Ranjita Jena, Angul V. ACIT, Central Circle, Cuttack

ITSSA 81/CTK/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2633 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-01-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SB
• Assessment Year: 2013-2014
• Appeal Filed On: 30-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Assessee Lawyers: J M PATTNAIK
• Keywords: Depreciation; Search and seizure; Condonation of delay; TDS
• Section: 44AD; 40(a)(ia); 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M.GARG, JM & SHRI L.P. SAHU, AM (THROUGH : VIDEO CONFERENCING) IT (SS) A NO S . 80 & 8 1 /CTK/201 9 ( / ASSESSMENT YEAR S : 2012 - 2013 & 2013 - 2014 ) SMT. RANJITA JENA, C/O DR. SUBAS CHANDRA JENA, AMALAPADA, TALCHER TOWN, TALCHER, ANGUL - 759107 VS ACIT, CENTRAL CIRCLE, CUTTACK PAN NO. : A CVPJ 3787 A ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SH RI J.M.PATTNAIK , AR /REVENUE BY : SHRI M.K.GAUTAM , CIT DR / DATE OF HEARING : 20 /1 1 /2020 / DATE OF PRONOUNCEMENT : 29 /0 1 /202 1 / O R D E R PER C.M.GARG, JM : THESE TWO APPEALS FILED BY THE ASSESSEE ARE AGAINST THE ORDER DATED 19.12.2018 PASSED BY THE CIT(A) - 2, BHUBANESWAR FOR THE ASSESSMENT YEARS 2012 - 2013 TO 2014 - 2015. 2. AS PER THE OFFICE NOTE, THERE IS A DELAY OF 287 DAYS IN FILING BOTH THE APPEALS. LD. AR FILED AN APPLICATION ALONG WITH AFFI DAVI T FOR CONDONATION OF DELAY AND SUBMITTED THAT THE DELAY OF ABOVE DAYS IN FILING THE PRESENT APPEALS MAY KINDLY BE CONDONED. ON THE OTHER HAND, LD. DR OPPOSED TO CONDONE THE DELAY. 3 . ON PERUSAL OF THE AFFIDAVIT FILED BY THE ASSESSEE, IT IS FOUND THAT THE D ELAY OCCURRED IN FILING THE PRESENT APPEAL DUE TO THE ILL - HEALTH OF THE ASSESSEE. T HE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR LAND IT (SS) A NO S . 8 0 & 81 /CTK/20 1 9 2 ACQUISITION VS. MST. KATIJI & ORS., 1987 AIR 1353, HAS LAID DOWN THAT IN SUCH MATTERS, A LIBERAL APPROACH IS ADOPTED A S ORDINARILY A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. IT HAS BEEN FURTHER LAID DOWN THAT SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED FOR THE OT HER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON - DELIBERATE DELAY. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE JUDICIAL DECISION OF HONBLE SUPREME COURT, WE CONDONE THE DELAY OF 287 DAYS IN FILING BOTH THE APPEALS AND THE APPEALS ARE ADMITTED FOR HEARING ON MERITS. 4 . SINCE THE ISSUE INVOLVED IN ALL THE APPEALS IS IDENTICAL, THEREFORE, ALL THE APPEALS HAVE BEEN HEARD EN MASSE AND DISPOSED OFF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF BREVITY AND CONVENIEN CE, WE SHALL TAKE INTO CONSIDERATION FACTS MENTIONED IN IT(SS)A NO.80/CTK/2019 FOR THE A.Y.2012 - 2013 FOR DECIDING BOTH THE APPEALS. 5 . THE SOLE ISSUE INVOLVED IN BOTH THE APPEALS OF THE ASSESSEE IS WITH REGARD TO DISALLOWANCE OF EXPENSES @49% ON A NOVEL ID EA WITHOUT ANY SCIENTIFIC BASIS TO THAT EFFECT. 6 . BRIE F FACTS OF THE CASE ARE THAT THERE WAS A SEARCH AND SEIZURE ACTION ON 03.09.2015 IN THE CASES BELONGING TO CUTTACK, HOSPITAL PVT. LTD. (CHPL) GROUP. CHPL RUNS A SUPER - SPECIALITY HOSPITAL UNDER THE NAM E AND STYLE OF 'ASHWINI HOSPITAL' AT CUTTACK. THE DIRECTORS OF CHPL ARE DR. MAYA GANTAYAT, DR. SUBRAT KUMAR JENA, MRS. SUMA DEVI DASH, SHRI JAYAJIT DASH, SMT. RANJITA JENA, SHRI RAJANI KANT JENA AND TANAYA DEVI. SMT. IT (SS) A NO S . 8 0 & 81 /CTK/20 1 9 3 RANJITA JENA IS A SISTER OF DR. SUBRAT KUMAR JENA AND IS MARRIED TO DR. SUBHASH CHANDRA JENA. SHE RUNS A PROPRIETARY NURSING HOME AT TALCHER UNDER A NAME 'JENA AND JENA NURSING HOME' IN WHICH DR. SUBHASH CHANDRA JENA PRACTICES AS A GYNAECOLOGIST. SAMPA ANUPURBA AND SAMPIKA JENA ARE DAUGHTERS OF DR. SUBHASH CHANDRA JENA AND SMT. RANJITA JENA. SUBSEQUENT TO THE SEARCH, THE ASSESSING OFFICER ISSUED NOTICE U/S.L53A OF THE INCOME TAX ACT, 1961 AND THEREAFTER CO MPLETED THE ASSESSMENT U/S.153 A OF THE INCOME TAX ACT, 1961. AGAINST THE ABOVE ORDER OF AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND FINDINGS OF AO , DELETED THE ADDITION MADE BY THE AO. HOWEVER, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US WITH THE GRIEVANCE THAT THE DISALLOW ANCE MADE BY THE AO @49% OF THE GROSS RECEIPTS IS ON HIGHER SIDE WHICH SHOULD BE REDUCED TO A REASONABLE EXTENT. 7 . LD. COUNSEL DUE TO NON - DEDUCTION OF TDS U/S.194J OF THE ACT ON THE SALARIES PAID TO THE DOCTORS, THE AO DISALLOWED THE EXPENDITURE @49% OF THE GROSS RECEIPTS WHICH SEEMS TO BE IN A HIGHER SIDE AS IN NO CIRCUMSTANCES THE EXPENSES CANNOT BE 49% OF THE GROSS RECEIPTS IN THIS LINE OF BUSINESS WHICH MAY KINDLY BE REDUCED TO A REASONABLE EXTENT BASING ON COMPARABLE CASES. 8 . REPLYING TO THE ABOVE, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN THE RETURN OF INCOME, THE ASSESSEE HAS COMPUTED THE PROFITS U/S.44AD OF THE ACT ON PRESUMPTIVE BASIS AND THE AO HAS ALREADY REJECTED ASSESSEES CLAIM OF SUCH DISCLOSURE . IT IS ALSO SUBMITTED BY THE LD. IT (SS) A NO S . 8 0 & 81 /CTK/20 1 9 4 DR THAT THE DEPRECIATION IS NOT ALLOWED SINCE RELEVANT ASSETS ARE NOT OWNED BY THE ASSESSEE AND THE ASSESSEE HAS NO TAN (TAX DEDUCTION ACCOUNT NUMBER) IN HER NAME, THEREFORE, IT CLEARLY INDICATES THAT NO TDS WAS MADE IN RESPECT OF DOCTORS FEES AS REQUIRED U/ S.194J OF THE ACT. ACCORDINGLY, THE AO HAS RIGHTLY DISALLOWED EXPENSES @ 49% OF THE TOTAL GROSS RECEIPTS. 9 . CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ARGUMENTS ADVANCED BY BOTH THE PARTIES BEFORE US, FIRST OF ALL WE NOTE THAT THE L D. CIT(A) HAS GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE BY OBSERVING AS FOLLOWS : - 3.4 I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. IT IS AN ADMITTED FACT THAT NO EVIDENCE ABOUT UNDISCLOSED RECEIPTS WAS FOUND DURING THE SEARCH FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HAS NOT DONE ANY INVESTIGATION TO DETERMINE HIGHER RECEIPTS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IN ABSENCE OF ANY OF THIS, THE APPELLANT'S GROSS RECEIPTS CANNOT BE ARBI TRARILY ESTIMATED AT THE AVERAGE OF THE THREE FINANCIAL YEARS FOR WHICH SEIZED MATERIAL IS AVAILABLE. THERE IS NO CONNECTION OF SEIZED MATERIAL WITH THE GROSS RECEIPTS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IT CANNOT BE PRESUMED THAT JUST BECAUSE FOR FINANCIAL YEARS FOR WHICH SEIZED MATERIAL HAS BEEN FOUND AND HIGHER RECEIPTS ARE DETECTED, RECEIPTS FOR THE FINANCIAL YEAR UNDER CONSIDERATION WILL ALSO BE HIGHER. IN VIEW OF THIS, THE ASSESSING OFFICER IS DIRECTED TO ACCEPT GROSS RECEIPTS SHOWN BY THE AP PELLANT AT RS.11,88,500/ - . 3.5 IN PARAGRAPH 4 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS DEALT WITH APPLICABILITY OF THE PROVISIONS OF SECTION 44AD OF IT. ACT, 1961. ACCORDING TO THE ASSESSING OFFICER, SINCE THE APPELLANT IS PROVIDING SERVICE S RELATING TO MEDICAL MATTERS, SHE WILL BE DEEMED TO HAVE CARRIED ON MEDICAL PROFESSION, EVEN IF, SHE IS NOT A QUALIFIED DOCTOR. ON THE OTHER HAND, THE APPELLANT HAS STATED THAT SHE IS RUNNING A NURSING HOME AND SHE EMPLOYS PROFESSIONALS SUCH AS DOCTORS, N URSES, LAB ASSISTANTS ETC AND BY NO MEANS, SHE CAN BE CALLED A MEDICAL PROFESSIONAL. ACCORDING TO HER, SHE HAS PREMISES AND EQUIPMENTS AND PROFESSIONALS TO RUN HER BUSINESS AND THEREFORE, PROVISIONS OF SECTION 44AD ARE VERY MUCH APPLICABLE TO HER. I HAVE C AREFULLY EXAMINED THE VERSION OF ASSESSING OFFICER AND THAT OF THE APPELLANT. THE APPELLANT IS NOT A DOCTOR, NOR DOES SHE POSSESS ANY DEGREE TO RUN A PROFESSION IN MEDICAL FIELD. SHE IT (SS) A NO S . 8 0 & 81 /CTK/20 1 9 5 HAS EMPLOYED SERVICES OF MEDICAL PROFESSIONALS AND SHE HAS PREMISES AND E QUIPMENTS FOR RUNNING HER BUSINESS OF NURSING HOME. THEREFORE, I AM OF A CONSIDERED VIEW THAT SHE IS IN THE BUSINESS OF NURSING HOME AND PROVISIONS OF SECTION 44AD OF IT. ACT, 1961 ARE APPLICABLE TO HER BUSINESS. 3.6 THE APPELLANT HAS DISCLOSED HER I NCOME FROM THE BUSINESS OF NURSING HOME AT RS. 3,57,270/ - , WHICH IS MORE THAN 8% OF TURN OVER DISCLOSED BY THE APPELLANT OF RS. 11,88,500/ - . IN PARAGRAPH 3.4 ABOVE, I HAVE DIRECTED THE ASSESSING OFFICER TO ACCEPT THE GROSS RECEIPTS DISCLOSED BY THE APPELLA NT AT RS . 11,88,500/ - . THE ASSESSING OFFICER HAS DISALLOWED EXPENSES @ 49% OF THE GROSS RECEIPTS TO CALCULATE NET PROFIT. IN MY APPEAL ORDER FOR A.Y. 2010 - 11, I HAVE HELD THAT THE APPELLANT IS ENTITLED FOR DEPRECIATION. IN THE ASSESSMENT YEAR UNDER CONSIDER ATION, THE ASSESSING OFFICER HAS NOT EVEN SPECIFIED AS TO WHICH DOCTOR'S FEES ATTRACT THE PROVISIONS OF SECTION 40(A)(IA) OF I.T. ACT, 1961. IN ANY CASE, THE APPELLANT'S NET PROFIT IS DETERMINED U/S. 44AD OF I.T. ACT, 1961 OR A HIGHER AMOUNT DISCLOSED BY H ER. THE ASSESSING OFFICER CANNOT DISALLOW EXPENSES IN A SUMMARY MANNER. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ACCEPT NET PROFIT FROM THE BUSINESS OF NURSING HOME AT RS. 3,57,270/ - . THE ADDITION MADE BY THE ASSESSING OFFICER OF RS 30,50,023/ - IS DIRECTED TO BE DELETED. THE GROUNDS OF APPEAL ARE ALLOWED. 10. ON PERUSAL OF THE ABOVE OBSERVATIONS OF THE CIT(A), IT IS AMPLY CLEAR THAT THE LD. CIT(A) HAS DELETED THE ENTIRE ADDITION MADE BY THE AO AND DIRECTED THE AO TO ACCEPT THE NET PROFIT FROM THE BUSINESS OF NURSING HOME AT RS.3,57,270/ - GRANTING RELIEF OF RS.30,50,023/ - . THEREFORE, IN OUR HUMBLE UNDERSTANDING, WHEN THE ASSESSEE HAS ALREADY BEEN GRANTED RELIEF BY THE LD. CIT(A) AND NO PROFIT SHOWN BY THE ASSESSEE HAS BEEN ACCEPTED, THEN NO GRIEVAN CE ON THE PART OF THE ASSESSEE REMAINS. ACCORDINGLY, WE DISMISS THE SOLE GROUND RAISED BY THE ASSESSEE AND CONSEQUENTLY THE APPEAL OF THE ASSESSEE FOR A.Y.2012 - 2013 IS DISMISSED. 11 . SINCE THE GROUNDS RAISED BY THE ASSESSEE IN OTHER APPEAL FOR A.Y.2013 - 201 4 ARE SIMILAR TO THE GROUNDS RAISED IN THE APPEAL FOR A.Y.2012 - 2013 WHEREIN WE HAVE ALREADY UPHELD THE FINDINGS OF THE CIT(A), THEREFORE, OUR OBSERVATIONS MADE IN THE ABOVE APPEAL SHALL APPLY IT (SS) A NO S . 8 0 & 81 /CTK/20 1 9 6 MUTATIS MUTANDIS TO THIS APPEAL ALSO. ACCORDINGLY, THE APPEAL OF THE ASSESSEE FOR A.Y.2013 - 2014 IS DISMISSED. 12 . IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 /0 1 / 202 1 . SD/ - (L.P.SAHU) SD/ - (C.M.GARG) /ACCOUNTANT MEM BER / JUDICIAL MEMBER CUTTACK; DATED 29 / 0 1 /202 1 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK 1. / THE APPELLANT - SMT. RANJITA JENA, C/O DR. SUBAS CHANDRA JENA, AMALA PADA, TALCHER TOWN, TALCHER, ANGUL - 759107 2. / THE RESPONDENT - ACIT, CENTRAL CIRCLE, CUTTACK 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//