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Dr. S. Venkateswara Prasad and Smt. S. Amruthavalli Versus Asst. Commissioner of Income Tax, Central Circle, Tirupati and Vica-Versa

2015 (9) TMI 956 - ITAT HYDERABAD

Double addition of the same amount in both the assessee and assessee’s wife - receipts estimated on hospital - Held that:- Department did not have any evidence of suppression of receipts. It may be altogether a different issue that assessee has not maintained any Books of Account nor the hospital has any records. The only in-patient diary was available without any fee received or amount spent. It was the contention that hospital not only undertakes the room charges and nursing charges but also c .....

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ble to furnish any evidence with reference to actual number of surgeries being done, the reasonable estimation of the AO cannot be faulted. Therefore, the bifurcation adopted by the AO in the respective years out of the total patients is however, upheld.

On issue of estimation of fee received in surgery cases and non-surgery cases, it seems the amounts are on higher side. In one of the statements recorded from the patient there is a signed proforma for claim of reimbursement of medica .....

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d be inferred. Accepting the same, with reference to non-surgery fee also, the total receipts per year can be determined. - Decided partly in favour of assessee.

Assessment u/s. 153C - Held that:- The only incriminating material which AO considered is with reference to inpatient register of the hospital, based on which receipts were estimated by the AO. Apart from that there was no incriminating material on any other issue. Since there is some incriminating material and as the AO was .....

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iated and completed has been kept in mind, as any addition without any corresponding incriminating material may not be sustained.

Estimation of receipts - Held that:- Considering the estimations adopted by the AO, clarification given by assessee and the evidences on record, we are of the opinion that assessee might be passing on the receipts to others. Substantial part was towards Doctors which was separately considered in Dr. S V Prasad hand. Considering the receipts accounted and ra .....

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appeals in estimation will equally apply here. We are of the opinion that the above estimation will meet the ends of justice as there is no addition to wealth identified in search. AO is directed to modify the orders accordingly.

Capital Gains - Held that:- This issue arises in AY. 2003-04. The facts are similar to the facts discussed in the case of Dr. S. Venkateswara Prasad above for AY. 2003-04. For the reasons stated therein, since assessee has got possession in the year relevant .....

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erial was found and proceedings are u/s 153C, we are of the opinion that action of the AO cannot be upheld. He is directed to accept the agricultural income as offered by assessee. - 1717, 1718, 1719, 1744, 1745, 1746, 1747, 1748, 1749, 1750,1751, 1752, 1753, 1754, /Hyd/2011 - Dated:- 28-8-2015 - SHRI B. RAMAKOTAIAH AND SHRI SAKTIJIT DEY, JJ. For The Revenue : Shri Rajat Mitra, DR For The Assessee : Shri A.V. Raghu Ram, AR ORDER PER BENCH : These are appeals consequent to search and seizure oper .....

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tail. Appeals are decided as under: Dr. S. Venkateswara Prasad : 3. Briefly stated, Dr. S. Venkateswara Prasad, is a Government doctor and also works in Swarnamrutha Hospital, Tirupathi which is run by his wife Smt. S. Amruthavalli. Proceedings u/s. 153A were initiated in the case of Dr. S. Venkateswara Prasad, and appeals from AY. 2003-04 to 2006-07 are being considered in this batch. Eventhough assessee contested initiation of proceedings under 153A, the same are to be rejected as search and s .....

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its at Tirupathi on 09-03-2000. This was given for development to M/s. Chaitanya Constructions, Tirupathi. Ratio between the land owners and the builder is 33.67. The total constructed area was 15,646 Sq. Ft. and assessee and his wife got 5,163 towards their share. Assessee s share of 2,582 Sq. Ft., was disclosed in the return for AY. 2004-05. The stated value of cost of construction was at ₹ 604 per Sq. Ft. Accordingly, the value of construction area would come to ₹ 15,59,528/- and .....

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month of July, 2003 and the gain would become Long Term Capital Gain. AO did not agree and treated the gain as Short Term Capital Gain and brought to tax an amount of ₹ 13,30,053/- denying assessee s claim of investment under new house u/s. 54F. Before the Ld. CIT(A), assessee contended that the capital gain is not taxable in this year and is taxable as Long Term Capital Gain in later year and benefit u/s. 54F is eligible to assessee. Ld. CIT(A) consequent to the orders in the hands of as .....

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onsidering the respective contentions and perusing the evidences on record, we are of the opinion that the capital gains cannot be taxed in AY. 2003-04. As seen from the order of Smt. Amruthavalli, CIT(A) s finding is as under: 7.2 It may be seen that the appellant and her husband had entered into agreement with M/s. Chaitanya Constructions, Tirupati on 02.10.2000. The said property was purchased on 9.3.2000. The developer completed the construction work and handed over flats to the appellant an .....

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m Capital Gains in accordance to law. Hence, this ground of appeal is partly allowed . 5. As can be seen from the above findings of the Ld. CIT(A), there is no dispute with reference to the fact that agreement was entered on 02-10-2000. There is also finding that developer has completed the construction work and handed over flats to assessee and her husband on 12-07-2003, as seen from the completion letter furnished by the developers. Even the evidence and letting out the property also confirms .....

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s contention that the amount cannot be brought to tax in this year is upheld and accordingly, grounds are allowed. AYs. 2004-05, 2005-06 & 2006-07: 6. In all the three years, issue is common in the sense that AO estimated hospital receipts and brought to tax certain amounts as unrecorded incomes. The issue arises as under. 6.1 During the course of search in assessee s premises on 28- 11-2007, some note books containing addresses of the patients with date of admission and date of discharge a .....

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4, 511, 264 and 119. Out of these patients, the AO roughly considered some as surgery cases and some as non-surgery cases. In surgery cases, the doctor s receipt was taken at ₹ 18,000/- per patient and in non-surgery cases, ₹ 2,500/- per patient. Accordingly, AO estimated the receipt in the impugned assessment years i.e., AYs. 2004-05 to 2006-07 as under: Asst. Year Receipts from Surgery Cases Receipts from Non-Surgery Cases Total Collections Rs. 2004-05 72,00,000 3,35,000 75,35,000 .....

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lections and along with offered income by assessee an amount of ₹ 55,53,750/- was made as addition in AY. 2004-05. In AY. 2005-06, like-wise, an addition of ₹ 52,59,650/- was added and in AY. 2006-07, ₹ 25,97,650/- was added to assessee s incomes. However, it is to be noted that AO considered again the entire receipts estimated on hospital in the case of Smt. S. Amruthavalli also. Before the Ld. CIT(A), it was contended that there was first of all double addition of the same am .....

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seized material and the statements recorded from 20 patients, it was the contention of the Ld. Counsel that there is no basis for estimating the surgery cases at ₹ 18,000/- for surgery and further there is also no evidence that so many surgery cases were done by assessee. It was submitted that assessee being a Govt. employee, he could not have attended so many surgeries as estimated by AO i.e., more than one in a day whereas he also attends in other hospitals and offered the receipts. It .....

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o ₹ 750/- in these years and if the same are accepted, assessee s receipts that can be considered will be as under: S.No./ AY. Revised estimation Total as per the rates suggested Rs. Gross Income already admitted in ROI Net addition to be sustained Surgery Non- Surgery 2004-05 400 @ ₹ 2,500/- ₹ 10,00,000 143 @ ₹ 500/- ₹ 71,500 10,71,500 3,46,550 7,24,950 2005-06 383 @ ₹ 3,000/- ₹ 11,49,000 128 @ ₹ 600/- ₹ 76,800 12,25,800 4,11,280 8,14,520 20 .....

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o be noted that department did not have any evidence of suppression of receipts. It may be altogether a different issue that assessee has not maintained any Books of Account nor the hospital has any records. The only in-patient diary was available without any fee received or amount spent. It was the contention that hospital not only undertakes the room charges and nursing charges but also consultation fee of the doctors which was passed on to respective persons. As far as assessee is concerned, .....

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ion of the AO cannot be faulted. Therefore, the bifurcation adopted by the AO in the respective years out of the total patients is however, upheld. 9.2 Coming to the issue of estimation of fee received in surgery cases and non-surgery cases, it seems the amounts are on higher side. AO estimated the addition in the hands of assessee at ₹ 55,53,750/- in AY. 2004-05, ₹ 52,59,650/- in AY. 2005-06 and ₹ 25,97,650/- in AY. 2006-07. These amounts could not have been received by assess .....

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pts. The rate of estimation made does not support the AO s contentions as there is no corresponding accumulation of wealth in the hands of assessee or in the hands of the family members. Prima facie, the estimation seems to be on very high side. In one of the statements recorded from the patient there is a signed proforma for claim of reimbursement of medical expenditure in which surgery fee was shown at ₹ 3,500/-. Based on that, it is fairly reasonable to estimate that amount as fee recei .....

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. Total as per the rates estimated Rs. Gross receipts already admitted in ROI Net addition to be sustained 2004-05 10,71,500 3,46,550 7,24,950 2005-06 12,25,800 4,11,280 8,14,520 2006-07 7,42,500 5,05,620 2,36,880 10. The amounts mentioned in above column No. 8 are accordingly sustained and AO is directed to delete balance amount. Assessee s grounds are partly considered as allowed. 11. In the result, Appeal in AY 2003-04 is allowed and in AYs 2004-05,05-06,06-07 are partly allowed. Smt S. Amrut .....

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re passed in assessee s case. Even though, the AO has made double addition of the same amount in assessee s case as well as her husband s case, Ld. CIT(A) gave relief and Revenue is aggrieved on that in AYs. 2004-05 to 2006-07. In AYs. 2007-08 and 2008-09 again the issue is only with reference to agricultural income. In AY. 2003-04, issue of capital gains was also contested by assessee like in husband s case. From AY 2004-05 assessee is managing the Hospital where as AO wrongly noted as running .....

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aterial on any other issue. Since there is some incriminating material and as the AO was satisfied that in-patient register pertains to the hospital being run by assessee, we are of the opinion that proceedings U/s. 153C were validly initiated. Assessee is questioning that proceedings U/s. 153C were initiated without any satisfaction. Even though this ground was raised no evidence was placed by either party in order to examine this aspect. Therefore, the grounds are considered as not validly rai .....

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eswara Prasad case above, in assessee s hands also, AO estimated receipts in AYs. 2004-05, 2005-06 and 2006-07 and made additions of ₹ 67,07,900/-, ₹ 62,44,785/- and ₹ 24,17,149/- respectively after giving credit to disclosed receipts. Ld. CIT(A) while upholding the estimation of income, however, gave relief to the extent of amounts brought to tax in the hands of assessee s husband, therefore, substantial relief was granted by CIT(A) by deleting the double addition. The aspect .....

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as surgery fee and non-surgery referral fee are concerned, they were separately brought to tax in the hands of Dr. S. Venkateswara Prasad. Therefore, what is to be considered in assessee s hand is only the hospital charges, nursing charges and Pathology charges etc. These charges may not vary whether it is the surgical case or a non-surgical case. These charges may be fixed depending on the number of days the patient stays in the hospital. However, AO did not examine for how many days each patie .....

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7; 12,10,151/-. Since assessee is increasing the gross receipts regularly over a period of time and the number of patients admitted in that AY. 2006-07 are comparatively less when compared to other years, there seems to be no basis in this assessee s case for estimating so much receipts as was done by AO. 14.1 We have asked the Ld. Counsel to furnish information about the hospital and support staff. The clarification filed by assessee s counsel is as under: On the previous date of hearing, Hon&# .....

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have not maintained receipt books and therefore are not in a position to file the same. The Appellants employ 4-5 nurses and 5-6 housekeeping ward for the hospital. Further, in surgery cases, the Appellants take the help of outside specialist doctors for which they incur expenditure. Therefore, even in a surgery case what is earned by the Appellants is only 30% of the fee collected by them from patient for surgery and the remaining 70% is the expenditure which is passed on to other team members .....

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t ₹ 3,50,000/- in AY. 2004-05, ₹ 4,30,000/- in AY. 2005-06. In AY 2006-07 the in-patient register shows less number of patients. Assessee has shown substantial increase in receipts already. Keeping that in mind an amount of ₹ 2,00,000 can be estimated to be additional receipts in assessee case. The reasons given in the husband s appeals in estimation will equally apply here. We are of the opinion that the above estimation will meet the ends of justice as there is no addition to .....

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this year. Agricultural Income: 16. From AY. 2002-03 onwards to 2008-09, the common issue is with reference to agricultural income. In AY. 2002-03, assessee offered an amount of ₹ 40,000/- towards Income from agriculture . AO was of the opinion that assessee could not earn so much of agricultural income from agricultural land of ₹ 1.33 acres. It was the contention of the assessee that assessee was having Mango Orchards on the land, therefore, income is higher. AO, however, reduced t .....

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h. Having considered that assessee is having Mango Orchards on the land and nature of agricultural land, we are of the opinion that income offered is not unreasonable. It is to be noted that there is no evidence on record of any incriminating material with reference to the issue of agricultural income. As seen from assessee s returns, assessee owns substantial amount of agricultural land up to AY. 2005-06 and in that year part of the agricultural lands were sold by assessee. Assessee also reduce .....

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nd and also the fact that no incriminating material was found and proceedings are u/s 153C, we are of the opinion that action of the AO cannot be upheld. He is directed to accept the agricultural income as offered by assessee. ITA Nos. 1717, 1718 & 1719/Hyd/2011: 18. These appeals are by Revenue with reference to the deletion by CIT(A) in Smt Amrutavalli s hands of the amounts assessed in Dr. S. Venkateswara Prasad. In these appeals, Revenue has raised the following grounds: 1. The Hon'b .....

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