Sri Raju Neuro & Multi Specialities Pvt. Ltd., Rajahmundry v. The ACIT, Central Circle, Rajahmundry

CO 4/VIZ/2009 | 2003-2004
Pronouncement Date: 29-09-2010 | Result: Dismissed

Appeal Details

RSA Number 425323 RSA 2009
Assessee PAN AACCR7533C
Bench Visakhapatnam
Appeal Number CO 4/VIZ/2009
Duration Of Justice 1 year(s) 7 month(s) 26 day(s)
Appellant Sri Raju Neuro & Multi Specialities Pvt. Ltd., Rajahmundry
Respondent The ACIT, Central Circle, Rajahmundry
Appeal Type Cross Objection
Pronouncement Date 29-09-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 29-09-2010
Assessment Year 2003-2004
Appeal Filed On 02-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO S . 647 TO 651 /VIZAG/ 20 08 ASSESSMENT YEAR S : 2002 - 03 TO 2006 - 07 RESPECTIVELY ACIT CENTRAL CIRCLE RAJAHMUNDRY RAJU NE U R O & MULTI SPECIALITIES PVT. LTD. RAJAHMUNDRY (APPELLANT) VS. (RESPONDENT) PAN NO.AACCR 7533C CO NOS.3 TO 7/VIZAG/20 09 ASSESSMENT YEARS : 2002 - 03 TO 2006 - 07 RESPECTIVELY RAJU NE U R O & MULTI S PECIALITIES PVT. LTD. RAJAHMUNDRY ACIT CENTRAL CIRCLE RAJAHMUNDRY (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI SUBRATA SARKAR DR RESPONDENT BY: SHRI G.V.N. HARI CA ORDER PER BENCH : - THESE APPEALS ARE PREFERRED ON BEHALF OF THE REVENUE AGAINST THE CONSOLIDATED ORDER OF THE CIT FOR THE ASSESSMENT YEAR 2002 - 03 TO 2006 - 07 ON COMMON GROUNDS. 2. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTIONS IN ALL THESE APPEALS CHALLENGING THE VALIDITY OF THE SEARCH. SINCE THESE APPEALS AND CROSS OBJECTI ONS WERE HEARD TOGETHER THESE ARE BEING DISPOSED OFF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. WE HOWEVER PREFER TO ADJUDICATE THESE APPEALS AND THE COS ONE AFTER THE OTHER. ITA NOS.647 TO 651 OF 2008: 3. THROUGH THESE APPEALS THE ORDE R OF THE CIT(A) HAS BEEN ASSAILED ON VARIOUS GROUNDS BUT THEY ALL RELATE TO THE DELETION OF THE UNDISCLOSED INCOME ESTIMATED BY THE ASSESSING OFFICER. 2 4. THE BRIEF FACTS BORNE OUT FROM THE RECORD ARE THAT THE SEARCH AND SEIZURE OPERATION WAS CONDUCTED UPO N THE ASSESSEE ON 4 TH AUGUST 2005. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION RECEIPT BOOKS NAMED ADVANCE BOOKS WHICH REPRESENTS AMOUNTS COLLECTED AS ADVANCE S FROM THE INPATIENTS WERE FOUND AND SEIZED. THESE BOOKS ARE FOR THE PART PERIOD OF FINANCIAL YEAR 2004 - 05 AND PART PERIOD OF FINANCIAL YEAR 2005 - 06. FROM THESE BOOKS A.O. HAS OBSERVED THAT THE ADVANCE BOOKS DO NOT FIND PLACE IN THE CASH BOOKS. THE A.O. HAS ALSO NOTICED TH E IRREGULARITIES IN THE BOOKS OF AC COUNTS IN RESPECT OF 7 PATIEN TS. HE HAS DISCUSSED EACH AND EVERY CASE AND FORMED A VIEW THAT THE ADVANCES SHOWN IN THE RECEIPT BOOKS WERE NEITHER ADJUSTED IN THE FINAL BILLS NOR RECORDED IN THE CASH BOOKS. THEREFORE THE ASSESSEE HAS SUPPRESSED THE INCOME AND ACCORDINGLY HE ESTIMATE D THE UNDISCLOSED ADVANCES RECEIVED BY THE ASSESSEE AT RS.1 10 24 235/ - OVER A PERIOD OF 5 YEARS. 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSIONS THAT ASSESSEE COMPANY MAINTAINED REGULAR BOOKS OF ACCOUNTS AND THEY HAVE BEEN THOR OUGHLY SCRUTINIZED. THE COMPANY COLLECTED ADVANCES FROM THE PATIENTS. THE PROCEDURE FOR ACCOUNTING FOR ADVANCES WAS EXPLAINED TO THE AUTHORITIES DURING THE COURSE OF SEARCH PROCEEDINGS AND ALSO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL. IT WAS FURTHER EXPLAINED BEFORE THE CIT(A) THAT THE ADVANCES ARE NOT TAKEN FROM ALL THE PATIENTS. THE ASSESSEE TREATS ADVANCE AS A TEMPORARY RECEIPT. A RECEIPT IS GIVEN WHEN ADVANCE IS RECEIVED BUT THIS AMOUNT IS NOT TAKEN INTO THE CASH BOOKS AND AFTER COMPLET ION OF TREATMENT A DETAILED FINAL BILL IS PREPARED. THIS FINA L BILL IS REFLECTED IN THE I.P. BILL BOOK WHICH IS TAKEN INTO THE CASH/BANK BOOK AND THE ADVANCE RECEIVED IS CANCELLED. IN SOME CASES ADVANCE RECEIVED BECOMES MORE THAN THE FINAL BILL AND ON SETTLEMENT THE BALANCE IS REFUNDED TO THE PATIENT. IT WAS ALSO CONTENDED BEFORE THE CIT(A) THAT THERE IS A PROCEDURE FOR COLLECTION OF FEES FROM THE PATIENTS DEPENDS UPON THE VARIOUS DOCUMENTS/INFORMATION JUST LIKE ANY OTHER HOSPITAL. IT IS GENERALLY BAS ED ON PATTERN OF BILLINGS CASE SHEETS WHICH CONTAIN ALL THE INFORMATION RELEVANT FOR BILLING A PATIENT. BASED ON THE ABOVE INFORMATION THE ASSESSEE COMPANY 3 PREPARED A TABLE SHOWING THE AMOUNT DUE FROM A PATIENT AND THE FINAL BILL IN RESPECT OF SAID PATI ENT. THE FINAL BILL INCLUDES ADVANCES COLLECTED. 6. IN THE ABOVE PROCEDURE OF ACCOUNTING NO QUESTION OF ACCOUNTING FOR THE REFUNDS NOR THE NECESSITY OF KEEPING A PROOF TO SUPPORT THE REFUNDS DOES NOT ARISE. HE HAS ALSO FILED DETAILED SUBMISSIONS ON ALL THE ISSUES ON THE BASIS OF WHICH ASSESSING OFFICER HAS ESTIMATED THE SUPPRESSED INCOME. FOR THE SAKE OF REFERENCE WE EXTRACT THE SUBMISSIONS MADE BY THE ASSESSES BEFORE THE CIT(A). THE FOLLOWING IS THE PROCEDURE ADOPTED IN RESPECT OF ACCOUNTING FOR TH E ADVANCES A RECEIPT IS GIVEN WHEN ADVANCE IS RECEIVED BUT THIS AMOUNT IS NOT TAKEN INTO THE CASH BOOK. AFTER COMPLETION OF TREATMENT A DETAILED FINAL BILL IN RESPECT OF THE TOTAL AMOUNT DUE FROM THE PATIENT IS PREPARED. BUT THE PATIENT PAYS THE BALANC E AMOUNT AS PER THE FINAL BILL AFTER DEDUCTING THE ADVANCE PAID. THE ADVANCE RECEIPT IS CANCELLED. THIS FINAL BILL (THAT REFLECTS THE TOTAL AMOUNT RECEIVED FROM THE PATIENT AT VARIOUS POINTS OF TIME I.E. IN ADVANCE AS WELL AS AT THE FINAL STAGE) IS SHOW N IN THE IP BILL BOOK WHICH IS TAKEN INTO THE CASH/BANK BOOK. IN VIEW OF THE ABOVE PROCEDURE IT MAY BE CONCLUDED THAT THERE IS NO SUPPRESSION OF ANY AMOUNT OF WHATSOEVER NATURE. FOR ANY REASON (FOR EXAMPLE A PATIENT MAY NOT STAY IN THE HOSPITAL FOR THE PERIOD HE WAS EXPECTED FOR) IF ADVANCE RECEIVED BECOMES MORE THAN THE FINAL BILL THE BALANCE IS REFUNDED TO THE PATIENT. IT IS THE FUNDAMENTAL FACT THAT THERE WILL BE A PROCEDURE FOR THE COLLECTION OF FEES FROM THE PATIENTS IN ANY HOSPITAL. IN THE HOSP ITAL RUN BY THE APPELLANT COMPANY ALSO THERE IS A PROCEDURE FOR COLLECTION OF FEES WHICH DEPENDS UP ON THE FOLLOWING DOCUMENTS/INFORMATION JUST LIKE IN ANY OTHER HOSPITAL. A) PATTERN OF BILLING B) CASE SHEET WHICH CONTAINS ALL THE INFORMATION RELEVANT FOR BILL ING A PATIENT. BASED ON THE ABOVE INFORMATION THE APPELLANT COMPANY PREPARED A TABLE SHOWING THE AMOUNT DUE FROM A PATIENT AND THE FINAL BILL IN RESPECT OF THE SAID PATIENT WHICH CLEARLY ESTABLISHED THE FACT THAT THE FINAL BILL INCLUDES ADVANCE COLLECTED ALSO. IN THE ASSESSMENT ORDER THE LD. A.O. HAS SUMMARIZED THE DISCUSSION REGARDING ADVANCES AS FOLLOWS: (THE EXPLANATION OF THE APPELLANT IS ALSO GIVEN AGAINST EACH CONTENTION OF THE A.O.) 4 1. ADVANCES RECEIVED BY THE ASSESSEE ARE NOT BEING ENTERED IN T HE CASH BOOK MAINTAINED BY COMPANY AS PER THE ABOVE ACCOUNTING PROCEDURE ENTIRE RECEIPT FROM THE PATIENT IS ENTERED ONLY AT THE FINAL DISCHARGE STAGE AND NO SEPARATE ACCOUNTING IS REQUIRED. 2. ADVANCE RECEIPT BOOKS ARE BEING DESTROYED TO SUPPRESS INCOME AS PER THE ABOVE ACCOUNTING PROCEDURE THE ADVANCE RECEIPTS ARE ONLY TEMPORARY RECEIPTS. THE ADVANCE RECEIPT BOOKS ARE OF RELEVANCE ONLY UPTO THE FINAL BILL PROCESSING STAGE. IN SPITE OF THE FACT THERE IS NO INTENTIONAL DESTRUCTION OF THE ADVANCE RECEIP T BOOKS. 3. CLAIMS REGARDING INCLUSION A TABLE WITH FULL DETAILS IS ENCLOSED TO ESTABLISH THE FACT THAT THE FINAL BILL INCLUDES THE ADVANCE RECEIVED. 4.CLAIMS OF THE ASSESSEE REGARDING ALLEGED REFUNDING EXCESS ADVANCE COLLECTED COULD NOT ALSO BE SUBSTANT IATED WITH ANY DOCUMENTARY EVIDENCE. CONTRARY TO THIS IT IS FOUND FROM PATIENTS THAT THERE IS NO TRUTH IN THE ASSESSEES CLAIM. AS PER THE ABOVE ACCOUNTING PROCEDURE NO QUESTION OF DOCUMENTARY PROOF ARISES IN THE CASE OF REFUNDS. 5. FINALLY THE ONLY CO NTEST AGAINST THE ADMISSION MADE BY PATIENTS SEEMS TO BE FACT THAT THEY HAVE NOT PRODUCED THE RECEIPTS FOR THE AMOUNTS THEY HAVE ADMITTED TO HAVE PAID. IT IS A FACT6 THE RESPONSIBILITY PRIMARILY LIES WITH THE HOSPITAL TO MAINTAIN A PROPER ACCOUNTING PROCE DURE REFLECTING ACTUAL TRANSACTION CARRIED BY THE HOSPITAL FOR THE AMOUNTS COLLECTED BY IT FROM THE PATIENTS. APPELLANT MAINTAINS PROPER ACCOUNTING PROCEDURE WHICH REFLECTS THE ENTIRE AMOUNTS RECEIVED BY THE COMPANY ON ITS ACCOUNT. THE LEARNED A.O. HAS CONTEMPLATED THREE IMAGINARY SCENARIO AND DISCUSSED THE FOLLOWING CASES UNDER THE SAID SCENARIO AND TRIED TO ESTABLISH THAT THERE IS SUPPRESSION OF INCOME (OF COURSE IN THE FORM OF ADVANCES). LIST OF CASES: 1. B.J. GUPTA 2. P. PADMAJA 3. P. BHIMAYYA 4. L. MANI 5. D. BHA DRAMMA 6. K. AMMAJI EXCEPTING THE FIRST TWO CASES ALL THE OTHER ABOVE LISTED CASES INVOLVE SURGERY. 5 NAME OF THE CASES CONTENTION OF THE A.O. EXPLANATION OF THE APPELLANT 1. B.J. GUPTA IN THIS CASE THE PATIENT HAS PAID RS.18 800/ - BASED ON THE BILLING PATT ERN OF THE HOSPITAL AND THE CASE SHEET WHICH FORMS BASIS FOR CALCULATION OF FEES DUE AN AMOUNT OF RS.15 975/ - IS DUE FROM THE PATIENT AND THE TOTAL BILL IS SETTLED FOR RS.15 800/ - AND THE SAME IS RECORDED IN THE BOOKS OF ACCOUNTS. A COPY OF THE STATEMENT FROM THE SON OF THE PATIENT IS ENCLOSED FOR YOUR REFERENCE. 2.P. PADMAJA AMOUNT COLLECTED IS RS.15 000/ - BUT SHOWN AS RS.5 000/ - ONLY BASED ON THE BILLING PATTERN OF THE HOSPITAL AND THE CASE SHEET WHICH FORMS BASIS FOR CALCULATION OF FEES DUE AN AMOUNT OF RS.16 200/ - IS DUE FROM THE PATIENT AND THE TOTAL BILL IS SETTLED FOR RS.15 000/ - . IN THIS CASE PATIENT IS A RELATIVE OF A PMP WHO REGULARLY REFERS CASES TO THE HOSPITAL AND CLAIMS REFERRAL FEES. THE SAID PMP VIZ. DR. P. VEERRAJU REQUESTED THE COMPAN Y TO PAY HIM AN AMOUNT OF RS.10 000/ - . IN VIEW OF THE BUSINESS EXPEDIENCY COMPANY PAID THE SAID AMOUNT. THE RECEIPT AND THE CORRESPONDING EXPENDITURE HAVE TO BE SEPARATELY SHOWN. BUT THE NET RECEIPT IS ONLY SHOWN IN THE COMPANY BOOKS. HOWEVER THERE IS NO SUPPRESSION OF INCOME RECEIVED BY THE COMPANY. NOTE: THE FACT OF RELATION MAY BE VERIFIED FROM THE IMPOUNDED CASE SHEETS. A COPY OF THE CONFIRMATION STATEMENT FROM THE PMP IS ENCLOSED HEREWITH THE OTHER CASES IN THE ABOVE LIST INVOLVE SURGERY. I N THIS CONNECTION YOUR KIND ATTENTION IS INVITED TO Q.NO.14 OF THE STATEMENT RECORDED FROM DR. SUJATHA ON 3.10.2005 WHICH IS REPRODUCED BELOW FOR YOUR READY REFERENCE TOGETHER WITH THE RELEVANT EXTRACT FROM THE ANSWER TO THE SAID QUESTION. Q.NO.14 PLEASE GIVE THE PROCEDURE ADOPTED BY YOU WHILE PREPARING BILLS IN RESPECT OF OUT PATIENTS OTHER DOCTOR PATIENTS AND IN PATIENTS AND OTHER DOCTORS IN PATIENTS. 6 A. FROM IN PATIENTS OF OTHER DOCTORS IN RESPECT OF OTHER IN PATIENTS ROOM RENTS NURSING CHARGES A RE COLLECTED BY THE HOSPITAL AND OTHER FEES SUCH AS OPERATION CHARGES AND DOCTOR FEES ARE COLLECTED BY HOSPITAL AND PAID TO THEM DIRECTLY. IN THE CASE OF SOME OTHER DOCTORS WE RECEIVE AMOUNTS FROM PATIENTS IN TOTAL AND SEND TO SUCH DOCTORS DIRECTLY FROM O UR HOSPITAL THROUGH CHEQUES. NAME OF THE CASE CONTENTION OF THE A.O. EXPLANATION OF THE APPELLANT K. AMMAJI THE AMOUNT COLLECTED IS RS.15 000/ - BUT SHOWN AS RS.5 000/ - THIS IS A CASE OF SURGERY. THE AMOUNTS DUE TO SURGEON AND ANESTHETIST WERE PAID TO THE M DIRECTLY. THE AMOUNT DUE TO HOSPITAL I.E. RS.5 000/ - IS RECEIVED BY THE HOSPITAL AND ACCOUNTED FOR. D. BHADRAMMA THE AMOUNT COLLECTED IS RS.24 235/ - BUT SHOWN AS RS.14 235/ - THIS IS A CASE OF SURGERY. THE AMOUNT DUE TO SURGEON HAS BEEN PAID TO HIM DIR ECTLY. THE AMOUNT OF RS.14 235/ - DUE TO HOSPITAL HAS BEEN RECEIVED AND ACCOUNTED FOR. P. BHIMAYYA THE AMOUNT COLLECTED WAS NOT REFLECTED IN THE BOOKS THIS IS A CASE OF SURGERY AND UNFORTUNATELY IN THIS CASE THE PATIENT HAS EXPIRED. THE AMOUNT PAID BY THE PATIENT IS SUFFICIENT ENOUGH TO COVER THE AMOUNT IN RESPECT OF SURGERY. THE AMOUNT DUE TO HOSPITAL WAS NOT PAID. AS IT IS A CASE OF DEATH THE APPELLANT DIDNT INSIST ON THE PAYMENT. HENCE NO FINAL BILL IN THIS CASE. L. MANI EVEN THOUGH THE PATIENT WAS DISCHARGED NO FINAL BILL WAS PREPARED IN THIS CASE IT IS RESPECTFULLY SUBMITTED THAT THE FINAL BILL WAS PREPARED AND THE SAME WAS SEIZED BY THE DEPARTMENT. BUT THE COLLECTION OF FINAL BILL BECAME A LITIGATION. HENCE THE SAME IS NOT TAKEN INTO BOOKS. AS PER THE ESTABLISHED PRACTICE OF ACCOUNTING FOR THE TOTAL RECEIPT AT ONE TIME I.E. AFTER THE SETTLEMENT AT THE TIME OF DISCHARGE AND THE FINAL BILL IS NOT SETTLED THE ADVANCE OF RS.7 990/ - WAS ALSO NOT ENTERED INADVERTENTLY. IT IS AN EXCEPTIONAL OMISSIO N ONLY AND NOT AT ALL A CASE OF SUPPRESSION OF RECEIPTS. 7 ALL THE ABOVE FACTS WITH RELEVANT EVIDENCES ARE SUBMITTED BEFORE LEARNED A.O. UNFORTUNATELY HE HAS NOT TAKEN NOTE OF THE FACTS CLAIMING THAT THERE IS NO TIME. THE LEARNED A.O. HAS DERIVED A PEC ULIAR MATHEMATICAL FORMULA BY ADDING THE ADVANCES AND THE TOTAL RECEIPTS (IN WHICH ADVANCES AND FINAL PAYMENT ARE INCLUDED) AND ARRIVED AT THE IMAGINARY FIGURES OF SUPPRESSION FOR VARIOUS YEARS. IN FACT 1. ALL THE PATIENTS MAY NOT/NEED NOT PAY THE ADVANCE 2. TH ERE IS NO REGULAR PATTERN IN WHICH ADVANCE IS COLLECTED. 3. THUS THERE IS NO NEXUS BETWEEN THE ADVANCE COLLECTED AND TOTAL AMOUNT OF BILL IN RESPECT OF A GIVEN PATIENT. ON MULTIPLICATION FORMULA IN R.M.L. MEHROTRA VS. ASST. CIT [1999] 68 ITD 288 (ALL) IT WA S HELD BY THE TRIBUNAL AS FOLLOWS (PP. 304 AND 305): NOW PASSING ON THE MULTIPLICATION FORMULA ADOPTED BY THE ASSESSING OFFICER WE FIND OURSELVES UNABLE TO ACCORD OUR NOD TO IT. IN THE FIRST PLACE ONE SHOULD NOT FORGET THAT IT IS A SEARCH CASE IN WHI CH A SEARCH PARTY IS SUPPOSED AND EXPECTED TO FIND OUT ALL THE INCRIMINATING DOCUMENTS MATERIAL AS ALSO UNDISCLOSED ASSETS. A SEARCH ASSESSMENT MUCH LESS A BLOCK ASSESSMENT THEREFORE STANDS ON A FOOTING DIFFERENT THAN A NORMAL ASSESSMENT MUCH LESS AN ASSESSMENT BASED ON THE BEST JUDGEMENT OF AN ASSESSING OFFICER. FURTHER IF THE ASSESSEE HAD ACTUALLY MADE A FORTUNE OF SIMILAR RECEIPT IN RESPECT OF THE REMAINING PART OF THE YEAR THEY MUST BE REFLECTED BY CERTAIN ASSETS MOVABLE OR IMMOVABLE OUGHT TO HAVE BEEN FOUND DURING THE COURSE OF SEARCH. NO SUCH ASSETS DESPITE THE EXTREME STEP OF SEARCH WHICH AMOUNTS TO A SERIOUS INVASION ON THE RIGHTS OF SUBJECTS AND WHICH IS PERHAPS THE LAST WEAPON IN THE ARSENAL OF THE DEPARTMENT WERE FOUND WHICH COULD BE ATTRIBUTED TO ANY SUCH PATENTLY HYPOTHETICAL RECEIPTS. IN VIEW OF THIS WE ARE UNABLE TO CONCUR WITH THE DEPARTMENT TO THE MULTIPLICATION FORMULA ADOPTED BY THE LEARNED ASSESSING OFFICER. [PP. 304 - 305] 7. ON THE BASIS OF THE WRITTEN SUBMISSIONS CIT( A) HAS CALLED A REMAND REPORT FROM THE ASSESSING OFFICER WITH RESPECT TO THE VARIOUS PATIENTS FROM WHOM ASSESSEE HAS RECEIVED THE ADVANCES AND IT WAS ALLEGED BY THE A.O. THAT THESE ADVANCES WERE NEITHER ADJUSTED IN THE FINAL BILL NOR WERE RECORDED IN THE C ASH BOOKS. IN REMAND REPORT THE ASSESSING OFFICER HAS REPORTED THAT THE FINAL BILL AMOUNT WAS ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS. HOWEVER HE IS NOT IN A POSITION TO CATEGORICALLY SAY WHETHER ADVANCES RECEIVED IS ACCOUNTED FOR OR NOT. BEFOR E THE CIT(A) ASSESSEE HAS SUBMITTED ST ATEMENT OF ADVANCE ANALYSIS IN 54 CASES WHERE IN THE ADVANCE RECEIPTS OTHER DETAILS OF PATIENTS OTHER CHARGES AND FINAL BILLS AND CONCESSION IF ANY 8 GIVEN HAVE BEEN NARRATED. OUT OF THAT CIT(A) HAS EXAMINED FINAL BI LL OF 18 CASES. BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE THE CIT(A) CAME TO THE CONCLUSION THAT SINCE THE FINAL BILL TAKE S INTO ACCOUNT THE ADVANCES RECEIVED IT CANNOT BE SAID ADVANCES ARE OVER AND ABOVE THE BILL AMOUNT. ACCORDINGLY NO SU PPRESSION OF ADVANCE HAS TAKEN PLACE. THE CIT(A) ACCORDINGLY DELETED THE ADDITIONS MADE ON ESTIMATE BASIS. 8. AGGRIEVED THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL . B ESIDES PLACING A HEAVY RELIANCE UPON THE ORDER OF THE A.O. THE LD. D.R. HA S CONTENDED THAT DURING THE COURSE OF SEARCH THE ADVANCE BOOKS WERE FOUND AND THE RECEIPTS RECORDED IN THE ADVANCE BOOKS WERE NEITHER ADJUSTED AGAINST THE FINAL BILL NOR RECORDED IN THE CASH BOOKS. A SEARCH TEAM HAS ALSO IDENTIFIED THE CERTAIN CASES IN W HICH THE ADVANCES WERE RECEIVED BUT IT WERE NOT ADJUSTED AGAINST THE FINAL BILL NOR WAS IT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THEREFORE THE A.O. HAS RIGHTLY ESTIMATED THE SUP PRESSED INCOME OVER A PERIOD PERTAINING TO THE ASSESSMENT YEAR 2002 - 03 T O 2006 - 07. 9. THE LD. COUNSEL FOR THE ASSESSEE BESIDES PLACING HEAVY RELIANCE UPON THE ORDER OF THE CIT(A) HAS CONTENDED THAT THOUGH HE HAS FILED ALL THE EXPLANATIONS AND RELEVANT PAPERS IN SUPPORT OF HIS CONTENTION THAT THE ADVANCES COLLECTED FROM THE P ATIENTS WERE ADJUSTED IN THE FINAL BILLS BUT THESE EXPLANATIONS WERE NOT EXAMINED BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE SAME EVIDENCE WAS AGAIN FILED BEFORE THE CIT(A) AND CIT(A) CALLED A REMAND REPORT FROM THE A.O. AND IN REMAND RE PORT THE ASSESSING OFFICER HIMSELF HAS OBSERVED THAT THE FINAL BILL AMOUNTS WERE ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS. HE WAS ALSO NOT IN A POSITION TO STATE CATEGORICALLY WHETHER THE ADVANCES RECEIVED IS ACCOUNTED FOR OR NOT. THE REMAND REPOR T IS AVAILABLE AT PG.NO.238 TO 244. SINCE THE REVENUE COULD NOT BRING OUT ANY MATERIAL ON RECORD TO ESTABLISH THAT THE ADVANCES RECEIVED BY THE ASSESSES WERE NOT PROPERLY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS THE ALLEGED ADDITION ON ACCOUNT OF SUPPRESSE D INCOME ON RECEIPT OF ADVANCES IS NOT CALLED FOR. 9 WHATEVER ADVANCES WERE RECEIVED BY THE ASSESSES THEY ALL WERE ADJUSTED IN THE FINAL BILLS. 1 0 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RECORD WE FIND THAT BEFORE THE ASSESSI NG OFFICER ASSESSEE HAS FURNISHED ALL DETAILS WITH REGARD TO THE DISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER. ON CAREFUL PERUSAL OF THE ASSESSMENT ORDER WE FIND THAT THE ASSESSMENT ORDER WAS PASSED ON 27.12.2007 AND THE ASSESSEE HAS FURNISHED THE DETAILED EXPLANATIONS ON 18.12.2007 IN RESPONSE TO THE QUESTIONNAIRE ISSUED TO IT. THOUGH THE PERIOD OF LIMITATION FOR FRAMING THE ASSESSMENT WAS TO BE EXPIRED ON 31.12.2007 THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT ON 27.12.2007 WITHOUT EXAMIN ING THE DETAILED EXPLANATIONS OF THE ASSESSES ON ACCOUNT OF PAUCITY OF TIME. THIS DETAILED EXPLANATIONS WERE FILED ON 18.12.2007 AND THE ASSESSING OFFICER HAS SUFFICIENT TIME OF 12 DAYS TO EXAMINE THE EXPLANATIONS AND TO FIND FAULT THEREIN BEFORE MAKING A N ADDITION. 1 1 . DURING THE APPELLATE PROCEEDINGS THE CIT (A) CALLED THE REMAND REPORT FROM THE ASSESSING OFFICER AND IN REMAND REPORT THE ASSESSING OFFICER HAS CATEGORICALLY STATED THAT THE ADVANCE AMOUNT WAS GIVEN CREDIT IN THE FINAL RECEIPT AND THE PA TIENTS HAVE PAID THE NET AMOUNT I.E. FINAL BILL AMOUNT MINUS ADVANCE PAID. THE RELEVANT OBSERVATION OF THE A.O. IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: ALSO ALSO DIRECTED BY THE ACIT I HAVE VERIFIED THE EXPLANATION OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE CIT(A) - I HYDERABAD WITH REFERENCE TO THE RECEIPTS CASE SHEETS AND OTHER SEIZED MATERIAL. AS PER THE SEIZED MATERIAL AVAILABLE WITH THE DEPARTMENT THE ASSESSE E ISSUED SEPARATE RECEIPTS FOR ADVANCE AMOUNT IN ADVANCE RECEIPT BOOK AND SEPARATE RECEIPT BOOKS FOR FINAL PAYMENT. I HAVE TEST CHECKED CASES INVOLVING HIGHER AMOUNTS SPECIFIED IN THE STATEMENT ANNEXED TO THE ABOVE SUBMISSIONS OF THE ASSESSEE AND IT IS N OTICED THAT ADVANCE AMOUNT WAS GIVEN CREDIT IN THE FINAL RECEIPT THOUGH THE PATIENT HAVE PAID THE NET AMOUNT I.E. FINAL BILL AMOUNT MINUS ADVANCE PAID . FURTHER THE ASSESSEE HAS REFLECTED THE ENTIRE RECEIPTS FROM THE IN PATIENTS INVOLVING SURGERY AND THE CORRESPONDING PAYMENT MADE TO SURGEONS AND ANESTHETISTS ETC. FROM SUCH RECEIPTS. IN THESE CASES THE ASSESSEE COMPANY ACCOUNTED FOR THE NET RECEIPTS RELATING TO IT. 10 1 2 . FROM A CAREFUL PERUSAL OF THE REMAND REPORT WE FIND THAT THE ASSESSING OFFICER IN F ACT WAS CONVINCED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSES WITH REGARD TO THE ADJUSTMENT OF THE ADVANCES RECEIVED AT THE TIME OF ADMISSIONS OF THE PATIENT IN A FINAL BILL. THE CIT(A) TOOK COGNIZANCE OF THE DETAILED EXPLANATIONS OF THE ASSESSES AND THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER AND HAVING CONVINCED WITH IT HE DELETED THE ADDITIONS. THE RELEVANT OBSERVATION OF THE CIT(A) IS ALSO EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: 06.3 ACCORDINGLY THE DISCREPANCIES NARRATED BY THE ASSESSING OFFICER HAS BEEN CLEARLY EXPLAINED BY THE APPELLANT HENCE THE DISCREPANCIES NARRATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER STANDS EXPLAINED. IN THE REMAND REPORT DATED 29.8.2008 THE ASSESSING OFFICER HAS REPORTED THAT THE FINAL BIL L AMOUNTS WERE ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT. HOWEVER HE IS NOT IN A POSITION TO CATEGORICALLY SAY WHETHER ADVANCES RECEIVED IN ACCOUNTED FOR OR NOT. DURING THE APPEAL HEARING THE APPELLANT HAS SUBMITTED THE STATEMENT OF ADVANCE ANALYSIS IN 54 CASES WHEREIN ADVANCE RECEIPTS OTHER DETAILS OF THE PATIENTS OTHER CHARGES FINAL BILL AND CONCESSION IF ANY GIVEN HAVE BEEN NARRATED IN THE FORM OF A PAPER BOOK. OUT OF THE SAME I HAVE EXAMINED FINAL BILLS OF 18 CASES. THE BILLS IN SUCH CASES SHOWS THE TOTAL AMOUNT ON ACCOUNT OF VARIOUS CHARGES FROM WHERE ADVANCE RECEIVED IS DEDUCTED CONCESSION GIVEN IF ANY IS DEDUCTED AND FINAL AMOUNT COLLECTIBLE IS CALCULATED. THE FINAL BILL THUS TAKES INTO ACCOUNT THE ADVANCES RECEIVED. IF THE FINAL HA S BEEN TAKEN INTO REGULAR BOOKS OF ACCOUNT THIS LEADS TO OBVIOUS CONCLUSION THAT THE ADVANCE AMOUNT HAS BEEN FINALLY ACCOUNTED FOR BEING PART OF THE FINAL BILL AND NOT OVER AND ABOVE THE FINAL BILL AMOUNT ACCORDINGLY IT CANNOT BE SAID THAT THE ADVANCES RE CEIVED HAVE ESCAPED ASSESSMENT. IN THE REMAND REPORT THE ASSESSING OFFICER HAS REMARKED THAT NO CONCLUSIVE FINDING CAN BE GIVEN WHETHER THE ADVANCE AMOUNT IS PART OF FINAL BILL OR NOT UNDER SUCH CIRCUMSTANCES THE ASSESSING OFFICER CANNOT TAKE ADVERSE VIE W AGAINST THE APPELLANT. IF THE ASSESSING OFFICER CANNOT GIVE A CONCLUSIVE FINDING THAT PART OR FULL ADVANCES WERE NOT ACCOUNTED FOR IN THE FINAL BILL THE ASSESSING OFFICER CANNOT CONSIDER THE ADVANCES AS SUPPRESSED AND ON THE BASIS OF THE SAME CANNOT ES TIMATE SUPPRESSED INCOME. 06.4 IT IS THE REAL INCOME IN THE FORM OF FINAL BILL WHICH IS ASSESSABLE AND NOT ADVANCE AMOUNTS. SINCE THE FINAL BILL TAKES INTO ACCOUNT THE ADVANCES RECEIVED IT CANNOT BE SAID THAT ADVANCES ARE OVER AND ABOVE THE BILL AMOUNT . ACCORDINGLY NO SUPPRESSION OF ADVANCES HAS TAKEN PLACE. IN VIEW OF THE SAME THERE IS NO FOUNDATION FOR ESTIMATING UNDISCLOSED INCOME FOR THE ASSESSMENT YEARS 2002 - 03 TO 2005 - 06. ON THE BASIS OF SOME PATIENTS CASES THE ASSESSING OFFICER CONCLUDED TH AT ADVANCES ARE NOT ACCOUNTED 11 FOR. THOSE WERE RARE AND PECULIAR CASES COULD NOT BE CONSIDERED AS REPRESENTING NORMAL CASES AND EVEN IN THOSE CASES THE DISCREPANCIES NARRATED STANDS EXPLAINED. AT THE SAME TIME THE ASSESSING OFFICER HAS REMAINED SILENT O R NOT COMMENTED ABOUT REST OF THE CASES WHERE DETAILS SHOW THAT FINAL BILLS HAVE TAKEN INTO ACCOUNT ADVANCE AMOUNTS AND ACCORDINGLY THERE WAS NO BASIS FOR THE GENERAL OBSERVATION THAT ADVANCES ARE NOT ACCOUNTED FOR. ACCORDINGLY THERE IS NO BASIS FOR THE CONCLUSION THAT ADVANCES ARE NOT ACCOUNTED FOR HENCE THERE IS NO BASIS FOR ESTIMATING UNDISCLOSED INCOME. ACCORDINGLY THE UNDISCLOSED INCOME ESTIMATED BY THE ASSESSING OFFICER FOR A.YRS. 2002 - 03 TO 2005 - 06 ARE HEREBY DELETED. 1 3 . DURING THE COURSE OF HEARING OF THE APPEAL THE LD. COUNSEL FOR THE REVENUE HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE ORDER OF THE CIT(A). HE HOWEVER PLACED A HEAVY RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. BUT ON CAREFUL PERUSAL OF THIS ORDER OF THE LOWER AUTH ORITIES WE FIND THAT DURING THE COURSE OF APPELLATE PROCEEDINGS THE CIT(A) HAS ADJUDICATED THE ISSUE IN THE LIGHT OF EXPLANATIONS FURNISHED BY THE ASSESSES AND THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER. SINCE NO CONCRETE MATERIAL HAS BEEN BRO UGHT ON RECORD TO ESTABLISH THAT THE ADVANCES RECEIVED BY THE ASSESSE E S ON ADMISSION OF THE PATIENTS WERE NOT ACCOUNTED FOR IN THE FINAL BILLS RAISED AT THE TIME OF DISCHARGE OF THE PATIENTS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND ACCO RDINGLY WE CONFIRM THE SAME. 1 4 . THROUGH THESE COS 3 TO 7 OF 2009 THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE SEARCH ON THE GROUND THAT NO SEARCH WARRANT WAS ISSUED IN THE NAME OF THE ASSESSEES THEREFORE THE SEARCH IS ILLEGAL AND THE ASSESSMENT FRAM ED CONSEQUENT THERETO IS VOID - AB - INITIO. IN SUPPORT OF HIS CONTENTIONS HE HAS INVITED OUR ATTENTION TO THE VARIOUS PANCHNAMAS APPEARING AT PG.NO.1 TO 14 WITH THE SUBMISSION THAT THE WARRANTS WERE ISSUED IN THE NAME OF DR. B. VENKATA RAJU BUT THE SEARCH W AS CONDUCTED IN THE ASSESSEE COMPANY I.E. RAJU NEURO & MULTI SPECIALITY HOSPITAL. HE HAS ALSO PLACED A RELIANCE UPON THE LETTER WRITTEN BY THE DCIT TO THE ASSESSEE DATED 22.8.2007 APPEARING AT PG.71 OF THE COMPILATION IN SUPPORT OF HIS CONTENTION THAT THE SEARCH WAS CONDUCTED UPON DR. BALABADRA VENKATA RAJU THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY AND THE REVENUE IS SEEKING INFORMATION FROM THE ASSESSEES WITH REGARD TO THE SEARCH CONDUCTED UPON DR. BALABADRA VENKATA RAJU. SINCE 12 NO SEARCH WAS CONDUCT ED UPON THE ASSESSEES THE ASSESSMENT FRAMED CONSEQUENT TO THE SEARCH UPON THE ASSESSEES U/S 153A IS ILLEGAL AND DESERVE TO BE QUASHED. IN SUPPORT OF HIS CONTENTION HE PLACED A RELIANCE UPON THE FOLLOWING JUDGEMENTS: 1. DCIT VS. K. KOTESWARA RAO IT(SS) A NO.08/VIZAG/2005. 2. DR. MANSUKH KANJIBHAI SHAH VS. ACIT 41 DTR 353 1 5 . THE LD. D.R. ON THE OTHER HAND HAS INVITED OUR ATTENTION TO THE WARRANT OF AUTHORIZATION ISSUED IN FORM NO.45 WHICH IS FILED DURING THE COURSE OF HEARING WITH THE SUBMISSION THAT TH E WARRANTS WERE ISSUED IN THE NAME OF DR. B.V. RAJU AND RAJU NEURO MULTI SPECIALITY HOSPITAL PVT. LTD. BOTH THE NAMES WERE MENTIONED IN THE WARRANT OF AUTHORIZATION AND THE ADDRESSES WERE SHOWN IN DIFFERENT COLUMN AS D.NO.76 - 4 - 7 GANDHIPURAM RAJAHMUNDRY. THEREFORE IT CANNOT BE SAID THAT THE WARRANT WAS ONLY ISSUED IN THE NAME OF DR. B.V. RAJU AND SEARCH WAS CONDUCTED ON THE ASSESSEE HOSPITAL. 1 6 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM CAREFUL EXAMINATION OF THE RECORD WE FIND THAT IN WARRANT OF A UTHORIZATION THE NAME OF DR. B.V. RAJU AND THE RAJU NEURO & MULTI SPECIALITY HOSPITAL WERE MENTIONED TOGETHER AND NO INFERENCE CAN BE DRAWN THAT THE WARRANT OF AUTHORIZATION WAS ISSUED ONLY IN THE NAME OF DR. B.V. RAJU. THE RELEVANT PARAS IN THIS REGARD IN THE WARRANT OF AUTHORIZATION ARE AS UNDER: SHRI (DR.) BALABHADRA VENKATA RAJU RAJU NEURO MULTI SPECIALITY HOSPITAL IS IN POSSE3SSION OF ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH MONEY BULLION JEWELLERY OR OTHER VALUAB LE ARTICLE OR THINGS REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT BE DISCLOSED FOR THE PURPOSES OF THE INDIAN I.T. ACT 1922 OR THE INCOME TAX ACT 1961: AND WHEREAS I HAVE REASON TO SUSPECT THAT SUCH BOOKS OF AC COUNTS OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS HAVE BEEN KEPT AND ARE TO BE FOUND IN D.NO.76 - 4 - 7 GANDHIPURAM RAJAHMUNDRY (SPECIFY PARTICULARS OF THE BUILDING/PLACE/VESSEL/VEHICLE/AIRCRAFT) 13 1 7 . FROM A CAREFUL PERU SAL OF TH E RECORD AND THE WARRANT OF AUTHORIZATION WE ARE OF THE VIEW THAT WARRANTS WERE ISSUED IN THE NAME OF DR. B.V. RAJU AND THE ASSESSEE RAJU NEURO MULTI SPECIALITY HOSPITAL AS WELL. THEREFORE WE FIND NO FORCE IN THE CONTENTION OF THE ASSESSEES AND ACCORDINGLY WE REJECT THE SAME. 1 8 . IN THE RESULT THE APPEALS OF THE REVENUE AND THE C.O. OF THE ASSESSEES ARE DISMISSED . PRONOUNCED IN THE OPEN COURT ON 29.9 .20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL ME MBER VG/SPS VISAKHAPATNAM DATED 29 TH SEPTEMBER 20 10 COPY TO 1 ACIT CENTRAL CIRCLE RAJAHMUNDRY 2 RAJU NEURO & MULTI SPECIALITIES PVT. LTD. D.NO.76 - 4 - 7 GANDHIPURAM - 2 RAJAHMUNDRY 3 THE CI T HYDERABA D 4 THE CIT (A) - I HYDERABAD 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM