9911796707
TMI Blog2014 (1) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) has come to a finding that the appellant has furnished entire details of medicines and disposables before the AO. 3. Briefly stated relevant facts of the case are that the assessee is a General Surgeon by profession and owns 30 bedded hospital named Das Surgical Hospital situated at Chembur, Mumbai. Assessee filed the return of income for the AY 2008-09 declaring the total income of Rs. 37,41,900/-. The return was scrutinised u/s 143(3) of the Act and the that total income was determined at Rs. 47,21,460/-. In the assessment the AO made various additions and one such addition, which is subject matter of the present appeal before us, relates to the disallowances of expenses amounting to Rs 7,68,83 on account of consumption of med ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eness of the purchases was demonstrated before the AO and the same is accepted by the AO. Therefore, there is no dispute on this aspect. However, regarding the consumption of the said medicine and disposables, it is the claim of the assessee that entire expenditure incurred on Medicines and Disposables is recovered from the patients and the same is shown as income of the assessee under the head of Medicines Charges Recovery. Regarding the backup records for demonstrating the consumption of Medicines and disposalbles, the assessee submitted that no separate details records are required to be maintained. Therefore, the assessee maintained only the opening and closing stock of Medicines and the same is duly verified physically which is confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the assessee. Further, giving no reasons, he held that flat rate of 20% is on the higher side. Aggrieved with the part confirmation of the addition, assessee filed the present appeal before us. During the proceedings, Learned Counsel for the assessee mentioned that the assessee debited the expenditure of Rs. 38,41,448/- on account of Medicines and Disposables. During the assessment proceedings, Ld AO is satisfied with regard to the genuineness of the purchase of said Medicines and Disposables and however, on the issue of particulars of "consumption of medicine and disposable", in view of the assessee's failure to produce the consumption records of the said account, AO made disallowance amounting to Rs. 7,68,833/- ie @ 20 % of Rs 38, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case the claim of the assessee cannot be accepted. Therefore, as per Ld DR, the order of the CIT(A) is reasonable which is it call for any interference. 7. We have heard both the parties and perused the order of the Assessing Officer as well as CIT(A). The core issue for adjudication relates to the genuineness of the claim of consumption of the medicine and disposables for the patients and the recording of the same. In this regard, assessee argues that there is no need to maintain such records and therefore, mere submission of opening and closing stock records is sufficient and there is no need to maintain records showing the use of medicine/disposable for the patients. Of course, assessee also relies on the principle of consistency, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the principle of res judicata to income tax matters. Therefore, in principle, the AO is justified in resorting to make disallowance on account of "consumption of medicine and disposables". However, we reject the basis adopted by both the authorities below ie flat rate of 20% or 5% of the claim. As such, the orders of the AO/CIT(A) are silent on the reasoning for adopting the said flat rates and therefore, they constitute complete guesswork. As held by various Courts, some amount of guesswork is accepted in such estimation based additions and however, complete guesswork is unacceptable. The decisions relied upon by Ld Counsel for the assessee supports the same. Therefore, we reject the very manner of quantifying the disallowance. Inst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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