D.b.income Tax Appeal v. Dr.suresh Sharma 1

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR :::JUDGMENT D.B.INCOME TAX APPEAL NO.47/2012 CIT, Udaipur Vs. Dr.Suresh Sharma DATE OF JUDGMENT ::: 14[th] January 2013 PRESENT HON'BLE MR. JUSTICE DINESH MAHESHWARIHON’BLE MR. JUSTICE ARUN BHANSALI Mr.K.K.Bissa for the appellant <><><> BY THE COURT:(PER HON'BLE BHANSALI),J. The present appeal under Section 260A of the Income TaxAct, 1961 ['the Act'] has been filed by the Revenue seeking toquestion the order dated 09.12.2011 passed by the Income TaxAppellate Tribunal, Jodhpur Bench, Jodhpur ['the Tribunal'] in ITANo.659/JU/08 and C.O. No.25/JU/2009 for the assessment year2002-2003 whereby the Tribunal has affirmed the order dated17.09.2008 passed by the Commissioner of Income Tax (Appeals),Udaipur ['the CIT(A)'] partly allowing the appeal preferred by theassessee and deleting the additions, of Rs.1,35,441/- on account ofunaccounted purchase of medicine, Rs.6,88,687/- on account of feesand Rs.40,61,361/- as unexplained factory and hospital expenditure,as made by the Assessing Officer ['the AO'] in the assessment orderdated 31.12.2007. D.B.INCOME TAX APPEAL NO.47/2012 CIT, Udaipur Vs. Dr.Suresh Sharma Having heard the learned counsel for the appellant and havingperused the material placed on record, we are clearly of the view thatthe present appeal essentially raises issues relating to appreciationof evidence resulting in finding on facts; and no substantial questionof law is involved. The facts of the case may be noted thus: The assessee runs anursing home and also owns a marble cutting plant. The assesseefiled his original return of income for the assessment year 2002-2003on 08.03.2004 declaring total income of Rs.58,250/-. Theassessment was completed under Section 143(3) of the Act on28.02.2005 at a total income of Rs.8,96,313/- besides agricultureincome of Rs.58,280/-. It appears that thereafter, a survey underSection 133A of the Act was undertaken at the business premises ofthe assessee and on the basis of material found during the course ofsurvey, a notice under Section 148 of the Act was issued and theassessment was completed under Section 143(3)/148 of the Act on31.12.2007 on a total income of Rs.59,27,490/-. The AO found thatthe assessee had not included purchase of medicine ofRs.1,35,441/- in the purchases shown at Rs.10,35,869/- during theyear and, therefore, made an addition of Rs.1,35,441/- asundisclosed purchases. The AO further found that the sale ofmedicines and fee charged by the assessee was in the ratio of 60:40and, therefore, he enhanced the sales to Rs.26,14,251/- and aftergiving adjustment for profit on sale of medicines, computed the feeat Rs.10,45,700/- and made another addition of Rs.6,88,687/- afterdeducting the declared profit of Rs.3,57,013/-. The AO further found D.B.INCOME TAX APPEAL NO.47/2012 CIT, Udaipur Vs. Dr.Suresh Sharma that the assessee had made payments in respect of factory andhospital expenses out of undisclosed income and made yet furtheraddition of Rs.40,61,361/- (Rs.24,19,029/- in respect of factory andRs.16,42,831/- in the case of hospital) to the total income. Whilemaking certain other additions, the AO ultimately assessed the totalincome of the assessee at Rs.59,27,489/- after making an additionof Rs.50,31,176/- to the original assessment order. Aggrieved by the aforesaid assessment order dated31.12.2007, the assessee preferred an appeal, which wasconsidered and partly allowed by the CIT(A) in his order dated17.09.2008. The learned CIT(A) reversed the findings recorded bythe AO and recorded his findings on the three issues as under:- (i) Addition on account of unaccounted purchase of medicines: Aggrieved by the aforesaid assessment order dated31.12.2007, the assessee preferred an appeal, which wasconsidered and partly allowed by the CIT(A) in his order dated17.09.2008. The learned CIT(A) reversed the findings recorded bythe AO and recorded his findings on the three issues as under:- (i) Addition on account of unaccounted purchase of medicines: “I have considered the facts of the case and submission ofthe Ld. A/R and found that the AO made the addition on theground that the purchase amount of Rs.1,35,440/- has not beenshown by the appellant and, therefore, treated the same asundisclosed purchase and undisclosed investment. The A/Rsubmitted that the original assessment was completed u/s 143(3)by estimating the turnover at Rs.15 lacs as against the declaredsales of Rs.12,67,290/- and made addition of Rs.92,987/- byincreasing the g.p. also, therefore, automatically covered thepurchase in the estimated turnover. On going through the originalorder it is revealed that the AO estimated the sales at Rs.15 lacsas against Rs.12.67 lacs. The increase in estimation made overand above the declared turnover is more than the unexplainedpurchase, therefore, covered the undeclared purchase in thesales estimated. Therefore, no further addition is warranted. Theaddition is deleted. The appeal is allowed on this ground.” (ii)Addition to the total income on account of fees: “.....On going through the facts it is noticed that during the courseof survey no incriminating documents relating to this assessmentyear 2002-03 were found. The addition has been made on thebasis of patient slips found and scrutinized during the course ofsurvey day i.e. 9-11-2006. The criteria for the survey yearcannot be applied in earlier years. The addition made in thisyear is simply on the basis of calculation given by the AO.Further the point of fee has already been considered in theoriginal assessment and made addition. Therefore, no further addition i.e. without any supporting material on record can bemade. The addition is, therefore, deleted. The appeal is allowedon this ground.” (iii)Additions as unexplained factory and hospital expenditure: “....On going through the facts of the case it is noticed that M/sSuresh Granite is the concern owned by the appellant anddeclared the income in the return of income showing the receiptand expenditure. Sushma Granite is the sister concern ownedby the appellant's wife and is filing the return of income regularlyshowing the receipt and expenditure. M/s. Dolley Granite is aPvt. Ltd. company and furnishing the return regularly. All theseconcerns are managed by the appellant and the payments notedby the appellant in a common note book. As both theseconcerns are assessed to tax separately, the payment appearingin the note book pertaining to these concerns cannot beconsidered in the hands of the appellant as payment fromundisclosed receipt of the appellant. The appellant is theproprietor of Sharma Nursing Home and M/s Suresh Granite anddeclared the income from these concerns in the return of income.The assessment for the assessment year 2002-03 was originallycompleted u/s 143(3) and considering all the facts. Therefore,the question of again considering the payment as out ofundisclosed sources and not genuine does not arise....” “....the AO considered the payments in respect of all theconcerns owned by the appellant and sister concern and thePvt. Ltd. Co. as expenditure incurred by the appellant out ofundisclosed receipts. As all the sister concerns are assessed totax and furnished their returns separately, the expenditureincurred by the sister concerns are verifiable from the record. Inthe case of the appellant, the appellant is the prop. of twoconcerns i.e. Sharma Nursing Home and Suesh Granite. Theincome of both the concerns were estimated by estimating thetotal receipt. Therefore, the expenditure should also beconsidered as out of the total receipt. The appellant alsoexplained the bank deposits properly. In the abovecircumstances of the case, the expenditure has to be allowedwhether books of accounts maintained or not. Therefore, theaddition made by the AO on account of expenses is deleted.....” In the Revenue's appeal against the order passed by the CIT(A), the Tribunal found that the CIT(A) had rightly deleted theadditions and did not find any reason to make interference. TheTribunal, inter alia, recorded its findings after, again, elaborately discussing the findings recorded by the CIT(A) on all the three issues thus:- (i) Addition on account of unaccounted purchase of medicines: “...The assessing officer in the original assessmentproceedings has already enhanced the sales fromRs.12,67,290/- to 15,00,000/- and made a treading addition. Insuch circumstances when the sales & purchases were declaredon estimates basis and thereafter the assessing officer estimatedthe trading results by enhancing the sales by an amount ofRs.2,22,710/-, the further addition of Rs.1,35,441/- isunwarranted....” (ii)Addition to the total income on account of fees: “.....There is a gap of 4 years in the assessment year in questionand the survey year and therefore, the total receipts shown by theassessee looks reasonable considering the estimated charges ofRs.120/- per patient for average 35 customers per day for 300working days. Moreover, the AO has already enhanced the grossreceipts at Rs.15 lacs in the proceedings u/s 143(3) and madetrading addition by applying GP Rate of 30%. Therefore, we findno reason to make any interference in the order of CIT(A) on thisground.” (iii)Additions as unexplained factory and hospital expenditure: “We found that the entries noted in these diaries aredetails of sums paid by the assessee for hospital and the factory.The amount so paid includes the amount deposited in the bankaccounts, which are part of regular assessment proceedings. Theamount also includes payments made for M/s Sushma Granitewhich is proprietor concern of wife of the assessee and M/s DollyGranite Pvt. Ltd. the payments made relating to both theconcerns of the assesee i.e. M/s Suresh Granite and M/s SharmaNursing Home are not exceeding the transactions as reflected intheir Profit & Loss A/c and Balance Sheets. By perusing the saidnotebook it appears that the daily payments made by theassessee for expenditure or for depositing in the bank are noted inthese notebooks. The assessee has not maintained any set ofbooks of accounts. On the contrary there is no evidence onrecord to show that the payments noted in these notebook areover and above the amount of expenditures/deposits made in thebank accounts/other payments made by the assessee during theyear. In these facts & circumstances of the case we are in theagreement with the finding given by the CIT(A). This ground ofappeal is accordingly dismissed.” Seeking to challenge the order passed by the Tribunal, it is contended by the learned counsel for the Revenue that the AO had Seeking to challenge the order passed by the Tribunal, it is contended by the learned counsel for the Revenue that the AO had made the additions after properly scrutinizing the material availablewith him after survey was conducted under Section 133A of the Act;and the CIT(A) as also the Tribunal have erred in deleting the same.It is further submitted that the question involved in the matter is as towhether the Tribunal was legally right in upholding the deletionsordered by the CIT(A), of the additions made by the AO on accountof unexplained purchases of medicines, on account of unexplainedreceipt of consultation fees and on account of unexplainedexpenditure at factory and hospital while ignoring the fact of surveycarried out at the premises of the assessee. In our view, the submissions do not make out any substantialquestion of law for consideration by this Court in this appeal. Thegrounds as urged and the questions as suggested essentially relateto the matters of appreciation of evidence for factual enquiry andrendering findings on facts about the expenditure on purchase ofmedicines, receipt of consultation fees and expenditure at factoryand hospital. Though the AO made the additions with reference tohis opinion on the material found and impounded during the courseof survey proceedings, however, the CIT(A) disagreed with thefindings of the AO after thoroughly analyzing the material on recordand after referring to the inconsistencies in the assessment order onaccounting aspects and the fact that the trading additions hadalready been made in the original assessment. Thereafter, theTribunal found no reason to interfere while scrutinizing the findingsrecorded by the CIT(A) on relevant considerations. MK In an overall view of the matter, we are satisfied that thefindings on facts have been rendered by the two appellateauthorities in accordance with law; and the orders impugned do notsuffer from any perversity or wrong application of any principle of lawso as to raise any substantial question of law. Consequently and in view of the above, the appeal fails andthe same is, therefore, dismissed summarily. (ARUN BHANSALI),J. (DINESH MAHESHWARI), J.