Income Tax Appellate Tribunal - Ahmedabad
Dr. Mayur M.Shah, Modasa vs Department Of Income Tax on 31 March, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL : 'B' BENCH : AHMEDABAD
(Before Hon'ble Shri T.K. Sharma, J.M. & Hon'ble Shri N.S. Saini, A.M. )
I.T.A. No. 2195/AHD./2008
Assessment Year : 2004-2005
Dr. Mayur M. Shah, Sabarkantha -vs.- Income Tax Officer, SK Ward-4, Modasa
(PAN : AQCPS 9324 D)
(Appellant) (Respondent)
&
I.T.A. No. 2260/AHD/2008
Assessment Year : 2004-2005
Income Tax Officer, Ward-4, Modasa -vs. Dr. Mayur M. Shah, Bayad, Sabarkantha
(Appellant) (Respondent)
Assessee by : Shri S.N. Divetia
Department by : Shri Dileep Kumar, Sr. D.R.
ORDER
Per Shri T.K. Sharma, Judicial Member :
These cross appeals are against the order dated 31.03.2008 of Learned Commissioner of Income Tax (Appeals)-X, Ahmedabad for the assessment year 2004-05.
2. Briefly stated the facts are that the assessee is a Gynaecology Doctor and running Vatsalya Hospital and Sonography Clinic at Bayad. A survey was carried out under section 133A of the Income Tax Act in the business premises of the assessee on 10.11.2003, wherein a statement of the assessee was recorded. In this statement in reply to Question No. 18, he made voluntary disclosure of Rs.18,00,000/- stating that all the properties have been invested from his own income and as the details are complicated he disclosed income of Rs.18,00,000/- on account of undisclosed income in respect of investment in residential bungalow, Vatsalya Hospital and investment in Fixed Deposits. Subsequently, the assessee retracted from the aforesaid disclosure made at the time of survey proceedings by filing an affidavit dated 29.10.2004. He also filed an affidavit of his wife Dr. Prerna M. Shah dated 01.11.2004. In the affidavit, it was stated that the immovable property i.e. residential bungalow and Vatsalya Hospital belonged to his wife Dr. Prerna M. Shah. The Assessing Officer relied upon the various decisions and held that the 2 ITA Nos. 2195-AHD-2008 & 2260-AHD-2008 assessee's retraction is not valid and not correct because it was made after one year of the disclosure and, therefore, it was an afterthought.
3. For the assessment year under appeal, the assessee filed the return of income declaring total income of Rs.2,81,550/- on 01.11.2004. Thereafter the assessee filed revised return on 18.05.2005 declaring total income of Rs.3,58,550/-. The Assessing Officer framed the assessment under section 143(3) at total income of Rs.21,63,215/-. In this assessment order, the Assessing Officer made addition of Rs.18,04,668/- as under :-
(a) Rejection of books of accounts (para no. 7 of the assessment order) - Rs.13,88,635/-
(b) Cost of construction of Vatsalya Hospital (para no. 8 of Asst. order)- Rs. 8,181/-
(c) On account of undisclosed income (para no. 9 of assessment order) - Rs. 4,03,184/-
(d) Petrol, etc. expenses (para no. 10 of the assessment order) - Rs. 4,668/-
Total : Rs.18,04,668/-
4. On appeal, in the impugned order the Learned Commissioner of Income Tax (Appeals) allowed the partial relief to the assessee. Aggrieved with the order of Learned Commissioner of Income Tax (Appeals) both the sides are in appeals before the Tribunal.
5. Various grounds raised by the assessee in his appeal are as under :-
(1.1). The order passed u/s. 250 of the Act on 31.03.2008 for AY 2004- 05 by CIT(A.)-X, Ahmedabad partly upholding the order of assessment passed by A.O. is wholly illegal, unlawful and against the principles of natural justice.
Addition on account of Dharti Medical Store 2.1. The ld.CIT(A.) has grievously erred in law and/or on facts in rejecting the affidavit filed by the appellant as well as the proprietor of Dharti Medical Stores.
2.2. The ld. CIT(A.) has grievously erred in law and /or on facts in upholding that the appellant had examined the patients as noted by the proprietor of Dharti Medical Stores in his bill book and thereby upholding the addition in respect of alleged said patients.
2.3. That in the facts and circumstances of the case as well as in law, the ld. CIT(A.) ought not to have relied upon the statement of the proprietor of Dharti Medical Stores as well as the notings made by him in his 3 ITA Nos. 2195-AHD-2008 & 2260-AHD-2008 record and, therefore, the conclusion arrived at by A.O. on the basis of such material was vitiated and liable to be struck down.
2.4. The ld. CIT(A.) ought not to have confirmed the addition of Rs.37,295/- out of the addition made by A.O. relying upon the statement of the proprietor of Dharti Medical Store.
Addition of Sonography Receipts 3.1. The ld. CIT(A.) has grievously erred in law and on facts in confirming the addition to the extent of Rs.69,497/- as unaccounted Sonography receipts.
3.2. That in the facts and circumstances of the case, the ld. CIT(A.) ought not to have confirmed that the appellant had not fully disclosed Sonography receipts especially with regard to the alleged patients as per Dharti Medical Stores.
3.3. That the observations made and conclusion reached by the CIT(A.) for the purpose of confirming the addition to the extent of Rs.69,497/- as unaccounted receipts of Sonography are wholly unjustified and unwarranted.
Indoor Receipts :
4.1. The ld. CIT(A.) has grievously erred in law and on facts in confirming the addition to the extent of Rs.2,80,100/- as unaccounted indoor receipts.
4.2. That in the facts and circumstances of the case as well as in law, the ld.
CIT(A.) ought not to have upheld that the appellant had not disclosed fully the indoor receipts.
5.1. The Revenue in its appeal has raised the following grounds :-
(1) The ld. CIT(A.) has erred in law and on the facts of the case in restricting the addition of Rs.88,130/- being unaccounted income related to patients of Dharati medical Stores to Rs.37,295/-.
(2) The ld. CIT(A.) has erred in law and on the facts of the case in restricting the addition of Rs.1,15,235/- being unaccounted receipts from Sonography to Rs.69,497/-.
(3) The ld. CIT(A.) has erred in law and on the facts of the case in restricting the addition of Rs.9,84,259/- made by the A.O. on account of suppression of indoor receipts to Rs.2,80,100/-.4
ITA Nos. 2195-AHD-2008 & 2260-AHD-2008 (4) The ld, CIT(A.) has erred in law and on the facts of the case in deleting the addition of Rs.2,01,011/- made by the A.O. on account of suppression of indoor receipts.
(5) The ld. CIT(A.) has erred in law and on the facts of the case in deleting the addition of Rs.8,181/- made on account of difference in the cost of construction of Vatsayla Hospital.
(6) The ld. CIT(A.) has erred in law and on the facts of the case in deleting the addition of Rs.4,03,184/- made on account of undisclosed income.
6. At the time of hearing before us, on behalf of assessee Shri S.N. Divetia, ld. counsel appeared and contended that Ground No. 1 of assessee's appeal is general in nature and needs no adjudication.
7. The facts relating to controversy involved in Ground No. 2 of assessee's appeal and ground No. 1 of revenue's appeal are that in the assessment order, the Assessing Officer made addition of Rs.88,130/- on account of OPD receipts based on bill of Dharti Medical Stores, wherein name of the assessee was written in 1904 bills as "referring doctor". On this basis, the Assessing Officer estimated the new patients at 52% on the basis of percentage of new patients as per books of accounts. On appeal, in the impugned order, the Learned Commissioner of Income Tax(Appeals) restricted the said addition to Rs.37,295/- for the detailed reasons given in para 4.9 of the impugned order, which reads as under :-
"4.9. I have considered the submissions of the A R. carefully and the remand report of the A.O. and the counter reply of the A.R. I reject the affidavit filed by the appellant and the affidavit filed by proprietor of Dharti Medical Stores as these retractions are not substantiated by any reason or evidence. As per the 3 C register maintained by the appellant, the A.O. found that total patients examined by the appellant during the year were 3929 patients including 1994 old OPD patients and 2035 new OPD patients. Thus, the new OPD patients formed 52% of total patients. Accordingly, he adopted the said ratio for the 1904 patients found as per the bills issued by M/s. Dharti Medical Score which had not been accounted by the appellant and he calculated the old OPD cases as 914 and the new OPD cases as 990.
(i) Addition of Rs.l8.280/- + Rs.49,500/- For 914 old patients , the charge received by Doctor was @ Rs.20/- per old OPD case, so total amount not accounted by the appellant was calculated as 914 x 20 = Rs.l8,280/- and for 990 new patients , the charge per patient being Rs.50/- , the amount not accounted was calculated as Rs.49,500/- and addition of Rs.49,500/-was made.5
ITA Nos. 2195-AHD-2008 & 2260-AHD-2008
(ii) Addition of Rs.20,350/- For the new OPD cases of 2035 in number based on the 3C register maintained by the appellant, the A.O was of the conclusion that the appellant has accounted Rs.40/- as consultancy charges as against Rs.50/- charged by him, therefore he made an addition of Rs.20,350/- (2035 x 10). The A.R. has strongly contended that some of the patients' names in the bills issued by M/s. Dharti Medical Store are repetitions as can be seen from the Annexure-A and therefore addition should not be made for the entire number of (1904) patients. It has also been contended that there were three other Doctors in the same area apart from the appellant, therefore, the entire bills of Dharti Medical Stores can not be presumed lo have been referred by the appellant alone and therefore it is the contention of the A.R . that only l/4lh of (1904) bills should be considered in the hands of the appellant. I find the contention of the A.R. is acceptable as the appellant has clearly stated that there were three other Doctors in the area i.e. Dr.Mukeshbhai J Shah, Dr. Mahendrabhai S.Patel & Dr. Nandini who are senior and established doctors , Considering the said facts, as it is quite likely that M/s.Dharti Medical Store has not mentioned the names of the other doctors and considering the fact that there is repetition of names of the patients, it is reasonable to estimate that 1/4th of 1904 patients has not been accounted by the appellant and from them the receipts have not been accounted, therefore instead of addition of Rs.l8,280/- and Rs.49,500/- i.e. total Rs.67,780/- the addition is reduced to 1/4th of the same which comes to Rs.16,945/- as against Rs.67,780/- As regards the addition of Rs.20,350/- which hah been made on the assumption that Rs.50/- was collected per patient as against Rs.40/-recorded in the register, the addition is found to be correct therefore, the addition of Rs.20,350/- is sustained, inns the addition sustained is (Rs.20,350 + Rs.16,945) to Rs.37,295/- as against Rs.88,130/-".
Aggrieved with the order of Learned Commissioner of Income Tax (Appeals), both the sides are in appeals before the Tribunal.
8. At the time of hearing, on behalf of assessee Shri S.N. Divetia, ld. counsel appeared and contended that the entire addition of Rs.88,130/- was made on doubts and suspicion, therefore, the Learned Commissioner of Income Tax(Appeals) ought to have deleted the entire addition.
9. On the other hand, Shri Dileep Kumar, ld. Sr. D.R. appearing on behalf of the Revenue vehemently supported the reasoning given by the Assessing Officer. He further submitted that the Learned Commissioner of Income Tax (Appeals) ought to have confirmed the addition of Rs.88,130/- made by the Assessing Officer.
10. Having heard both the sides, we have carefully gone through the orders of authorities below. It is pertinent to note that in the statement recorded at the time of survey proceedings under section 133A, the assessee has stated that about 5% may have purchased from Dharti 6 ITA Nos. 2195-AHD-2008 & 2260-AHD-2008 Medical Stores. Prima facie, we are of the view that no medical stores will write the name of any doctor as 'referring doctor' without examine the prescription. At the same time, possibility of mentioning the name of the doctor without prescription cannot be ruled out. We are, therefore, of the view that it will meet the ends of justice if the addition made by the Assessing Officer is restricted to Rs.50,000/- as against Rs.88,130/- made by the Assessing Officer. We direct the Assessing Officer accordingly. Resultantly, ground No. 2 of assessee's appeal is rejected and Ground no. 1 of Revenue's appeal is partly allowed.
11. Facts relating to controversy involved in Ground No. 3 of assessee's appeal and Ground No. 2 of Revenue's appeal are that in the assessment order, the Assessing Officer made addition of Rs.1,15,235/- on account of unaccounted receipts shown from Sonography. In the impugned order, the Learned Commissioner of Income Tax (Appeals) restricted the same to Rs.69,497/- for the detailed reasons given in para 5.3 to 5.5, which reads as under :-
"5,3 I have considered the submissions of the A.R. carefully. The findings are given on item-wise additions as under :-
Addition of Rs.57,000/- Considering the said submissions and the chart filed at page 79 of paper book and considering the fact that (1904) patients as per the bills of M/s.Dharti Medical Store would not have been referred by the appellant doctor alone, only 1/4th of bills can be presumed to be patients referred by [he appellant doctor and assuming 20% patients have undergone sonography test, i.e. 380 for l/4th of 330 cases i.e. 95 cases are considered as against 380 and considering the average amount of Rs.125/- as sonography charge per patient, as in some cases, the appellant has charged Rs.100/- and in some cases Rs.150/-, the addition is sustained for 95 patients @ 125/- as sonography receipt which comes to Rs.11,875/- as against Rs.57,000/-.
5.4. Addition of Rs.5l,809/- Out of 6 cases, for which sonography has been carried out of 15 patients examined as per page 79 of paper book which is Annexure-P, the appellant has not shown receipts in respect of 4 patients and has shown receipts for only 2 patients as per Annexure P, which shows that the appellant has not accounted for 4 patients out of 6 patients which comes to 66%. Therefore, the addition is reduced to 66% of receipts of Rs.59,550/- from sonography accounted by the appellant which comes to Rs.39,303/- instead of Rs 51,809/-. So addition of Rs.5 1,809/- is reduced to Rs.39,303/-.
5.5. Addition of Rs.6,426/- The A.O. observed that the appellant has shown less sonography charge @ Rs.50/- instead of Rs.150/- in 13% of the cases.. As I have found that the average rate of sonography charged is Rs.l25/- and the appellant has shown sonography receipts in 2 out of 6 cases as per Annexure P which comes to 33% , 33 % of receipts of Rs.59,500/- are considered and the receipts shown less work out to Rs.19,635/- as against which the appellant has shown Rs.1,316/-7
ITA Nos. 2195-AHD-2008 & 2260-AHD-2008 therefore, the difference of (Rs.19,635/- (-) Rs. 1,316/-) which comes to Rs 18,319/- is to be added as against Rs.6,426/-. Thus, instead of the total addition of Rs.1,15,235/- as sonography receipts unaccounted, the addition is sustained to the tune of (Rs.11,875/- + Rs,39,303/- + Rs.18,319/-) = Rs.69,497/-".
Aggrieved with the order of Learned Commissioner of Income Tax (Appeals) both the sides are in appeals before the Tribunal.
12. At the time of hearing before us, the ld. D.R. relying on the reasoning given by the Assessing Officer contended that the addition of Rs.1,15,235/- on account of unaccounted receipts from Sonography was rightly made by the Assessing Officer and the Learned Commissioner of Income Tax(Appeals) is not justified in restricting the same to Rs.69,497/-. The ld. counsel of the assessee pointed out that the addition to the extent of Rs.69,497/- sustained by the Learned Commissioner of Income Tax(Appeals) is on the higher side.
13. We have carefully gone through the order of Learned Commissioner of Income Tax (Appeals). In our opinion, the Learned Commissioner of Income Tax(Appeals) has given cogent reason for restricting the unaccounted Sonography receipts amounting to Rs.69,497/-. We, therefore, incline to uphold the order of Learned Commissioner of Income Tax (Appeals). Resultantly, Ground No. 3 of assessee's appeal and Ground No. 2 of Revenue's appeal are dismissed.
14. Facts relating to controversy involved in Ground No. 4 of assessee's appeal and Grounds No. 3 & 4 of Revenue's appeal are that in the assessment order, the Assessing Officer made addition of Rs.2,80,100/- on account of unaccounted indoor receipts. In the impugned order, the Learned Commissioner of Income Tax (Appeals) restricted the same to Rs.2,01,011/- for the reasons given in para 6.3 by mentioning that the AR has contented that the AR has calculated 29% as excess fees declared by the assessee more than what has been stated by the patients. As the assessee has disclosed higher receipts than what has been stated by the patients, there is no need for making further addition, therefore, this addition as held is not justified and deleted the same. Aggrieved with the order of Learned Commissioner of Income Tax (Appeals), both sides are in appeals before the Tribunal.
8ITA Nos. 2195-AHD-2008 & 2260-AHD-2008
15. We have heard both the sides. It is pertinent to note that the estimate made by the Learned Commissioner of Income Tax (Appeals) is fair and reasonable. We, therefore, incline to uphold the order of Learned Commissioner of Income Tax (Appeals). Resultantly, Ground No. 4 of assessee's appeal and Grounds No 3 & 4 of Revenue's appeal are dismissed.
16. In Ground No. 5 of Revenue's appeal is against addition for cost of construction of Vatsalya Hospital amounting to Rs.8,181/-. During the course of survey proceedings, the assessee has voluntarily disclosed Rs.18 lakhs for undisclosed income in respect of residential bungalow, Vatsalya Hospital & Fixed Deposits investment by stating that all the properties have been made from his own income, which he retracted almost after one year by stating that all these properties belongs to his wife Smt. Prerna M. Shah, who is only a salaried person of Vatsalya Hospital. The Assessing Officer observed that there was different in cost of construction of Vatsalya Hospital building on the basis of DVO's report. The DVO has estimated the cost of construction of building at Rs.31,532/- for the year under consideration against declared cost of construction of Rs.23,451/-, therefore, there was difference in cost of construction of Rs.8,181/-. The Assessing Officer treated the same as unexplained investment under section 69 of the Income Tax Act, 1961.
16.1. The Learned Commissioner of Income Tax (Appeals) deleted the aforesaid addition by observing in para 7.2 of his impugned order as under :-
"I have considered the submissions of the A.R. carefully. As regards the consideration of unexplained investment, the wife of the appellant has shown the same in the books of accounts maintained by her, so the property Vatsalya Hospital should be considered in the hands of his wife. Further she has shown cost of construction at the average rate of Rs.2,650/- per sq. metre which is comparable with the State Government rate. As compared to Rs.2,650/- per sq. metre, the DVO has adopted the rate of Rs.3,442/- per sq. metre as CPWD rates applicable to Delhi and he has not made any adjustment in rates for construction in Himatnagar District where labour is cheap and quality of construction is lower. In view of the above facts and submissions, the addition made by the A.O. which has been made without any material evidence and without pointing defects from the vouchers and books of accounts maintained by the appellant cannot be sustained and the same is therefore, deleted. The addition is deleted following my finding in AY 2003-04 in the case of the appellant vide order dated 31.03.2008".9
ITA Nos. 2195-AHD-2008 & 2260-AHD-2008
17. At the time of hearing before us, the ld. D.R. relying on the reasoning given by the Assessing Officer in the assessment order contended that the addition was rightly made and the Learned Commissioner of Income Tax(Appeals) is not justified in deleting the same. In our opinion, after considering all the relevant factors, in the impugned order the Learned Commissioner of Income Tax (Appeals) deleted the addition. We, therefore, incline to uphold the order of Learned Commissioner of Income Tax (Appeals). Resultantly, Ground No. 5 of Revenue's appeal is rejected.
18. Ground No. 6 of revenue's appeal is against addition on account of undisclosed income of Rs.4,03,184/-. The Assessing Officer in his assessment order observed that additions have been made in the assessment as undisclosed income to the tune of Rs.13,96,816/- and the assessee had disclosed an amount of Rs.18 lakhs as undisclosed income at the time of survey, hence for the balance amount of Rs.4,03,184/-, the Assessing Officer made addition on account of undisclosed income on the ground that the assessee has not offered any satisfactory explanation about the source and nature of investment.
19. On appeal, in the impugned order, the Learned Commissioner of Income Tax (Appeals) deleted the same for the detailed reasons given in para 8.2, which reads as under :-
"8.2. I have considered the submissions of the AR carefully. The AR has contended that for this addition, there is no evidence with the A.O. and the A.O. has made addition simply on the basis of statement recorded at the time of survey which has been retracted by the appellant. The AR has also referred to the decision in the case of Ashok Manilal Thakkar -vs.- ACIT reported in 97 ITD 361 (Ahd) wherein it has been held as under :-
"Thus, it cannot be said that only on the basis of statement given by the assessee the disclosed income was assessable as lawful income of the assessee. There being no evidence/ material available on record to prove the existence of such disclosed income or earning of such income in the hands of assessee, it cannot be said that the tax was lawfully payable by assessee in his hand on the disclosed income".
Further, in the case of Smt. Ranjanaben Mansukhlal Shah -vs.- ACIT reported in 83 TTJ 369 (Rajkot) it has been held that addition made only on the basis of disclosure statement normally should not be confirmed in absence of corroboration. Relying on the above case laws and submissions of the AR and considering the facts of the case, as the addition is not supported by any material 10 ITA Nos. 2195-AHD-2008 & 2260-AHD-2008 or evidence, the addition of Rs.4,03,184/- is held to be not justified and same is deleted".
20. We have heard both the sides. It is pertinent to note that in the assessment order, the Assessing Officer has made various additions on the basis of evidences, etc. found at the time of survey proceedings under section 133 of the Income Tax Act, 1961. Having made the additions in respect of various items, in our opinion, there was no necessity for making separate addition of Rs.4,03,184/-. We, therefore, decline to interfere. Resultantly, Ground No. 6 of Revenue's appeal is rejected.
21. In the result, the appeal filed by the assessee is dismissed and the appeal filed by the Revenue is partly allowed as indicated above.
The Order was pronounced in the Court on 31.01.2011
Sd/- Sd/-
(N.S. Saini) (T.K. Sharma)
Accountant Member Judicial Member
DATED : 31/ 01 / 2011
Copy of the order is forwarded to :
1) The Assessee
(2) The Department.
3) CIT(A.) concerned, (4) CIT concerned, (5) D.R., ITAT, Ahmedabad.
True Copy By Order Deputy Registrar, ITAT, Ahmedabad Laha/Sr.P.S.