOME ACTUALLY RECEIVED FROM BANKS 38,78,402 (AS PER ANNEXURE 2) CLOSING BALANCE AS PER LEDGER 180 16,44,797 ANNEXURE 2 DATE AMOUNT RECEIVED FROM BANKS PAGE NO. AMOUNT 13-05-09 ICICI BANK LTD 264 1,30,515 13-05-09 ICICI BANK LTD 264 1,21,795 17-06-09 ICICI BANK LTD 264 1,55,438 10-07-09 ICICI BANK LTD 264 4,36,000 04-08-09 ICICI BANK LTD 264 3,08,164 07-09-09 ICICI BANK LTD 265 3,55,169 07-10-09 ICICI BANK LTD 266 3,32,718 07-10-09 ICICI BANK LTD 266 30,148 11-11-09 ICICI BANK LTD 266 3,05,675 03-12-09 ICICI BANK LTD 266 1,05,606 15-12-09 ICICI BANK LTD 266 94,837 04-01-10 SBI MASAB TANK 253 38,700 25-01-10 ICICI BANK LTD 253 3,45,877 06-02-10 ICICI BANK LTD 267 3,47,842 08-03-10 ICICI BANK LTD 267 1,66,860 08-03-10 ICICI BANK LTD 267 3,00,402 TOTAL: 38,78,402 25. THEREFORE, THE PAYMENTS RECEIVED BY ASSESSEE A S CERTIFIED BY ADITYA HOSPITAL, TDS CERTIFICATES WERE ONLY AMOUNTS VERIFIABLE FROM ASSESSEES BANK ACCOUNTS AND NOTHING MORE. EVEN BE FORE THE AO VIDE LETTER DT. 13-04-2010, ASSESSEE BROUGHT TO THE NOTI CE OF THE AO AS UNDER: AS REGARDS EXHIBIT 1 GIVEN TO ME WHICH IS APPENDE D HERE TO, I WOULD LIKE TO STATE THE FACTS STATED IN THE SAID EXHIBIT ARE FACTUALLY I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 26 - : WRONG. AS STATED EARLIER HEREIN ABOVE, EVEN AT THE TIME OF SEARCH AT MY RESIDENCE WHEN THE EXHIBIT 1 WAS SHOWN TO ME AND A STATEMENT WAS RECORDED FROM ME AND ALSO DURING THE COURSE OF MY PERSONAL APPEARANCE BEFORE YOU, I ONCE AGAIN CONFIRM THAT TH E PAYMENTS ALLEGED TO HAVE BEEN MADE TO ME AS PER EXHIBIT 1 IS NOT TRUE. A CURSORY GLANCE AT SAID EXHIBIT WOULD REVEAL THAT CE RTAIN PAYMENTS ALLEGEDLY MADE TO ME ARE BY CHEQUE AND ALSO CASH. FIRST OF ALL I ONCE AGAIN CONFIRM THAT I HAVE NOT RECEIVED ANY PAY MENT IN CASH. SECONDLY THE ALLEGED PAYMENTS SHOWN AGAINST ME IN F ORM OF CHEQUE WHICH ARE DULY HIGHLIGHTED FOR EASY REFERENCE DO NO T FIGURE IN MY BANK ACCOUNTS. AS PER THE SAID EXHIBIT SUMS AGGREG ATING TO ABOUT RS. 1,74,26,698/- WAS ALLEGEDLY MADE TO ME BY ADITY A HOSPITALS COMPRISING OF ABOUT RS. 19,70,493/- IN CASH AND BAL ANCE OF RS. 1,54,56,205/- BY CHEQUES WHICH IS ABSURD. A TABLE IS APPENDED HERETO SHOWING THE ALLEGED PAYMENTS IN CASH AND CHE QUE. WHATEVER I HAVE RECEIVED FROM ADITYA HOSPITAL DURIN G THE FINANCIAL YEAR 2009-10 OR TILL DATE IS ONLY BY CHEQUES WHICH CAN BE VERIFIED WITH REFERENCE TO MY BANK ACCOUNTS. IF THE CHEQUES AS PER EXHIBIT 1 HAVE BEEN GIVEN TO ME, SHOULD FIGURE IN MY BANK ACC OUNTS, WHICH IS NOT THE CASE. ALL MY BANK ACCOUNTS ARE AVAILABLE W ITH YOU WHICH CAN BE VERIFIED. I HAVE NO OTHER BANK ACCOUNTS OTH ER THAN WHAT HAS BEEN ADMITTED AND REFLECTED IN MY BALANCE SHEETS FI LED BEFORE THE DEPARTMENT AND COPIES OF WHICH HAVE BEEN ALREADY GI VEN TO YOU. 26. THERE IS NO REBUTTAL OF ASSESSEES CONTENTIONS EVEN BY AO AT THE TIME OF ASSESSMENT ITSELF. IN VIEW OF THE ABOV E, WE ARE OF THE OPINION THAT RELIANCE ON HMS PACKAGE, WITHOUT ANY VERIFICAT ION OR SUPPORT FROM ANY OTHER EVIDENCE CANNOT BE ACCEPTED SO AS TO MAKE SUBSTANTIAL ADDITIONS IN ASSESSEES HANDS AS WAS DONE BY THE AO . FOLLOWING THE PRINCIPLES LAID DOWN BY COORDINATE BENCH IN THE CAS E OF DR. PAWAN KUMAR (SUPRA) UNLESS THERE IS SOME OTHER EVIDENCE ON RECORD TO SHOW THAT THE AMOUNT MENTIONED IN THE SEIZED MATERI AL WAS ACTUALLY PAID TO THE ASSESSEE, IT CANNOT BE SAID W ITH CERTAINTY THAT THE ASSESSEE HAS ACTUALLY RECEIVED THE AMOUNTS AS MENTIONED IN THE SEIZED DOCUMENT. MORE SO, WHEN THE HOSPITAL HAS ISSUED A TDS CERTIFICATE MENTIONING THE AMOUNT ACTUALLY PAID TO THE ASSESSEE. THE BANK ACCOUNT OF THE ASSE SSEE ALSO I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 27 - : REFLECTED ONLY THOSE PAYMENTS AS MENTIONED IN THE T DS CERTIFICATE. IT IS A FACT ON RECORD THAT THE ASSES SING OFFICER HAS NOT MADE ANY ENQUIRY OR BROUGHT ANY OTHER MATERIAL ON RECORD TO PROVE THE FACT THAT THE AMOUNT MENTIONED IN THE SEI ZED MATERIAL WAS ACTUALLY PAID TO ASSESSEE. IN THE AFORESAID CI RCUMSTANCES, ONLY BECAUSE SOME OF THE DOCTORS HAVE ADMITTED OF R ECEIVING THE PAYMENTS MENTIONED IN THE SEIZED MATERIAL OR THE FA CT THAT THE HOSPITALS APPLICATION BEFORE THE SETTLEMENT COMMIS SION HAS BEEN ADMITTED, IN NO WAY PROVES THAT THE ASSESSEE HAS ACTUALLY RECEIVED THE AMOUNT MENTIONED IN THE SEIZED DOCUMEN T, UNLESS THERE ARE OTHER CORROBORATIVE MATERIAL TO PROVE SUC H FACT. SUSPICION HOWEVER STRONG CANNOT BE A SUBSTITUTE FOR EVIDENCE. NO ADDITION CAN BE MADE ONLY ON THE BASIS OF PRESUM PTIONS AND SURMISES. IN THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT ADEQUATE EVIDENCE OR MATERIAL HAVE NOT BEEN B ROUGHT ON RECORD TO CONCLUSIVELY PROVE THE FACT THAT THE ASSE SSEE HAS RECEIVED CASH PAYMENTS AS MENTIONED IN THE SEIZED M ATERIAL. ACCORDINGLY, ADDITION OF THOSE TWO AMOUNTS I.E., RS . 96,73,154/- (2009- 10) AND RS. 1,31,79,867/- (2010-11) CANNOT BE SUSTAINED. ASSESSEES GROUNDS ARE ACCORDINGLY ALLOWED. AO IS DIRECTED TO DELETE THE ADDITIONS SO MADE. 27. IN THE RESULT ALL THE APPEALS ARE PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND SEPTEMBER, 2015 SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 2 ND SEPTEMBER, 2015 TNMM I.T.A. NOS. 812 TO 818/HYD/2014 DR. B. NARSAIAH :- 28 - : COPY TO : 1. DR. B. NARSAIAH, 8-3-609/14/1/A, ANAND NAGAR, KHAIRATABAD, HYDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL C IRCLE-2, HYDERABAD. 3. CIT(APPEALS)-I, HYDERABAD. 4. CIT-CENTRAL, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.