DR. HITESH A. PATEL,,HIMATNAGAR vs. THE INCOME TAX OFFICER, S.K.WARD-3,, HIMATNAGAR

PER MADHUMITA ROY- JM: The instant appeal is directed against the order dated 15.12.2014 passed by the Commissioner of Income Tax (Appeals)-2, Ahmedabad arising out of the order dated 18.03.2013 passed by the ITO S.K. Ward-3, Himatnagar u/s. 143(3) of the Act, 1961(hereinafter referred to as ‘the Act’) for assessment year 2010-11.

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carried out on 04.09.2009 in the ‘Harsh Hospital’ of the assessee where certain incriminating loose papers and/or documents were found; the statement of the assessee was also recorded. The assessee has given the detailed information regarding the undisclosed income of every year and agreed to pay tax in Financial Year 2009-10 on undisclosed/unaccounted receipt of Rs. 14,15,120/-. The assessee further agreed to pay tax for the Financial Year 2009-10 on unaccounted investment of Rs. 25,99,883/- on building and Rs. 15,00,530/- on furniture. However, by and under a letter dated 07.09.2009 the assessee retracted from the disclosure given by him during the course of survey proceedings conducted on 04.09.2009.

Ground No.1:- Disallowance u/s. 40(a)(3) to the tune of Rs. 99,296:-

3.1. The appellant had purchased certain medicine by cash exceeding Rs. 20,000/- from one M/s. VaibhavSurgical on four different dates amounting to Rs. 99,296/- due to necessity and urgency for treatment of the patients on urgent basis including the treatment under various Government scheme details whereof were duly submitted by the assessee before the authorities below. Such charges were recovered from patients. The same was disallowed by the Ld. AO, as non-genuine transaction, further confirmed by the Ld. CIT(A).

3.2. At the time of hearing the instant appeal the Ld. Advocate appearing for the assessee submitted before us the Coordinate Bench in ITA No. 2526/Ahd/2013 decided the issue in favour of the assessee in assessee’s own case for Assessment Year 2009-10, copy whereof as also been handed over to us. He, therefore, press for same relief.

On the contrary the Ld. DR failed to rebut such contentions made by the Ld. AR.

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3.3. We have heard the parties, perused the relevant materials available on record. We have also carefully considered the order passed by the Hon’ble Coordinate Bench; the relevant portion whereof is as follows:-

“5. I have noted that basic contention of the assessee is that goods like medicines and surgical disposables, that to in very small end use quantities, is inherently an emergency purchase and no shopkeeper is willing to accept the cash for such small purchases. I quite agree with this claim of the assessee and am of the considered view that in today's world. Rs 20,000/- is too small an amount for purchase of things like emergency medicines and surgical disposables by cash. While looking at, and interpreting, the statutory provisions, we cannot be so pedantic in approach so as to be completely divorced from the ground realities and so as to overlook the glaring factual scenario. These realities are staring at us and we can cannot be living in denial just because someone has not stated so in so many words The purchase of these small quantities of surgical disposables and emergency medicines, in cash - even though the billing amounts are marginally more than Rs 20.000 in each instance- are quite understandable and are compulsions of normal practices. In the light of this factual position, and in the light of law laid down by Hon'ble jurisdictional High Court in the case of Anupam Tele Services Vs ITO [(2014) 366 ITR 122 (Guj)] which permits deduction of even cash purchases in excess of Rs 20,000 in deserving cases where the assessee had no other choice in the matter, I am of the considered view that the impugned disallowance indeed deserves to be deleted.”

3.4. Respectfully following the said judgment we allow this ground of appeal in favour of the assessee by deleting the addition of Rs. 99,296/- disallowed u/s. 40(a)(3) of the Act.

In the result, this ground of appeal is allowed.

Ground No. 2:- The second ground of appeal is directed against the addition of Rs. 48,000:-

4.1. On account of unaccounted rent expenses. During the post survey proceeding the statement of one Dr. ManojSuthar being the tenant of the assessee was recorded on oath on 16.02.2009 wherein he has categorically stated that he was paying Rs. 8,000/- per month by cheque and Rs. 3,000 to 4,000 per month in cash for maintenance of the hospitals to the assessee. Such payment of Rs. 48,000/- for a year has been added as unaccounted income of the assessee. Relying upon the order passed by the predecessor for Assessment Year 2008-09 the Ld. CIT(A) confirmed such addition.

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4.2. At the time of hearing of the instant appeal the Ld. AR fairly submitted that this ground of appeal was dismissed by the Coordinate Bench in ITA No. 2470/Ahd/2012 of 09.06.2016. We, therefore, do not find any reason to interfere with the order passed by the authorities below. Hence, this ground of appeal is dismissed.

Ground No. 3 Unaccounted Medical Receipts:-

5.1. During the survey proceeding from inventorized documents it appears actual receipts for Financial Year 2009-10 relevant to Assessment Year 2010-11 was of Rs. 22,75,090/-. The assessee further issued receipts to the tune of Rs. 8,59,070/- the Ld. AO was of the view that the assessee suppressed the receipt of Rs. 14,15,120/- for Assessment Year 2010-11. Being dissatisfied with explanation rendered by the assessee the Ld. AO added Rs. 14,15,120/- as unaccounted receipt of the assessee which was in appeal restricted to Rs. 8,15,130/- by the Ld. CIT(A) being the difference between receipts recorded in documents found during the survey and declared in return.

5.2. At the time of hearing of the instant appeal the Ld. Advocate appearing for the assessee submitted before us that the Coordinate Bench in ITA No. 2526/Ahd/2013 by its order dated 28.04.2017 set aside the issue to the file of the Ld. AO for fresh adjudication of the matter; copy whereof as also been submitted before us.

5.3. Heard the parties, perused the relevant materials available on record, also considered carefully the judgment passed by the Hon’ble Coordinate Bench the relevant portion whereof is as follows:-

“It is by now a settled legal position that the statement recorded during the survey proceedings cannot be used as an evidence, and thus, for the reason of statement alone, the addition cannot be made. The material gathered during the survey, however, can be used against the assessee on merits. On these fundamental principles, there is no dispute. In this view of the matter, and having noted that the addition is confirmed on the basis of statement recorded, I deem it fit and proper to remit the matter to the file of the Assessing Officer, for adjudication de novo, in the light of the above observations, in accordance with the law, after

ITA No. 528/Ahd/2015 A.Y. 2010-11 5 giving yet another opportunity of hearing to the assessee, and in accordance with the law. Ordered, accordingly.”

5.4. Respectfully following the judgment passed by the Coordinate Bench for A.Y. 2009-10 in assessee’s own case we set aside the issue to the file of the Ld. CIT(A) in the light of the observation made in the said judgment reproduced above. Thus, this ground of appeal is allowed for statistical purposes.

Ground No. 4 The Ld. AO has made an addition on account of unaccounted cost of construction:-

6.1 It appears from the record that the document shows during the course of survey reflects expenditure incurred on construction of a hospital was of Rs. 45,24,569/- till the date of survey. But the books of accounts shows such cost at Rs. 19.24 lacs. Hence, addition of the difference was made by the Ld. AO. The case of the assessee is thus that the DVO on the reference made by the Ld. AO estimated such cost of construction less than the value declared by the assessee in its books of accounts. In appeal the addition was restricted to 4,25,534/-. He thus, prayed for deletion of such addition.

6.2. It was submitted by the Ld. Counsel appearing for the assessee that this ground of appeal in ITA No. 2470/Ahd/2012 was disposed of wherein the difference was less than 15%. Copy whereof has been submitted before us.

6.3. Further the Ld. DR relied upon the order passed by the Ld. AO.

6.4. Heard the parties, perused the relevant materials available on record including the order passed by the Coordinate Bench in assessee’s own case in ITA No. 2470/Ahd/2012 for A.Y. 2008-09; relevant portion whereof is a follows:-

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“4. I have heard both the parties and perused the material available on record. Apropos second ground, the impugned addition has been made on the basis of difference in the valuation report the assessee’s declared cost of construction for the year under consideration. The total valuation between the assessee’s cost of construction and valuation report is admittedly less than 15%. A post facto valuation of property is an estimate as compared to assessee’s maintained record. The difference being negligible, in my considered view, the addition in question is uncalled-for; hence it is deleted. Thus, this ground of the assessee is allowed. ”

Respectfully following the said judgment we delete the addition made by the authorities below. Hence, assessee’s appeal is allowed.

Ground No. 5:- This ground is against the addition of Rs. 15,00,530 on account of unaccounted investment in furniture:-

7.1. From the materials available during the survey including inventorized documents it appears that the assessee incurred expenses on furniture to the tune of Rs. 15,00,530/-. The assessee admitted that he had not accounted the said expenditure in his books of accounts.

7.2. The Ld. AO relying upon the disclosure made during the course of survey added the said sum to the total income of the assessee. In appellate proceeding the appellant submitted that the investment in furniture was of Rs. 1,17,809/-. In fact the appellant could not explain except relying on the fact that the statement as has been retracted by him as observed by the Ld. CIT(A) in the order impugned before us. If that be the position then we find it fit and proper to remit to the matter to file of the Assessing Officer for adjudicating of the same Denovo upon giving an opportunity of hearing to the assessee and upon taking into consideration the evidence which the assessee may choose to file at the time of the hearing of the issue. Hence, this ground of appeal is allowed for statistical purposes.

Ground No. 6:- This ground of appeal relates to disallowance depreciation of Rs. 46,528:-

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8.1. In this particular case three portions of the hospital premises totaling to an area of 1950 Sq. Ft. were let out to three parties, pro rata depreciation was disallowed. The Ld. CIT(A) confirmed the same by following his predecessors order for A.Y. 2009-10.

8.2. At the time of hearing the Ld. Advocate appearing for the assessee fairly submitted before us that this ground of appeal was dismissed in ITA No. 2470/Ahd/2012 by its order dated 09.06.2016. Hence, we do not find any reason to interfere with the order passed by the authorities below. This ground of appeal, is thus dismissed.

Ground No. 7:- This Ground of Appeal is against the confirmation of addition of Rs. 60,000 on consultancy charges paid to one Dr. SubhashHaribhai Patel:-

9.1. Since the appellant was carrying on profession in the field of Gynec. Dr. SubhashHaribhai Patel being a Homoeopathy cannot be the team member and the remuneration thereon as consultancy charges paid to him has been found non-genuine. It was held that the Ld. AO that there was no need of Homoeopathy Doctor in the field of appellant, hence such disallowance. But the assessee’s case is this that the said Doctor was an Assistant Doctor in the team and consultancy charges were duly paid thereon. In the present scenario we are unable to accept the idea that the Homoeopathy Doctor cannot at all be a part of the Doctors team. The Doctors team may comprised of Homoeopathy, Ayurvedic and Allopathy, which is also recognized by the statutory authorities controlling medical field. In fact the Ministry of AYUSH formed on 09th November, 2014 by Government of India was to ensure the optimal development propagation of AYUSH system and health care. Earlier this was known as Department of Indian System of Medicine and Homoeopathy (ISM&H) which was created in March, 1995. It is relevant to mention that AYUSH stands that Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy as well. It is a combined programme of different field of medical facilities/disciplined/treatment. Thus, the

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contribution of a Homoeopath cannot at all be brushed aside in view of the present medical scenario of the country. In that view of the matter we find it fit and proper to set aside the issue to the file of the Ld. AO to reexamine the same taking into consideration our view upon giving a reasonable opportunity of being heard to the assessee on this account and also upon taking into consideration the evidences be placed by the assessee in support of the services rendered by the said doctor in the said hospital or any other relevant document which the assessee may choose to file at the time of hearing of the appeal before him. If such evidence is produced, upon being satisfied on the same the AO would pass orders allowing such consultancy charges to the assessee in accordance with law. Hence, this ground of appeal is allowed for statistical purposes.

[Order pronounced in the Court on 04-04-2019.]

Sd/- Sd/- (PRAMOD KUMAR) (MADHUMITA ROY) VICE PRESIDENT JUDICIAL MEMBER TRUE COPY Ahmedabad; Dated 04/04/2019 Tanmay आदेशक���त�ल�पअ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent. 3. संबं�धतआयकरआयु�त/ Concerned CIT 4. आयकरआयु�त(अपील) / The CIT(A) 5. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण/ DR, ITAT, 6. गाड�फाईल / Guard file. आदेशानुसार/ BY ORDER

उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपील�यअ�धकरण, अहमदाबाद / ITAT, Ahmedabad