9911796707
TMI Blog2014 (9) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- plus agricultural income at Rs. 80,000/-.The assessee derives income from running of nursing home / ambulance, consultancy, dispensary, X-ray etc. The assessee maintained proper books of account and the same were audited. The AO considering the comparative chart and history of the assessee found that the assessee's receipts are increasing year by year and expenses are also increasing, but the net profit ratio is going down each year. In the assessment year under appeal, the assessee has shown net profit ratio of 29.90% whereas in preceding assessment years 2007-08 and 2008-09, the same was shown at 34.85% and 32.83%. The AO observed in the assessment order that there was information with the department that the assessee has constructed a guest house in the name and style of "Vandhan" guest house (in short guest house), Farrukhabad in financial year 2007-08 and 2008- 09.The Inspector was deputed to visit the hospital premises of the assessee and the building of guest house. The Inspector gave his report, which was confronted to the assessee, in which it was intimated that the guest house is situated on the land purchased from different persons and is constructed upto second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, there is no substantial difference in the report of the DVO and the expenses reported by the assessee on construction. Therefore, there is no basis, whatsoever, to make any addition against the assessee. 5.2 The ld. CIT(A) considering the explanation of the assessee and the material on record deleted the addition. His findings in para 5.10 of the impugned order are reproduced as under : "5.10. G.O.A.No.12 This is the main ground. The A.O. has added a sum of Rs. 1,33,17,372/- on the ground of unexplained investment u/s 69 of the act. The A.O. discusses regarding investment made by assessee in Vandhan Vatika and then goes on to estimate not only the Registration expenses regarding the plots purchased by the assessee, but also the A.O. tabulates the value of plots, stamp duty paid and estimated registration expenses in respect of plots purchased by other persons. The total of various amounts of purchases, stamp duty paid and estimated registration expenses as on page 14 of assessment order comes to Rs. 25,53,372/-. There-after the A.O. held, estimated on basis of Inspector's report that construction expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various amounts of registry expenses and of construction expenses is held to be futile, irrelevant and improper. The entire addition of Rs. 1,33,17,372/- has no logical basis and reasoning and thus requires to be deleted. 6. The ld. DR relied upon the order of the AO and submitted that the ld. CIT(A) did not examine the facts of the case. The ld. DR referred to the order sheet of dated 16.12.2011 recorded by the AO to show that the AO has investigated the issue of unexplained investment in the building. He has also referred to the report of Income-tax Inspector dated 31.10.2011 to show that the assessee has made unexplained investment in building. The ld. DR referred to the report of DVO dated 23.05.2012, in which the DVO has not examined the issue of year of construction. PB-63 is reply of the assessee in which the assessee explained that construction was not raised in the year under consideration, which is accepted by the ld. CIT(A). The ld. DR, therefore, submitted that the ld. CIT(A) was not justified in deleting the addition. 7. On the other hand, the ld. counsel for the assessee reiterated the submissions made before the authorities below and submitted that the report of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount, nor rejected account books before making such reference - Held, yes." 7.3 He has referred to capital account of the assessee ending 31.03.2009 (PB-26), in which the value of the plot purchased in the year under appeal was mentioned at Rs. 3,17,790/-. PB-89 is acknowledgement of return filed for subsequent assessment year 2010-11 on 20.09.2011 prior to completion of assessment order, in which the assessee has mentioned the same value of plot rectification entry (PB-102) in a sum of Rs. 3,17,790/- and the value of construction in assessment year 2010-11 (PB-103). PB-106 is acknowledgement of filing of return for the assessment year 2011-12, in which also at page 122, land and construction have been mentioned of guest house. PB-139 is balance sheet of assessment year 2012-13, in which also net income from guest house has been shown and in the same year, the Inspector has visited the premises on 31.10.2011. He has, therefore, submitted that there was no basis, whatsoever, to make any addition on the basis of report of the inspector. He has submitted that the ld. CIT(A) was justified in deleting the addition. 8. We have considered the rival submissions and the material available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged the deletion of addition of Rs. 2,27,935/- on account of discount allowed to the patients. The AO noted that the assessee has debited the amount of Rs. 4,55,870/- under the head rebate and discount. On verification of books of account and bills etc., it was found that same are not verifiable as to whether the bills have been given to all the concerned persons. The AO observed that he cannot believe the accounts of the assessee. The AO noticed that the assessee has earned income during the year at Rs. 6,72,555/- and has given discount of Rs. 4,55,870/-. Therefore, it was nothing but adjustment of profit / income of the year. 50% of the expenses were, accordingly, disallowed. Before the ld. CIT(A), the assessee claimed that it is a consistent practice to give rebate and discount to the patients. The ld. CIT(A) finding that the books of account of the assessee are audited and similar accounting system is maintained in earlier years, in which no discrepancies have been pointed out, deleted the entire addition. 10. On consideration of the rival submissions, we are of the view that the ld. CIT(A) failed to take note of the finding of the AO on this issue. The AO has specifical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) agreed to the submissions of the assessee that many of the patients came repeatedly for follow up treatment. Therefore, the addition was deleted. 12. On consideration of the rival submissions, we are of the view that the ld. 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. The order of the ld. CIT(A) is, therefore, set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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