Income Tax Appellate Tribunal - Delhi
Karan Singh, Haridwar vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'D': NEW DELHI
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
I.T.A.No.3547/Del/2011
Assessment Year : 2004-05
ACIT vs. Karan Singh
Circle Hardwar, Prop. M.s Dev Nurshing Home,
D-29 & 30, Industrial Area, Near Malviya Chawk, Roorkee
Haridwar. Haridwar.
PAN: ABUPS1712M.
(Appellant) (Respondent)
CO.No.307/Del/2011
In ITA No.3547/Del/2011
Assessment Year : 2004-05
Dr. Karan Singh vs. ACIT
Prop. M.s Dev Nurshing Home, Circle Hardwar,
Near Malviya Chawk, Roorkee D-29 & 30, Industrial Area
Haridwar. Haridwar.
PAN: ABUPS1712M.
(Appellant) (Respondent)
Appellant by : S.K. Monga, Adv
Respondent by : Shri S. N. Bhatia, DR.
ORDER
PER I. C. SUDHIR, JUDICIAL MEMBER
ITA No.3547/Del/2011
The Revenue has questioned first appellate order on the following grounds:
2
"1. The Ld. CIT (A) has erred in law and on facts in restricting the addition only up to the surrendered amount of Rs.5,00,000/- against the addition made by the Assessing Officer of Rs.19,61,583/- ignoring the facts gestured during survey conducted u/s 133A of the Income Tax Act, 1961.
2. That the Ld. CIT (A) has erred in law and on facts by holding that the assessee having agricultural income on the basis of additional evidences without confrontation to the Assessing Officer in contravention of Rule 46A of the Income Tax Rules, 1962."
2. The relevant facts are that the assessee is a surgeon and earns income from his proprietorship concern (Dev Nursing Home) at Roorkee. During the year it was subjected to survey operations u/s 133A of the Act on 21.01.2004. During the course of the said survey the assessee stated that he was maintaining outdoor patient register, indoor patient register and indoor receipt register etc. However except for outdoor/ indoor patient register no other register was found at the time of survey proceedings. The OPD register was not properly maintained and it was found that as per OPD register there were 27 patient on 17.01.2004 but the names of only 12 patients were entered by the doctor in his register. Similarly name of only 01 patient was entered on 19.01.2004 and on 20th and 21st January, 2004 (i.e. on the date of survey) not even single patient name was entered in the register. The indoor patient register was maintained up to 30.12.2003 and since that date till the date of survey i.e 21.01.2004 none of the patient name was entered in the 3 indoor patient register. The assessee surrendered Rs.5 lac during the survey proceedings and also paid advance tax of Rs.1,50,000/- on it. However at later stage assessee retracted from this surrendered amount. Narrating other surrounding facts, the Assessing Officer estimated the difference of undisclosed receipt from OPD patients/indoor patients at Rs.19,60,583/- and after adding disallowance of agriculture income at Rs.25,000/- and excess depreciation at Rs.38,122/-, the total income has been worked out at Rs.19,30,525/- against the disclosed loss of Rs.93,180/-.
3. The Ld. CIT (A) after discussing the issue in detail has restricted the addition at the income of Rs.5 lac ignoring the loss of Rs.93,180/- with direction to the Assessing Officer to accept the agriculture income of Rs.25,000/- declared in the return of income. Against this action of the Ld. CIT (A), the Revenue is in appeal.
4. The grievance of the Revenue is also that the Ld. CIT (A) has accepted the declared agriculture income of Rs.25,000/- on the basis of additional evidences without confrontation to the Assessing Officer, which is in contravention of Rule 46A of the IT Rules.1962.
5. In support of the grounds the Ld. Departmental Representative has basically placed reliance on the assessment order. He referred the contents of para 2 at page no.5 of the assessment order. He submitted that the Assessing 4 Officer has estimated the receipts under this background that the actual number of patient attended by the doctor in the OPD cannot be quantified as neither any details of OPD patient attended in various days were available nor any data regarding number of patients attended were maintained by the doctor as the patients details of OPD were destroyed by the doctor on the same day.
6. On the issue of non compliance of Rules 46A of the IT Rules by the Ld. CIT (A) raised in the ground no.2, the Ld. Departmental Representative submitted that in support of the claimed agriculture income neither any details of agriculture operation done by the assessee nor any details of agriculture produce were filed during the assessment proceedings before the Assessing Officer. He submitted further that not a single evidence of this alleged agricultural income was found during the course of survey proceedings. Thus, the Ld. CIT (A) was not justified in accepting the additional evidence in this regard without confronting the same with the Assessing Officer.
7. The Ld. AR, on the other hand, supported the first appellate order. He submitted that the estimation made by the Assessing Officer at Rs.36 lac on account of total receipt of nursing home against the disclosed receipt of Rs.16,39,417/- was without any basis, hence the Ld. CIT (A) after 5 mentioning those faults in estimation by the Assessing Officer has rightly restricted the addition to Rs.5 lac only. He submitted further that the Ld. CIT (A) has accepted agriculture income of Rs.25,000/- declared in the return of income, on the basis of submission of the assessee that he owned 113 Bigha of Kaccha agriculture land in village Sherpur Luhara, Distt, Baghpat, the land is fertile and irrigated, in support of which the assessee had filed Khasra and Khatouni showing agriculture land and agriculture operation. Considering these material facts as well as that the Assessing Officer had accepted the agriculture income in the assessment years 2003-04 & 2005-06, the Ld. CIT (A) has accepted the declared agricultural income.
8. Considering the above submissions, we find that the Assessing Officer had estimated the total receipt of nursing home at Rs.36 lac against the declared receipt of Rs.16,39,417/-, on the basis that number of patient attended by the doctor per day in OPD can safely be taken as 40, charging fee of Rs.50/- per patient which comes to Rs.2000 per day from and excluding all the holidays and off days, he estimated the number of effective days at 300 in a year and multiplied it by Rs.2000/- i.e. of OPD per day, he worked out the figure of Rs.6,00,000/- as a receipt from OPD for the assessment year under consideration.
6
9. Similarly he estimated indoor patient receipt at Rs.10,000/- per day on average basis, which was also included the receipt of his wife, a Gynecologist. Thus by multiplying this figure of Rs.10,000/- by 300 working days, he worked out the receipt from indoor patient during the year at Rs.30,00,000/-. The total estimated receipts by the Assessing Officer accordingly came to Rs.36,00,000/- and after deducting the declared receipt of Rs.16,39,417/-, the amount of Rs.19,60,583/- in difference has been added as undisclosed income of the assessee during the year under consideration.
10. The Ld. CIT (A) has held the said estimation by the Assessing Officer without any just and proper basis. There is no dispute that books of account were not being properly and regularly maintained and had not been maintained for some days before the survey operation.
11. Having gone through the orders of the authorities below, we concur with the view of the Ld. CIT (A) that there was no just and proper basis for making estimation of receipt at Rs.36,000/- before the Assessing Officer. It was pure and simple guess work. The observation of the Ld. CIT (A), in this regard has not been satisfactorily rebutted by the Revenue before us. The Ld. CIT (A) has observed that the Assessing Officer estimated 40 patients per day for OPD charging Rs. 50 per patient without taking into account the fact 7 that patients when come for recheck are, normally, not charged. Even in the absence of proper records with the assessee, the Assessing Officer could have done better estimation of receipt by using papers and documents identified during survey operation. Such papers consisted of a register dated 17.01.2004 showing the number of patients at 27 on that date. It reflects that out of 27 patients an amount of Rs.50/- was mentioned against 12 patients only. The only piece of evidence that the survey team has laid its hand on is the said paper and the total collection of the assessee per day from the OPD does not work out to more than Rs.600/- and not Rs.2,000/- as estimated by the Assessing Officer. Similarly, from the indoor patients, the Assessing Officer has estimated receipts of Rs.10,000/- per day but as per the statements of the patients recorded by the survey team it works out to Rs.3,662.50/- per day. Even with regard to the number of days on which the doctor worked in the nursing home, the survey team had not gathered and verified the basic information as to when the nursing home remains closed and when opened. The submission of the assessee also remained that Physician takes 15 to 30 minutes to see and examine a patient and for consultation of 40 patients he would need 10 to 12 hours per day. It was also submitted that since the nursing home has surgery facilities etc. for which indoor patients are admitted, the physician/surgeon would not be able to 8 spare more than five hours or at least six hours for OPD, which is not possible.
12. Considering these material aspects and in absence of any reference in the assessment order or in the report of the Assessing Officer if any statement of a patient was recorded and whether the assessee was cross examined with reference to that any cash was found or any bank accounts were ascertained in order to know the deposits therein and also keeping in mind this admitted fact that assessee was not maintaining a proper nursing home records and books of account, the Ld. CIT (A), in our view, has rightly came to the conclusion that the estimation made by the Assessing Officer regarding the receipt from the patient and working days is having no basis and is based on surmises only. It is however an admitted fact that the assessee when confronted certain relevant queries by the survey team, he could not corroborate his replies with supporting evidences.
13. Considering above facts in its totality, we are of the view that the Ld. CIT (A) has rightly come to the conclusion that assessee was having no option and thus he had voluntarily offered Rs.5 lac for tax to buy the peace of mind from the Department during the course of survey proceedings. In absence of any plausible reason retracting from the said surrender, we are of the view that the Ld. CIT (A) has rightly rejected the retraction made by the 9 assessee from the above surrender made voluntarily during the course of survey, having being no satisfactory answer to the queries raised by the survey party. The Ld. Commissioner of Income Tax (appeals), in our view has rightly restricted the addition of Rs.5lac ignoring the loss of Rs.93,190/- declared in the return of income since the loss declared was not based on any books of account.
14. The first appellate order on the issue is upheld. In result ground no.1 is rejected.
15. So far as, ground no.2 is concerned, we find that the assessee had furnished copies of Khasra and Khatouni in support of the claimed concern land of the agriculture operation on the claimed owned land of 113 bighas before the Ld. CIT (A), on which the Ld. CIT (A) had not sought any re- action from the Assessing Officer and has entertained it for accepting the claimed income of Rs.25,000/- that also on the basis that the agriculture income in the assessment years 2003-04 & 2005-06 has been accepted by the Assessing Officer. Thus there is violation of rule 46A of the IT Rules by the Ld. CIT (A). We thus in the interest of justice set aside the matter to the file of the Assessing Officer to consider those evidence i.e Khasra and Khatouni filed by the assessee before the Ld. CIT (A) in support of the claimed agricultural land and agricultural operation and decide the issue 10 afresh, after affording opportunity of being heard to the assessee and keeping in mind the shown and accepted agricultural income in the assessment years 2003-04 & 2005-06. The ground no.2 is thus allowed for statistical purposes.
Consequently, appeal is partly allowed.
CO No. 307/Del/2011 The assessee has preferred this cross objection only in support of the first appellate order, which has become infructuous in view of the above decision on an identical issue in appeal preferred by the Revenue. The cross objection is accordingly dismissed.
In summary the appeal filed by the Revenue is partly allowed and the cross objection preferred by the assessee is dismissed. The order pronounced in the open court on 11th .04.2014.
Sd/- Sd/-
(Shamim Yahya) (I. C. Sudhir)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 11th April, 2014.
*S. Sinha*
Copy of the order forwarded to:-
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
11
5. DR
By Order
Deputy Registrar, ITAT.