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2014 (9) TMI 655 - ITAT AGRAUnexplained investment u/s 69 – Construction of guest house – Held that:- The AO did not reject the books of accounts of the assessee prior to directing the inspector to visit the guest house premises and to make estimate of construction - no books of accounts have been rejected prior to making reference to the DVO to estimate the cost of construction - the whole basis for making the addition was unjustified – Following the decision in Sargam Cinema Versus. Commissioner of Income-tax [2009 (10) TMI 569 - Supreme Court of India] - the Income-tax Inspector is not a technical person to make estimate of cost of construction - He has not given any basis as to how his report was worth reliance and no evidence has been brought on record as to whether the construction was raised in the AY under appeal 2009- 10 - The AO was also not justified in observing that the construction was started in the earlier two financial years to the assessment year under appeal because when the map was sanctioned by the Municipal Authorities on 24.06.2008, there was no question of raising any construction prior to it. There is no substantial difference between the value of construction estimated by the DVO and that reported by the assessee - CIT(A) was justified in holding that no construction was raised in the year and that the record would also reveal that only part of the land was purchased in the year which have been duly shown in the books of account of the assessee – the order of the CIT(A) is upheld – Decided against revenue. Discount allowed to the patients – Held that:- CIT(A) failed to take note of the finding of the AO on this issue - The AO has specifically noted in the assessment order that though the receipts of the assessee are increasing and expenses are also increasing, but the net profit ratio is going down in the year - the net profit ratio of the assessee was found at 29.90% as against net profit rate disclosed in the preceding AY 34.85% and 32.83% - The AO specifically noted that the assessee has earned income during the year and has given discount - It would mean that substantial income is returned back to the patients on account of rebate and discount, which is highly improbable - net profit ratio of the assessee is decreasing would strengthen the finding of the AO that the assessee has adjusted the profit / income in this year and the accounts are not verifiable on this issue - CIT(A) was not justified in deleting the addition – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO – Decided in favour of revenue. Consultancy and dispensary charges – Held that:- CIT(A) without any justification should not have deleted the addition - The AO has also noted that the net profit rate of assessee is decreasing - The AO has given specific finding against the assessee that the patient register and visiting register is not disclosing true picture because of the repetition of the same names were found regularly and different names were not found in whole of the year - The finding of the AO that names are repeated during whole of the year is not rebutted by the assessee through any material on record because it is difficult to believe that in this type of business run by the assessee, the same patients would come regularly for whole of the year - No new persons have been mentioned in the patient register and as such, the AO was justified in estimating the income under this head particularly when the profit rate is decreasing and no plausible explanation has been given to the AO – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO – Decided in favour of revenue.
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