ROYAL NURSING HOME, V. ITO RG 11(3)(2),

MA 104/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8204 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI D DD D BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI R S SYAL, R S SYAL, R S SYAL, R S SYAL,AM AMAM AM & & & & SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM MISCELLANEOUS APPLICATION NOS. 103 & 104/MUM/2012 MISCELLANEOUS APPLICATION NOS. 103 & 104/MUM/2012 MISCELLANEOUS APPLICATION NOS. 103 & 104/MUM/2012 MISCELLANEOUS APPLICATION NOS. 103 & 104/MUM/2012 ARISING OUT OF ITA NOS. 2448 & 5128/MUM/2008 (ASST YEARS 2004-05 & 2005-06) M/S ROYAL NURSING HOME JUNCTION CST ROAD & LBS MARG (W) MUMBAI 70 VS THE INCOME TAX OFFICER RANGE 11(3)(2), MUMBAI (APPELLANT (APPELLANT (APPELLANT (APPELLANT ) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAFFR9760B AAFFR9760B AAFFR9760B AAFFR9760B ASSESSEE BY SHRI K GOPAL REVENUE BY SH ATIZ AHMED DT.OF HEARING 20 TH APRIL 2012 DT OF PRONOUNCEMENT 27 TH ,APRIL 2012 ORDER ORDER ORDER ORDER PER PER PER PER VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, , , , JM JMJM JM THESE MISCELLANEOUS APPLICATIONS BY THE ASSESSEE A RE DIRECTED AGAINST THE ORDER DATED 29.10.2010 OF THE TRIBUNAL WHEREBY THE APPEALS FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06 WERE DISPOSED OFF. 2 THE ONLY GRIEVANCE PLEADED BY THE ASSESSEE IN THE SE MISCELLANEOUS APPLICATIONS IS REGARDING THE ADDITION MADE ON ACCO UNT OF PURCHASE COST OF MEDICINES AS THE ASSESSEE HAS SHOWN NIL SALE OF MED ICINES IN THE BOOKS OF ACCOUNT. 3 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL A S THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD AR HAS SUBMITTED THAT WHILE DECIDING THE ISSUE, THE TRIBUNAL IN PARA 10 OF THE IMPUGNED ORDER HAS CONFIRMED THE ADDITION TOWARDS THE PURCHASE COST OF THE MEDIC INES AGAINST THE ADDITION M/S ROYAL NURSING HOME JUNCTION MA NOS. 103 & 104/MUM/2012 2 MADE BY THE ASSESSING OFFICER ESTIMATING THE PROFIT OF 40% ON THE COST OF THE MEDICINES AND THEREBY THE ADDITION ON THIS ACCOUNT WAS MADE BY THE ASSESSING OFFICER OF THE AMOUNT OF COST PLUS PROFIT. THE LD AR HAS SUBMITTED THAT THE AMOUNT OF RS. 16,63,326/- REPRESENTS THE PURCHASE P RICE OF THE MEDICINES RECORDED IN THE BOOKS OF ACCOUNTS. IT WAS SUBMITTE D THAT THE ASSESSING OFFICER HAS ALLEGED THAT THE ASSESSEE HAS SOLD THE MEDICINE S AND HAS NOT RECORDED THE SAME IN HIS BOOKS OF ACCOUNTS WAS WITHOUT ANY EVIDE NCE TO SUBSTANTIATE THE SAME. IT WAS SUBMITTED THAT THE ASSESSING OFFICER R EJECTED THE BOOK RESULT AND ESTIMATED THE SALES ON ACCOUNT OF THE MEDICINES AND RECEIPTS ON ACCOUNT OF X- RAY, PATHOLOGY LAB ETC. AND TREATED THE ENTIRE SALE S AND THE GROSS RECEIPTS AS INCOME OF THE ASSESSEE. IT WAS SUBMITTED THAT THE TRIBUNAL HAS ADDED THE ENTIRE PURCHASES AS INCOME IN THE HANDS OF THE ASSESSEE WH EN THE SAME WAS ALREADY RECORDED IN THE REGULAR BOOKS OF ACCOUNT. IT WAS F URTHER SUBMITTED THAT DURING THE COURSE OF ARGUMENTS BEFORE THE TRIBUNAL, IT WAS PLEADED THAT EVEN IF THE ACTION OF ASSESSING OFFICER OF REJECTION OF BOOK RE SULTS IS CONFIRMED, THEN THE GROSS RECEIPTS CANNOT BE TREATED AS INCOME OF THE A SSESSEE. HENCE, IT WAS SUBMITTED THAT THE TRIBUNAL HAS NOT CONSIDERED THE SUBMISSION OF THE ASSESSEE, WHICH HAS RESULTED INTO A MISTAKE APPARENT ON RECOR D. 3.1 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE TRIBUNAL HAS ALREADY CONSIDERED THE RIVAL CONTENTION OF THE PARTIES AND THE RELEVANT MATERIAL ON RECORD. THEREFORE, IN THE PROCEEDINGS U/S 254(2), T HE ISSUE DECIDED ON MERIT CANNOT BE REVIEWED. 4 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND CAREF UL PERUSAL OF THE IMPUGNED ORDER, WE NOT THAT THE ASSESSING OFFICER M ADE AN ADDITION OF RS. 23,28,656/- FOR THE ASSESSMENT YEAR 2004-05 AND RS. 24,05,507/- FOR THE ASSESSMENT YEAR 2005-06 ON ACCOUNT OF MEDICINE SOLD AT PROFIT OF 40%. IT IS M/S ROYAL NURSING HOME JUNCTION MA NOS. 103 & 104/MUM/2012 3 PERTINENT TO NOTE THAT THE ASSESSEE HAS BOOKED THE PURCHASE COST OF MEDICINES OF RS. 16,63,326/- FOR THE AY 2004-05 AND RS. 17,18,21 9/- FOR THE ASSESSMENT YEAR 2005-06; BUT HAS NOT SHOWN ANY RECEIPT ON ACCOUNT O F SALE OF THE MEDICINES TO THE PATIENTS EITHER IN THE BOOKS OR IN THE BILLS RA ISED TO THE PATIENTS. THUS, IT IS A CASE OF BOOKING PURCHASE COST OF THE MEDICINES BUT NOT SHOWING ANY CORRESPONDING SALE OF THE MEDICINES. THE ASSESSING OFFICER ESTIMATED THE PROFIT OF SALE OF MEDICINES AT 40% AND THEREBY MADE AN ADD ITION OF COST PLUS 40% ON ACCOUNT OF NON RECORDING OF SALE OF MEDICINES. THE TRIBUNAL WHILE DECIDING THIS ISSUE HAS GIVEN RELIEF TO THE EXTENT THAT THE ADDIT ION ON ACCOUNT OF NOT SHOWING THE MEDICINES SHALL BE AT COST AND NOT ON ESTIMATED SALES AS TAKEN BY THE ASSESSING OFFICER. THE RELEVANT PORTION OF THE IMPU GNED ORDER IN PARA 10 IS REPRODUCED HEREUNDER: THIS IS REGARDING ADDITION PERTAINING TO SALE OF M EDICINE ESTIMATED BY THE ASSESSING OFFICER. AS WE HAVE DISCUSSED EARLIER, TH E ASSESSEE HAS NOT SHOWN THE SALE OF MEDICINE IN THE BILLS AND THE PLE A OF THE ASSESSEE IS THAT, THE ASSESSEE IN THE INITIAL YEAR OF THE BUSINESS HA D NOT CHARGED THE MEDICINE COST FROM THE PATIENT. WHILE DECIDING THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS, WE FOUND THAT THE PLEA OF THE AS SESSEE, THAT THE ASSESSEE DID NOT CHARGE THE COST OF MEDICINE FOR IN ITIAL YEAR, DOES NOT INSPIRE CONFIDENCE BECAUSE WHEN THE ASSESSEE HAS NO T GIVEN ANY DISCOUNT ON THE OTHER SERVICES THEN THE CLAIMED TO HAVE NOT CHARGED THE COST OF THE MEDICINE WHICH WERE PURCHASED FROM OUTSIDE IS NOT A CCEPTABLE. HOWEVER, THE ASSESSING OFFICER HAS MADE ADDITION BY ESTIMATI NG THE PROFIT RATIO OF 40% ON THE PURCHASE COST OF THE MEDICINE. WE DO NOT FOUND ANY BASIS FOR ESTIMATION OF PROFIT OF 40% IN THE COST OF MEDICINE . ACCORDINGLY, WE ARE OF THE VIEW THAT THE ADDITION ON ACCOUNT OF NOT SHOWIN G THE COST OF MEDICINE SHALL BE AT RS.16,63,326/- BEING COST OF ONLY INSTE AD OF RS.23,28,656/- ADDED BY THE ASSESSING OFFICER ON ESTIMATE BASIS. 4.1 THEREFORE, WHEN THE ENTIRE SALE HAS NOT RECORDE D IN THE BOOKS OF ACCOUNT BY THE ASSESSEE, THEN THE PLEA OF THE ASSESSEE THAT ONLY THE PROFIT COMPONENTS ON THE COST OF THE MEDICINES SHALL BE TREATED AS IN COME OF THE ASSESSEE IS NOT ACCEPTABLE IN THE FACTS OF THE CASE. IT IS NOT THE CASE OF SALE OUTSIDE THE BOOKS OF ACCOUNT WHICH MEANS THAT THE PURCHASE AND SALES WER E NOT RECORDED IN THE BOOKS OF ACCOUNT. IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS BOOKED THE M/S ROYAL NURSING HOME JUNCTION MA NOS. 103 & 104/MUM/2012 4 PURCHASE PRICE OF THE MEDICINES; BUT NOT RECORDED A NY SALES OF MEDICINES AND CLAIMED THAT THE ASSESSEE DID NOT CHARGE ANY COST T O THE PATIENTS ON ACCOUNT OF MEDICINES. THE ISSUE IS ONLY WHETHER THE ADDITION MADE BY THE ASSESSING OFFICER AS COST PLUS 40% PROFIT OR ONLY THE COST OF THE MED ICINES BY ASSUMING THAT THE ASSESSEE HAS CHARGED ONLY THE COST OF THE MEDICINES FROM THE PATIENTS WITHOUT ANY PROFIT ON THE SAME. THEREFORE, WE DO NOT FIND ANY SUBSTANCE OR MERIT IN THE MISCELLANEOUS APPLICATIONS OF THE ASSESSEE. 4.2 FURTHER, THE SCOPE OF SECTION 254(2) IS VERY LI MITED AND THE TRIBUNAL HAS THE JURISDICTIONAL TO RECTIFY THE ERROR WHICH IS AP PARENT AND MANIFEST ON THE FACE OF THE RECORD. IN THE PROCEEDINGS U/S 254(2), THE TRIBUNAL HAS NO JURISDICTION TO RE-APPRECIATE THE EVIDENCE AND TO REVIEW THE ORDER PASSED ON MERITS. 5 IN VIEW OF THE ABOVE DISCUSSION, THE MISCELLANEOU S APPLICATIONS FILED BY THE ASSESSEE ARE DEVOID OF ANY MERIT AND ACCORDINGLY, T HE SAME ARE DISMISSED. 6 IN THE RESULT, THE MISCELLANEOUS APPLICATIONS FIL ED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS ORDER PRONOUNCED ON THIS ORDER PRONOUNCED ON THIS ORDER PRONOUNCED ON THIS 27 2727 27 TH THTH TH DAY OF DAY OF DAY OF DAY OF APRIL APRIL APRIL APRIL 2012 2012 2012 2012 SD/ SD/ SD/ SD/ SD/ SD/ SD/ SD/ - -- - ( (( ( R S SYAL R S SYAL R S SYAL R S SYAL ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 27 TH , APRIL 2012 RAJ* RAJ* RAJ* RAJ* M/S ROYAL NURSING HOME JUNCTION MA NOS. 103 & 104/MUM/2012 5 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI