ACIT, Patiala V. Smt. Bharti Bansal Prop., Patiala

ITA 957/CHANDI/2010

• Counselvise Citation: 95721514 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: ASHOK KUMAR GOEL
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: A BENCH: CH ANDIGARH BEFORE SHRI H L KARWA, VP AND SHRI D K SRIVASTAVA, AM ITA NO. 957/CHD/2010 AY 2007-08 A.C.I.T. CIRCLE, PATIALA V. SMT. BHARTI BANSAL P ROP. M/S MODERN CLINICAL LABORATORY, PATIALA AARPB G CROSS OBJECTION NO. 27/CHD/2010 ARISING OUT OF ITA NO. 957/CHD/201 AY 2007-08 SMT. BHARTI BANSAL PROP. M/S MODERN V A.C.I.T. CIRC LE, PATIALA CLINICAL LABORATORY, PATIALA DEPARTMENT BY : SHRI N.K. SAINI ASSESSEE BY: SHRI ASHOK KUMAR GOEL DATE OF HEARING: 17.11.2011 DATE OF PRONOUNCEMENT: 16 .01.2012 ORDER D K SRIVASTAVA: THE APPEAL FILED BY THE DEPARTMENT AND THE MEMORANDUM OF CROSS-OBJECTIONS FILED BY THE ASSESSE E ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) ON 26.4. 2010. BOTH OF THEM RELATE TO AY 2007-08. THE ISSUES IN BOTH OF THEM A RE COMMON. WE THEREFORE FIND IT CONVENIENT TO DISPOSE OFF BOTH OF THEM BY A CONSOLIDATED ORDER. 2. IN ITA NO. 957/CHD/2010, THE DEPARTMENT HAS TAKE N THE FOLLOWING GROUNDS OF APPEAL: 1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE BOOK RESULTS OF THE ASSES SEE SHOULD NOT BE REJECTED IN-TOTO EVEN W HEN THE ASSESSEE HAD FAI LED TO MAINTAIN CASE/PATIENT REGISTER, STOCK REGISTER AND INVENTORY OF CONSUMABLES. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO THE EXTENT OF RS. 75,000/- OUT OF THE TOTAL ADDITION OF RS. 20,11,210/- MADE BY TH E AO ON ACCOUNT OF UNACCOUNTED RECEIPTS, WHICH IS ARBITRARY AND WI THOUT ANY BASIS. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONDONING THE ASSESSEES FAILURE TO MAINTA IN THE BOOKS OF ACCOUNT, INCLUDING CASE/PATIENT REGISTER AND STOCK REGISTER, AGAINST THE MANDATE OF RULE 6F(3) READ WITH SECTION 44AA, W HICH IS CLEARLY ITA NO. 957/CHD/2010 AND C.O NO. 27/CHD/2010 A.C.I.T V. BHARTI BANSAL 2 BEYOND THE JURISDICTION OF LD. CIT(A) AND HENCE THE RELIEF GIVEN TO THE ASSESSEE IS ILLEGAL. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE, HAVING FAILED TO MAINTAIN THE RECORDS AS PER RULE 6 F(3) READ WITH SECTION 44AA AND IN TURN FAILED TO SUBSTANTIATE THE BOOK RESULTS AND HENCE THE AO WAS JUSTIFIED IN REJECTING THE BOO KS OF ACCOUNT AND ESTIMATING THE GROSS RECEIPTS. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE BY MERELY ME NTIONING THAT THE RATES MENTIONED IN THE ASSESSMENT ORDER AND THE RAT ES ACTUALLY CHARGED BY THE ASSESSEE IN A GREAT WAY SUBSTANTIAT E THE APPELLANTS CONTENTION, WITHOUT APPRECIATING THE F ACT THAT THE AO HAD APPLIED THE RATES AS PER ASSOCIATION OF PRACTIS ING PATHOLOGISTS AND MICRO-BIOLOGISTS, PATIALA, SUPPLIED BY THE ASSE SSEE HERSELF TO THE AO ON 16.10.2009 WHEREVER THE ASSESSEE HAD FAIL ED TO FURNISH THE LIST OF RATES CHARGED BY HER. 6. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE, BEING ILLEGAL AND THAT OF THE AO RESTORED. 7. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OF. 3. IN CROSS-OBJECTIONS NO. 27/CHD/2010, THE ASSESSE E HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1 THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING THE BO OK RESULT IN TOTO WHEN BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED. 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDIT ION OF RS. 75,000/- WHEN EVEN IN ESTIMATE MADE WITHOUT ANY SCI ENTIFIC BASIS, THE DIFFERENCE IS NOMINAL. 4. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNI NG A PATHOLOGICAL LABORATORY AT PATIALA IN THE NAME AND STYLE OF M/S MODERN CLINICAL LABORATORY. SHE FILED HER RETURN OF INCOME ON 6.8. 2007 RETURNING TOTAL INCOME AT RS. 9,32,880/-. AFTER PROCESSING, THE RE TURN WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF SCRUTINY THE AO FOU ND THAT THE ASSESSEE HAD NOT MAINTAINED THE CASE/PATIENT REGISTER, STOCK REGISTER AND INVENTORY OF CONSUMABLES. HE THEREFORE REJECTED THE BOOK RESULTS AND ITA NO. 957/CHD/2010 AND C.O NO. 27/CHD/2010 A.C.I.T V. BHARTI BANSAL 3 ADDED A SUM OF RS. 26,11,210/- TO THE INCOME RETURN ED BY THE ASSESSEE FOR THE REASONS GIVEN IN THE ASSESSMENT ORDER. 5. AGGRIEVED BY THE AFORESAID ADDITION MADE BY THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HOWEVER, DELETED THE IMPUGNED ADDITION WITH THE FOLLOWING OBSERVATIONS:- 4.8 I HAVE GONE THROUGH THE RIVAL SUBMISSIONS, ASS ESSMENT RECORD AND REMAND REPORT/COUNTER COMMENTS. LOOKING TO THE ALL FACTS AS DISCUSSED ABOVE THE MOST OF CHEMICALS ARE LIQUID AN D ARE SUPPLIED IN BOTTLES/CONTAINERS. FURTHER AOS PLEA THAT CONS UMPTION OF CONSUMABLE ARE NOT RELATED TO RECEIPT MONTH WISE IS ALSO NOT VALID GROUND. FIRSTLY IT IS MONTHLY PURCHASE AND FURTHER IN VIEW OF DETAIL SUBMISSIONS BY THE APPELLANT THAT EVEN THE COLLECTI ON COST VARIES FOR 0.67 TO 20% AND OTHER FACTOR LIKE TIME TAKEN IN ANALYSIS VARIES FROM HRS TO DAYS, DEPENDING UPON NATURE OF TEST. TH E ALLEGATION OF MONTHLY VARIATION DOES NOT HOLD GOOD IN VIEW OF HE FACT THAT IN THE ACTUAL ESTIMATE PREPARED FROM THE ACTUAL CONSUMPTIO N OF CHEMICAL THE VARIATION IS JUST 1.77% WITHOUT ANY SCIENTIFIC BASIS AND FURTHER ALLOWING STANDARD COST CALIBRATION COST AND WASTAGE IS NOT ON ANY TECHNICAL BASIS AND IN VIEW OF VARIOUS HIGH COURTS FINDINGS MONTHLY VARIATION IN CONSUMABLE USED CANNOT BE GROUND FOR R EJECTION OF BOOKS OF ACCOUNT. FURTHER PLEA OF ASSESSEE THAT MO RE ANALYSIS REQUIRED I.E. CONSUMPTION OF CONSUMABLE LIKE DISPOS ABLE SYRINGE/NEEDLE ARE SAME FOR TEST, NON MAINTENANCE O F STOCK RECORD OF CONSUMABLES COST OF EACH TEST, PURCHASE FOR A PE RIOD, PURCHASE TAKEN AS CONSUMPTION ARE COVERED IN THE ABOVE POINT AND HAS NOTHING TO DO WITH THE PATIENT REGISTER. MOST OF T HE OBSERVATION OF THE AO ARE GENERAL IN NATURE BUT THESE CANNOT BE BA SIS FOR REJECTION OF BOOKS OF ACCOUNTS. REGARDING NON MAIN TENANCE OF PATIENT REGISTER THE ASSESSEES PLEA THAT WHEN ALL THE REQUISITE INFORMATION AS THOSE REQUIRED IN THE PRESCRIBED REG ISTER IS THERE MENTIONED IN THE RECEIPT ITSELF I.E. DATE, SR. NO., PATIENT NAME, TEST PERFORMED, FEE RECEIVED AND DATE OF RECEIPT IS THERE, THAT CAN NOT BE BASIS FOR REJECTION OF BOOKS OF ACCOUNT. RE GARDING THE ESTIMATE PREPARED BY AO AS PER ANNEXURE, THE DIFFER ENCE AFTER REMAND REPORT AS SUBMITTED BY ASSESSEE AS PER REVIS ED WORKING COMES OUT TO RS. 73,830/- AFTER CORRECTING FOR RATE , EXPERT OPINION AS DISCUSSED SUPRA. IT IS FACTUALLY CORRECT THAT N O SCIENTIFIC BASIS ITA NO. 957/CHD/2010 AND C.O NO. 27/CHD/2010 A.C.I.T V. BHARTI BANSAL 4 HAS BEEN GIVEN BY AO NEITHER IN THE ASSESSMENT ORDE R NOR IN THE REJOINDER FOR BASIS OF NUMBER OF TEST HENCE THE SAI D ESTIMATE IS NOT CORRECT. OTHERWISE, DIFFERENCE IS JUST 1.77% WHICH IS VERY MINOR. I HAVE ALSO CAREFULLY CONSIDERED THE REMAND REPORTS S UBMITTED BY THE AO ON 9.4.2010 DULY FORWARDED BY JCIT ON 15.4.2010 IN WHICH THE AO IN PARA 2(I) OF HIS ORDER HAS GIVEN THE FACTUAL POSITION REGARDING RATE MENTIONED IN ANNEXURE I OF THE ASSES SMENT ORDER AND ACTUAL RATE CHARGED BY THE ASSESSEE AFTER VERIF ICATION ON THE BASIS OF RECEIPT OF BOOKS WHICH IN A GREAT WAY SUBS TANTIATES THE APPELLANTS CONTENTION. AS REGARDS QUANTITY OF WAX USED FOR BIOPSY TEST AND THE CROSS EXAMINATION PROVIDED TO ASSESSEE THE RESULT IS THAT DURING THE CROSS EXAMINATION THE CONCERNED MED ICAL EXPERT RELIED UPON BY THE AO IN HIS ORDER HAS STATED THE F ACT THAT THE WASTAGE OF WAX FOR MAKING BLOCKS FOR BIOPSY TEST CO MES TO 20% AND BLOCKS REQUIRED FOR ONE SMALL ENDOSCOPY BIOPSY IS ONE BLOCK AND FOR OTHER BIOPSY IT IS 10 BLOCKS. AS REGARDS, THE AOS EMPHASIS IN HIS ORDER THAT AS SESSEE IS NOT MAINTAINING STOCK REGISTER FOR CONSUMABLES AND COUNSELS PLEA THAT THIS PRACTICE IS BEING GOING ON SINCE THE INCE PTION OF LAB. LOOKING TO THE PECULIAR NATURE OF THE BUSINESS OF T HE ASSESSEE WHERE THE PATHOLOGICAL TESTS ARE TO BE PERFORMED IN VOLVING THE DIAGNOSIS OF DISEASE WHERE THE HUMAN LIFE IS AT A S TAKE NO PRECISE FORMULATE CAN BE LAID OUT AND IT IS NOT POSSIBLE TO MAINTAIN STOCK OF OPEN LIQUIDS/CHEMICALS ETC. THE ASSESSEE HAS ALSO BROUGHT TO MY NOTICE THAT THE ASSESSEES BOOK RESULT WHICH HAS BE EN ACCEPTED IN PAST BY THE DEPARTMENT IS CONSISTENT AND THERE IS N O VARIATION IN THAT. ASSESSEE ALONGWITH IN HIS REPLY LETTER DATED 22.4.2010 HAS FILED RATIO OF CONSUMABLE TO GROSS RECEIPTS WHICH I S 22.06% FOR THIS YEAR AS COMPARED TO 25.33% AND 26.54% OF EARLIER YE ARS. 6. IN SUPPORT OF APPEAL, THE LD. DR SUPPORTED THE O RDER PASSED BY THE AO. 7. IN REPLY THE LD. AUTHORISED REPRESENTATIVE FOR T HE ASSESSEE SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS PASSED BY THE AO AND THE LD. CIT(A). THE LD. CIT(A) HAS GIV EN COGENT REASONS FOR DELETING THE IMPUGNED ADDITION. WE ARE IN AGREEMEN T WITH THE ITA NO. 957/CHD/2010 AND C.O NO. 27/CHD/2010 A.C.I.T V. BHARTI BANSAL 5 REASONING GIVEN BY HIM. IN THIS VIEW OF THE MATTER , THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. 9. APROPOS MEMORANDUM OF CROSS-OBJECTIONS, THE LD. CIT(A) HAS GIVEN COGENT REASONS FOR SUSTAINING THE ADDITION TO THE E XTENT OF RS. 75,000/- OUT OF TOTAL ADDITION OF RS. 20,11,210/- MADE BY TH E AO. NO INFIRMITY IN HIS ORDER HAS BEEN POINTED OUT. IN THIS VIEW OF TH E MATTER, THE ORDER PASSED BY THE LD. CIT(A) IS CONFIRMED. MEMORANDUM OF CROSS-OBJECTIONS FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 16.01.2012 SD/- SD/- (H L KARWA) (D K SRIVASTAVA) VICE PRESIDENT ACCOUNANT MEMBER CHANDIGARH, 16.01.2012 SURESH COPY TO: 1. THE APPELLANT, A.C.I.T. 2. THE RESPONDENT, SMT. BHARTI BANSAL 3. THE CIT, PATIALA 4. THE CIT(A), PATIALA 5. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH ASSISTANT REGISTRAR, ITAT, CHANDIGARH