ACIT, CHENNAI v. Dr. C.Natesan, CHENNAI

ITA 2174/CHNY/2008 | 2000-2001
Pronouncement Date: 10-12-2010 | Result: Dismissed

Appeal Details

RSA Number 217421714 RSA 2008
Assessee PAN AAAPN7458B
Bench Chennai
Appeal Number ITA 2174/CHNY/2008
Duration Of Justice 2 year(s) 12 day(s)
Appellant ACIT, CHENNAI
Respondent Dr. C.Natesan, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 10-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 10-12-2010
Date Of Final Hearing 01-12-2010
Next Hearing Date 01-12-2010
Assessment Year 2000-2001
Appeal Filed On 28-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE ACCOUNTANT MEMBER] I.T.A.NOS.2173 2174 & 2175/MDS/2008 ASSESSMENT YEARS : 1999-20002000-01 & 2001-02 THE ACIT COMPANY CIRCLE I(2) CHENNAI VS DR. C. NATESAN PROP. BHARATHI RAJA HOSPITAL & RESEARCH CENTRE NO.11 MADLEY ROAD T. NAGAR CHENNAI 600 017 [PAN - AAAPN7458B] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.B. SEKARAN RESPONDENT BY : SHRI S. SRIDHAR O R D E R PER HARI OM MARATHA JM: THESE APPEALS BY THE REVENUE FOR ASSES SMENT YEARS 1999- 2000 2000-01 AND 2001-02 ARE DIRECTED AGAINST SEP ARATE ORDERS DATED 23.7.2008 OF THE LD. CIT(A)-VI CHENNAI. AS IDENTICAL ISSUES ARE INVOLVED IN THESE APPEALS WE PROCEED TO DECIDE TH EM BY A COMMON ORDER. FOR THE SAKE OF CONVENIENCE WE NARRATE TH E FACTS OFASSESSMENT YEAR 1999-2000. 2. THE ASSESSEE AN INDIVIDUAL IS A DOCTOR BY PROFE SSION. HE IS ALSO PROPRIETOR OF BHARATHI RAJA HOSPITAL AND RESEA RCH CENTRE AT ITA 2173 TO 2175/08 :- 2 -: NO.11 MADLEY ROAD T. NAGAR CHENNAI 17. FOR THI S ASSESSMENT YEAR RETURN OF INCOME WAS FILED BY HIM ON 25.1.2003 DEC LARING A TOTAL INCOME OF ` 6 170/- WHICH WAS PROCESSED INITIALLY U/S 143(1) O F THE ACT. THIS ASSESSMENT WAS REOPENED ON THE BASIS OF REASON OF ESCAPEMENT OF INCOME ON ACCOUNT OF EXCESSIVE SET OF F OF DEPRECIATION FOR ASSESSMENT YEARS 1999-2000 2000-01 AND 2001-02 AND FINALLY THE ASSESSMENT ORDERS FOR ALL THE THREE ASSESSMENT YE ARS WERE FRAMED U/S 147 R.W.S 143(3). IN REPLY TO NOTICE U/S 148 ISSUED ON 12.9.2005 THE ASSESSEE REPLIED THAT THE RETURN ALR EADY FILED U/S 139(1) BE TREATED AS RETURN FILED IN RESPONSE TO THIS NOTI CE. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT FOR ASSESSMENT YE AR 1999-2000 AND COMPUTED AT THE INCOME AS UNDER: I) INCOME FROM HOUSE PROPERTY AS ADMITTED 6174 II) INCOME FROM BUSINESS AS ADMITTED 5912697 III) DISALLOWANCE OF 20% HOSPITAL RUNNING EXPENSES 356318 IV) ADMINISTRATIVE EXPENSES 298066 V) ESTABLISHMENT CHARGES 345026 VI) DISALLOWANCE OF INTEREST PAYMENTS 139054 VII) DISALLOWANCE OF DEPRECIATION ON NEW ASSETS 2075 TOTAL 70 53 236 3. OUT OF THE CLAIM OF DEPRECIATION LOSS OF ` 93 89 598/- THE ABOVE MENTIONED SUM OF ` 70 53 236/- WAS ADJUSTED AND THE BALANCE AMOUNT ITA 2173 TO 2175/08 :- 3 -: OF ` 23 36 362/- WAS CARRIED FORWARD AND SET OFF IN THE SUBSEQUENT YEARS. IN THIS WAY THE TOTAL TAXABLE INCOME FOR T HIS ASSESSMENT YEAR WAS DETERMINED AT ` 6174/-. AGGRIEVED THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BOTH ON REOPENING AS WELL AS ON MERITS. ON LEGALITY OF REOPENING THE LD. CIT(A) HAS DECIDE D THAT THE REOPENING WAS VALID. HOWEVER ON MERITS HE HAS DELETED THE ENTIRE ADDITION. NOW THE REVENUE IS AGGRIEVED AND HAS RAISED THE FO LLOWING GROUNDS: 1. THE ORDER OF THE LEARNED C!T(A) IS CONTRARY TO LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LEARNED C!T(A) ERRED IN DELETING THE FOLLO WING DISALLOWANCES MADE BY THE ASSESSING OFFICER. 2.2 THE LEARNED C!T(A) ERRED IN ALLOWING THE ABO VE RELIEFS TAKING THE STAND THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN AUDITED BY A QUALIFIED AUDITOR AND THE ASSESSING OFFICER HAD NOT REJECTED THE AUDI T REPORT FURNISHED BY THE CHARTERED ACCOUNTANT. 2.3. THE LEARNED CIT(A) FAILED TO NOTE THAT INSPIT E OF ALLOWING SUFFICIENT OPPORTUNITY AND CLEARLY POINTIN G OUT THAT THE LETTER DATED 8.11.2006 ISSUED BY THE ASSES SING OFFICER IS THE FINAL OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER. 2.4. THE LEARNED C!T(A) OUGHT TO HAVE SEEN THAT IN SPITE OF THE FACT THAT THE ASSESSEE DID NOT PRODUCE THE BOOK S OF ACCOUNTS AND OTHER DETAILS CALLED FOR BEFORE THE ASSESSING OFFICER THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON A REASONABLE ESTIMATE. ITA 2173 TO 2175/08 :- 4 -: 3. FOR THESE AND OTHER GROUNDS THAT M AY BE ADDUCED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE LEARNED C!T(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE M ATERIAL AVAILABLE ON RECORD. IT WAS FOUND THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED BY QUALIFIED CHARTERED AUDITOR AND THE ASSESSING OFFICER HAS NOT REJECTED THE AUDIT REPORT FURNISHED BY THE CHARTERED ACCOUNTANT. IT IS ALSO TRUE THAT THE BOOKS OF ACCO UNT COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER. IN FACT TH E ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF EXPENSES AT A NET RATE OF 20% OF EACH OF THE FOLLOWING EXPENSES: A) HOSPITAL RUNNING EXPENSES B) ADMINISTRATIVE EXPENSES C) ESTABLISHMENT EXPENSES D) INTEREST PAYMENTS; AND E) DEPRECIATION ON NEW ASSETS 5. THE LD. CIT(A) HAS DISCUSSED EACH AND EVERY EXPENSE IN DETAIL IN HIS ORDER AND HAS FOUND THAT IN THESE EXPENSES NO ELEMENT OF PERSONAL USER IS INVOLVED. WHATEVER EXPENDITURE HA S BEEN INCURRED IT HAS BEEN INCURRED FOR RUNNING THE HOSPITAL ONLY. W E HAVE ALSO FOUND THAT THE ASSESSEE HAS BEEN RUNNING THE HOSPITAL FOR THE PAST MANY YEARS AND THE EXPENSES ARE NOT FOUND TO HAVE BEEN I NCURRED OTHER THAN FOR RUNNING THE HOSPITAL. THE ADHOC DISALLOWA NCE OF 20% IS ITA 2173 TO 2175/08 :- 5 -: BASED SOLELY ON THE REASON THAT THE BOOKS OF ACCOU NT BILLS AND VOUCHERS WERE NOT PRODUCED BEFORE HIM. BUT IN THE AUDIT REPORT PRODUCED BEFORE HIM NO FAULT WAS FOUND BY THE ASS ESSING OFFICER. THE REASON FOR NON-PRODUCTION OF THE BOOKS OF ACCOU NT WAS STATED TO BE THAT THE SAME COULD NOT BE PRODUCED AS THESE WE RE SPOILED BY WHITE ANTS AND PARTLY DUE TO FLOODS THAT TOOK PLAC E IN THE YEAR 2004- 05. THE AUDIT REPORTS ARE PLACED ON RECORD. NO O BJECTION HAS BEEN FOUND TO HAVE BEEN NOTED BY THE CA THEREIN. WE ARE OF THE CONSIDERED OPINION THAT THERE WAS A REASONABLE CAUS E FOR NON- PRODUCTION OF THE BOOKS OF ACCOUNT BILLS AND VOUCH ERS. THE ASSESSEE HAS INCURRED SUCH AN EXPENDITURE WHICH IS NECESSARY FOR RUNNING A HOSPITAL AND THE ASSESSING OFFICER HAS ALSO ACCEPTE D IT TO A GREATER EXTENT I.E UPTO 80%; BUT HE HAS MADE AN ADHOC DISAL LOWANCE OF 20% WHICH IS NOT AT ALL JUSTIFIED IN OUR CONSIDERED OPI NION SOLELY. BECAUSE THE BOOKS OF ACCOUNT COULD NOT BE PRODUCED AND FOR NON-PRODUCTION OF BOOKS OF ACCOUNT REASONABLE CAUSE HAS BEEN GIVEN M OREOVER WHEN THE AUDITED ACCOUNTS HAVE BEEN PRODUCED IN FORM 3CD AND FORM 3CB WHEREIN THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT NOR THE CA HAS QUALIFIED THEM THERE IS NO JUSTIFIABLE REAS ON TO MAKE AN ADHOC ADDITION. THEREFORE IN OUR CONSIDERED OPINION TH E FINDING OF THE LD. CIT(A) IS PERFECTLY IN ORDER AND NO INTERFERENCE IS CALLED FOR. ITA 2173 TO 2175/08 :- 6 -: 6. FOR ALL THE OTHER YEARS SIMILAR ISSUES AND SIMILAR GROUNDS HAVE BEEN RAISED. CONSEQUENTLY WITH THE SIMILAR REASON ING WE CANNOT ALLOW THE APPEALS OF THE REVENUE FOR OTHER YEARS A S WELL. 7. IN OTHER TWO YEARS ONE MORE COMMON GROUND IS RAISE D WHICH IS REGARDING TREATING THE ASSESSMENTS MADE BY THE ASSE SSING OFFICER AFTER IGNORING THE REVISED RETURN AS IRREGULAR. T HE ASSESSEE AFTER RESPONDING TO NOTICE U/S 148 HAD ALSO FILED THE REV ISED RETURNS WHICH WERE IGNORED BY THE ASSESSING OFFICER. WE DO NOT F IND ANY VALID REASON TO INTERFERE IN THIS FINDING OF THE LD. CIT( A) AS WELL. CONSEQUENTLY WE CANNOT ALLOW THESE APPEALS OF THE REVENUE FOR THESE THREE YEARS. 8. IN THE RESULT ALL THE THREE APPEALS OF THE REVENUE STAND DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10.12.2010. SD/- SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 10 TH DECEMBER 10 RD COPY TO: APPELLANT /RESPONDENT/CIT(A)/CIT/DR