Income Tax Officer, Deoria V. Dr. Sunil Kumar Agrawal, Deoria

ITA 97/ALLD/2011

• Counselvise Citation: 9720714 RSA 2011
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 10-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T P SHUKLA
• Assessee Lawyers: ABHINAV MEHROTRA
• Keywords: Unexplained investment; Depreciation; Source of fund; Reason to believe
• Section: 69; 148; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 97/ALLD./2011 ASSTT. YEAR : 2007-08 INCOME-TAX OFFICER, VS. DR. SUNIL KUMAR AGARWAL, WARD, DEORIA. KAILASHPURI, GORAKHPUR ROAD, DEORIA. (PAN: AAQPA 4642J) C.O. NO. 19/ALLD./2011 (IN ITA NO. 97/ALLD./2011) ASSTT. YEAR : 2007-08 DR. SUNIL KUMAR AGARWAL, VS. INCOME-TAX OFFICER, KAILASHPURI, GORAKHPUR ROAD, WARD, DEORIA. DEORIA. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI T.P. SHUKLA, SR. DR ASSESSEE BY : SHRI ABHINAV MEHROTRA, ADV. DATE OF HEARING : 11.08.2014 DATE OF PRONOUNCEMENT : 14.08.2014 ORDER PER BHAVNESH SAINI, J.M.: THE DEPARTMENTAL APPEAL AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A)-III, LUCKN OW DATED 14.10.2010 FOR THE ASSESSMENT YEAR 2007-08. ITA NO. 97 AND CO NO. 19/ALLD./2011 2 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. BOTH THE MATTERS ARE DECIDED TOGETHER AS UNDER : 3. ON GROUND NO. 1, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.10,97,991/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF PROPERTY. THE ASSESSEE WAS FOUND TO HAVE CONSTRUCTED A HOUSE AND A NURSING HOME WHICH IS CLAIMED TO BE ONLY THE CLINIC OF THE ASSESSEE AND I N ORDER TO WORK OUT THE COST OF CONSTRUCTION IN THE HOUSE AND NURSING HOME, THE VAL UATION OFFICER, ALLAHABAD WAS REQUESTED TO WORK OUT THE ESTIMATED COST OF INVESTM ENT IN THE PROPERTY OF ASSESSEE, WHO WORKED OUT THE COST OF INVESTMENT IN THE PROPER TY AT GROUND FLOOR AND FIRST FLOOR FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08 A T RS.35,92,600/- AS AGAINST THE DECLARED COST OF CONSTRUCTION AT RS.25,58,000/-. IN THE ASSESSMENT YEAR UNDER APPEAL, THE DIFFERENCE IN THE COST OF INVESTMENT WO RKED OUT BY THE VALUATION OFFICER COMES TO RS.4,52,991/- (15,72,991 11,20,0 00), WHEREAS THE ADDITION OF RS.10,97,991/- HAS BEEN MADE BY THE AO. BEFORE THE AO, IT WAS CONTENDED THAT THE HOUSE ACTUALLY BELONGS TO FATHER AND MOTHER OF THE ASSESSEE AND IN SUPPORT OF THIS CONTENTION, THE ASSESSEE FILED TITLE DEED. IT WAS S TATED THAT THE ASSESSEE HAS BORROWED A SUM OF RS.12,00,000/- AS LOAN FROM SBI, DEORIA, WHICH WAS HANDED OVER TO HIS PARENTS THROUGH CHEQUE ALONG WITH ANOTH ER SUM OF RS.75,000/- FROM HIS ITA NO. 97 AND CO NO. 19/ALLD./2011 3 OWN RESOURCES FOR CONSTRUCTION OF THE HOUSE AS HIS PARENTS WERE NOT IN A POSITION TO INVEST ANY FURTHER SUM IN THE CONSTRUCTION OF THE P ROPERTY AND THE AO CONDUCTED ENQUIRY FROM SBI AS TO HOW THE LOAN HAD BEEN SANCTI ONED IN THE ABSENCE OF OWNERSHIP OF THE LAND. THE BANK AUTHORITIES REPLIED THAT PARENTS OF THE ASSESSEE ARE THE OWNER OF THE LAND, HAD RELINQUISHED THEIR RIGHT OVER THE LAND AND ACKNOWLEDGED THE LIEN OVER THE PROPERTY IN FAVOUR OF THE ASSESSE E/SBI AND BOTH THE PARENTS HAD ENTERED INTO A WRITTEN AGREEMENT ON A STAMP PAPER F OR NO OBJECTION ON CONSTRUCTION OVER THE LAND TO THE BANK AUTHORITIES. THIS EVIDEN CE WAS CONSTRUED AS DIVESTMENT OF THE RIGHT OF THE PARENTS TO USE THE PROPERTY IN FAVOUR OF THE ASSESSEE. OTHER FACTORS WHICH WEIGHED AGAINST THE ASSESSEE WERE THA T THE ASSESSEE SUBMITTED VARIOUS VOUCHERS OF EXPENDITURE INCURRED BY HIM IN HIS OWN NAME FOR THE PURCHASE OF RAW MATERIAL AND PAYMENT OF VARIOUS EXPENSES REQ UIRED FOR THE CONSTRUCTION OF THE PROPERTY. THE PROPERTY WAS VALUED AT RS.12,75,0 00/- IN THE BALANCE SHEET FOR THE YEAR UNDER CONSIDERATION WITHOUT REDUCING THE LIABI LITY OF SBI, THE ASSESSEE HAS CONFESSED BEFORE THE SURVEY TEAM THAT HE HAD RECEIV ED THE RENT FROM THE MEDICAL SHOP RUN BY SHRI G.K. SRIVASTAVA, WHO HAS ALSO GIVE N STATEMENT ON OATH DURING THE SURVEY THAT HE HAD BEEN PAYING RENT OF THE SHOP TO THE ASSESSEE. THE AO, THEREFORE, CONCLUDED THAT THE PROPERTY HAD BEEN TRANSFERRED TO THE ASSESSEE AND ENTIRE AMOUNT OF INVESTMENT IN THE CONSTRUCTION OF THE PROPERTY W AS CONSIDERED IN THE HANDS OF THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS ADMITTED ITA NO. 97 AND CO NO. 19/ALLD./2011 4 INVESTMENT IN PROPERTY AT RS.4,75,000/- WHEREAS THE TOTAL INVESTMENT INCLUDING THAT OF HIS PARENTS WAS SHOWN AT RS.11,20,000/-. THE AO HAS HELD THAT THERE WERE NO REASON TO BELIEVE THE CONTENTION OF THE ASSESSEE TH AT OVER AND ABOVE THE AMOUNT OF RS.4,75,000/-, A SUM OF RS.6,45,000/- WAS INVESTED BY THE PARENTS WHEN THEY HAD NO SOURCE OF INCOME TO MAKE INVESTMENT. THE ASSESSE E ALSO OBJECTED TO THE MEASUREMENT NOTED AND OBJECTIONS WERE SENT TO THE V ALUATION OFFICER FOR HIS COMMENTS, WHO STATED THAT THERE WERE NO MISTAKES IN THE VALUATION MADE IN THE EARLIER YEAR. THE ASSESSEE STATED BEFORE THE BANK A UTHORITIES, HE PAID SUPERVISION CHARGES AT THE RATE OF 200/- PER DAY, THE REBATE CL AIMED FOR SELF SUPERVISION CHARGES WAS NOT ALLOWED. IT WAS CONTENDED THAT BALANCE OF R S.14,99,991/- REMAINED TO HAVE BEEN INVESTED BY THE ASSESSEE FROM HIS LOAN ACCOUNT AND HIS OWN INCOME AND AFTER CONSIDERING THE INVESTMENT MADE BY THE ASSESSEE AT RS.7,45,000/-, THE BALANCE AMOUNT OF RS.10,97,991/- HAS BEEN SUBSTANTIALLY ADD ED IN THE HANDS OF ASSESSEE AS UNEXPLAINED INVESTMENT. 4. THE ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A ) AND THE ASSESSEE FURNISHED COPY OF SALE DEED FOR PURCHASE OF LAND BY PARENTS OF THE ASSESSEE. THE MAP WAS APPROVED FOR CONSTRUCTION IN THEIR NAMES AN D THE ACTUAL CONSTRUCTION STARTED IN JUNE, 2005 AND NOVEMBER, 2005. COPY OF B ANK ACCOUNTS OF PARENTS OF ASSESSEE WERE FILED TO SHOW WITHDRAWALS WERE MADE F ROM RENTAL INCOME, CAPITAL ITA NO. 97 AND CO NO. 19/ALLD./2011 5 GAINS ETC. THE EVIDENCES FOR INCOME FROM HOUSE PROP ERTY ALONG WITH COPY OF BANK ACCOUNT WERE FILED TO SHOW THAT THERE WERE ENTRIES IN THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07 AND COPY OF THE RETURN TO SHOW THAT BOTH ARE OLD ASSESSEES. THE MAP OF FIRST FLOOR WAS APPROVED ON 11.11.2005 A ND TILL 02.02.2006, A SUM OF RS.6,83,097/- WAS INVESTED AFTER DRAWING FROM THE B ANK ACCOUNT OF HIS PARENTS. THE ASSESSEE HAD OBTAINED LOAN OF RS.12 LACS WHICH WAS NOT USED BY HIM FROM TIME TO TIME FOR CONSTRUCTION PURPOSES, BUT WAS TRANSFERRED IN THE BANK ACCOUNT OF HIS PARENTS. IT WAS EXPLAINED THAT A SUM OF RS.24,58,90 7/- HAS BEEN WITHDRAWN FROM BANK PASSBOOK OF PARENTS OF THE ASSESSEE. IT WAS UT ILIZED FOR CONSTRUCTION OF HOUSE. THE OBJECTION OF THE AREA WAS NOT VERIFIED BY THE A O. THE AO HAS NOT CONSIDERED THAT THE ASSESSEE IS NOT OWNER OF THE PROPERTY BECA USE HE HAS NOT CLAIMED ANY INTEREST ON LOAN OR DEPRECIATION IN THE RETURN OF I NCOME FILED WITH THE DEPARTMENT. THE PROPERTY WAS CONSTRUCTED BY THE PARENTS OF THE ASSESSEE. NO OBJECTION FROM THE PARENTS WAS FILED. THE INVESTMENT IN THE PROPERTY H AS ALSO BEEN SHOWN IN THE RETURN OF PARENTS OF ASSESSEE FOR THE ASSESSMENT YEAR 2007 -08 WHICH WAS MUCH BEFORE COMPLETION OF THE ASSESSMENT IN THE CASE OF ASSESSE E. THE DEPARTMENT ISSUED NOTICE U/S. 148 FOR THE ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09, WHICH ITSELF SHOWED THAT THE DEPARTMENT WAS NOT SURE ABOUT THE E NTIRE INVESTMENT MADE BY THE ASSESSEE. THE ASSESSEE FILED ALL THE DOCUMENTS INCL UDING INSURANCE COVER OBTAINED BY THE PARENTS OF ASSESSEE OF THE PROPERTY IN THEIR NAMES. THE LD. CIT(A) AFTER ITA NO. 97 AND CO NO. 19/ALLD./2011 6 CONSIDERING THE EXPLANATION OF THE ASSESSEE AND THE MATERIAL ON RECORD DELETED THE ADDITION. HIS FINDINGS IN PARA 3.1.3 OF THE APPELLA TE ORDER ARE REPRODUCED AS UNDER : 3.1.3. I HAVE CONSIDERED THE REPLY FILED AND A LSO PERUSED THE EVIDENCE ON RECORD. BOTH THE PARENTS OF THE ASSESSE E ARE ASSESSED TO TAX AND NOTICES U/S 148 APPARENTLY FOR CONSIDERI NG THE SOURCE OF INVESTMENT IN THE PROPERTY HAVE ALSO BEEN ISSUED TO THEM. MERELY BECAUSE SOME OF THE BILLS/VOUCHERS WERE OBTA INED IN THE NAME OF THE ASSESSEE AND THE PARENTS HAD GIVEN A N. O.C. WHICH HAS BEEN CONSIDERED AS RELINQUISHMENT OF THEIR RIGH T OVER THE LAND IN FAVOUR OF THE ASSESSEE, THE ASSESSING OFFIC ER WAS NOT JUSTIFIED TO DISREGARD THE OVERWHELMING EVIDENCE ON RECORD IN THE FORM OF THE INVESTMENT SHOWN IN THE RETURNS OF THE PARENTS, WITHDRAWALS FROM BANK ACCOUNT OF THE PARENTS AS ALS O THE FACT THAT BEING MORE THAN. 60 YEARS OLD AND LACKING FUND S, THE BANK NORMALLY WOULD NOT HAVE GIVEN THEM ANY LOAN FOR THE PURPOSE OF CONSTRUCTION AND THE ASSESSEE HAD ONLY OBTAINED THE LOAN FOR FACILITATING THE CONSTRUCTION ON THE FIRST FLOOR, T HE ENTIRE OWNERSHIP OF THE GROUND FLOOR AS WELL AS THE FIRST FLOOR CANNOT BE VESTED IN THE ASSESSEE. AS PER - THE D.V.O'S REPORT, THE DIFFEREN CE IN THE YEAR UNDER CONSIDERATION WORKS OUT TO RS.4,52,9 91/- ONLY WHICH HAS BEEN ERRONEOUSLY TAKEN AT RS.10,97,991/- BY NOT CONSIDERING THE INVESTMENT FROM DISCLOSED SOURCES O F THE PARENTS OF THE ASSESSEE. A PART OF THE PERIOD OF CONSTRUCTI ON ALSO FALLS IN THE F.Y. 2007-08, RELEVANT TO A,Y. 2008-09 AND IT I S EVIDENT FROM THE COPY OF THE STATEMENT RECORDED ON 16.11.2006 TH AT THE ASSESSEE HAD STATED THAT THE CONSTRUCTION STARTED I N JUNE 2006 AND WAS GRADUALLY BEING CARRIED ON AS AND WHEN THE FUNDS WERE BEING AVAILABLE. ONLY THE CONSTRUCTION OF THE FIRST FLOOR WAS DONE AND THE FINISHING AND WOOD WORK AS WELL AS DISTEMPE RING WAS NOT COMPLETE AND THE CONSTRUCTION ON THE GROUND FLO OR WAS OF AVERAGE STANDARD AND THE ASSESSEE STATED THAT THE A CTUAL INVESTMENT WOULD BE INFORMED AFTER HIS FATHER'S RET URN WHO WAS NOT AVAILABLE AT THE TIME OF THE STATEMENT. THEREFO RE, WITHOUT CONSIDERING OR QUANTIFYING THE UNDISCLOSED INVESTME NT IN CONSTRUCTION OF THE HOUSE FOR WHICH THE LOAN HAD BE EN OBTAINED BY THE ASSESSEE, AND NOT CONSIDERING THE INVESTMENT OF THE PARENTS, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ATTRIBUTING THE ENTIRE AMOUNT OF RS. 10,97,991/- AS UNEXPLAINED INV ESTMENT U/S 69 ITA NO. 97 AND CO NO. 19/ALLD./2011 7 OF THE I.T. ACT, 1961 SUBSTANTIALLY IN THE HANDS OF THE ASSESSEE INSTEAD OF HIS FATHER AND MOTHER. MOREOVER, THE PRO VISIONS OF SECTION 69B AND NOT 69 WERE TO BE APPLIED, EVEN IF THE ASSESSING OFFICER'S VIEW IS TO BE ACCEPTED. ANY UNEXPLAINED A DDITION COULD HAVE BEEN MADE IN THE HANDS OF THE OWNER ONLY AS TH E ASSESSEE CAN AT THE MOST BE TREATED AS A CREDITOR WHO HAD AD VANCED A LOAN OF RS.12,75,000/- TO HIS PARENTS BEING RS.12,0 0,000/- AS LOAN FROM THE BANK AND RS.75,000/- OUT OF HIS KNOWN SOURCES OF INCOME. THUS, THE ADDITION OF RS.10,97,991/- MADE I N THE HANDS OF THE ASSESSEE IS HEREBY DELETED. THE ASSESSING OF FICER SHALL BE FREE TO TAKE APPROPRIATE ACTION IN THE CASES OF RES PECTIVE YEARS OF THE ACTUAL OWNERS I.E. THE PARENTS OF THE ASSESSEE WHO ARE ALSO ASSESSED TO TAX. THUS, GROUND NO. 1 OF THE APPEAL I S ALLOWED. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE PARENTS OF THE ASSESSEE ARE ADMITTEDLY OWNER OF THE PROPERTY IN QUESTION. WHEN THE ASSESSEE OBTA INED LOAN FROM SBI, THE PARENTS OF THE ASSESSEE HAVE EXECUTED CERTAIN DOCUMENTS INC LUDING RELINQUISHMENT DEED WHICH WOULD ONLY SUGGEST THAT THESE DOCUMENTS AND A GREEMENTS WERE SIGNED BY THE PARENTS OF THE ASSESSEE FOR GIVING COLLATERAL SECUR ITY TO THE BANK FOR OBTAINING LOAN BY THE ASSESSEE. NO OTHER DOCUMENT HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE PROPERTY IN QUESTION WAS LEGALLY TRANSFERRED IN THE NAME OF THE ASSESSEE. INVESTMENT IN THE PROPERTY HAS BEEN SHOWN IN THE RETURN OF INC OME FILED BY THE PARENTS OF THE ASSESSEE. THE MAP WAS SANCTIONED IN THE NAME OF PAR ENTS OF THE ASSESSEE FOR RAISING CONSTRUCTION IN PROPERTY IN QUESTION AND THERE HAVI NG SUFFICIENT SOURCE TO MAKE INVESTMENT IN THE PROPERTY, THE ASSESSEE NEVER CLAI MED INTEREST ON LOAN OR DEPRECIATION IN HIS RETURN OF INCOME. THE DVO HAS W ORKED THE DIFFERENCE OF ITA NO. 97 AND CO NO. 19/ALLD./2011 8 RS.4,52,991/- IN THE YEAR UNDER APPEAL AND WHEN YEA R-WISE BIFURCATION HAS BEEN GIVEN, THERE WAS NO JUSTIFICATION TO MAKE ENTIRE AD DITION IN THE ASSESSMENT YEAR UNDER APPEAL. THE LD. CIT(A) HAS PROPERLY ANALYSED EVIDENCES BEFORE HIM AND HAS CORRECTLY CAME TO THE CONCLUSION THAT THE PROPERTY ONLY VESTED IN THE PARENTS OF THE ASSESSEE AND AS SUCH THE INVESTMENTS, IF ANY, MADE OUTSIDE THE BOOKS OF ACCOUNTS COULD NOT BE ADDED IN THE HANDS OF THE ASSESSEE. TH E LD. CIT(A) WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION. IT MAY ALSO BE NOTED HERE THAT WHEN SIMILAR ISSUE WAS CONSIDERED IN RE-ASSESSMENT PROCEEDINGS U/S. 14 8 OF THE IT ACT IN THE CASE OF PARENTS OF THE ASSESSEE, THERE WAS NO REASON TO MAK E ADDITION IN THE HANDS OF THE ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION IN THE HANDS OF THE ASSESSEE. FURTHER, THE LD. CIT(A) HAS ALREADY GIVEN LIBERTY TO THE AO TO TAKE UP APPROPRIATE ACTION IN THE CASES OF PARENTS OF THE ASSESSEE, THEREFORE, THERE WOULD NOT HAVE BEEN ANY JUSTIFICATION TO FILE THE APPEAL ON THE MATTER IN ISSUE. GROUND NO. 1 OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 6. ON GROUND NO. 2, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.2,64,185/- AS INCOME FROM CONSULTATION FEES AND THE ASSESSEE CHALLENGED THE SUSTENANCE OF ADDITION OF RS.1,00,000/- ON THE SAME ISSUE ON GROUND NO. 1 OF THE CROSS OBJECTION. THE AO OBSERVED THAT AT THE TIME O F SURVEY, ONLY TWO PATIENT ITA NO. 97 AND CO NO. 19/ALLD./2011 9 REGISTERS WERE FOUND AND SEIZED. IN THE RETURN OF I NCOME, THE ASSESSEE HAD SHOWN INCOME FROM PROFESSION AT RS.4,78,450/-, INVESTIGAT ION CHARGES AT RS.66,450/- AND FROM INWARD PATIENTS AT RS.32,495/-. THE ASSESSEE W AS REQUIRED TO SUBMIT PATIENT REGISTERS, BILLS AND VOUCHERS BUT THE ASSESSEE PROD UCED THE BOOKS MAINTAINED AS PRESCRIBED UNDER THE INCOME-TAX RULES. THE AO REQUI RED THE ASSESSEE AS TO WHY THE INCOME FROM PROFESSION SHOULD NOT BE CALCULATED ON THE BASIS OF BOOKS SEIZED BY THE DEPARTMENT AS THERE WAS DISCREPANCY IN THE N UMBER OF PATIENTS WHO HAD CONSULTED AND NUMBER OF PATIENTS, FOR WHICH RECEIPT S HAVE BEEN SHOWN. THE ASSESSEE STATED BEFORE THE AO THAT HE DOES NOT CHAR GE FROM ALL THE OLD PATIENTS. CHARGES FROM NEW PATIENTS WERE ADOPTED AT RS.125/- AND THE DIFFERENCE IN THE AMOUNT SHOWN BY THE ASSESSEE AND THE AMOUNT CALCULA TED BY THE AO WAS WORKED OUT AT RS.14,775/- IN THE CASE OF NEW PATIENTS WHIL E THE DIFFERENCE IN THE CASES OF OLD PATIENTS WAS WORKED OUT AT RS.3,49,410/- AND A SUM OF RS.3,64,185/- HAS BEEN ADDED TO THE TOTAL INCOME AS UNDISCLOSED INCOME FRO M CONSULTATION FEES. THE ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A) AND I T WAS EXPLAINED THAT THE ASSESSEE HAD PRODUCED BOOKS OF ACCOUNTS AT THE ASSE SSMENT STAGE WHICH WERE LATER ON IMPOUNDED. REGARDING THE PATIENT REGISTERS FOUND AT THE TIME OF SURVEY, IT WAS STATED THAT THE SAME WAS CLARIFIED BEFORE THE AO. T HE FIRST REGISTER WAS OF PATIENTS/ATTENDANTS FOR GIVING A NUMBER TO THEM AND THE SECOND REGISTER WAS THE REGISTER OF ACTUAL PATIENTS WHO WERE ATTENDED. AS P ER DOCUMENTS UPTO 11.04.2006, ITA NO. 97 AND CO NO. 19/ALLD./2011 10 THE CONSULTATION CHARGES FROM NEW PATIENTS WERE CHA RGED AT RS.180/-, AND UPTO 30 TH JUNE, 2006 AT RS.100/- AND ON THE DATE OF THE SURVE Y I.E., 16.11.2006, IT WAS INFORMED THAT THE FEE WAS INITIALLY RS.50/- WHICH H AD BEEN INCREASED FROM AUGUST, 2006 TO RS.125/- WHILE THE AO HAS NOT GONE THROUGH THE RECORDS AND HAS APPLIED THE CONSULTATION CHARGES OF RS.125/- UNIFORMLY FOR ALL THE PATIENTS. IT WAS FURTHER EXPLAINED AT THE TIME OF SURVEY THAT NO CONSULTANCY CHARGES WERE TAKEN FROM OLD PATIENTS TILL THREE WEEKS WHILE THE AO HAS CONSIDER ED THAT ALL THE PATIENTS VISITED AFTER A PERIOD OF 3-4 WEEKS. NORMALLY, THE PATIENTS LIVING NEARBY COME AFTER 5-7 DAYS WHILE THOSE LIVING FAR OFF COME AFTER 10-15 DA YS WHILE THE AO HAD WORKED OUT THE DIFFERENCE IN THE RECEIPTS OF 4% IN THE CASE OF NEW PATIENTS, THE SAME HAS BEEN COMPUTED AT 340% IN THE CASE OF OLD PATIENTS WHICH IS LIABLE TO BE DELETED. THE LD. CIT(A) CONSIDERING THE ASSESSMENT ORDER FOUND THAT THE RECEIPTS COMPUTED BY THE AO IN RESPECT OF CERTAIN MONTHS ARE LESS THAN THOSE SHOWN BY THE ASSESSEE HIMSELF. IT WAS ALSO FOUND THAT WHILE DIFFERENCE OF 4% ONLY HAS BEEN WORKED OUT IN THE CASES OF NEW PATIENTS, HOWEVER, IN THE CASES OF OLD PATIENTS, IT HAS BEEN COMPUTED AT 340%. THE LD. CIT(A), HOWEVER, NOTED THAT THE FA CT REMAINS THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT AT THE TIME OF SURVEY NOR THE SAME WERE INITIALLY PRODUCED BEFORE THE AO. THEREFORE, THERE WAS JUSTIF ICATION TO DISBELIEVE THE GROSS RECEIPTS SHOWN BY THE ASSESSEE. THE LD. CIT(A) AFTE R CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES REDUCED THE ADDITION OF RS. 3,64,185/- TO RS.1,00,000/- AND ITA NO. 97 AND CO NO. 19/ALLD./2011 11 ALLOWED THE APPEAL OF THE ASSESSEE. BOTH THE PARTIE S ARE IN APPEAL AND CROSS OBJECTION. 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL AS WELL AS THE CROSS OBJECTION FILED BY ASSESSEE ON THIS ISSUE. ON THE BASIS OF BOOKS OF ACCOUNTS SEIZED BY THE DEP ARTMENT DURING THE COURSE OF SURVEY, THERE WERE DISCREPANCIES IN THE NUMBER OF P ATIENTS WHO HAD CONSULTED AND NUMBER OF PATIENTS, FOR WHICH RECEIPTS WERE SHOWN. THE LD. CIT(A) AFTER VERIFYING THE FACTS FROM THE RECORD CORRECTLY FOUND THAT THE DIFFERENCE IN THE RECEIPTS OF 4% WAS FOUND IN THE CASES OF NEW PATIENTS, THEREFORE, THERE WAS NO JUSTIFICATION TO COMPUTE THE DIFFERENCE AS 340% IN THE CASES OF OLD PATIENTS. THEREFORE, THE ADDITION WAS RIGHTLY REDUCED BY THE LD. CIT(A). HOWEVER, THE FACT REMAINS THAT AT THE INITIAL STAGE, NO BOOKS OF ACCOUNT WERE PRODUCED AT THE TIM E OF SURVEY OR AT THE ASSESSMENT STAGE. THE EXPLANATION OF THE ASSESSEE W AS NOT SUFFICIENT TO DELETE THE ENTIRE ADDITION. THEREFORE, THE LD. CIT(A) WAS JUST IFIED IN RESTRICTING THE ADDITION OF RS.1,00,000/- ON THIS ISSUE. GROUND NO. 2 OF THE DE PARTMENTAL APPEAL AND GROUND NO. 1 OF THE CROSS OBJECTION ARE ACCORDINGLY DISMIS SED. 8. ON GROUND NO. 3, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.58,700/- AS UNDISCLOSED INCOME FROM ECG, ON GROU ND NO.4 CHALLENGED THE ITA NO. 97 AND CO NO. 19/ALLD./2011 12 DELETION OF ADDITION OF RS.98,840/- AS ROOM RENT, O N GROUND NO.5 CHALLENGED THE DELETION OF ADDITION OF RS.25,725/- AS ROOM RENT FR OM PRIVATE WARDS, ON GROUND NO. 6, CHALLENGED THE DELETION OF ADDITION OF RS.58,450 /- ON ACCOUNT OF SUGAR TESTING AND ON GROUND NO.7, CHALLENGED THE DELETION OF ADDI TION OF RS.1,17,000/- ON ACCOUNT OF NURSING CHARGES. THE LD. CIT(A) DECIDED ALL THESE GROUNDS TOGETHER. THE AO HAS DISREGARDED THE RECEIPTS SHOWN BY THE ASSESS EE UNDER THESE HEADS AND HAS ESTIMATED THE ECG CARRIED OUT IN 5% OF THE PATIENTS , ROOM RENT AT NOT LESS THAN RS.80/- IN PLACE OF RS.10/- CLAIMED BY THE ASSESSEE FOR EACH WARD, ROOM RENT FROM PRIVATE WARD AT RS.300/- IN PLACE OF RS.125/- SHOWN BY THE ASSESSEE, INCOME FROM SUGAR TESTING, ECG FOR 10% OF THE PATIENTS ON ESTIM ATE BASIS IN THE ABSENCE OF RECORDS. THE ADDITION HAS BEEN MADE FOR ROOM RENT O N ACCOUNT OF STATEMENT GIVEN TO SBI AUTHORITIES IN THE PROJECT REPORT WHILE NURS ING CHARGES HAVE BEEN ESTIMATED AT 50% OF THE AMOUNT OF SALARY PAID TO THE NURSING STAFF. THE FACT REMAINS THAT THE PREMISES OF THE ASSESSEE WAS SURVEYED U/S. 133A OF THE IT ACT AND THERE WAS NO EVIDENCE INCLUDING THAT FOR THE DATE OF SURVEY TO I NDICATE THAT THE ASSESSEE HAD RECEIVED EXCESSIVE CHARGES FOR THESE TESTS. ALL THE SE TESTS COULD BE VERIFIED AND THE ASSESSEE IS REQUIRED TO MAINTAIN PROPER RECORDS AND NO QUESTION HAS BEEN ASKED FROM THE ASSESSEE REGARDING THE NUMBER OF PATIENTS FOR WHOM THE TESTS WERE CARRIED OUT. NO STATEMENTS OF PATIENTS HAVE BEEN RECORDED. IN THE ABSENCE OF ANY INDEPENDENT EVIDENCE, THE ESTIMATE MADE BY THE AO U NDER THESE HEADS IS WHOLLY ITA NO. 97 AND CO NO. 19/ALLD./2011 13 UNJUSTIFIED. THE LD. CIT(A), CONSIDERING THE EXPLAN ATION OF THE ASSESSEE AND THAT NO MATERIAL WAS FOUND AGAINST THE ASSESSEE ON THESE IS SUES, DELETED ALL THE ADDITIONS AND APPEAL OF THE ASSESSEE ON THESE GROUNDS HAS BEE N ALLOWED. 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THESE GROUNDS OF APPEAL OF THE REVENUE. NO MATERIAL IS PR ODUCED BEFORE US TO SHOW THAT ANY INCRIMINATING EVIDENCE WAS FOUND AGAINST THE AS SESSEE DURING THE COURSE OF SURVEY TO JUSTIFY THE ESTIMATE OF INCOME UNDER THES E HEADS OF INCOME. THE STATEMENTS OF PATIENTS HAVE NOT BEEN RECORDED. NO E VIDENCES OF EXCESS CHARGES RECEIVED BY THE ASSESSEE WERE ON RECORD. IN THE ABS ENCE OF ANY INDEPENDENT ENQUIRY OR EVIDENCE BROUGHT ON RECORD, THERE WAS NO JUSTIFI CATION TO ESTIMATE THE INCOME UNDER THESE HEADS OF INCOME. THE LD. CIT(A) WAS, TH EREFORE, JUSTIFIED IN DELETING THE ADDITION. GROUNDS NOS. 3 TO 7 OF THE APPEAL OF THE REVENUE ARE ACCORDINGLY DISMISSED. 10. ON GROUND NO.8, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF RS.35,000/- FROM SHOP RENT. THE ASSESSEE EXPLAINED THAT SHOP DID NOT BELONG TO HIM BUT TO HIS PARENTS WHO HAVE SHOWN RENTAL INCOME EQU ALLY IN THE RETURN OF INCOME. THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSES SEE AND HELD THAT NO SUCH ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE . IN VIEW OF THE SPECIFIC FINDING ITA NO. 97 AND CO NO. 19/ALLD./2011 14 OF FACT RECORDED BY THE LD. CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER. GROUND NO. 8 OF APPEAL OF THE REVENUE IS ACC ORDINGLY DISMISSED. 11. GROUND NO. 9 OF APPEAL OF THE REVENUE IS GENERA L AND CALLS FOR NO FURTHER FINDING. 12. ON GROUND NO. 2 OF THE CROSS OBJECTION, THE ASS ESSEE CHALLENGED THE DISALLOWANCE OF RS.90,000/- UNDER THE HEAD RENT. TH E AO DISALLOWED RS.96,000/- TOWARDS RENT PAID. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT RENT OF RS.6,000/- PER MONTH WAS PAID TO THE HUF FOR TWO MONTHS AND RE NT OF RS.90,000/- FOR 10 MONTHS WAS PAID TO THE PARENTS. THE AO DISALLOWED R S.90,000/-, AS INVESTMENT IN THE CONSTRUCTION OF HOUSE AND NURSING HOME HAS BEEN HELD TO BE MADE BY THE ASSESSEE. THE LD. CIT(A) DELETED THE ADDITION OF RS .6,000/- AND CONFIRMED THE ADDITION OF RS.90,000/-. 13. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. WE HAVE CONSIDERED THE ISSUE OF THE PROPERTY IN THE NAME OF PARENTS OF ASSESSEE AND CONFIRMED THE FINDINGS OF L D. CIT(A) THAT INVESTMENT IN THE CONSTRUCTION OF PROPERTY HAS BEEN MADE BY THE PAREN TS OF THE ASSESSEE. THE AO MERELY DISALLOWED RS.90,000/- BECAUSE THE ADDITION ON ACCOUNT OF INVESTMENT IN ITA NO. 97 AND CO NO. 19/ALLD./2011 15 CONSTRUCTION OF HOUSE AND NURSING HOME HAVE BEEN MA DE IN THE CASE OF ASSESSEE. SINCE THE PROPERTY BELONGED TO THE PARENTS OF THE A SSESSEE AND WHEN RENT IS PAID BY THE ASSESSEE TO HIS PARENTS, THE ADDITION SHOULD NO T HAVE BEEN SUSTAINED IN THE CASE OF THE ASSESSEE. THE LD. CIT(A) DID NOT GIVE ANY RE ASON FOR SUSTAINING THE ADDITION. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORIT IES BELOW AND DELETE THE ADDITION OF RS.90,000/-. IN THE RESULT, GROUND NO. 2 OF CROS S OBJECTION OF THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE DEPARTMENTAL APPEAL STANDS D ISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B.C. MEENA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT BY ORDER 2. RESPONDENT 3. CIT(A), CONCERNED ASSTT. REGISTRAR 4. CIT, CONCERNED 5. DR, ITAT, ALLAHABAD 6. GUARD FILE TRUE COPY