ACIT, Ernakulam v. M/s Lakshmi Hospital, Ernakulam

ITSSA 20/COCH/2008 | 2001-2002
Pronouncement Date: 07-09-2010

Appeal Details

RSA Number 2021916 RSA 2008
Assessee PAN AAAFL4191N
Bench Cochin
Appeal Number ITSSA 20/COCH/2008
Duration Of Justice 2 year(s) 6 month(s)
Appellant ACIT, Ernakulam
Respondent M/s Lakshmi Hospital, Ernakulam
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 07-09-2010
Appeal Filed By Department
Bench Allotted DB
Tribunal Order Date 07-09-2010
Date Of Final Hearing 11-08-2010
Next Hearing Date 11-08-2010
Assessment Year 2001-2002
Appeal Filed On 07-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE T.R.SOOD A.M & SHRI N.VIJAYAKUMARAN JM. I.T.A.NOS. A.Y APPELLANT RESPONDENT 32/COCH/08 2000-01 M/S LAKSHMI HOSPITAL DIWANS ROAD ERNAKULAM. PAN NO.AAAFL 4191 N THE A.C.I.T. CENTRAL CIRCLE I ERNAKULAM. 33/COCH/08 2001-02 M/S LAKSHMI HOSPITAL ACIT-I ERNAKULAM 34/COCH/08 2002-03 M/S LAKSHMI HOSPITAL ACIT-I ERNAKULAM 441/COCH/08 2003-04 M/S LAKSHMI HOSPITAL ACIT-I ERNAKULAM AND I.T.A.NOS. A.Y APPELLANT RESPONDENT 620/COCH/08 2003-04 DY. CIT CENTRAL CIRCLE I ERANAKULAM. M/S LAKSHMI HOSPITAL ERNAKULAM. 621/COCH/08 2004-05 DY. CIT CENTRAL CIRCLE I ERANAKULAM. M/S LAKSHMI HOSPITAL ERNAKULAM. AND I.T(SS)A.NOS. A.Y APPELLANT RESPONDENT 19/COCH/08 2000-01 THE ACIT CENTRAL CIRCLE I ERNAKULAM M/S LAKSHMI HOSPITAL ERNAKULAM 20/COCH/08 2001-02 ACIT I ERNAKULAM. M/S LAKSHMI HOSPITAL ERNAKULAM. 21/COCH/08 2002-03 ACIT I ERNAKULAM. M/S LAKSHMI HOSPITAL ERNAKULAM. ASSESSEE BY : SHRI C.B.M.WARRIER. REVENUE BY : SHRI S.C.SONKAR CIT DR O R D E R PER BENCH: IN ALL THESE APPEALS COMMON ISSUES HAVE BEEN RAISE D BY BOTH THE PARTIES. THEREFORE SAME WERE HEARD TOGETHER AN D ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE LD.CIT DR RAISED A PRELIMINARY OBJECTION IN RESPECT OF FILING OF SYNOPSIS. 2 3. THE LD. CIT-DR SUBMITTED THAT SYNOPSIS IS ALSO TO B E CONSTRUED AS PAPER BOOK AND THEREFORE ACCORDINGLY SHOULD HA VE BEEN FILED MUCH BEFORE THE DATE OF HEARING SO HAT THE LD. REPRESENT ATIVES OF THE DEPARTMENT ALSO HAS THE TIME TO GO THROUGH THE SAME . 4. ON THE OTHER HAND THE LD. CHARTERED ACCOUNTANT SHRI WARRIER FOR THE ASSESSEE SUBMITTED THAT SYNOPSIS IS BASICALLY A GIST OF THE MATTER AND RAISED IN THE CONCERNED APPEALS AND CONTAINS SO ME CASE LAWS. HE CONTENDED THAT AS A MATTER OF PRACTICE AND CONVENTI ON SUCH SYNOPSIS IS SUBMITTED ONLY ON THE DATE OF HEARING AND ALL TH E BENCHES OF THE TRIBUNAL ARE ACCEPTING THE SAME ON DATES OF HEARING . HOWEVER HE FURTHER SUBMITTED THAT IF THE DEPARTMENT HAS MADE A BIG ISSUE OUT OF THIS THEN HE WILL NOT EVEN PRESS FOR ACCEPTING THE SYNOPSIS. 5. WE HAVE CONSIDERED THIS PRELIMINARY OBJECTION RA ISED BY THE CIT-DR AND FIND NO FORCE IN THE SUBMISSIONS OF THE LD. CIT-DR. THE MEANING OF SYNOPSIS IS GIVEN IN INCOME TAX LEXICON P.RAMANATHA AIYAR AS UNDER:- SYNOPSIS. A VIEW OF THE WHOLE TOGETHER; A GENERAL VIEW OF A SINGLE SUBJECT. SYNOPSIS SYNOPSIS MEANS TO CUT SHORT DIMINISH REDUCE; A BRIEF OR PARTIAL STATEMENT LES THAN THE WHOLE; AN EPITOME 6. THE ABOVE CLEARLY SHOWS THAT SYNOPSIS IS BASICAL LY A SHORT SUMMARY OF THE MATTER BEING PROJECTED BEFORE THE TR IBUNAL IN COMPLICATED ISSUES. SUCH SYNOPSIS ARE REGULARLY BE ING FILED BY BOTH THE SIDES BEFORE VARIOUS BENCHES SINCE THESE KINDS OF S YNOPSIS ARE QUITE HELPFUL TO THE MEMBERS OF THE TRIBUNAL WHILE DICTAT ING THE ORDERS AND THAT IS WHY THEY ARE BEING ACCEPTED. THE SYNOPSIS DOES NOT INCLUDE 3 ANY DOCUMENT OR MATERIAL FOR WHICH THE DEPARTMENT H AS TO SPECIFICALLY OBJECT. THE SYNOPSIS GENERALLY ALSO INCLUDES CASE LAWS WHICH ARE QUITE HELPFUL FOR DICTATING ORDERS BECAUSE NOTING THE CIT ATIONS SOMETIMES LEADS TO NOTING OF WRONG CITATIONS BECAUSE OF VARIO US REASONS LIKE PRONUNCIATION OMISSION TO RECORD A PARTICULAR DECI SION ETC. AND AT THE TIME OF DICTATING SOMETIMES MEMBERS ARE NOT IN A PO SITION TO FIND THOSE JUDGMENTS WHICH ARE RELIED ON BY THE PARTIES. THER EFORE GENERALLY THEY ARE WELCOME BECAUSE THEY ARE QUITE HELPFUL. I N THE SYNOPSIS PRESENTED BEFORE US NO DOCUMENT OR ANY MATERIAL HA S BEEN RELIED FOR WHICH THE LD. REPRESENTATIVES OF THE DEPARTMENT WAS REQUIRED TO PREPARE OR OPPOSE AND THEREFORE WE HAVE TAKEN ON R ECORD THE SYNOPSIS SUBMITTED BY THE LD. COUNSEL FOR THE ASSES SEE AND REJECT THIS PRELIMINARY OBJECTION ALSO. 7. WE WOULD LIKE TO MAKE A NOTE THAT COPY OF THE SY NOPSIS WAS DULY SERVED TO CIT-DR. THE SYNOPSIS CONTAINED FEW PAGES AND THE CIT-DR SHOULD HAVE SCANNED THE SAME BY THE TIME THE OTHER APPEAL SIDE WAS ARGUING HIS APPEAL INSTEAD OF RAISING THES E OBJECTIONS. IN ANY CASE THIS IS A TRIVIAL MATTER AND WE DO NOT WANT T O GO INTO FURTHER DETAILS. 8. I.T.A.NO.32/COCH/2008 - A.Y 2000-01 : IN THIS APPEAL FILED BY THE ASSESSEE THE FOLLOWING ADDITIONAL GROU ND HAS BEEN RAISED: 1. ASSESSING OFFICER LEVIED INTEREST UNDER SEC. 234A RS. 5 50 746 234B RS.33 31 066 234C RS. 16 717 2. THE INTEREST LEVIED FOR THE ASSESSMENT UNDER SEC TION 234A 234B AND 234C ARE LEGALLY INCORRECT SINCE THE PROVISIONS OF SECTION 1 53A IS INTRODUCED IN THE RESPECTIVE SECTION OF 234A 234B AND 234C ONLY WITH EFFECT FRO M 01-6-2003 RELEVANT TO THE ASSESSMENT YEAR 2004-05. SINCE THE SECTION IS INTRO DUCED IN THE RESPECTIVE SECTIONS 4 ONLY FROM THE 1-06-2003 THE INTEREST UNDER SECTION 234A 234B AND 234C IN RESPECT OF THE ASSESSMENT YEARS 2000-2001 IS LEGALLY INCORR ECT AND IT IS SUBMITTED THAT THE INTEREST UNDER THE ABOVE SECTIONS MAY BE CANCELLED. 3. WITHOUT PREJUDICE TO THE ABOVE SUBMISSION THE AP PELLANT MAY SUBMIT THAT IN RESPECT OF THE LEVY OF THE INTEREST UNDER SECTION 234A 234 B AND 234C THE PERIOD FOR CALCULATING THE INTEREST SHOULD BE THE PERIOD FROM THE DATE OF ASSESSMENT UNDER SECTION 143[1] TO THE DATE OF ASSESSMENT UNDER SECT ION 143A AS PER SECTION 234B OF THE ACT. THE ASSESSING OFFICER LEVIED INTEREST FROM THE COMMENCEMENT OF THE ASSESSMENT YEAR AS PER THE PROVISION OF THE SECTION 234B[1] WITH EXPLANATION (2) AND 234C [1] WITH EXPLANATION (2) WHICH IS NOT CORRECT. 9. THE LD. CHARTERED ACCOUNTANT OF THE ASSESSEE SUB MITTED THAT THIS BEING A LEGAL ISSUE AND DOES NOT REQUIRE FINDI NG OF ANY FRESH FACTS THEREFORE SHOULD BE ADMITTED. 10. ON THE OTHER HAND LD.CIT DR OBJECTED TO THE A DMISSION OF THIS GROUND BECAUSE ACCORDING TO HIM CHARGING OF INTER EST UNDER SECTIONS 234A 234B AND 234C WAS A QUESTION OF FACT. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD.COUNSEL OF THE A SSESSEE. CHARGING OF INTEREST UNDER SECTIONS 234A 234B AND 234C IS PURELY A LEGAL QUESTION PARTICULARLY WHEN THE LEVY OF INTEREST I TSELF IS SOUGHT TO BE CHALLENGED. WE FURTHER FIND THAT HONBLE APEX COUR T IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT 229 ITR 383 HELD AS UNDER THAT THE TRIBUNAL HAD JURISDICTION TO EXAMINE A QU ESTION OF LAW WHICH AROUSE FROM THE FACT AS FOUND BY THE AUTHORITIES AND HAVING A BEARI NG ON THE TAX LIABILITY. SINCE NO NEW FACTS ARE REQUIRED TO BE FOUND AND IN VIEW OF THE ABOVE DECISION OF THE HONBLE SUPREME COURT WE ADMIT THI S ADDITIONAL GROUND. 12. BEFORE US LD. CHARTERED ACCOUNTANT OF THE ASSE SSEE SHRI C.B.M.WARRIER SUBMITTED THAT SEC.153A WAS INTRODUC ED W.E.F. 1-6-2003 BY FINANCE ACT 2003 AND THEREFORE AT BEST INTERE ST CAN BE LEVIED ONLY 5 AFTER THAT PERIOD AND NOT BEFORE THAT. HE FURTHER A RGUED THAT IN ANY CASE INTEREST U/S.234B HAS TO BE CALCULATED AS PER SUB-SEC.[3] OF SEC.234B BECAUSE EARLIER ALSO REGULAR ASSESSMENT WA S COMPLETED U/S.143[1]. 13. ON THE OTHER HAND LD.CIT DR INVITED OUR ATTENT ION TO THE EXPLANATION TO SEC.153A AND SUBMITTED THAT IT IS MA NIFESTLY CLEAR FROM THIS EXPLANATION THAT ALL OTHER PROVISIONS OF THE A CT WOULD BE APPLICABLE. SINCE UNDER SEC.153A THE ASSESSMENT FOR EARLIER YE AR CAN BE REOPENED AND EARLIER ASSESSMENT STANDS ABETTED. THE INTEREST HAS ALSO TO BE CHARGED IN TERMS OF THAT EARLIER ASSESSMENT IN TERM S OF SEC.234B BECAUSE THAT PROVISION WAS INSERTED FROM 1-4-1989 O NWARDS. HE FURTHER SUBMITTED THAT IN THE CASE BEFORE US IT IS SEC.234B[1] OF THE ACT WHICH WOULD BE ATTRACTED BECAUSE ORIGINALLY RETURNS WERE PROCESSED U/S.143[1] OF THE ACT. THE PROCESSING U/S.143[1] CA NNOT BE CALLED REGULAR ASSESSMENT AND THIS POSITION HAS BEEN MADE CLEAR BY THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. RAJE SH JHAVERI STOCK BROKERS PVT. LTD. [291 ITR 500]. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT EXPLANATION 1 TO SEC.153A READS AS UNDER: EXPLANATION.- FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT - (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION SECTION 153B AND SECTION 153C ALL OTHER PROVISIONS OF THIS ACT SHAL L APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; THE ABOVE MAKES IT CLEAR THAT ALL THE PROVISIONS HA VE TO BE APPLIED TO THE ASSESSMENTS WHICH ARE TO BE FRAMED U/S.153A. UN DER THIS PROVISION THE POWERS HAVE BEEN GIVEN TO ISSUE NOTICE FOR FURN ISHING IN RESPECT OF THOSE ASSESSMENT YEARS IMMEDIATELY PRECEDING THE AS SESSMENT YEARS 6 RELEVANT TO THE PREVIOUS YEARS IN WHICH SEARCH IS C ONDUCTED. THE AO HAS BEEN GIVEN POWER TO ASSESS THE INCOME IN RESPEC T OF THESE SIX YEARS AND IT IS ALSO MADE CLEAR THAT EARLIER ASSESS MENT ORDERS WOULD ABATE. THIS MEANS THAT FRESH ASSESSMENT CAN BE MADE IN RESPECT OF SIX ASSESSMENT YEARS AND THEREFORE THE PROVISIONS OF THE ACT WOULD APPLY ACCORDINGLY. SINCE SEC.234B IS ON THE STATUTE RIGHT FROM 1-4-1989 ONWARDS THEREFORE THIS HAS TO BE APPLIED EVEN IN CASES BEFORE 1-6- 2003. THEREFORE THERE IS NO FORCE IN THE SUBMISSIO N THAT INTEREST CANNOT BE CHARGED BEFORE 1-6-2003 AND ACCORDINGLY W E REJECT THIS PART OF THE ARGUMENT. 15. WE FURTHER FIND THAT SEC.234B READS AS UNDER: 234B. (1) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION WHERE IN ANY FINANCIAL YEAR AN ASSESSEE WHO IS LIABLE TO PAY AD VANCE TAX UNDER SECTION 208 HAS FAILED TO PAY SUCH TAX OR WHERE THE ADVANCE T AX PAID BY SUCH ASSESSEE UNDER THE PROVISIONS OF SECTION 210 IS LESS THAN NINETY PER CENT OF THE ASSESSED TAX THE ASSESSEE SHALL B E LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF [ONE] PER CENT FOR EVERY M ONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1ST DAY OF APRIL N EXT FOLLOWING SUCH FINANCIAL YEAR [TO THE DATE OF DETERMINATION OF TOT AL INCOME UNDER SUB- SECTION (1) OF SECTION 143 [AND WHERE A REGULAR ASSESSMENT IS MADE TO THE DATE OF SUCH REGULAR ASSESSMENT ON AN AMOUNT]] EQUAL TO THE ASSESSED TAX OR AS THE CASE MAY BE ON THE AMOUNT BY WHICH THE ADVANCE TAX PAID AS AFORESAID FALLS SHORT OF THE AS SESSED TAX. EXPLANATION 1. - XX XX XX EXPLANATION 2. WHERE IN RELATION TO AN ASSESSMENT YEAR AN ASSESSMENT IS MADE FOR THE FIRST TIME UNDER SECTION 147 [OR SECTION 153A ] THE ASSESSMENT SO MADE SHALL BE REGARDED AS A REGUL AR ASSESSMENT FOR THE PURPOSES OF THIS SECTION. EXPLANATION 3.- XX XX XX SUB-SEC.(2) XX XX XX SUB-SEC.(3) WHERE AS A RESULT OF AN ORDER OF REASS ESSMENT OR RECOMPUTATION UNDER SECTION 147 [OR SECTION 153A ] THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER SUB-SECTION (1) IS INCRE ASED THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF [ONE] PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD CO MMENCING ON THE DAY FOLLOWING [THE DATE OF DETERMINATION OF TOTAL INCOM E UNDER SUB-SECTION (1) 7 OF SECTION 143 [AND WHERE A REGULAR ASSESSMENT IS MADE AS IS REF ERRED TO IN SUB-SECTION (1) FOLLOWING THE DATE OF SUCH REGUL AR ASSESSMENT]] AND ENDING ON THE DATE OF THE REASSESSMENT OR RECOMPUTA TION UNDER SECTION 147 [OR SECTION 153A ] ON THE AMOUNT BY WHICH THE TAX ON THE TOTAL INCO ME DETERMINED ON THE BASIS OF THE REASSESSMENT OR RECO MPUTATION EXCEEDS THE TAX ON THE TOTAL INCOME DETERMINED [UNDER SUB -SECTION (1) OF SECTION 143 OR] ON THE BASIS OF THE REGULAR ASSESSMENT AFORESA ID. A CAREFUL READING OF THE ABOVE WOULD MAKE IT CLEAR THAT SEC.234B[1] OF THE ACT WOULD BE ATTRACTED IN A CASE WHERE THE ASSE SSMENT IS MADE U/S.143[1] OF THE ACT. IF SO INTEREST HAS TO BE CH ARGED FROM THE FIRST DAY OF APRIL NEXT FOLLOWING ON SUCH FINANCIAL YEAR WOULD BE THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SUB-SEC.[1] OF SEC.143[3] WHERE REGULAR ASSESSMENT IS MADE LATER ON THEN TO SUCH AS SESSMENT. 16. NOW EXPLANATION 2 MAKES IT CLEAR THAT WHEN ASSE SSMENT IS MADE FOR THE FIRST TIME U/S.147 OR SEC.153A THEN ASSESS MENT SO MADE WOULD BE REGARDED AS A REGULAR ASSESSMENT FOR THE PURPOSE OF THIS SECTION. THE HONBLE SUPREME COURT IN THE CASE OF RAJESH JHA VERI STOCK BROKERS PT. LTD. [SUPRA] HAS MADE IT CLEAR THAT PROCESSING OF RETURN U/S.143[1] OF THE ACT WOULD NOT MOUNT TO THE ASSESSMENT. IN AN Y CASE A CAREFUL READING OF SUB-SEC.[3] OF SEC.234 WOULD SHOW THAT T HE PROVISION IS APPLICABLE ONLY IN THE CASE OF RE-ASSESSMENT WHICH MEANS IN CASES WHERE ASSESSMENTS HAVE BEEN ALREADY FRAMED U/S.143[ 3] AND THE SAME HAVE BEEN REOPENED AND THEN RE-ASSESSMENTS HAV E BEEN MADE IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT I N THIS CASE INTEREST IS CHARGEABLE U/S.234B[1] OF THE ACT. ACCORDINGLY WE REJECT THIS ADDITIONAL GROUND. 17. ONE MORE ADDITIONAL GROUND HAS BEEN RAISED BY T HE ASSESSEE WHICH IS AS UNDER: 8 THE COMPLIMENTARY EXPENDITURE AS EVIDENCED BY THE SEIZED RECORDS IS RS.3 36 302/- AS IN PAPER BOOK PAGES 142-176. BUT THE ASSESSING O FFICER ALLOWED RS.19 336/- ONLY. THE CIT(A) ESTIMATED THE VALUE OF COMPLIMENTARY TRE ATMENT AT RS.1 00 000/- WITHOUT ANY EVIDENCE ON ESTIMATED BASIS AND ALLOWED A FURTH ER SUM OF RS.80 664/-. THE VALUE OF COMPLIMENTARY TREATMENTS LAB TEST SUPPLY OF DR UGS CHEMICALS AND MATERIALS ARE SUPPORTED BY SEIZED EVIDENCES AND THE APPELLANT MAY SUBMIT THAT REMAINING AMOUNT OF RS.2 36 302 ALSO MAY BE ALLOWED AS EXPENDITURE. 18. THE LD. CHARTERED ACCOUNTANT SHRI WARRIER SUBM ITTED THAT THIS GROUND WAS OMITTED TO BE RAISED BECAUSE OF AN OVER SIGHT. THE FACTS REGARDING THIS GROUND ARE ALREADY INCORPORATED IN T HE ORDERS OF THE LOWER AUTHORITIES AND THEREFORE SAME SHOULD BE AD MITTED. 19. ON THE OTHER HAND LD.CIT DR OBJECTED TO THE A DMISSION OF THIS GROUND BECAUSE ACCORDING TO HIM THIS IS A FACTUAL MATRIX. 20. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIN D THAT ALL THE FACTS LEADING TO THE DISPUTE IN THIS ADDITIONAL GROUND AR E ON RECORD IN THE ORDERS PASSED BY THE LOWER AUTHORITIES AND THEREFO RE IT SEEMS TO BE A SIMPLE CASE OF OMISSION AND THEREFORE WE HAVE ADMIT TED THIS ADDITIONAL GROUND. 21. AS FOR MERITS OF THIS ADDITIONAL GROUNDS ARE CO NCERNED AFTER HEARING BOTH THE PARTIES WE FIND THAT THERE WAS A S EARCH IN THE PREMISES OF THE ASSESSEE AND IT WAS FOUND THAT MANY TRANSACTIONS WERE NOT DISCLOSED TO THE DEPARTMENT. MANY DOCUMENT S ETC. WERE SEIZED. ULTIMATELY ASSESSEE FILED FRESH RETURNS U/ S.153A IN WHICH RECEIPTS RECORDED IN THE SEIZED MATERIAL WERE OFFER ED FOR TAXATION. HOWEVER CERTAIN ITEMS WERE EXCLUDED FROM SUCH RECE IPTS BY THE ASSESSEE WHICH ARE AS UNDER: ITEM TO BE EXCLUDED O.P.ADVANCE RS.26 96 210 DENTAL PROCEDURE RS. 5 81 725 DRC CASH AND CREDIT RS. 5 62 055 COMPLIMENTARY RS. 3 36 302 9 ----------------- TOTAL RS.41 76 292 ------------------ IT WAS POINTED OUT THAT IF RECEIPTS RECORDED IN THE SEIZED MATERIAL WERE TO BE CONSIDERED THEN CORRESPONDING OTHER ITEMS WER E ALSO TO BE CONSIDERED ACCORDINGLY. HOWEVER AO REDUCED THE FOL LOWING ITEMS O.P.ADVANCE RS.26 96 210 DENTAL PROCEDURE RS. 5 81 725 DRC CASH AND CREDIT RS. 5 62 055 COMPLIMENTARY RS. 19 336 THUS IT IS CLEAR THAT AO HAS REDUCED THE FIRST THR EE ITEMS. HOWEVER AS FAR AS THE REDUCTION ON ACCOUNT COMPLEMENTARY TREAT MENT IS CONCERNED SAME WAS NOT ALLOWED. THIS REDUCTION WAS RESTRICTED TO RS.19 336/- OUT OF THE TOTAL CLAIM OF RS.3 32 302/- BECAUSE ACCORDING TO THE AO THIS AMOUNT PERTAINED TO THE TREATMENT G IVEN TO THE STAFF AND THEIR FAMILY MEMBERS. NO OTHER REASON HAS BEEN GIVEN FOR THIS REDUCTION. 22. BEFORE THE LD. CIT(A) IT WAS MAINLY SUBMITTED T HAT SOME TREATMENTS ARE ALWAYS GIVEN FREE TO THE STAFF AS WE LL AS FAMILY MEMBERS OF THE STAFF. SUCH TREATMENTS ARE ALSO EXTE NDED TO SOME OTHER BENEFICIARIES WHO WERE CLOSE RELATIVES AND WE LL WISHERS OF THE HOSPITAL. SOMETIMES THIS BENEFIT IS EXTENDED ON COM PASSIONATE GROUND TO THE POOR PATIENTS ALSO. SINCE ALL THESE ITEMS WE RE FOUND TO BE RECORDED IN THE SEIZED MATERIAL SAME SHOULD HAVE B EEN ALLOWED. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS FOUND THAT EVIDENCES FOR COMPLEMENTARY TREATMENTS WERE AVAILABLE IN THE SEIZ ED RECORDS. BUT THESE EVIDENCES WERE NOT FULL AND COMPLETE AND CONS IDERING THE NORMAL PRACTICE IN A HOSPITAL BENEFIT ON ACCOUNT OF COMPL EMENTARY TREATMENT WAS ALLOWED AT RS.1 00 000/-. 10 23. BEFORE US LD. CHARTERED ACCOUNTANT SHRI WARRIE R REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND E MPHASIZED THAT SOME COMPLEMENTARY TREATMENT HAS TO BE METED OUT TO THE STAFF FAMILY MEMBERS AND CLOSE RELATIVES OF THE STAFF CE RTAIN OTHER BENEFICIARIES WHO WERE WELL WISHERS AND SOME FREE T REATMENT ON COMPASSIONATE GROUND TO THE POOR PATIENTS. THESE AR E WELL ESTABLISHED PRACTICES IN ANY HOSPITAL. THEREFORE THESE EXPENSE S WHICH WERE RECORDED IN THE SEIZED MATERIAL SHOULD HAVE BEEN AL LOWED TO BE REDUCED FROM THE GROSS RECEIPTS WHEN NO MONEY WAS R ECEIVED. IN ANY CASE IN ASSESSMENT YEAR 2001-02 ASSESSEE HAD CLAIM ED A SUM OF RS.92 211/- OUT OF WHICH AO HIMSELF HAD ALLOWED A S UM OF RS.89 514/- AND ASSESSEE DID NOT FILE ANY APPEAL BECAUSE OF THE SMALLNESS OF THE AMOUNT. HOWEVER IN A.Y 2002-03 THE CLAIM ON ACCOUN T OF COMPLEMENTARY TREATMENT WAS OF RS.2 88 704/- OUT OF WHICH AO HAD ALLOWED A SUM OF RS.30 360/-. ON APPEAL THE BALANCE WHOLE AMOUNT WAS ALLOWED BY THE CIT(A) AGAINST WHICH NO APPEAL H AS BEEN FILED BY THE DEPARTMENT. SIMILARLY IN A.Y 2003-04 OUT OF TH E CLAIM OF RS.2 53 780/- ON THIS ACCOUNT AO HAD ALLOWED ONLY A SUM OF RS.83 780/- AND BALANCE WAS ALLOWED BY THE CIT(A) A ND AGAIN DEPARTMENT HAS NOT FILED ANY APPEAL. IN A.Y 2004-05 NO DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF COMPLEMENTARY TREATMENT BY THE AO HIMSELF. THEREFORE EVEN KEEPING THE PRINCIPLE OF C ONSISTENCY THESE DISALLOWANCES SHOULD BE ALLOWED. 11 24. ON THE OTHER HAND LD.CIT DR SUBMITTED THAT THE CLAIM ON ACCOUNT OF COMPLEMENTARY TREATMENT WAS NOT SUPPORTE D BY ANY EVIDENCE. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND ARE UNABLE TO AGREE WITH THE SUBMISSIONS OF THE LD.CIT DR. FIRSTLY WHEN THE DETAILS REGARDING COMPLEMENTARY TREATMENTS ARE RECORDED IN THE SEIZED MATERIAL AND THE RECEIPTS HAVE BEEN TAKEN ON THE BASIS OF THE SEIZED MATERIAL THEN SUCH COMPLEMENTARY TREATMENTS FOR WHICH NO MONEY HAS BEEN RECEIVED SHOULD HAVE BEEN REDUCED F ROM THE GROSS RECEIPTS. WITH HOSPITALS IT IS A PRACTICE TO GIVE FREE TREATMENTS TO THE STAFF THEIR FAMILY MEMBERS AND EVEN SOMETIMES TO T HE POOR PATIENTS ON COMPASSIONATE GROUNDS ETC. WE FAIL TO UNDERSTAND AS TO WHAT KIND OF EVIDENCE IS REQUIRED FOR THIS WHEN NO MONEY WAS RECEIVED. IN ANY CASE THE ADDITIONS MADE IN A.YRS. 2002-03 AND 2003- 04 HAVE ALREADY BEEN ALLOWED BY THE CIT(A) AND DEPARTMENT HAS NOT F ILED ANY APPEAL. IN FACT NO SUCH DISALLOWANCE HAS BEEN MADE IN A.Y 2004-05 BY THE AO THEREFORE EVEN ON THE BASIS OF CONSISTENCY THI S AMOUNT SHOULD HAVE BEEN REDUCED. ACCORDINGLY WE SET ASIDE THE OR DER OF THE LD. CIT(A) AND DIRECT THE AO TO REDUCE WHOLE OF THE AMO UNT OF COMPLEMENTARY TREATMENT AMOUNTING TO RS.3 36 302/- AS DEDUCTION FROM GROSS RECEIPTS. THEREFORE WE ALLOW THIS ADDIT IONAL GROUND. 26. THE ASSESSEE HAS RAISED THE FOLLOWING OTHER GRO UNDS IN THIS APPEAL- 1. THE APPELLANT PREMISES WAS SEARCHED ON 07-10-200 4 AND AS PER THE NOTICE U/S.153A THE RETURN OF INCOME WAS FI LED DECLARING INCOME OF RS.13 28 060/- AND THE RETURN O F INCOME U/S.153A IS NOT CONSIDERED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSMENT IS PROCEEDED WITH THE 12 INCOME DISCLOSED AS PER THE ORIGINAL RETURN OF INCO ME FILED BY THE APPELLANT. HENCE THE ASSESSMENT COMP0LETED BY O RDER DATED 28-12-2006 IS NULL AND VOID. 2. IN THE ASSESSMENT PROCEEDINGS THE APPELLANT CLAI MED THE PAYMENT TO DOCTORS RS.65 61 775/- AS EXPENDITURE. O UT OF THIS RS.45 39 089/- IS PAID AS PER THE REGULAR BOOKS OF ACCOUNT AND RS.20 22 686/- IS PAID AS PER THE DIARY SEIZED AT T HE TIME OF SEARCH ON 07-10-2004 3. THE COMMISSIONER OF INCOME TAX [APPEALS] FOUND T HAT THE PAYMENT TO THE DOCTORS TO THE EXTENT OF RS.65 61 77 5/- IS SUPPORTED BY EVIDENCE AS PER THE BOOKS OF ACCOUNTS AND DIARY SEIZED AT THE TIME OF SEARCH BUT PAYMENT IS DISALL OWED TO THE EXTENT OF 75% AND RS.15 17 014/- IS DISALLOWED AND ALLOWED ONLY 25% RS.5 05 672/- WHICH IS NOT CORRECT. 4. THE PAYMENT TO DOCTORS ARE SUPPORTED BY EVIDENCE AND IN THESE CIRCUMSTANCES THE DISALLOWANCE OF RS.15 17 01 4/- AS EXPENDITURE IS NOT JUSTIFIED. 5. THE GROSS INCOME AS PER THE SEIZED MATERIAL ARE ACCEPTED WHEREAS THE EXPENDITURE SUCH AS PAYMENTS TO THE DOC TORS SUPPORTED BY THE SEIZED MATERIAL ARE NOT ALLOWED IN FULL. 27. GROUND NO.1 : THE LD. CHARTERED ACCOUNTANT OF THE ASSESSEE SHRI WARRIER SUBMITTED THAT THE ASSESSEE HAD FILED RETUR NS FOR VARIOUS YEARS ON RECEIPT OF NOTICE U/S.153A. WHILE COMPLETING THE ASSESSMENT AO HAD STARTED COMPUTATION OF INCOME [PAGE-4 PARA 10 O F HIS ORDER] FROM THE INCOME RETURNED AS PER ORIGINAL RETURN. SINCE T HE ASSESSMENT WAS BEING FRAMED U/S.153A R.W.S. 143[3] AO SHOULD HAVE PROCEEDED ON THE BASIS OF INCOME RETURNED U/S.153A AND THEREFOR E THE ASSESSMENT SHOULD BE HELD AS NULL AND VOID. 28. ON THE OTHER HAND LD.CIT DR SUBMITTED THAT NO RULE HAS BEEN PRESCRIBED IN THE I.T.ACT FOR COMPUTATION OF INCOM E AND AS LONG AS THE COMPUTATION IS COMPREHENSIBLE SAME HAS TO BE ACCEPT ED. HE ARGUED THAT LD. CHARTERED ACCOUNTANT OF THE ASSESSEE HAS N OT POINTED OUT AS TO HOW THE ASSESSEE WOULD BE AFFECTED IF THE STARTING POINT OF INCOME IS TAKEN AS PER THE ORIGINAL RETURN. IT IS THE PREROGA TIVE OF THE ASSESSING AUTHORITY TO DETERMINE THE INCOME IN ANY MANNER AS HE LIKES AS LONG AS THE SAME CONFIRMS TO THE GENERAL PRINCIPLE OF ACCOU NTANCY AND LAW. 13 29. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND NO FORCE IN THE SUBMISSIONS OF THE LD. CHARTERED ACCOU NTANT OF THE ASSESSEE SHRI WARRIER. SEC.153A(B) READS AS UNDER: 153A . [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECTION 153 IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT OTHER DOCUMENTS OR ANY ASSETS ARE REQUISIT IONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY 2003 THE ASSESSING OFF ICER SHALL (A) . . ( B ) - ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITI ON IS MADE. SIMILARLY SEC.143[3] READS AS UNDER- SEC.143( 3) ON THE DAY SPECIFIED IN THE NOTICE ( I ) ISSUED UNDER CLAUSE ( I ) OF SUB-SECTION (2) OR AS SOON AFTERWARDS AS MAY BE AFTER HEARING SUCH EVIDENCE AND AFTER TAKIN G INTO ACCOUNT SUCH PARTICULARS AS THE ASSESSEE MAY PRODUCE THE A SSESSING OFFICER SHALL BY AN ORDER IN WRITING ALLOW OR REJECT THE CLAIM OR CLAIMS SPECIFIED IN SUCH NOTICE AND MAKE AN ASSESSMENT DET ERMINING THE TOTAL INCOME OR LOSS ACCORDINGLY AND DETERMINE THE SUM PAYABLE BY THE ASSESSEE ON THE BASIS OF SUCH ASSESSMENT; ( II ) ISSUED UNDER CLAUSE ( II ) OF SUB-SECTION (2) OR AS SOON AFTERWARDS AS MAY BE AFTER HEARING SUCH EVIDENCE AS THE ASSESSEE MAY PRODUCE AND SUCH OTHER EVIDENCE AS THE ASSESSING OFFICER MA Y REQUIRE ON SPECIFIED POINTS AND AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH HE HAS GATHERED THE ASSESSING OFFICER SHALL BY AN ORDER IN WRITING MAKE AN ASSESSMENT OF THE TOTAL INCOME OR LOSS OF THE ASSESSEE AND DETERMINE THE SUM PAYABLE BY HIM OR R EFUND OF ANY AMOUNT DUE TO HIM ON THE BASIS OF SUCH ASSESSMENT:] THE COMBINED READING OF THE ABOVE TWO PROVISIONS MA KES IT CLEAR THAT THE AO HAS POWERS TO MAKE AN ASSESSMENT BY AN ORDER WHICH SHOULD BE IN WRITING AND HE HAS TO DETERMINE THE TAX PAYAB LE ALSO. NO PARTICULAR METHOD HAS BEEN GIVEN FOR COMPUTATION OF SUCH INCOME AND IT IS ALMOST SETTLED THAT AS LONG AS THE ASSESSMENT OF INCOME IS COMPREHENSIBLE NO FAULT CAN BE FOUND FOR SUCH DETE RMINATION AND/OR ASSESSMENT. WE HAD SPECIFICALLY ASKED THE LD. CHART ERED ACCOUNTANT OF THE ASSESSEE TO POINT OUT AS TO HOW THE INTEREST OF THE ASSESSEE WOULD 14 BE AFFECTED IF THE STARTING POINT OF ASSESSMENT OF INCOME WAS TAKEN AT INCOME RETURNED AS PER THE ORIGINAL RETURN. BUT HE GAVE AN EVASIVE REPLY AND ARGUED THAT IT MAY EFFECT THE PENALTY PRO CEEDINGS ETC. IT IS A MATTER OF COMMON SENSE THAT AO STARTS THE COMPUTATI ON OF INCOME SOMETIMES ON THE BASIS OF RETURNED INCOME SOMETIME S ON THE BASIS OF COMPUTATION OF INCOME FILED BY THE ASSESSEE AND SOM ETIMES ON THE BASIS OF PROFIT & LOSS ACCOUNT AND IN OUR VIEW THE ASSESSING AUTHORITIES ARE GENERALLY FREE TO CHOSE ANY OF THE METHODS. MER ELY BECAUSE THE STARTING POINT FOR ASSESSMENT HAS BEEN MADE AS INCO ME ORIGINALLY RETURNED THE ASSESSMENT CANNOT BE SAID TO BE BAD I N LAW. IN THESE CIRCUMSTANCES WE REJECT THIS GROUND OF APPEAL. 30. GROUND NOS.2 3 4 & 5 PERTAIN TO THE COMMON DI SPUTE I.E. REGARDING DISALLOWANCE OF THE PAYMENTS MADE TO THE DOCTORS. 31. BRIEF FACTS OF THE CASE ARE THAT A SEARCH WAS C ONDUCTED IN THE ASSESSEES HOSPITAL AND SEVERAL DOCUMENTS WERE SEIZ ED FROM THE HOSPITAL WHICH DEPICTED THAT RECEIPTS WERE MUCH MOR E. ULTIMATELY ASSESSEE FILED RETURNS U/S.153A ACCEPTING THE GROSS RECEIPTS INCORPORATED IN THE SEIZED RECORDS. HOWEVER CERTAI N ITEMS WERE ALSO SOUGHT TO BE REDUCED AS PER THE SEIZED RECORDS. INT ER ALIA ONE OF THE ITEMS WAS PAYMENTS MADE TO THE DOCTORS. IN THE ORIG INAL RETURNS DOCTOR PAYMENT HAS BEEN REFLECTED AT RS.45 39 089/- . ASSESSEE CLAIMED FURTHER SUM OF RS.20 22 686/- PAID TO VARIO US DOCTORS DETAILS OF WHICH WERE INCORPORATED IN THE SEIZED RECORDS. T HIS CLAIM WAS NOT ACCEPTED BECAUSE NO EVIDENCE WAS THERE REGARDING TH IS PAYMENT. 15 32. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THESE P AYMENTS ARE REFLECTED IN PANCHANAMA NO.SSA 54 AMV 43. IT WAS AR GUED THAT SINCE GROSS INCOME INCLUDES DOCTORS FEE WHICH HAS BEEN CO NSIDERED AS PER THE COMPUTER PRINT OUT THEN ACCORDINGLY THE PAYME NTS MADE TO DOCTORS AS EVIDENCED BY THE SEIZED BOOKS WERE ALSO REQUIRED TO BE CONSIDERED. IT WAS SUBMITTED THAT DETAILS SUCH AS N AMES OF THE DOCTORS AND GROSS PAYMENTS MADE TO EACH ONE OF THEM WERE SE PARATELY RECORDED EVERY MONTH IN THE SEIZED RECORDS. SINCE T HE SEIZED BOOKS WERE REGULARLY MAINTAINED BY GENERAL MANAGER SHRI K .SIVADAS SUCH RECORDS SHOULD BE ACCEPTED. EVEN IN THE STATEMENT T AKEN FROM SHRI K. SIVADAS HE HAD CLEARLY STATED THAT PAYMENTS RECORDE D IN THE SEIZED RECORDS WERE ACTUALLY MADE AND THE SAME WERE PAID T HROUGH CHEQUES AS WELL AS CASH. LD. CIT(A) DECIDED THE ISSUE AS UN DER: THE PAYMENTS TO DOCTORS WHICH ARE NOT ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNTS ARE NOT ALLOWABLE AS EXPENDITURE IN THE ABSENCE OF ACKNOWLEDGMENT OR RECEIPTS FROM THE RESPECTIVE DOCT ORS BY WAY OF EVIDENCE. HOWEVER THE CLAIM OF THE APPELLANT THAT THE PAYMENTS ARE EVIDENCE BY THE SEIZED BOOKS MAINTAINED BY THE GENE RAL MANAGER IN HIS OWN HANDWRITING IS A PIECE OF EVIDENCE. THE APP ELLANT SUBMISSION THAT EQUAL RELIANCE IS TO BE GIVEN BOTH IN REGARD T O THE INCOME AND EXPENDITURE WHICH ARE PROVED BY THE SEIZED BOOKS SU PPORTED BY THE STATEMENTS TAKEN AT THE TIME OF SEARCH IS LEGALLY T ENABLE. HOWEVER IN THE ABSENCE OF FULL EVIDENCE REGARDING PAYMENTS I A M NOT INCLINED TO ALLOW THE FULL AMOUNT AS EXPENDITURE BUT CONSIDERI NG THE CIRCUMSTANTIAL EVIDENCE AS PER THE SEIZED BOOKS 75% OF THE CLAIM OF THE APPELLANT IS DISALLOWED WHICH INCLUDES THE DISA LLOWANCE UNDER SECTION 40A(3) AND 25% RS.5 05 672/- IS ALLOWED. RELIEF RS.5 05 672/-. 33. BEFORE US THE LD. CHARTERED ACCOUNTANT SHRI WAR RIER SUBMITTED THAT THE SEARCH WAS CONDUCTED ON 7-10-2004 IN THE P REMISES OF THE ASSESSEE WHEREIN VARIOUS DOCUMENTS WERE FOUND AND S EIZED. IT WAS FOUND THAT THE HOSPITAL HAS NOT RECORDED THE RECEIP TS AND THE RECEIPTS WHICH WERE COLLECTED WERE OUT OF BOOKS AND CERTAIN EXPENSES WERE 16 MADE OUT OF SUCH RECEIPTS. ONE OF THE ITEMS OF SUCH EXPENDITURE IS WITH REGARD TO DOCTORS PAYMENTS. IN FACT A SEPARAT E BOOK WAS BEING MAINTAINED IN WHICH THESE RECEIPTS AND EXPENSES WER E BEING RECORDED BY THE MANAGER SHRI K.SAVADAS. A STATEMENT OF SHRI K. SIVADAS WAS RECORDED DURING THE SEARCH AND WITH REFERENCE TO QU ESTION NO.4 IT WAS SPECIFICALLY ADMITTED THAT SUCH BOOKS WAS BEING MAI NTAINED IN WHICH COLLECTION FROM PATIENTS AND PAID TO DOCTORS WAS RE CORDED. IN THIS RESPECT HE REFERRED TO PAGES 107 TO 109 OF THE PAPE R BOOK WHICH IS A COPY OF THE STATEMENT RECORDED U/S.132 AND THE SAID QUESTION NO.4 AND ANSWER THERETO READ AS UNDER: Q.4 I AM SHOWING YOU A NOTE BOOK MARKED AS SSA 54 SEIZED FROM YOUR CABIN. EXPLAIN THE CONTENTS OF THIS BOOK. ANS. I HAVE GONE THROUGH THIS BOOK AND THIS BOOK CO NTAINS DETAILS OF COLLECTIONS FROM PATIENTS AND PAID TO DOCTORS ON VA RIOUS DATES. THESE PAYMENTS ARE FOR THE YEARS 1999-2001. THE PAY MENTS ARE MADE IN CASH AND CHEQUE. HE ARGUED THAT IF COLLECTIONS ARE BEING ENHANCED ON THE BASIS OF THE SEIZED MATERIAL THEN EXPENDITURE SHOULD ALSO BE AL LOWED ON THE BASIS OF THE SAME SEIZED MATERIAL. THE EXTRA PAYMENTS TO THE DOCTORS HAVE BEEN DENIED BY THE AO MERELY ON THE BASIS THAT NO E VIDENCE IN SUPPORT OF THE SAME WAS PUT-FORTH. THIS CLAIM WAS PARTLY AL LOWED BY THE CIT[A] BY OBSERVING THAT PAYMENTS ARE EVIDENCED BY THE SEI ZED BOOK MAINTAINED BY THE GENERAL MANAGER IN HIS OWN HANDWR ITING. BUT STILL SUCH PAYMENTS WERE ALLOWED ONLY TO THE EXTENT OF 25 % IN THE ABSENCE OF EVIDENCE. 34. HE SUBMITTED THAT ORIGINALLY DOCTORS PAYMENTS W ERE SHOWN AT ` `` ` .45 39 089/- AND AFTER REDUCING THIS FIGURE FROM TH E ORIGINAL RECEIPT NET COLLECTION ON ACCOUNT OF DOCTORS FEE WAS SHOWN AT ` `` ` .56 45 802/-. 17 BUT NOW THE COLLECTION HAS GONE UP TO ` `` ` .2 91 53 433/-. ACTUALLY DOCTORS PAYMENTS AS PER SEIZED MATERIAL ARE ` `` ` .65 61 775/- WHICH MEANS EXTRA PAYMENTS WERE MADE TO THE EXTENT OF ` `` ` .20 22 686/-. HE ARGUED THAT WHILE CONSIDERING THE TOTAL RECEIPTS WHICH WERE REC ORDED IN DOCUMENTS FOUND BY THE SAID SEARCH PARTY WERE ALSO WITH ANY A CKNOWLEDGMENT BUT STILL THE RECEIPTS WERE TAKEN AT THE HIGHER FIG URE. THEREFORE SAME PARA METER SHOULD APPLY IN RESPECT OF DOCTORS PAYME NTS ALSO. IN ANY CASE WHEN A PARTICULAR DOCUMENT HAS TO BE RELIED FO R MAKING AN ASSESSMENT THEN ALL THE CONTENTS OF THIS DOCUMENT H AS TO BE EFFECTED. 35. ON THE OTHER HAND LD.CIT DR SUBMITTED THAT UND ISPUTEDLY THE EXPENDITURE ON ACCOUNT OF DOCTORS PAYMENTS WAS UNEX PLAINED EXPENDITURE AND THEREFORE SAME COULD BE ADDED U/S .69C. ALTERNATIVELY HE SUBMITTED THAT PAYMENTS TO DOCTOR S WERE MADE WHICH ARE PROHIBITED IN THE SENSE THAT MAKING ALL CASH PA YMENTS LEADING TO TAX EVASION IS AN OFFENCE AND THEREFORE SAME WAS COVERED UNDER EXPLANATION TO SEC.37. IN FACT ASSESSEE DISTRIBUTE D SURPLUS ON ACCOUNT OF RECEIPTS ACCORDING TO THE WHIMS AND FANCY OF MAN AGEMENT AND THEREFORE THERE IS NO CO-RELATION BETWEEN THE DOCTO RS PAYMENTS AND THE RECEIPTS. 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND AGREE WITH THE SUBMISSIONS OF THE LD. CHARTERED ACCOUNTAN T SHRI WARRIER. IT IS A CLEAR CASE WHERE CERTAIN RECEIPTS AND EXPENSES WE RE BEING RECORDED IN A SEPARATE BOOK AND WERE NOT BEING DISCLOSED TO THE DEPARTMENT. DURING THE SEARCH IT WAS NOTICED FROM THE SEIZED D OCUMENTS THAT CERTAIN RECEIPTS HAVE NOT BEEN DECLARED TO THE DEPA RTMENT AND THE 18 DEPARTMENT HAS BROUGHT THOSE RECEIPTS TO TAX WHICH IS CORRECT BECAUSE THAT IS THE PURPOSE OF THE SEARCH. HOWEVER WE FAIL TO UNDERSTAND WHEN ONCE A PARTICULAR DOCUMENT AND/OR A NOTE BOOK IN WH ICH SUCH RECEIPTS HAVE BEEN RECORDED AND ALSO CERTAIN EXPENSES HAVE B EEN RECORDED THEN HOW CAN SUCH EXPENDITURE BE IGNORED. IN FACT IT IS THE ONLY INCOME PORTION WHICH CAN BE SUBJECTED TO TAX. IT IS ALMOST SETTLED LAW THAT EVEN IF ASSESSEE IS RUNNING AN ILLEGAL BUSINES S EVEN THEN ONLY NET INCOME OF SUCH ILLEGAL BUSINESS CAN BE SUBJECTED TO TAX. WE ARE UNABLE TO AGREE WITH THE SUBMISSIONS OF THE LD.CIT DR. AS FAR AS THE CONTENTION THAT THIS IS THE UNEXPLAINED EXPENDITURE AND THEREFORE SHOULD BE BROUGHT TO TAX U/S.69C BECAUSE NO SOURCE IS THERE IS CONCERNED THE SOURCE OF SUCH EXPENDITURE IS CLEARL Y AVAILABLE IN THE FORM OF UNACCOUNTED RECEIPTS WHICH HAVE NOW BEEN IN CLUDED IN THE RETURN FILED U/S.153A. THE SECOND SUBMISSION REGARD ING EXPLANATION TO SEC.37 IS CONCERNED THIS EXPLANATION READS AS UNDE R: EXPLANATION .FOR THE REMOVAL OF DOUBTS IT IS HEREBY DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PUR POSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR PROFES SION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE . THE ABOVE CLEARLY SHOWS THAT ONLY THOSE PAYMENTS WH ICH ARE PROHIBITED BY ANY LAW OR AN ITEM WHICH IS AN OFFENC E ARE NOT TO BE ALLOWED. MAKING CASH PAYMENT TO DOCTOR CANNOT BE TE RMED AS AN OFFENCE AND THERE IS NO SUCH PROHIBITION UNDER ANY LAW THAT PAYMENTS TO DOCTORS CANNOT BE MADE IN CASH. THE ONLY ISSUE I S THAT SUCH PAYMENTS MAY NOT HAVE BEEN SUBJECT TO TAX IN THE HA NDS OF SUCH DOCTORS BUT THE DEPARTMENT WAS FREE TO REOPEN THE A SSESSMENTS OF THOSE DOCTORS AGAINST WHOM SUCH PAYMENTS WERE CLAIM ED TO HAVE BEEN 19 MADE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW T HAT THE TOTAL EXPENDITURE ON ACCOUNT OF DOCTORS PAYMENTS HAS TO B E ALLOWED PARTICULARLY IN VIEW OF THE MATTER THAT TOTAL UNACC OUNTED RECEIPTS HAVE BEEN BROUGHT TO TAX. UNDER THESE CIRCUMSTANCES WE SET ASIDE THE ORDER OF THE LD. CIT[A] AND DIRECT THE AO TO ALLOW WHOLE OF THE DOCTORS PAYMENTS FROM THE GROSS RECEIPTS INCLUDING THE UNAC COUNTED RECEIPTS AS EXPENDITURE. 37. IN THE RESULT ASSESSEES APPEAL IN I.T.A.NO.32 /COCH/08 IS PARTLY ALLOWED. 38. I.T.[SS]A NO.19 [REVENUES APPEAL]: THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 2. THE CIT[A] HAS ERRED IN RESTRICTING THE TOTAL INCOM E TO ` `` ` .30 81 672/- AS AGAINST ` `` ` .1 09 94 635/- ORIGINALLY ASSESSED [WHICH HAS BEEN REVISED TO ` `` ` .64 55 550/- AS PER 154 ORDER DATED 13-4-2007] WITHOUT CONSIDERING THE FACT THAT THE REVISED P&L ACCOUNT FILED WITH R/I U/S.153A IS BASED IN THE RECASTED ACCOUNTS IN ORDER TO COVER UP THE DISCREPANCIES FOU ND OUT BY THE DEPARTMENT DURING THE COURSE OF SEARCH. 3. THE CIT[A] HAS FAILED TO NOTE THAT THE NEWLY PRE PARED ACCOUNTS FILED ALONG WITH THE RETURN U/S.153A IS AN AFTER TH OUGHT OF THE ASSESSEE. IT IS AN ATTEMPT TO COVER UP THE UNDISCLO SED RECEIPTS BY PREPARING NEW ACCOUNTS WHERE ENTRIES DO NOT FIND A PLACE IN THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS SEIZED DU RING THE SEARCH. ASSESSING OFFICERS ACTION IN COMPLETING TH E ASSESSMENT ADOPTING THE DIFFERENCE IN THE COLLECTIO N AS PER THE COMPUTER PRINT OUT TAKEN AT THE TIME OF SEARCH AND THE AMOUNT SHOWN IN THE ORIGINAL RETURN AFTER ALLOWING THE ITE MS CLAIMED TO BE EXCLUDED BY THE ASSESSEE AMOUNTING TO ` `` ` .38 69 326/- EXCEPT COMPLIMENTARY BILLS AND DOCTORS FEES IS COR RECT. THE CIT[A] OUGHT TO HAVE FIND THAT OUT OF THE COMPLIMEN TARY BILLS OF ` `` ` .3 36 302/- THE ASSESSING OFFICER HAS GIVEN DEDUCT ION OF ` `` ` .19 336/- TOWARDS COMPLIMENTARY TREATMENT GIVEN TO THE STAFF AND THEIR FAMILY MEMBERS. HENCE CIT[A]S ACTION IN ALLOWING A FURTHER REDUCTION OF ` `` ` .80 664/- IS UNWARRANTED AND IS NOT CORRECT IN THE ABSENCE OF EVIDENCE. 4. THE CIT[A] ALSO ERRED IN DELETING 25% [ ` `` ` .5 05 671] OF THE AMOUNT PAID TO DOCTORS AMOUNTING TO ` `` ` .20 22 686/-. THE CIT[A] OUGHT TO HAVE SEEN THAT THE ASSESSEE COULD NOT PROD UCE ANY CONFIRMATION LETTERS FROM THE DOCTORS ABOUT THE REC EIPT OF THE AMOUNT BY THEM. HENCE CIT[A]S ACTION IN DELETING 2 5% OF THE SAME IS UNWARRANTED. 20 39. IN ADDITION TO ABOVE THE REVENUE HAS RAISED TH E ADDITIONAL FOLLOWING GROUND: 1.1 THE LEARNED CIT[APPEALS] ERRED IN ALLOWING THE ADDITIONAL CLAIM OF ` `` ` .4 76 267/- TOWARDS REPAIRS OF THE HOSPITAL BUILDIN GS ON THE BASIS OF THE VALUATION REPORT. THE CIT[APPEALS] FAI LED TO NOTE THAT NO SUCH CLAIM WAS MADE BEFORE THE ASSESSING OF FICER AND NO ADDITION WAS ALSO CONSIDERED BY THE ASSESSIN G OFFICER AS UNEXPLAINED EXPENDITURE BASED ON THE VALUATION R EPORT. THE CIT[APPEALS] FAILED TO NOTE IF THE ADDITIONAL CLAIM OF ` `` ` .4 76 267/- TOWARDS REPAIRS BASED ON THE VALUATION REPORT HAD TO BE ALLOWED THE ADDITION ON ACCOUNT OF UNEXPLAIN ED EXPENDITURE SHOULD ALSO HAVE BEEN CONSIDERED. THE CIT[APPEALS] FAILED TO NOTE THAT NO REVISED RETURN FOR CLAIMING THE ADDITIONAL EXPENDITURE WAS FILED. IN THIS CONNE CTION RELIANCE IS PLACED ON THE SUPREME COURTS DECISION R EPORTED IN 284 ITR 323 IN THE CASE OF GOETZE VS. CIT. 1.2 THE CIT[APPEALS] FAILED TO NOTE THAT THE DATE[S ] OF THE DVO REPORT AND THE ASSESSMENT ORDER WERE THE SAME I.E. 28-23- 3006 AND THAT THE ASSESSING OFFICER DID NOT HAVE SU FFICIENT OPPORTUNITY TO EXAMINE THE REPORT OF THE DVO IN THE ASSESSMENT ORDER. 1.3 FAILURE OF THE CIT[APPEALS] TO PROVIDE REASONAB LE OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE DVOS REPOR T TANTAMOUTNS TO CONTRAVENTION OF RULE 46A AND FOR WH ICH REASON THE CIT[APPEALS]S ORDER BE SET ASIDE. 40. THE LD.CIT DR WANTED TO ARGUE THE OTHER RELIEFS GIVEN BY THE CIT[A] TO WHICH LD. CHARTERED ACCOUNTANT SHRI WARRI ER OBJECTED AND SUBMITTED THAT NO SPECIFIC GROUNDS HAVE BEEN RAISED IN RESPECT OF THOSE ISSUES. HOWEVER WE REJECT THIS OBJECTION BEC AUSE THIS CAN BE CONSTRUED AS GENERAL GROUND WHEREBY RELIEFS GIVEN B Y THE CIT[A] HAVE BEEN CHALLENGED. IN ANY CASE THE OTHER RELIEFS PER TAIN TO BUILDING REPAIRS AND DEPRECIATION AND THE ISSUE REGARDING BU ILDING REPAIRS HAS BEEN RAISED BY THE DEPARTMENT IN THE ADDITIONAL GRO UND ALSO. THOUGH SOME ARGUMENTS WERE MADE IN RESPECT OF THE ADDITION AL GROUND OF THE DEPARTMENT BUT AS OBSERVED BY US WHILE ADJUDICATIN G ASSESSEES ADDITIONAL GROUNDS THAT NO NEW FACTS ARE REQUIRED T O BE FOUND AND 21 THEREFORE EVEN THE ADDITIONAL GROUND RAISED BY THE DEPARTMENT IS ADMITTED. 41. FIRST OF ALL WE SHALL DEAL WITH THE ISSUE REGAR DING THE RELIEF GIVEN BY THE CIT[A] IN RESPECT OF REPAIRS. 42. BRIEF FACTS ARE THAT ASSESSEE HAD AN OLD BUILDI NG IN WHICH THE HOSPITAL WAS RUNNING WHICH WAS CONSTRUCTED IN 1985. THIS BUILDING REQUIRED SUBSTANTIAL REPAIRS WHICH WERE CARRIED OUT FROM F.Y 1999-2000 TO 7-10-2004 [THE PERIOD WITH WHICH WE ARE CONCERNE D]. THE FOLLOWING EXPENSES HAVE BEEN INCURRED IN RESPECT OF CONSTRUCT ION AS WELL AS REPAIRS: TOTAL INVESTMENT IN THE BUILDING CONSTRUCTION AND BUILDING REPAIRS. [PAPER BOOK PAGES 110-114] FROM THE ASST.YEAR 2001 TO ASST. YEAR 2004-05 AND U PTO 07-1-2004 [THE DATE OF SEARCH] ASST.YEAR BUILDING REPAIR BUILDING CONSTRUCTION TOT AL 2000-01 5 31 238 20 46 695 25 77 933 2001-02 2 46 139 27 35 337 29 81 476 2002-03 6 54 447 37 03 569 43 58 016 2003-04 4 73 364 36 05 278 40 78 642 2004-05 12 98 810 2 08 17 003 2 21 15 812 3 59 000 7 87 391 FROM 1-4- 2004 TO 7-10-2004 [DATE OF SEARCH] 4 28 3 59 000 ` `` ` .3 68 99 271 IN THE BOOKS OF ACCOUNT THESE EXPENSES WERE SHOWN A S UNDER: PARTICULARS AMOUNT BHAGAVATH BUILDING [I.E. NEW BUILDING] ` `` ` .1 45 35 307 ADDITIONAL CONSTRUCTION IN THE EXISTING BUILDING ` `` ` .1 47 13 437 TOTAL ` `` ` .2 92 48 744 ADD: EXPENDITURE INCURRED ON REPAIRS ` `` ` . 76 50 527 TOTAL ` `` ` .3 68 99 271 ========== 22 THE MATTER REGARDING CONSTRUCTION EXPENDITURE WAS R EFERRED TO THE DVO AND AS PER THE DVOS REPORT THE DETAILS OF EXP ENDITURE WERE AS UNDER: PARTICULARS AMOUNT NEW BUILDING ` `` ` .1 59 21 000 EXTENSION OF EXISTING BUILDING ` `` ` .1 41 72 000 ` `` ` .3 00 93 000 ========== 43. IN ADDITION TO ABOVE DVO DETERMINED THE COST O F REPAIRS AT ` `` ` .66 90 000/- AS PER THE CERTIFICATE DATED 28-12-200 6 COPY OF WHICH IS AVAILABLE AT PAGE 124 OF THE PAPER BOOK. AO MADE AN ADDITION OF ` `` ` .13 85 693/- ON ACCOUNT OF UNEXPLAINED INVESTMENT I N COST OF CONSTRUCTION OF BHAGAVATJ BUILDING I.E. ` `` ` .1 59 21 000/- AFTER REDUCING THE COST OF CONSTRUCTION AS PER BOOKS AMOUNTING TO ` `` ` .1 45 35 307/- ORIGINALLY DEDUCTION ON ACCOUNT OF REPAIRS HAD BEE N GIVEN ONLY TO THE EXTENT OF ` `` ` .36 32 388/-. AO DID NOT GIVE ANY ADDITIONAL DEDUCT ION ON ACCOUNT OF REPAIRS. THE LD. CIT[A] ALLOWED THE ADDI TIONAL CLAIM FOR PROPORTIONATE REPAIRS DURING THE YEAR AT ` `` ` .4 76 627/- AS UNDER: BUILDING REPAIRS PARA 4(E) .. 4 76 267 THE DISTRICT VALUATION OFFICER HAS VALUED BOTH THE CONSTRUCTION OF THE 2 NEW BUILDING AND THE VALUE OF THE REPAIR WORKS UNDE RTAKEN BY THE APPELLANT DURING THE BLOCK PERIOD. AS PER THE PROCE EDINGS OF THE DISTRICT VALUATION OFFICER DATED 28/12/2006 ADDRESS ED TO THE ASST. COMMISSIONER OF IT ` `` ` .66 99 000/- IS THE VALUE OF REPAIRS EFFECTED IN TH E BUILDING DURING THE BLOCK PERIOD OUT OF THIS THE AP PELLANTS CLAIM IS THE REPAIR TO THE EXTENT OF ` `` ` .4 76 267/- FOR THIS ASST. YEAR AND THIS AMOUNT IS ALLOWED FOR THIS ASST YEAR OUT OF THE TOTAL AMOU NT CERTIFIED BY THE DISTRACTION VALUATION OFFICER. THE RELIEF ` `` ` .4 76 267/-. 44. BEFORE US LD.CIT DR SUBMITTED THAT FIRST OF AL L THE VALUATION REPORT IS DATED 21-12-2006 AND THE ASSESSMENT WAS C OMPLETED ON 28- 23 12-2006. THE LETTER SHOWING THE DETAILS OF REPAIRS BY THE DVO IS ALSO DATED 28-12-2006. THEREFORE AO NEVER HAD AN OPPORT UNITY TO GO THROUGH THIS CLAIM AND THEREFORE CIT[A] SHOULD NO T HAVE ALLOWED THE CLAIM WITHOUT GIVING AN OPPORTUNITY TO THE AO AND T HIS CAUSES VIOLATION OF RULE 46A. 45. FURTHER NO CLAIM CAN BE MADE BEFORE THE AO WITH OUT REVISING THE RETURN IN VIEW OF THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF GOETZE VS. CIT [SUPRA]. IN ANY CASE WHEN I N THE ORIGINAL RETURN WHATEVER REPAIRS WERE CLAIMED WERE ALREADY ALLOWED AND THEREFORE THERE WAS NO JUSTIFICATION FOR THIS FURT HER CLAIM. 46. ON THE OTHER HAND LD. CHARTERED ACCOUNTANT SHR I WARRIER SUBMITTED THAT ALL THE EXPENSES WERE RECORDED IN TH E BOOKS OF ACCOUNT AND PERHAPS THERE WAS SOME MIX UP THAT SOME OF THE EXPENSES WERE BOOKED UNDER THE HEAD COST OF CONSTRUCTION. IN AN Y CASE WHEN AN ADDITIONAL INCOME IS BEING ASSESSED ON ACCOUNT OF U NDISCLOSED RECEIPTS THEN SIMILARLY UNDISCLOSED EXPENDITURE IS ALSO TO B E ALLOWED. HE ARGUED THAT REFERENCE TO DVO WAS NOT MADE AT THE INSTANCE OF THE ASSESSEE BUT THE REFERENCE WAS MADE BY THE AO ON HIS OWN. SI NCE SOME OF THE AMOUNTS WERE SPENT TOWARDS REPAIRS WHICH WERE IN TH E NATURE OF CONCRETE FLOORING PLASTERING OF THE WALLS PAINTIN G AND OTHER REPAIRS BECAUSE THE EXISTING BUILDING WAS 25 YEARS OLD AND REQUIRED SUBSTANTIAL REPAIRS. THE DVO HAS ESTIMATED THE COST OF CONSTRUC TION AFTER VERIFYING ALL THE DETAILS AND THE TOTAL EXPENDITURE ON ACCOUN T OF COST OF CONSTRUCTION AS WELL AS REPAIRS HAS BEEN ESTIMATED BY THE DVO AT ` `` ` .3 67 83 000/- WHEREAS THE ASSESSEE HAS ALREADY REF LECTED THE SUM OF 24 ` `` ` .3 68 99 271/- AS PER THE DETAILS FILED AT PAGES 11 0 TO 140 OF THE PAPER BOOK. HE SUBMITTED THAT WHEN ASSESSEE WAS FIL ING RETURNS U/S.153A ASSESSEE HAD ALL THE RIGHT TO CLAIM THE A CTUAL EXPENDITURE UNDER THE PROPER HEAD. 47. AS FAR AS OBJECTION REGARDING VIOLATION OF RULE 46A IS CONCERNED LD. CHARTERED ACCOUNTANT SHRI WARRIER REFERRED TO P AGE-10 OF THE APPELLATE ORDER AND INVITED OUR ATTENTION TO PARAS 7 & 8 OF THE ORDER WHICH CLEARLY SHOWS THAT THE MATTER WAS REMANDED ON 20-4-2007 TO THE FILE OF THE AO FOR FRESH CONSIDERATION AND THE CIT HAD DIRECTED THE AO TO FILE THE REMAND REPORT BY 31-5-2007 AND THE A O HAD ALL THE OPPORTUNITY TO COUNTER VERIFY THE CLAIM OF THE ASSE SSEE. INSTEAD OF DOING THAT HE HAS GIVEN A REPLY ON 20-8-2007 AND ME RELY STATED THAT ASSESSMENTS WERE COMPLETED AS PER THE PROVISIONS OF THE ACT AND NO FRESH VERIFICATIONS WERE REQUIRED. THEREFORE IT CA NNOT BE SAID THAT NO OPPORTUNITY WAS GIVEN TO THE AO. 48. AS FAR AS QUESTION REGARDING FRESH CLAIM IS CON CERNED HE SUBMITTED THAT THE CLAIM WAS MADE IN THE RETURN U/S .153A AND IT CANNOT BE SAID THAT SUCH CLAIM WAS MADE ONLY THROUG H A LETTER AND THEREFORE THE RATIO OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETEZE VS. CIT [SUPRA] WAS NOT APPLICABLE. 49. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT AS FAR AS THE ISSUE REGARDING VIOLATION OF RULE 46A IS CONCERNED WHEN CIT[A] HAD ALREADY REMANDED THE MATTER TO THE AO T HEN AO HAD ALL THE OPPORTUNITY TO EXAMINE THE CLAIM MADE BY THE AS SESSEE. IN ANY CASE THE CLAIM WAS BASED ON THE VALUATION REPORT A ND THE REFERENCE 25 WAS MADE BY THE AO ON HIS OWN AND NOT ON BEHALF OF THE ASSESSEE. THE REFERENCE WAS MADE TO DETERMINE THE COST OF CON STRUCTION BUT SINCE SUBSTANTIAL REPAIRS WERE ALSO INVOLVED DVO C HOSE TO GIVE SEPARATE ESTIMATE FOR COST OF CONSTRUCTION AND REPA IRS. THE CERTIFICATE DATED 28-12-2006 REGARDING REPAIRS COPY OF WHICH I S AVAILABLE AT PAGE 124 OF THE PAPER BOOK CLEARLY SHOWS THAT REPAIRS F OR THE OLD SIX STOREYED BUILDING HAD BEEN DETERMINED AT ` `` ` .66 90 000/-. SINCE NO INVESTIGATION HAS BEEN DONE DURING THE REMAND PROCE EDINGS NOW IT CANNOT BE ALLEGED THAT CIT[A] HAS VIOLATED RULE 46A AND THEREFORE WE REJECT THIS OBJECTION. 50. AS FAR AS THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF GOETEZEVS. CIT [SUPRA] IS CONCERNED FACTS ARE Q UITE DIFFERENT. IN THAT CASE THE QUESTION AROSE WAS WHETHER THE ASSESS EE CAN MAKE A FRESH CLAIM BEFORE THE ASSESSING AUTHORITY WITHOUT REVISING THE RETURN AND THE HON'BLE SUPREME COURT HAS HELD THAT AO CANN OT ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING OF A R EVISED RETURN. IN THIS CASE THE CLAIM HAS BEEN MADE THROUGH RETURN U/S.153 A AND THEREFORE THIS RATIO CANNOT BE APPLIED. 51. FROM THE DETAILS OF COST OF CONSTRUCTION AND RE PAIRS FILED AT PAGES 110 TO 114 OF THE PAPER BOOK IT IS CLEAR THA T THE TOTAL EXPENDITURE SHOWN IN THE BOOKS OF ACCOUNTS TOWARDS COST OF CONSTRUCTION AND REPAIRS BY THE ASSESSEE IS ` `` ` .3 68 99 271/- WHEREAS THE DVO HAS ESTIMATED THE COST OF CONSTRUCTION IN R ESPECT OF NEW BUILDING AND EXTENSION OF EXISTING BUILDING AT ` `` ` .3 00 93 000/- I.E. ` `` ` .1 59 21 000/- FOR THE NEW BUILDING AND ` `` ` .1 41 72 000/- FOR THE 26 EXTENSION OF EXISTING BUILDING. FURTHER DVO HAS ES TIMATED THE COST OF REPAIRS AT ` `` ` .66 90 000/-. THUS THE TOTAL EXPENDITURE ON THE CO ST OF CONSTRUCTION AND REPAIRS COMES TO ` `` ` .3 67 83 000/- WHICH IS LESS THAN THE TOTAL EXPENDITURE SHOWN IN THE BOOKS. SINCE THE RE SEEMS TO BE SOME MIX UP IN THE COST OF CONSTRUCTION AND THE REP AIRS IN THE ORIGINAL RETURN FILED THE DEPARTMENT HAS ALSO ASSESSED THE UNDISCLOSED RECEIPTS AS INCOME OF THE ASSESSEE. THEREFORE WHILE FILING THE RETURN U/S.153A ASSESSEE HAS FULL RIGHT TO MAKE THE CLAIM FOR CORRE CT AMOUNT UNDER THE APPROPRIATE HEAD AS LONG AS IT IS RECORDED IN THE B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IT WAS NEVER ARGUED BEF ORE US THAT THESE EXPENSES WERE NOT RECORDED IN THE BOOKS AND THEREF ORE WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT[A]. ACCORDINGLY WE REJECT THE ADDITIONAL GROUND AS WELL AS GROUND NO.2 OF THE REVENUES APPEAL. 52. THE OTHER ISSUES RAISED BY THE LD.CIT DR WERE I N RESPECT OF DEPRECIATION. THE LD. CIT[A] HAD ADJUDICATED THIS I SSUE AS UNDER: DEPRECIATION PARA 4(G) .. ` `` ` .5 57 076 THE APPELLANT PRODUCED THE SCHEDULE OF FIXED ASSETS SHOWING THE CLAIM OF DEPRECIATION FILED ALONG WITH THE ORIGINAL RETURN OF INCOME. THE APPELLANT SUBMITTED THAT IN RESPECT OF CERTAIN ITEM S OF ASSETS DEPRECIATION WAS CLAIMED AT LOWER RATE THAN WHAT IS ALLOWABLE UNDER THE IT RULES. A REVISED STATEMENT OF DEPRECIATION I N RESPECT OF THOSE ASSETS WAS FILED BEFORE ME. THE APPELLANT SUBMITTED THAT THIS CLAIM WAS MADE THROUGH REVISED PROFIT & LOSS ACCOUNT BEFO RE THE ASSESSING OFFICER BUT NOT CONSIDERED IN THE ASSESSMENT. SINCE DEPRECIATION IS LEGITIMATELY ALLOWABLE UNDER THE ACT THIS CLAIM OF THE APPELLANT IS ALLOWED. RELIEF `.5 57 076/-. 27 53. THE LD.CIT DR SUBMITTED THAT WHEN THE ASSESSEE HAS ALREADY CLAIMED DEPRECIATION AT A PARTICULAR RATE HE CANNO T REVISE THE SAME IN THE RETURNS FILED U/S.153A. 54. ON THE OTHER HAND LD. CHARTERED ACCOUNTANT SHR I WARRIER SUBMITTED THAT WHEN THE TOTAL INCOME WAS REQUIRED T O BE COMPUTED U/S.153A R.W.S. 143[3] THEN NECESSARILY ASSESSEE CA N MAKE CLAIMS AS PER THE PROVISIONS OF THE ACT AND EVEN THE DEPARTME NT WAS BOUND TO ALLOW SUCH CLAIMS EVEN IF THEY WERE NOT MADE. 55. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. CHARTERED ACCOU NTANT SHRI WARRIER. WE FIND THAT SEC.153A READS AS UNDER: 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECTION 153 IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT OTHER DOCUMENTS OR ANY ASSETS ARE REQUISIT IONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY 2003 THE ASSESSING OFF ICER SHALL ( A ) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURN ISH WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE THE RETU RN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B ) IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART ICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN R EQUIRED TO BE FURNISHED UNDER SECTION 139 ; ( B ) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESS MENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITI ON IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT IF ANY RELATING T O ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SI X ASSESSMENT YEARS REFERRED TO IN THIS [SUB-SECTION] PENDING ON THE DA TE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A AS THE CASE MAY BE SHALL ABATE. THE FIRST PROVISO MAKES IT VERY CLEAR THAT AO SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH OF THE ASSESSME NT YEAR WHICH HAS 28 COME UNDER SCANNER BECAUSE OF THE SEARCH. FURTHER THE SECOND PROVISO MAKES IT CLEAR THAT EARLIER ASSESSMENT SHAL L ABATE WHICH MEANS THEY ARE NOT IN EXISTENCE IN THE EYE OF THE LAW. TH IS ALSO MEANS THAT INCOME HAS TO BE DETERMINED AFRESH AS PER THE PROVI SIONS OF THE ACT. WE HAVE ALREADY REPRODUCED EXPLANATION 1 TO SEC.153 A WHILE DEALING WITH THE ADDITIONAL GROUNDS OF THE ASSESSEE REGARDI NG LEVY OF INTEREST WHICH CLEARLY PROVIDES THAT PROVISIONS OF THE ACT W OULD APPLY TO THE ASSESSMENTS UNDER THESE PROVISIONS. THEREFORE IT I S CLEAR THAT IF BY MISTAKE OR OTHERWISE ASSESSEE HAS MADE ANY INCORRE CT CLAIM IN RESPECT OF DEPRECIATION OR SOME OTHER CLAIM THEN THE SAME C AN BE REVISED IN THE RETURNS TO BE FILED U/S.153A BECAUSE INCOME HAS TO BE DETERMINED UNDER THESE PROVISIONS IN ACCORDANCE WITH THE PROVI SIONS OF THE ACT. WE FURTHER FIND THAT IT HAS NOT BEEN CONTENDED THAT RATES OF DEPRECIATION CLAIMED BY THE ASSESSEE ARE NOT CORREC T AND THEREFORE WE FIND NOTHING WRONG WITH THE ORDER OF THE CIT[A] IN THIS RESPECT AND ACCORDINGLY CONFIRM THE SAME. 56. THE LAST ISSUE RAISED THROUGH GROUND NO.2 IS IN RESPECT OF DELETION OF DISALLOWANCE OF SALARY. THIS ISSUE HAS BEEN ADJUDICATED BY THE LD. CIT[A] VIDE FOLLOWING PARA: SALARY PARA 4(F) ` `` ` .66 000 THE PAYMENT OF SALARY TO SRI K.SIVADAS AS PER THE S EIZED LEDGER OF THE HOSPITAL IS ONLY ` `` ` .18 000/- WHEREAS THE PERSONAL IT RETURN FILED BY H IM ON 28/10/2000 THE AMOUNT IS ` `` ` .84 000/-. THE APPELLANT CLAIMED THAT THE DIFFERENCE IS DUE TO MISTAKE IN ACCOUNTING. THE SEIZED BOOK AS WELL AS COPY OF THE RETURN FILED BY K.SIVADAS ON 28 /10/2000 BEFORE THE DATE OF SEARCH DISCLOSING SALARY OF ` `` ` .84 000/- WERE PRODUCED AND VERIFIED. BEING ONLY AN ACCOUNTING MISTAKE THIS EXP ENDITURE IS TO BE SET OFF AGAINST THE ADDITIONAL INCOME AS PER THE SEIZED BOOKS AND HENCE ALLOWED. RELIEF ` `` ` .66 000/-. 29 57. THE LD.CIT DR RELIED ON THE GROUNDS OF APPEAL. 58. ON THE OTHER HAND LD. CHARTERED ACCOUNTANT SHR I WARRIER SUBMITTED THAT SALARY CLAIMED TO SRI K.SIVADAS WAS ` `` ` .18 000/- WHEREAS ACTUALLY HE WAS PAID A SUM OF ` `` ` .84 000/-. IN FACT THIS SUM OF ` `` ` .66 000/- WAS DEBITED TO HIS PERSONAL ACCOUNT WHICH WAS REFLECTED IN THE SEIZED RECORDS. IN THIS REGARD HE REFERRED TO P AGE-137 OF THE PAPER BOOK WHICH IS A COPY OF THE SEIZED RECORD. HE ALSO REFERRED TO INCOME RETURNS FILED BY SRI K.SIVADAS COPY OF WHICH IS PL ACED AT PAGES 138 TO 148 OF THE PAPER BOOK. 59. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT THE RETURN FILED BY SRI K.SIVADAS COPY OF WHICH IS FILED AT PAGES 137 TO 140 OF THE PAPER BOOK CLEARLY SHOWS THAT HE HAS FI LED RETURN FOR SALARY AT RS.84 000/- AND THEREFORE THIS CLAIM HAS BEEN CORRECTLY ALLOWED BY THE CIT(A) AND WE DECLINE TO INTERFERE WITH THE ORD ERS OF THE LD. CIT(A). 60. IN VIEW OF THE ABOVE DISCUSSION IN RESPECT OF I SSUES REGARDING BUILDING REPAIRS DEPRECIATION AND SALARY WE REJEC T MAIN GROUND NO.2 OF THE REVENUES APPEAL. 61. GROUND NO.3: THE ISSUE REGARDING RELIEF OF RS.8 0 664/- TOWARDS COMPLEMENTARY HAS ALREADY BEEN ADJUDICATED BY US WH ILE ADJUDICATION THE ASSESSEES ADDITIONAL GROUND IN RESPECT OF CONF IRMATION OF DISALLOWANCE FOR BALANCE OF THE COMPLEMENTARY AMOUN T VIDE PARA-25 WHEREIN WE HAVE ALLOWED THE CLAIM. FOLLOWING THAT D ECISION WE REJECT THIS GROUND. 30 62. GROUND NO.4: THROUGH THIS GROUND REVENUE HAS CH ALLENGED THE PART RELIEF ON ACCOUNT OF DOCTORS PAYMENTS AND THIS ISSUE HAS BEEN ADJUDICATED BY US WHILE ADJUDICATING THE ASSESSEES APPEAL THROUGH GROUND NOS.2 TO 5 VIDE PARAS-36. SINCE WE HAVE ALLO WED THE RELIEF IN RESPECT OF WHOLE OF DOCTORS PAYMENTS WE REJECT THI S GROUND. 63. IN THE RESULT REVENUES APPEAL IN IT[SS]A NO.1 9/COCH/08 IS DISMISSED. 64. I.T.A.NO.33/COCH/08 [ASSESSEES APPEAL ]: IN THIS APPEAL ALSO AN ADDITIONAL GROUND HAS BEEN RAISED REGARDING LEVY OF INTEREST UNDER SECTIONS 234A 234B & 234C. 65. AFTER HEARING BOTH THE PARTIES WE FIND THAT TH IS ISSUE IS IDENTICAL TO THE ISSUE RAISED BY THE ASSESSEE IN ITS I.T.A.NO .32/COCH/08 FOR THE A.Y 2000-01. THIS ISSUE HAS BEEN ADJUDICATED BY US VIDE PARAS-14 TO 16 WHEREBY THE ISSUE RAISED BY THE ASSESSEE HAS BEE N REJECTED FOLLOWING THAT ORDER. WE THEREFORE REJECT THIS AD DITIONAL GROUND. 66. FURTHER TO THE ABOVE ADDITIONAL GROUND THE ASS ESSEE HAS RAISED VARIOUS GROUNDS BUT AT THE TIME OF HEARING THE LD. CHARTERED ACCOUNTANT SHRI WARRIER SUBMITTED THAT ONLY TWO ISS UES HAVE BEEN PRESSED WHICH ARE AS UNDER: [A] LEGAL OBJECTION REGARDING FRAMING OF ASSESSMENT ; [B] PART DISALLOWANCE OF PAYMENTS MADE TO DOCTORS. 67. AFTER HEARING BOTH THE PARTIES WE FIND THAT TH E FIRST ISSUE HAS BEEN ADJUDICATED BY US IN ASSESSEES APPEAL IN I.T. A.NO.32/COCH/08 FOR THE A.Y 2000-01 VIDE PARA-29. FOLLOWING THAT ORDER WE REJECT THIS GROUND. AS FAR AS SECOND DISPUTE REGARDING PART DIS ALLOWANCE OF DOCTORS PAYMENTS IS CONCERNED SAME HAS BEEN ADJUDI CATED BY US VIDE 31 PARA-36 AND FOLLOWING THAT ORDER WE ALLOW WHOLE OF PAYMENT MADE TO DOCTORS. 68. IN THE RESULT ASSESSEES APPEAL IN I.T.A.NO.33 /C/08 IS PARTLY ALLOWED. 69. IT[SS]A NO.20/COCH/08 [REVENUES APPEAL ]: IN THIS APPEAL REVENUE HAS RAISED THE ADDITIONAL GROUNDS WHICH ARE IN REGARD TO REPAIR EXPENSES. 70. AFTER HEARING BOTH THE PARTIES WE FIND THAT AN IDENTICAL ISSUE HAS BEEN ADJUDICATED BY US WHILE ADJUDICATING THE R EVENUES APPEAL IN IT[SS] A.NO.19/COCH/08 FOR THE A.Y 2000-01 AND FOLL OWING THAT ORDER WE REJECT THE ADDITIONAL GROUND RAISED BY THE REVEN UE. 71. THROUGH GENERAL GROUNDS THE FOLLOWING DISPUTES HAVE BEEN RAISED. 72. AS FAR AS THE ISSUE RELATING TO ALLOWANCE OF PA RT PAYMENTS TO DOCTORS FEE IS CONCERNED THE SAME HAS BEEN ADJUDIC ATED BY US VIDE PARA-36 WHILE ADJUDICATING ASSESSEES APPEAL IN I.T .A.NO.32/COCH/08 FOR THE A.Y 2000-01 AND FOLLOWING THAT ORDER WE HO LD THAT WHOLE OF THE DOCTORS PAYMENTS ARE ALLOWABLE AS EXPENDITURE. THE THIRD ISSUE IS REGARDING BUILDING REPAIRS WHICH HAS BEEN ADJUDICAT ED BY US VIDE PARAS-49-51 AND THIS ISSUE HAS BEEN ADJUDICATED BY US WHILE ADJUDICATING THE REVENUES APPEAL IN IT[SS]A.NO.19/ COCH/08 FOR THE A.Y 2000-01 AND FOLLOWING THAT ORDER WE REJECT THE ADDITIONAL GROUND RAISED BY THE REVENUE. 73. GROUND NO.3 IS AS UNDER: THE CIT[A] IS ALSO ERRED IN DELETING ADDITION OF ` `` ` .17 23 234/- REPRESENTING PEAK CREDIT HOLDING THAT PEAK DEPOSIT IS TO BE CONSIDERED IN ALL THE RELEVANT ASSESSMENT YEARS SEPARATELY AND IN DOING SO THE 32 AVAILABLE CASH BALANCE AS PER THE SEIZED CASH BOOK TOGETHER WITH THE INCOME OFFERED U/S.153A WILL BE SUFFICIENT TO COVER UP THE PEAK DEPOSITS. THE CIT[A] OUGHT TO HAVE SEEN THAT THESE AMOUNTS WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE HAD NO EXPLANATION FOR THE SAME. 74. AFTER HEARING BOTH THE PARTIES WE FIND THAT ON EXAMINATION OF THE BANK ACCOUNT MAINTAINED BY DR. K.K.R.WARRIYAR I N ERNAKULAM URBAN CO-OP. SOCIETY BEING A/C. NO.931 THE FOLLOWIN G DEPOSITS HAD BEEN CREDITED: S.NO. FINANCIAL YEAR AMOUNT ` `` ` . PEAK AMOUNT 1 1998-99 459 500 376 599 2 1999-2000 1 887 500 1 939 840 3 2000-01 2 585 250 2 140 533 4 2001-02 3 260 000 2 173 771 5 2002-03 1 471 000 TOTAL 9 663 250 IT WAS EXPLAINED THAT THIS ACCOUNT WAS MAINTAINED O N BEHALF OF THE ASSESSEE I.E. LAKSHMI HOSPITAL. AO NOTICED THAT THE SE AMOUNTS WERE NOT RECORDED IN THE SEIZED BOOKS OF ACCOUNTS. HE OB SERVED THAT ASSESSEES AUTHORIZED REPRESENTATIVE HAD SUGGESTED THAT ONLY PEAK DEPOSITS OF THE BANK IN EXCESS OF THE CASH AVAILABL E WITH THE FIRM MAY BE ASSESSED IN THE HANDS OF DR. K.K.R.WARRIYAR. AO NOTED THAT ON 4-12- 2000 PEAK DEPOSIT WAS OF RS.17 23 234/- IN EXCESS OF CASH BALANCE AVAILABLE WITH THE FIRM AND ACCORDINGLY MADE AN ADD ITION OF THIS AMOUNT. 75. BEFORE THE CIT(A) IT WAS SUBMITTED THAT DR. K.K .R.WARRIYAR IS THE MANAGING PARTNER OF THE FIRM AND ALL THE FUNDS DEPOSITED IN THE BANK ACCOUNT WERE OUT OF THE WITHDRAWALS FROM THE F IRM AND IN TURN WERE BEING UTILIZED FOR THE HOSPITAL PURPOSES. THIS ACCOUNT WAS NOT INCORPORATED IN THE ORIGINAL BOOKS OF ACCOUNTS. IT WAS SUBMITTED THAT 33 SINCE DR. K.K.RWARRIYAR WAS MAINTAINING THIS ACCOUN T RIGHT FROM THE BEGINNING OF BLOCK PERIOD THEREFORE PEAK AMOUNTS SHOULD BE CONSIDERED SEPARATELY FOR EACH OF THE ASSESSMENT YE ARS. THE DETAILS OF PEAK FOR EACH YEAR WERE GIVEN. IT WAS FURTHER EXPLA INED THAT PEAK DEPOSIT OF RS.19 39 840/- WAS COVERED BY THE SOURC ES AVAILABLE. MOREOVER A SUM OF RS.6 25 610/- WAS ALREADY DECLAR ED AS ADDITIONAL INCOME AND WHATEVER DEFICIT IS THERE WOULD BE COVER ED BY THAT AMOUNT. THE LD. CIT(A) AFTER REGARDING THE DETAILS OF PEAK DEPOSITS AS WELL AS CASH AVAILABLE IN EACH OF THAT YEAR DECIDED THE ISS UE AS UNDER: THE DETAILS SUBMITTED BY THE APPELLANT REGARDING T HE BALANCE OF CASH AVAILABLE AS PER THE SEIZED CASH BOOK AND THE BALAN CE OF DEPOSIT IN THE BANK ACCOUNT FOR EACH OF THE ABOVE ASST. YEARS ARE VERIFIED AND FOUND TO BE CORRECT. THE CONTENTION OF THE APPELLAN T THAT THE PEAK DEPOSIT AMOUNT IS TO BE CONSIDERED IN ALL THE ASST. YEARS SEPARATELY IS ACCEPTED. THE ADDITIONAL INCOME OFFERED BY THE APPELLANT IN T HE RETURNS U/S.153A FOR THE ASST. YEARS IN THE BLOCK PERIOD ARE NOT CON SIDERED BY THE ASSESSING OFFICER AND HENCE NO CREDIT IS GIVEN FOR THE INCOME OFFERED. THIS IS NOT JUSTIFIED. CONSIDERING THE AVAILABLE CA SH BALANCE AS PER THE SEIZED CASH BOOK TOGETHER WITH THE INCOME OFFERED A S PER SECTION 153A RETURNS IS COVERING THE PEAK DEPOSITS FOR THIS ASST. YEAR AND HENCE THE ASSESSMENT OF ` `` ` .17 23 234/- AS UNDISCLOSED INCOME IS NOT JUSTIFIED AND HEREBY CANCELLED. RELIEF ` `` ` .17 23 234/-. 76. BEFORE US LD.CIT DR ARGUED THAT PEAK HAS TO BE WORKED ON A PARTICULAR DATE AND IT CANNOT BE FOUND DURING A PAR TICULAR YEAR. IN ANY CASE CIT(A) HAS NO POWER TO DECIDE THE ISSUES IN O THER YEARS WHILE DECIDING THIS APPEAL AND THEREFORE THIS DECISION IS WRONG. 77. ON THE OTHER HAND LD. CHARTERED ACCOUNTANT SHR I WARRIER REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND A GAIN GAVE US DETAILS OF PEAK DEPOSITS IN EACH OF THE YEAR AS WEL L AS THE SOURCES AVAILABLE. HE POINTED OUT THAT BASICALLY THE RECEIP TS WHICH WERE NOT BEING RECORDED IN THE BOOKS OF ACCOUNTS ON THE BASI S OF WHICH INCOME 34 TAX RETURNS WERE BEING FILED WERE MAINLY UTILIZED FOR THE PURPOSE OF HOSPITAL EXPENSES THROUGH THE BANK ACCOUNT MAINTAIN ED IN THE NAME OF MANAGING PARTNER DR. K.K.R WARRIYAR. SINCE THE ACCO UNT IS BEING MAINTAINED RIGHT FROM THE BEGINNING OF SEARCH PERIO D THE PEAK HAS TO BE WORKED OUT ON THE BASIS OF EVERY YEAR AND THEN S AME HAS TO BE SET OFF AGAINST THE SOURCE AVAILABLE IN THE SEIZED MATE RIAL. SOME ADDITIONAL INCOME HAS ALSO BEEN OFFERED AND THEREFORE THERE WAS NO JUSTIFICATION FOR ADDING SEPARATE PEAK ON THE BASIS OF PEAK DEPOS ITS WHEN TOTAL COLLECTION NOT RECORDED IN THE BOOKS FOUND IN THE S EIZED MATERIAL IS BEING ASSESSED AS SUCH. HE ALSO SUBMITTED THAT NO A DDITION WAS MADE IN THE A.Y 2000-01 BECAUSE AO WAS SATISFIED WITH TH E EXPLANATION OF THE ASSESSEE AND THEREFORE NO ADDITION SHOULD HAV E BEEN MADE IN THIS ASSESSMENT YEAR ALSO. HE ALSO SUBMITTED THAT HE FAI LED TO UNDERSTAND THE CONTENTION OF THE LD.CIT DR THAT PEAK DEPOSIT H AS TO BE ON A PARTICULAR DATE AND NOT DURING THE YEAR. HE SUBMITT ED THAT IT IS ONE AND THE SAME THING BECAUSE THE MAXIMUM BALANCE OUTSTAND ING ON ANY OF THE DATE DURING THE YEAR IS NOTHING BUT PEAK DEPOSI T. HE ALSO POINTED OUT THAT CIT(A) WAS DECIDING THE APPEALS FOR ALL TH E YEARS AND THEREFORE DEFINITELY HE COULD HAVE TAKEN THE OVER ALL VIEW AS ALL THE ASSESSMENT ORDERS WERE BEFORE HIM. 78. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. CHARTERED ACCOU NTANT SHRI WARRIER. FIRSTLY WHEN ASSESSMENTS HAVE BEEN COMPLETED ON TH E BASIS OF THE SEARCH FOR FOUR YEARS AND APPEALS HAVE BEEN FILED I N ALL THE YEARS NATURALLY LD. CIT(A) WAS SEIZED OF THE MATTER FOR ALL THE FOUR YEARS 35 WHICH WERE FOR HIS CONSIDERATION AND HE COULD HAVE LOOKED INTO VARIOUS ORDERS OF THE AO WHILE DECIDING THE ISSUE. WE ALSO FIND THAT LD. CHARTERED ACCOUNTANT SHRI WARRIER IS CORRECT BY POI NTING OUT THAT PEAK DEPOSIT MEANS MAXIMUM BALANCE OUTSTANDING ON A PART ICULAR DATE DURING THE YEAR. THE DETAILS OF PEAK DEPOSITS IN EA CH OF THE YEAR ARE AS UNDER: [A] DURING A.Y 1999-2000 [WHICH IS NOT BEFORE US BU T BANK ACCOUNT WAS BEING MAINTAINED] PEAK DEPOSIT WAS RS.3 76 799/ - ON 30-3-1999. ON THAT DATE CASH AVAILABLE AS PER THE SEIZED RECPR DS WAS RS.3 95 994/- AND THEREFORE NO ADDITION WAS CALLE D FOR SINCE THE DEPOSITS STAND EXPLAINED IN TERMS OF SOURCES AVAILA BLE IN THE CASH BOOK. [B] IN A.Y 2000-01 PEAK DEPOSIT OF RS.19 39 840/- WAS THERE. NOW THIS HAS TO BE WORKED OUT AS UNDER: PEAK DEPOSIT RS.19 39 840 LESS: PEAK DEPOSIT FOR A.Y 1999-2000 RS. 3 76 599 BALANCE .. .. RS.15 63 241 CASH AVAILABLE ON THE DATE OF PEAK DEPOSIT I.E. 13.66 511 29-1-2000 BALANCE ` `` ` . 1 96 730 SINCE ASSESSEE HAD ALREADY DECLARED AN ADDITIONAL I NCOME OF RS.5 51 590/- NO FURTHER ADDITION IS REQUIRED TO BE MADE. THESE FIGURES HAVE ALSO BEEN EXTRACTED BY THE LD. CIT(A) ON PAGE 16 OF HIS ORDER AND THE LD.CIT DR HAS NOT DISPUTED THESE FIGURES BEFORE US. THE LOGIC IS SIMPLE BECAUSE WHATEVER DEPOSIT WAS THERE IN THE EA RLIER YEAR THAT CANNOT BE ADDED BACK AGAIN BECAUSE FURTHER DEPOSITS AND WITHDRAWALS WOULD START FROM THOSE DEPOSITS. SINCE THE REVENUE HAS NEVER DISPUTED THAT THIS ACCOUNT IS MAINTAINED FOR THE PURPOSE OF ASSESSEE FIRM OUT OF 36 UNDISCLOSED RECEIPTS NATURALLY CREDIT ALSO HAS TO BE GIVEN FOR THE CASH AVAILABLE IN THE SEIZED RECORDS. THEREFORE WE FIND NOTHING WRONG IN THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 79. GROUND NO.4: THROUGH THIS GROUND REVENUE HAS RA ISED THE ISSUE REGARDING BUILDING REPAIRS WHICH HAS BEEN ADJUDICAT ED BY US VIDE PARAS 49-51 OF THIS ORDER WHILE ADJUDICATING REVENUES AP PEAL IN IT[SS]A NO.19/COCH/08 FOR A.Y 2000-01. FOLLOWING THAT ORDER WE HOLD THAT LD. CIT[A] HAS RIGHTLY DISALLOWED THE SAME. 80. GROUND NO.5 : THROUGH THIS GROUND REVENUE HAS RAISED THE ISSUE REGARDING ALLOWANCE OF DEPRECIATION. THIS ISSUE HAS ALSO BEEN ADJUDICATED BY US VIDE PARA-55 OF THIS ORDER WHILE ADJUDICATING THE REVENUES APPEAL VIDE IT[SS]A NO.19/COCH/08 FOR A.Y 2000-01. FOLLOWING THAT ORDER WE REJECT THE SAME. 81. IN THE RESULT REVENUES APPEAL IN IT[SS]A NO.20 /COCH/08 FOR A.Y 2001-02 IS DISMISSED. 82. I.T.A.NO.34/COCH/08 [ ASSESSEES APPEAL ]: IN THIS APPEAL ALSO AN ADDITIONAL GROUND HAS BEEN RAISED REGARDING LEVY OF INTEREST UNDER SECTIONS 234A 234B & 234C. 83. AFTER HEARING BOTH THE PARTIES WE FIND THAT TH IS ISSUE IS IDENTICAL TO THE ISSUE RAISED BY THE ASSESSEE IN ITS I.T.A.NO .32/COCH/08 FOR THE A.Y 2000-01. THIS ISSUE HAS BEEN ADJUDICATED BY US VIDE PARAS 14-16 WHEREBY THE ISSUE RAISED BY THE ASSESSEE HAS BEEN R EJECTED FOLLOWING THAT ORDER. WE THEREFORE REJECT THIS ADDITIONAL G ROUND. 84. THE FIRST GROUND RELATES TO THE LEGAL OBJECTION AND AFTER HEARING BOTH THE PARTIES WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY US IN 37 ASSESSEES APPEAL IN I.T.A.NO.32/COCH/08 FOR THE A. Y 2000-01 VIDE PARA-29. FOLLOWING THAT ORDER WE REJECT THIS GROUN D. 85. AS REGARDS GROUND NOS. 2 TO 5 ARE CONCERNED TH E SAME HAVE BEEN ADJUDICATED BY US VIDE PARA-36 WHILE ADJUDICAT ING ASSESSEES APPEAL IN I.T.A.NO.32/COCH/08 FOR THE A.Y 2000-01 A ND FOLLOWING THAT ORDER WE HOLD THAT WHOLE OF THE DOCTORS PAYMENTS A RE ALLOWABLE AS EXPENDITURE. 86. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLO WED. 87. I.T.[SS]A NO.21/COCH/08 [REVENUES APPEAL ]: IN THIS APPEAL REVENUE HAS RAISED THE ADDITIONAL GROUNDS WH ICH ARE IN REGARD TO REPAIR EXPENSES. 88. AFTER HEARING BOTH THE PARTIES WE FIND THAT AN IDENTICAL ISSUE HAS BEEN ADJUDICATED BY US WHILE ADJUDICATING THE R EVENUES APPEAL IN IT[SS] A.NO.19/COCH/08 FOR THE A.Y 2000-01 AND FOLL OWING THAT ORDER WE REJECT THE ADDITIONAL GROUND RAISED BY THE REVEN UE. 89. THE OTHER GROUND NO.2 IS GENERAL IN NATURE AND DOES NOT REQUIRE SEPARATE ADJUDICATION. 90. GROUND NO.3 READS AS UNDER: THE CIT[A] HAS FAILED TO NOTE THAT THE COLLECTION F ROM OP SECTION OF ` `` ` .78 13 395/- TAKEN BY THE ASSESSING OFFICER IS AS PER THE SEIZED RECORDS AND AS SUCH CIT[A]S ACTION IN ALLOWING ` `` ` .6 67 005/- FROM THE TOTAL COLLECTION IS NOT CORRECT. 91. AFTER HEARING BOTH THE PARTIES WE FIND THAT WH ILE WORKING OUT THE GROSS COLLECTION THE AO CONSIDERED THE RECEIPTS FROM OP SECTION AT ` `` ` .78 13 395/- WHEREAS ACCORDING TO THE ASSESSEE RE CEIPTS FROM OP SECTION AS PER THE SEIZED RECORDS WERE ` `` ` .1 71 46 394/-. 38 92. ON APPEAL THIS POSITION WAS EXPLAINED TO THE C IT[A] AND AFTER CONSIDERING THE SAME THE LD. CIT[A] ALLOWED THE REL IEF ON ACCOUNT OF DIFFERENCE IN THE AMOUNT OF O.P. COLLECTION OF ` `` ` .6 67 005/-. 93. BEFORE US LD.CIT DR REFERRED TO PAGE 15 OF THE PAPER BOOK WHEREIN RECEIPTS FROM OP SECTION ARE SHOWN AT ` `` ` .78 13 397/-. HE ARGUED THAT IT IS NOT CLEAR ON WHAT BASIS THE CIT[A ] HAD VERIFIED THE FIGURE AND ALLOWED THE RELIEF. 94. ON THE OTHER HAND LD. CHARTERED ACCOUNTANT SHR I WARRIER REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES AND SUBMITTED THAT AS PER THE SEIZED RECORDS RECEIPT IS ONLY OF ` `` ` .71 46 390/-. 95. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT THE LD. CIT[A] HAD ADJUDICATED THIS ISSUE VIDE PARA 14(B) WHICH IS AS UNDER: 14(B). DIFFERENCE IN COLLECTION FROM THE O P SECTIO N AS PER PARA-3 OF THE ASSESSMENT ORDER [PARA 6 OF THIS ORDER] AS PER PARA-3 OF THE ASSESSMENT ORDER THE TOTAL COL LECTION FROM THE O.P.IS TAKEN AT ` `` ` .78 13 395/-. THE APPELLANTS SUBMITTED THAT THE SEI ZED RECORDS THE TOTAL COLLECTION IS ONLY ` `` ` .71 46 390/- AS PER THE DETAILS GIVEN IN PARA-6 OF THIS ORDER. THE COPY OF THE SEIZ ED RECORDS FILED BY THE APPELLANT IS VERIFIED. THE APPELLANTS CONTENTIO N IS FOUND TO BE CORRECT AND THE TOTAL COLLECTION FROM O P IS CORREC TLY TO BE TAKEN AT ` `` ` .71 46 390/- IN THE PLACE OF ` `` ` .78 13 395/- IN PARA-3 OF THE ASST. ORDER. THE APPELLANT IS ENTITLED TO GET THE RELIEF OF DIFF ERENT AMOUNT ` `` ` .6 67 005/-. RELIEF ` `` ` .6 67 005/-. THOUGH THE LD. CIT[A] HAS STATED THAT HE HAS VERIFI ED THE RECORDS BUT FROM PAGE 15 OF THE PAPER BOOK IT IS SEEN THAT RECE IPTS SEEM TO BE OF ` `` ` .78 13 395/-. THE LD. CHARTERED ACCOUNTANT SHRI WAR RIER HAD TRIED TO EXPLAIN THAT THERE WAS SOME MISTAKE REGARDING CALCU LATION BUT HE COULD 39 NOT EXPLAIN THE CALCULATION. THEREFORE IN THE INTE RESTS OF JUSTICE WE SET ASIDE THE ORDER OF THE LD. CIT[A] AND REMIT THIS IS SUE TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE RECEIPTS FROM OP SECTION FROM THE SEIZED RECORDS AND THEN DECIDE THE ISSUE ACCORDINGL Y. 96. AS FAR AS THE GROUND NO.4 RELATING TO THE DISAL LOWANCE OF DOCTORS FEE IS CONCERNED THE SAME HAS BEEN ADJUDICATED BY US VIDE PARA-36 WHILE ADJUDICATING ASSESSEES APPEAL IN I.T.A.NO.32 /COCH/08 FOR THE A.Y 2000-01 AND FOLLOWING THAT ORDER WE HOLD THAT WHOL E OF THE DOCTORS PAYMENTS ARE ALLOWABLE AS EXPENDITURE. 97. GROUND NO.5 READS AS UNDER: THE CIT[A] HAS ALSO ERRED IN DELETING ADDITION OF ` `` ` .5 96 799/- REPRESENTING PEAK CREDIT HOLDING THAT PEAK DEPOSIT IS TO BE CONSIDERED IN ALL THE RELEVANT ASSESSMENT YEARS SEPARATELY AND IN DOING SO THE AVAILABLE CASH BALANCE AS PER THE SEIZED CASH BOOK TOGETHER WITH THE INCOME OFFERED U/S.153A WILL BE SUFFICIENT TO COVER UP THE PEAK DEPOSITS. THE CIT[A] OUGHT TO HAVE SEEN THAT THESE AMOUNTS WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE HAD NO EXPLANATION FOR THE SAME. 98. AFTER HEARING BOTH THE PARTIES WE FIND THAT IN THIS YEAR ALSO AN ADDITION OF ` `` ` .5 96 799/- HAS BEEN MADE ON THE BASIS OF PEAK DEPO SITS. THIS ADDITION HAS BEEN DELETED BY THE LD. CIT[A] VI DE PARA (G) WHICH READS AS UNDER: (G) ASSESSMENT OF PEAK CREDIT IN CONNECTION WITH THE ASSESSMENT OF THE PEAK AMOUN T OF DEPOSIT THE APPELLANT SUBMITTED AS UNDER:- THE FIRM FILED A RETURN U/S.153A OFFERING AN ADDITI ONAL INCOME ` `` ` .8 46 150/-. BUT THIS RETURN OF INCOME IS NOT CONSI DERED IN THE ASSESSMENT WHEREAS THE ASSESSMENT IS COMPLETED AS P ER PARA-11 AFTER ADOPTING THE INCOME AS PER ORIGINAL RETURN ` `` ` .8 60 260/-. THE ADDITIONAL INCOME OFFERED BY THE FIRM IS COVERING T HE PEAK DEPOSIT AMOUNT IN THE BANK ACCOUNT ` `` ` .596799/-. IN THESE CIRCUMSTANCES THE APPELLANT SUBMITTED THAT NO FURTHER ADDITION SHOULD BE MADE TOWARDS THE PEAK DEPOSIT AMOUNT. 40 IN VIEW OF THE ADDITIONAL INCOME AS PER RETURN U/S. 153A COVERING THE PEAK DEPOSIT AMOUNT IN THE BANK ACCOUNT THE ADDITIO N OF THIS PEAK AMOUNT IS NOT JUSTIFIED AND HEREBY CANCELLED. RELIEF ` `` ` .5 96 799/-. 99. BEFORE US LD.CIT DR REITERATED THE ARGUMENTS M ADE IN A.Y 2001-02 WHEREAS THE LD. CHARTERED ACCOUNTANT SHRI W ARRIER REITERATED THE SUBMISSIONS AND INVITED OUR ATTENTION TO THE FI GURES GIVEN REGARDING FIXED DEPOSITS IN SYNOPSIS AT PAGE-5. 100. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREF ULLY AND FIND THAT DETAILS REGARDING PEAK DEPOSITS ARE AS UNDER: PEAK DEPOSITS AS ON 27-11-2001 ` `` ` .6 33 264 LESS: OPENING BALANCE ` `` ` .4 35 483 BALANCE .. .. ` `` ` .1 97 781 OUT OF THIS CASH AVAILABLE WAS .. .. ` `` ` . 36 462 FINAL BALANCE.. .. ` `` ` .1 61 313 WHEN WE AGREE WITH THE OBSERVATIONS OF THE LD. CIT[ A] THAT ASSESSEE HAS ALREADY OFFERED AN ADDITIONAL INCOME OF ` `` ` .8 56 150/- THEREFORE NO SEPARATE ADDITION COULD BE MAINTAINED. ACCORDINGLY WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT[A] AND CONFIRM HIS ORDER. 101. GROUND NO.6 IS WITH REGARD TO REGARD TO BUILDI NG REPAIR EXPENSES. 102. AFTER HEARING BOTH THE PARTIES WE FIND THAT A N IDENTICAL ISSUE HAS BEEN ADJUDICATED BY US WHILE ADJUDICATING THE R EVENUES APPEAL IN IT[SS] A.NO.19/COCH/08 FOR THE A.Y 2000-01 AND FOLL OWING THAT ORDER WE REJECT THE GROUND RAISED BY THE REVENUE. 103. IN THE RESULT REVENUES APPEAL IN IT[SS]A NO. 21/COCH/08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 41 104. I.T.A.NO.441/COCH/08- A.Y 2003-04 [ASSESSEES APPEA L ]: IN THIS APPEAL ALSO AN ADDITIONAL GROUND HAS BEEN R AISED REGARDING LEVY OF INTEREST UNDER SECTIONS 234A 234B & 234C. 105. AFTER HEARING BOTH THE PARTIES WE FIND THAT T HIS ISSUE IS IDENTICAL TO THE ISSUE RAISED BY THE ASSESSEE IN ITS I.T.A.NO .32/COCH/08 FOR THE A.Y 2000-01. THIS ISSUE HAS BEEN ADJUDICATED BY US VIDE PARAS-14-16 WHEREBY THE ISSUE RAISED BY THE ASSESSEE HAS BEEN R EJECTED FOLLOWING THAT ORDER. WE THEREFORE REJECT THIS ADDITIONAL G ROUND. 106. FURTHER TO THE ABOVE ADDITIONAL GROUND THE AS SESSEE HAS RAISED VARIOUS GROUNDS BUT AT THE TIME OF HEARING THE LD. CHARTERED ACCOUNTANT SHRI WARRIER SUBMITTED THAT ONLY TWO ISS UES HAVE BEEN PRESSED WHICH ARE AS UNDER: [A] LEGAL OBJECTION REGARDING FRAMING OF ASSESSMENT ; [B] PART DISALLOWANCE OF PAYMENTS MADE TO DOCTORS. 107. AFTER HEARING BOTH THE PARTIES WE FIND THAT T HE FIRST ISSUE HAS BEEN ADJUDICATED BY US IN ASSESSEES APPEAL IN I.T. A.NO.32/COCH/08 FOR THE A.Y 2000-01 VIDE PARA-29. FOLLOWING THAT ORDER WE REJECT THIS GROUND. AS FAR AS THE SECOND ISSUE RELATING TO THE DISALLOWANCE OF DOCTORS FEE IS CONCERNED THE SAME HAS BEEN ADJUDIC ATED BY US VIDE PARA-36 WHILE ADJUDICATING ASSESSEES APPEAL IN I.T .A.NO.32/COCH/08 FOR THE A.Y 2000-01 AND FOLLOWING THAT ORDER WE HO LD THAT WHOLE OF THE DOCTORS PAYMENTS ARE ALLOWABLE AS EXPENDITURE. 108. IN THE RESULT ASSESSEES APPEAL IN I.T.A.NO.4 41/COCH/08 FOR A.Y 2003-04 IS PARTLY ALLOWED. 109. I.T.A.NO.620/COCH/08 - A.Y 2003-04 [REVENUES APPEA L ]: GROUND NO.2 RELATES TO THE DISALLOWANCE OF DOCTORS FEE. AFTER HEARING 42 BOTH THE PARTIES WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY US VIDE PARA-36 WHILE ADJUDICATING ASSESSEES APPEAL I N I.T.A.NO.32/COCH/08 FOR THE A.Y 2000-01 AND FOLLOWI NG THAT ORDER WE HOLD THAT WHOLE OF THE DOCTORS PAYMENTS ARE ALLOWAB LE AS EXPENDITURE. 110. GROUND NOS.3 & 4 RELATES TO BUILDING REPAIRS. THIS ISSUE HAS BEEN ADJUDICATED BY US VIDE PARA-49-51 AND THIS ISS UE HAS BEEN ADJUDICATED BY US WHILE ADJUDICATING THE ASSESSEES APPEAL IN ITA.NO.32 /COCH/08 FOR THE A.Y 2000-01 AND FOLLOWIN G THAT ORDER WE REJECT THE ADDITIONAL GROUND RAISED BY THE REVENUE. 111. IN THE RESULT REVENUES APPEAL IN I.T.A.NO.62 0/COCH/08 FOR A.Y 2003-04 IS DISMISSED. 112. I.T.A.NO.621/COCH/08- A.Y 2004-05 [REVENUES APPEAL ] : THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: 2. THE LEARNED CIT[APPEALS] ERRED IN DELETING THE A DDITION OF ` `` ` .16 04 459/- REPRESENTING DIFFERENCE IN GROSS FEE C OLLECTION OF THE VARIOUS BRANCHES OF THE HOSPITAL.. THE ASSESSEE FIRM M/S LAKSHMI HOSPITAL VIDE ITS LETTER DATED 22-11-2006 H AD SHOWN THE TOTAL COLLECTION AT ` `` ` .10 87 58 765/- FROM ERNAKULAM TRIPUNITHURA AND ALUVA BRANCHES. BUT THE ASSESSEE H AS OMITTED TO DISCLOSE THE COLLECTION FROM NURSING SCH OOL ERNAKULAM AND LAKSHI HOSPITAL AT PANANGAD BRANCH TO TALLING TO ` `` ` .21 11 774/-. IN THESE FACTS AND CIRCUMSTANCES OF T HE CASE THE LEARNED CIT[APPEAL]S ORDER IS NOT ACCEPTABLE. 3. THE LEARNED CIT[A] ERRED IN FACTS AS WELL AS LAW IN DELETING THE ADDITION OF ` `` ` .13 85 693/- MADE ON ACCOUNT OF DIFFERENCE IN VALUATION OF BHAGAVAT BUILDING BY HOLDING THAT THE CASH FLOW FILED BY THE PARTNERS OF THE APPELLANT FIRM IN RESP ECT OF ASSESSMENT YEAR 2003-04 AMOUNTING TO ` `` ` .8 04 000/- WAS INVESTED FOR THE BUILDING CONSTRUCTION AND AFTER CO NSIDERING THE ADDITIONAL INCOME OF ` `` ` .14 72 640/- IN THE ASSESSMENT YEAR 2003-04 THE DIFFERENCE WAS ONLY ` `` ` .40 256/- WHEN NO SUCH CLAIM OR EVIDENCE WAS MADE BEFORE THE ASSESSING OFF ICER DURING THE ASSESSMENT. 3.1 THE LEARNED CIT[APPEAL]S DECISION IS IN CONTRA VENTION OF RULE 46A(1) AND DESERVES TO BE SET ASIDE AS NONE OF THE PERQUISITE CONDITIONS APPLY TO THE CASE OF THE ASSESSEE FOR AD MITTING ADDITIONAL EVIDENCE. 4. THE LEARNED CIT[APPEAL] ALSO CONTRAVENED RULE 46 A(2) IN FAILING TO RECORD HIS REASONS FOR ADMITTING THE ADD ITIONAL EVIDENCE. 43 4.1 WITHOUT PREJUDICE TO THE ABOVE ADDITIONAL EVIDE NCE COULD NOT HAVE BEEN ADMITTED WITHOUT ACCORDING REASONABLE OPP ORTUNITY TO THE ASSESSING OFFICER FOR EXAMINING OR REBUTTIN G THE SAME AS PER RULE 46A(3). 113. GROUND NO.2: AFTER HEARING BOTH THE PARTIES W E FIND THAT DURING ASSESSMENT PROCEEDINGS WHILE WORKING OUT GROSS RECE IPTS IT WAS NOTICED BY THE AO THAT ASSESSEE HAD DISCLOSED GROSS COLLECTION OF ` `` ` .10 87 58 765/-. IT WAS FURTHER NOTICED THAT THESE EXPENSES DO NOT INCLUDE THE RECEIPTS OF SCHOOL OF NURSING AT ERNAKU LAM AND COLLECTION OF PANANAGAD BRANCH. IN VIEW OF THIS THE RECEIPTS HAV E BEEN WORKED OUT BY THE AO AS UNDER: COLLECTION AS PER PROPOSAL ` `` ` .10 96 66 157 LESS: COLLECTION TOWARDS DENTAL PROCEDURE ` `` ` . 14 20 707 [SEPARATE UNIT] ` `` ` .10 82 45 450 ADD: NURSING SCHOOL COLLECTION AS PER ASSESSEES ACCOUNTS ` `` ` .18 07 774 PANANGAD BRANCH COLLECTION AS PER ASSESSEES ACCOUNT ` `` ` . 3 10 000 ` `` ` . 21.17 774 ` `` ` .11.03 63 224 LESS: COLLECTION AS PER ASSESSEES LETTER DT.22.11 .06 ` `` ` .10 87 58 765 DIFFERENCE ` `` ` . 16 04 459 ============ IN THIS BACKGROUND AO MADE THE ADDITION OF ` `` ` .16 04 459/-. 114. BEFORE THE CIT[A] IT WAS ARGUED THAT THE SCHOO L OF NURSING IN PANANGAD BRANCH WAS A SEPARATE UNIT AND SEPARATE PR OFIT & LOSS ACCOUNT HAS BEEN PREPARED FOR THIS UNIT. IN THE CAS E OF LAKSHMI SCHOOL OF NURSING THERE WAS A LOSS OF ` `` ` .2 98 323/- WHEREAS IN THE CASE OF PANANGAD BRANCH THERE WAS A NET PROFIT OF ` `` ` .3 23 416/-. THE COPIES OF SEPARATE PROFIT & LOSS ACCOUNT WERE FILED BEFORE TH E CIT[A] AND IT WAS POINTED OUT THAT THE SAME WERE ULTIMATELY CONSIDERE D IN THE ORAL STATEMENT AND THEREFORE THE ADDITION WAS NOT JUST IFIED. THE LD. CIT[A] 44 AFTER CONSIDERING THESE SUBMISSIONS DELETED THE ADD ITION BY OBSERVING THAT NET PROFIT AND/OR LOSS FROM THESE SEPARATE UNI TS HAS ALREADY BEEN ENTERED IN THE CONSOLIDATED PROFIT & LOSS ACCOUNT. 115. BEFORE US LD.CIT DR SUBMITTED THAT ADDITION H AS BEEN MADE CLEARLY ON THE BASIS OF SEIZED DOCUMENT AND THEREF ORE NO RELIEF WAS REQUIRED TO BE GIVEN. 116. ON THE OTHER HAND LD. CHARTERED ACCOUNTANT SH RI WARRIER REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES. 117. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFU LLY WE FIND THAT THE LD. CIT[A] HAS DECIDED THIS ISSUE VIDE FOLLOWING PA RA AT PAGES 3 & 4 AS UNDER: THE SEPARATE PROFIT & LOSS ACCOUNT OF THE LAKSHMI S CHOOL OF NURSING AND LAKSHMI HOSPTIAL PANANGAD BRANCH WERE VERIFIED WITH THE CONSOLIDATED PROFIT & LOSS ACCOUNT OF THE FIRM LAKS HMI HOSPITAL FILED ALONG WITH THE RETURN OF INCOME. IT IS FOUND THAT T HE SUBMISSION OF THE APPELLANT IS CORRECT NON DEDUCTION OF TAX AT SOURCE AND THERE IS NO OMISSION OF GROSS RECEIPTS IN RESPECT OF THE TWO UN ITS LAKSHMI SCHOOL OF NURSING AND LAKSHMI HOSPITAL PANANGAD BRANCH. THE NET PROFIT OF THE PANANGAD BRANCH AND THE NET LOSS OF THE LAKSHMI SCHOOL OF NURSING ARE ENTERED IN THE CONSOLIDATED PROFIT & LO SS ACCOUNT OF THE APPELLANT. AS A RESULT THE ADDITION OF ` `` ` .1604459/- TO THE INCOME RETURNED IS NOT JUSTIFIED AND HEREBY CANCELLED. RELIEF GRANTED ` `` ` .1604459/-. WE ARE OF THE VIEW THAT THE LD. CIT[A] HAS ALREADY VERIFIED THAT RECEIPTS FROM THESE TWO UNITS HAVE ALREADY BEEN CONSOLIDATED IN THE OVER ALL PROFIT & LOSS ACCOUNT AND THERE IS NO NEED TO MAKE THE SEPARATE ADDITION AND WE AGREE WITH THE CONCLUSIONS ARRIVED BY THE LD. CIT[A]. IT WAS NOT DISPUTED BEFORE US THAT THE RECEIPTS HAVE N OT BEEN CONSOLIDATED. 118. GROUND NOS.3 & 4 RELATES TO THE ISSUE REGARDIN G DELETION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE BUILDING. 45 119. AFTER HEARING BOTH THE PARTIES WE FIND THAT TH E AO HAS REFERRED THE MATTER REGARDING THE COST OF CONSTRUCTION TO TH E DVO AND THROUGH THAT REPORT DVO HAD DETERMINED THE COST OF CONSTRUC TION AS UNDER: BHAGVAT BUILDING ` `` ` .1 59 21 000 COST OF CONSTRUCTION FOR ADDITIONAL FLOOR ` `` ` .1 41 72 000 IN THE EXISTING BUILDING AGAINST THE ABOVE COST THE ASSESSEE HAD DECLARED TH E COST OF BHAGAVAT BUILDING AT ` `` ` .1 45 35 307/- AND EXISTING BUILDING AT ` `` ` .1 47 13 000/-. THE DIFFERENCE IN RESPECT OF BHAGVAT BUILDING AMOUN TED TO ` `` ` .13 85 693/- [I.E. 1 59 21 000 MINUS 1 45 35 307]. 120. BEFORE THE CIT[A] IT WAS MAINLY CONTENDED THAT IF COST OF CONSTRUCTION OF BOTH THE BUILDING WAS WORKED TOGETH ER THEN THE DIFFERENCE WILL BE ONLY OF ` `` ` .8 44 256/- WHICH HAS BEEN WORKED OUT AS UNDER: AS PER THE REPORT OF THE VALUATION OFFICER THE COST OF CONSTRUCTION OF THE TWO BUILDINGS ARE BHAGAVATH BUILDING ` `` ` .1 59 21 000 ADDITIONAL CONSTRUCTION ` `` ` .1 41 72 000 TOTAL ` `` ` .3 00 93 000 AS PER THE BOOKS OF ACCOUNTS OF THE APPELLANT THE I NVESTMENTS IN THE CONSTRUCTION OF THE BUILDINGS ARE: BHAGAVATH BUILDING ` `` ` .1 45 35 307 ADDITIONAL CONSTRUCTION ` `` ` .1 47 13 437 TOTAL ` `` ` .2 92 48 744 ------------------ DIFFERENCE ` `` ` . 8 44 256 ========== IT WAS SUBMITTED THAT SINCE CONSTRUCTION WAS GOING ON SIMULTANEOUSLY AND THERE COULD BE INSTANCES WHERE MATERIAL PURCHAS ED OR OTHER EXPENDITURES INCURRED IN RESPECT OF ONE BUILDING CO ULD HAVE BEEN BOOKED UNDER ANOTHER BUILDING. IT WAS ALSO SUBMITTE D THAT IN THE RETURNS FILED IN RESPECT OF PARTNERS IN THE CASH ST ATEMENT IN THE CASE OF 46 SRI K.K.R.WARRIYAR A FURTHER SUM OF ` `` ` .8 04 000/- WAS SHOWN AS INVESTMENT IN THE CONSTRUCTION OF BUILDING WHICH WI LL REDUCE THE DIFFERENCE TO ONLY ` `` ` .40 256/- AND THE SAME WAS NEGLIGIBLE. 121. THE LD. CIT[A] AFTER CONSIDERING THE SUBMISSIO NS DECIDED THE ISSUE AS UNDER: THE CONSTRUCTION OF THE TWO BUILDINGS ARE DONE SIM ULTANEOUSLY AND THE ARGUMENT OF THE APPELLANT THAT THE INVESTMENT I N THE CONSTRUCTION OF THE TWO BUILDINGS SHOULD BE CONSIDERED TOGETHER IS ACCEPTED. AS PER THE STATEMENT OF CASH FLOW FILED BY THE PARTNERS OF THE APPELLANT FIRM IN RESPECT OF THE ASST. YEAR 2003-2004 ` `` ` .804000/- IS INVESTED FOR THE BUILDING CONSTRUCTION. FOR THE ASST. YEAR 2003-2004 THE FIRM M/S LAKSHMI HOSPTIAL HAS OFFERED AN ADDITIONAL INCOME O F ` `` ` .1472460/- AS PER RETURN U/S.153A. THE DIFFERENCE IN THE TOTAL IN VESTMENTS AS PER THE VALUE FIXED BY THE VALUATION OFFICER AND THE TOTAL INVESTMENTS AS PER THE VALUE FIXED BY THE VALUATION OFFICER AND THE TOTAL INVESTMENTS BY THE APPELLANT FIRM AND PARTNERS IS ONLY ` `` ` .40256/- WHICH US ONLY MARGINAL CONSIDERING THE TOTAL INVESTMENT. AS A RESULT THE A DDITION OF ` `` ` .1385693/- ON ACCOUNT OF DIFFERENCE IN VALUATION IS NOT JUSTIFIED AND HEREBY CANCELLED. 122. BEFORE US LD.CIT DR RELIED ON THE GROUNDS OF APPEAL AND SUPPORTED THE ORDER OF THE AO. 123. ON THE OTHER HAND LD. CHARTERED ACCOUNTANT SH RI WARRIER REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES. 124. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE AG REE WITH THE SUBMISSIONS OF LD. CHARTERED ACCOUNTANT SHRI WARRIE R THAT THERE IS A EVERY POSSIBILITY THAT EXPENDITURE ON ACCOUNT OF MA TERIAL OR LABOUR ETC. IN RESPECT OF ONE BUILDING COULD HAVE BEEN BOOKED U NDER DIFFERENT BUILDING. WHEN ASSESSEE HAS CONSTRUCTED TWO BUILDIN GS WE ARE OF THE VIEW THAT A COMBINED PICTURE HAS TO BE SEEN. IF THE COMBINED PICTURE IS EXAMINED THEN THE DIFFERENCE COMES TO ONLY ` `` ` .8 44 256/-. THIS DIFFERENCE ON THE TOTAL COST OF CONSTRUCTION OF ` `` ` .3 CRORES COME TO LESS THAN 3%. THERE ARE VARIOUS DECISIONS OF HIGH COURTS AND THE TRIBUNALS IN WHICH IT HAD BEEN HELD THAT VALUATION IS AFTER A LL A MATTER OF OPINION 47 AND NO TWO EXPERTS CAN AGREE WITH THE SAME VALUATIO N. IT HAS BEEN FURTHER HELD THAT IF THE DIFFERENCE IS LESS THAN 10 % THEN SAME SHOULD BE IGNORED. IN THE CASE BEFORE US THE OVER ALL COST OF CONSTRUCTION SHOWN BY THE ASSESSEE IS LOWER BY ` `` ` .8 44 256/- WHICH WORKS TO LESS THAN 3% AS ESTIMATED BY THE DVO. THE DIFFERENCE BEI NG NEGLIGIBLE AND FURTHER CONSIDERING THE SOURCE EXPLAINED BY THE ASS ESSEE IN TERMS OF PERSONAL CONTRIBUTION OF SRI K.K.R.WARRIYAR WHICH WAS NOT CONTESTED BEFORE US THIS ADDITION HAS BEEN RIGHTLY DELETED B Y THE LD. CIT[A]. ACCORDINGLY WE CONFIRM HIS ORDER. 125. IN THE RESULT REVENUES APPEAL IN I.T.A.NO.62 1/COCH/08 FOR A.Y 2004-05 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07 TH DAY OF SEPTEMBER 2010. SD/- (N.VIJAYAKUMARAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER 07 TH SEPTEMBER 2010. P/-* COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA 4) CIT CITY 5) DR BENCH TRUE COPY BY ORDER DY /ASST.REGISTRAR ITAT KOCHI. 48 SR.NO. PARTICULARS DATE INITIALS 1 DRAFT DICTATED ON P 2 DRAFT PLACED BEFORE AUTHOR P 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO SR.PS/PS 6 ORDER KEPT FOR PRONOUNCEMENT 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER