JAVEDKHAN ABDULKHADARKHAN PATHAN,BELGAUM vs. INCOME-TAX OFFICER, BELGAUM

The grievance of the assessee revolves around the various additions totalling to Rs.16,16,504/- confirmed by ld.CIT(A) which was made by the Assessing Officer in the assessment order for A.Y. 2012-13. 2

We have heard the rival contentions and perused the record placed before us. We note that the assessee is an individual and is running Hospitals at Veerbhadranagar and at Ramteerth Nagar, Belagavi. Survey u/s.133A of the Act on the business premises of the assessee carried out on 26.02.2019. Original return of income for A.Y. 2012-13 stood filed on 16.02.2013 declaring income of Rs.11,20,030/-. Post survey, case of the assessee reopened u/s.147 of the Act after valid approval of Principal Commissioner of Income Tax dated 30.03.2019 followed by validly serving of notices u/s.148, 143(2) and 142(1) of the Act. Ld. Assessing Officer made various additions which were challenged by the assessee before ld.CIT(A) but the assessee failed to succeed.

Before us, ld. Counsel for the assessee had made submissions for each of the additions/disallowances and considering the same we proceed to deal with each of the addition.

First addition relates to difference in receipts as per the Receipt register and as per the OPD ledger. As per the details available in the assessment order, the receipt register shows the details from 18.01.2012 to 31.03.2012 totalling to Rs.3,21,000/- whereas as per OPD ledger figure shows at Rs.2,16,427/-. Ld. Assessing Officer made addition for the difference in receipts. It has been contended by ld. Counsel for the assessee that it is not a regular feature of receiving less amount as per the OPD ledger compared to receipt register because many times the excess amount paid to the patients is refunded and sometimes the balance amount is received. He gave reference to the entries of 22.01.2012 where the amount as per OPD ledger is shown as Rs.2,600/- whereas receipt register amount it is Rs.1,600/-, on 20.01.2012, OPD ledger shows Rs.3,800/- but as per receipt register it shows Rs.2,800/- and in some cases amount of receipt register and OPD ledger are same.

We find force in the contention of ld. Counsel for the assessee and observe that the OPD patients are from lower middle class and lower class of society who are facing financial problems and as per the practice followed at the hospital receipt, the chargeable fee amount is noted on the register manually and fees is collected at the consulting room by the cashier and recorded in the Excel sheet in the computer which subsequently gets recorded in the books of account. There are various instances where the patients are requesting for reducing the fees. Therefore, the difference found by the Assessing Officer between the rates of the OPD ledger and the receipt register is on account of short of fees but sometimes patients have paid more amount than that mentioned in the receipt register. Considering the details regularly maintained by the assessee and the entries in the OPD ledger and receipt register and the modus operandi regularly followed and taking into consideration the cash system of accounting regularly followed at the hospital, we find that the impugned addition deserves to be deleted. Addition of Rs.1,04,573/- is deleted. Ground No. 4 raised by the assessee is allowed.

Ground No.5 relates to addition of Rs.3,31,672/- towards alleged discrepancy in capital account.

We note that ld. Assessing Officer has made addition treating closing capital balance at Rs.29,07,678/- compared with the capital balance shown at Rs.32,29,350/-. We have gone through the capital account filed by the assessee at page 53 of the paper book and find that opening balance is shown at Rs.22,75,502/- and the debits/drawings during the year at Rs.4,80,699/- and the credits including profit for the year at Rs.14,44,546/- which makes the closing capital balance at Rs.32,39,349/- only and therefore ld. Assessing Officer has grossly erred in not taking the correct figures in the capital account and in our considered view no addition of Rs.3,31,672/- is called for. Ground No.5 raised by the assessee is allowed.

Ground No.6 relates to addition for unexplained gifts at Rs.5,03,000/-.

We observe that the assessee is claiming to have received gifts of Rs.78,000/- from his late mother and Rs.4,25,000/- from his brother-in-law. Supporting evidences from mother is in the form of Affidavit by the assessee as the mother passed away on 26.05.2018. Further, letter of confirmation, copy of aadhar card, record of rights holding agricultural land of brother-in-law Mr. Shoukat Patel has been placed on record. We however find that these details were never filed before the Assessing Officer and therefore we deem it appropriate to restore this issue to the file of ld. Jurisdictional Assessing Officer for necessary verification and examine the claim of assessee of having received gifts from relatives and then decide in accordance with law. Ground No.6 raised by the assessee is allowed for statistical purposes.

Ground No.7 raised by the assessee is against the addition of Rs.5,67,266/- for the alleged introduction of unexplained assets during the year. We note that the assessee has shown to have introduced building block at Rs.5,67,266/- along with expenditure at Rs.14,18,551/- for the building under construction. Ld. Assessing Officer was not satisfied with the building block of assets at Rs.5,67,266/- and made addition thereof.

Before us, ld. Counsel for the assessee filed copies of income tax returns and balance sheet for A.Y. 2004-05 and 2005-06 showing that capital expenditure of Rs.5,67,266/- was incurred during these two financial years for building construction and the assessee has not claimed any depreciation on these assets. It was only during the year that assessee intended to claim the depreciation and therefore since cost of construction was recorded in the books as on the close of 31.03.2006 the same figure has been brought forward for the year under consideration.

We have gone through the details filed in the paper book running into 75 pages, specific details of the balance sheet of the preceding years filed in the paper book from pages 5 to 42 along with copy of valuation report dated 08.04.2006 obtained by the appellant from Registered Valuer in respect of the alleged building on which construction of Ground and First floors measuring 1184.77 sq.ft. was carried out on the plot of land admeasuring 2000 sq.ft. situated at Ramteerth Nagar, KIADB site, Belgaum. We therefore find that since the asset in question was constructed on 18.04.2006 no addition of Rs.5,67,266/- is called for during the year under consideration. Finding of ld.CIT(A) is reversed. Ground No.7 raised by the assessee is allowed.

Ground No.8 by the assessee relates to addition of Rs.1,09,993/-, being difference between building construction expenses as per the CPWD valuation report and expenditure reflected in the books of account.

Claim of the assessee is that even though the figure in the valuation report is shown at Rs.15,28,544/- and as per the books of account it is Rs.14,18,551/-, the difference works out to Rs.1,09,993/- and the cost accounted for in the books of account is fully supported by documentary evidences. No discrepancy has been found by the Assessing Officer and the difference works out to very negligible and less than 10%. We note that it has been held in plethora of decisions that the difference upto 10% found in the valuation report and the cost offered by the assessee deserves to be ignored and considering the books of account regularly maintained by the assessee we find merit in the contention of ld. Counsel for the assessee and accordingly reverse the finding of ld.CIT(A) on this issue and delete the addition of Rs.1,09,993/-. Ground No.8 raised by the assessee is allowed.

Remaining grounds of appeal raised by the assessee in the instant appeal are either not pressed/argued by ld. Counsel for the assessee or are general in nature and do not warrant any adjudication.

In the result, the appeal of the assessee is partly allowed for statistical purposes.

The Pr. CIT concerned. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, Panaji 4. ‘SMC’ Bench / DR, ITAT, Panaji ‘SMC’ Bench ग र्ड फ़ इल / Guard File. 5. आिेश नुस र / BY ORDER,