Dr. Kavita Barnwal, v. ACIT,

ITA 61/PAT/2016 | 2010-2011
Pronouncement Date: 27-09-2016 | Result: Allowed

Appeal Details

RSA Number 6124314 RSA 2016
Assessee PAN EYEAR2013T
Bench Patna
Appeal Number ITA 61/PAT/2016
Duration Of Justice 3 month(s) 28 day(s)
Appellant Dr. Kavita Barnwal,
Respondent ACIT,
Appeal Type Income Tax Appeal
Pronouncement Date 27-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 27-09-2016
Assessment Year 2010-2011
Appeal Filed On 30-05-2016
Judgment Text
1 ITA NO. 61/NAG/2016. IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH PATNA. BEFORE SHRI SHAMIM YAHYA ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 61/PAT/2016. ASSESSMENT YEAR : 2010 - 11. DR. KAVITA BARNWAL ASSTT. COMMISSIONER OF INCOME - TAX MUNGER. VS. CIRCLE - 2 BEGUSARAI. APPELLANT. RESPONDENT. APPELLANT BY : S/SHRI S.K. RASTOGI RAKESH KUMAR & ASHISH AGRAWAL. RESPONDENT BY : SHRI S.K. PAUL . DATE OF HEARING : 03 - 08 - 2016 DATE OF PRONOUNCEMENT : 27 TH SEPT. 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 18 - 04 - 201 6 AND PERTAINS TO ASSESSMENT YEAR 20 10 - 11 . THE GROUNDS OF APPEAL READ AS UNDER : 1. FOR THAT APPELLATE ORDER DATED 18 - 04 - 2016 PASSED BY LEARNED CIT(APPEALS) BHAGALPUR IN APPEAL NO.16/A - 1/B/20213 - 14 IS NOT BASED ON CORRECT APPRECIATION OF FA CTS OF THE CASE AND MATERIALS ON RECORD. 2. FOR THAT THE ASSESSING OFFICER ADDED RS.10 14 753 ON GROUND OF NON PRODUCTION OF PURCHASE INVOICES FOR THE SAID AMOUNT WHEREAS LEARNED CIT(A) UPHELD THE ADDITION ON DIFFERENT GROUNDS. 3. FOR HA THERE WAS NO MATERIAL OR EVIDENCE ON RECORD THAT PHARMA COMPANIES HAD PROVIDED FREE S AMPLES OF MEDICINE FOR RS.10 14 753/ - TO THE APPELLANT AND SUCH ASSUMPTION OF LEARNED CIT(A) IS NOT TENABLE. 4. FOR THAT THE REASON ASSIGNED BY THE APPELLANT FOR NOT P RODUCING PURCHASE INVOICES FOR RS.10 14 753 IN FACTS AND CIRCUMSTANCES OF THE CASE SHOULD HAVE BEEN ACCEPTED. 2 ITA NO. 61/NAG/2016. 5. FOR THAT IN CASE OF TRADING ACCOUNT REASONABLE GROSS PROFIT RATE MAY BE ESTIMATED IN CASE OF NON PRODUCTION OF SOME PURCHASE INVOICE S. 6. FOR THAT LEARNED CIT(A) DID NOT CONSIDER THE FACT THAT SAMPLES OF MEDICINES ARE NOT FOR SALES WHICH IS THE NORMAL PRESUMPTION . 7. FOR THAT LEARNED CIT(A) IS NOT JUSTIFIED IN NOT ACCEPTING THE SUBMISSION OF THE APPELLANT THAT SEC. 44 AD IS INDICATIVE OF THE NET PROFIT RATE APPLICABLE BY THE DEPARTMENT. 8. FOR THAT LEARNED CIT(A) HAS ERRED IN NOT ACCEPTING THE SUBMISSION OF THE APPELLANT THAT ADDITION OF RS. 10 14 753 RAISED G.P. RATE TO 54.25% WHICH IS UNREAL AND UNIMAGINABLE. 9. FOR THAT IN FACTS AND CIRCUMSTANCES OF THE CASE AND MATERIAL AND EVIDENCES OF THE CASE AND MATERIALS AND EVIDENCES ON RECORD CONFIRMATION OF ADDITION OF RS.20 14 753 AS INCOME OF THE APPELLANT IS UNJUSTIFIED AND UNCALLED FOR. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A GYNECOLOGIST DERIVING INCOME FROM PROFESSION AS WELL AS SALE OF MEDICINE S. IN THE ASSESSMENT ORDER WHILE MAKING THE IMPUGNED ADDITION THE AO HELD AS UNDER : THE ASSESSEE PRODUCED AN AUDIT REPORT IN 3CB & 3CD FOR THE PERIOD ENDED ON 31.03.2010 WHICH STATED THAT THE ASSESSEE MAINTAINED CASH BOOK LEDGER ETC. THE AUDIT REPORT SHOWED NET PROFIT/TURNOVER RATION 36.65%. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED FROM THE P/L ACCOUNT THAT THE ASSESSEE HAD PURCHASED MEDICINES WORTH RS.22 22 418/ - DURING THIS YEAR. IN THIS REGARD THE ASSESSEE WAS ASKED TO PRODUCE COMPLETE BILLS AND VOUCHERS OF THE MEDICINES PURCHASED. IN RESPONSE THE ASSESSEE HAS PRODUCED BILLS OF RS.12 07 665/ - ONLY WHICH COULD BE EXAMINED AND VERIFIED. REST BILLS OF RS.10 14 753/ - HAS NOT BEEN PR ODUCED BY THE ASSESSEE. HENCE IT IS CONCLUDED THAT PURCHASES OF THE ABOVE AMOUNT ARE INFLATED AND THE TOTAL AMOUNT IS BEING DISALLOWED. THE SAME IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3. BEFORE THE LEARNED CIT(APPEALS) THE ASSESSEE SUBMITTED AS UNDER : DURING RELEVANT PREVIOUS YEAR THE APPELLANT MADE CASH PURCHASES OF MEDICINES FOR RS.22 22 418/ - FOR WHICH PURCHASE INVOICE WERE RECEIVED. IN COURSE OF ASSESSMENT HEARING IN THE YEAR 2013 THE APPELLANT COULD PRODUCE PURCHASE MEMOS FOR RS.12 0 7 655/ - AND COULD NOT PRODUCE CASH MEMOS OF PURCHASES FOR RS.101475/ - AS THESE WERE MISPLACED AND NOT 3 ITA NO. 61/NAG/2016. TRACEABLE WHICH FACT WAS STATED BY THE APPELLANT BEFORE LEARNED AO ON 14.03.2013. THE SELLERS HAVE EXPRESSED THEIR INABILITY TO GIVE CERTIFICATES TO THIS AFFECT AS THE SALES WERE CASH 6 YEARS BACK. PROVISION OF SEC. 44AD EXPRESSED DEPARTMENTS VIEW THAT IN CASE OF RETAIL SALES N E T PROFIT SHOULD BE 8% OF SALES. IN VIEW OF THIS PROVISION THE ADDITION OF RS.10 14 753/ - RAISED NOT PROFIT AT 54.25% WHICH IS NOT WARRANTED. HOWEVER THE LEARNED CIT(APPEALS) CONFIRMED THE AOS ACTION BY HOLDING AS UNDER : AFTER CONSIDERING THE AOS FINDING AND SUBMISSION OF THE APPELLANT I FIND T HAT THE AO HAD ADDED RS.10 14 753/ - PERTAINING TO MEDICINE PURCHASES FOR WHICH PURCHASE BILLS COULD NOT BE FURNISHED BY THE APPELLANT AT THE TIME OF ASSESSMENT PROCEEDINGS. THE APPELLANT HAD SHOWN TOTAL MEDICINES PURCHASES OF RS.22 22 418/ - DURING THE YEA R AND HAD PRODUCED BILLS OF PURCHASES OF RS.12 07 665/ - . AT THE TIME OF APPELLATE PROCEEDINGS THE A.R. OF THE APPELLANT RETREATED THE SAME POSITION THAT THE BILLS FOR PURCHASE OF RS.10 14 753/ - WAS NOT TRACEABLE AND THE SELLER IS NOT GIVING ANY CERTIFICAT E. THE AR OF THE APPELLANT ALSO PRODUCED COPY OF LEDGER ACCOUNT WHICH INDICATE THAT ALL THE PURCHASE OF MEDICINES WERE IN CASH. THE PURCHASES OF MEDICINE OF RS.1014753/ - REMAINS UNVERIFIABLE. CONSIDERING THE MARKET PRACTICE OF PHARMA COMPANIES PROVIDING FR EE SAMPLES OF MEDICINES TO DOCTORS THE ABSENCE OF PURCHASE BILLS FOR MEDICINES RAISES PRESUMPTION AGAINST THE APPELLANT AS REGARD THE SALE OF SUCH DOCTORS SAMPLE MEDICINES. THE AR OF THE APPELLANT HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE PERTAINING TO T HE PURCHASE OF MEDICINES WORTH RS.10 14 753/ - TO REBUT THE PRESUMPTION OF SALE OF FREE MEDICINE SAMPLES. ARS CONTENTION REGARDING 8% ESTIMATE IS NOT TENABLE AS THERE NIS SPECIFIC FINDINGS OF UNVERIFIED PURCHASES. THEREFORE I HAVE NO REASON TO DISAGREE WI TH THE ORDER OF THE AO AND HENCE THE ADDITION OF RS.10 14 753/ - IS HEREBY CONFIRMED. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT THE ASSESSEE IS A GYNECOLOG IST AND DEALS IN GYNECOLOGY AS WELL AS ENGAGED IN THE BUSINESS OF MEDICINE SALES. THE AO HAS MADE THE ADDITION BY HOLDING THAT RS.10 14 753/ - WORTH OF MEDICINE PURCHASES ARE NOT SUPPORTED BY PROPER 4 ITA NO. 61/NAG/2016. PURCHASE VOUCHE R S. HENCE THE AO HAS HELD THAT PURCHASES ARE INFLATED AND HE HAS DISALLOWED THE AMOUNT OF SUCH PURCHASES. 6. THE CIT(APPEALS) WHILE AFFIRMING THE AOS ACTION HAS HELD THAT THE ASSESSEE BEING DOCTOR IS RECEIVING FREE SAMPLES AND SHE MIGHT HAVE SOLD THOSE SAMPLES. I FIND THAT THE GROUNDS FOR DISA LLOWANCE TAKEN BY THE AO AS WELL AS THE LEARNED CIT(APPEALS) ARE NOT AT ALL SUSTAINABLE. THE AO HAS NOT DOUBTED THE SALES. THE NET PROFIT TURNOVER RATIO OF THE ASSESSEE AS PER THE BOOKS IS 36.65%. AFTER MAKING THE PROPOSED ADDITION OF THE AO IT WILL BE 54 .25% WHICH IS CORRECTLY LABELED AS UNREAL AND UNIMAGINABLE BY THE ASSESSEE. HENCE THE DISALLOWANCE OF PURCHASE S DEHORSE AOS ANY COMMENT UPON THE PROFITABILITY SHOWN BY THE ASSESSEE FOR MAKING THE SALES WHICH HAS BEEN ACCEPTED IS NOT AT ALL SUSTAINABLE. 7. AS REGARDS THE LEARNED CIT(APPEALS) OBSERVATION THAT THE ASSESSEE MIGHT HAVE SOLD THE SAMPLES RECEIVED FREE OF COST IS AGAIN BASED ON SURMISES AND CONJECTURE. WITHOUT ANY COGENT MATERIAL ON RECORD G UESS WORK ALONE CANNOT BE A REASON FOR MAKING THIS ALLOWANCE. SUCH PRESUMPTION CANNOT MAKE ANY VALID BASIS FOR DISALLOWANCE . MOREOVER THIS IS A SURMISE OF THE LEARNED CIT(APPEALS) WITHOUT ANY FINDING BY THE AO IN THIS REGARD. IN THE BACKGROUND OF AFORESAID DISCUSSION I SET ASI DE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE DISALLOWANCE. 8. IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF SEPT. 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. DATED: 27 TH SEPT. 2016. 5 ITA NO. 61/NAG/2016. COPY FORWARDED TO : 1. DR. KAVITA BARNWAL SAMARPAN HOSPITAL & RESEARCH CENTE R BASUDEOPUR MADHOPUL MUNGER. 2. A.C.I.T. CIRCLE - 2 BEGUSARAI. 3. C.I.T. - PATNA. 4. CIT(APPEALS) - PATNA. 5. D.R. ITAT PATNA. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR INCOME TAX APPELLATE TRIBUNAL PATNA BENCH PATNA. WAKODE.