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TMI Blog2015 (9) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... ant general surgeon to M/s. Aditya Hospital. For the impugned Financial Years relevant for AYs. 2009-10 and 2010-11, the search yielded some incriminating material in the form of information in HMS package maintained by M/s. Aditya Hospital, Hyderabad, wherein the entries differed from another Tally package maintained by them. In the course of search itself, assessee was asked to explain whether the entries in the HMS package pertain to him? Assessee replied that he was not aware about the HMS package being maintained by the said firm and stated that he has received moneys by way of cheque only and he requires time to examine other documents. Consequent to search, proceedings u/s. 153A were initiated for the impugned assessment years and apart from certain disallowances and additions u/s. 68 in other years, major additions were made in AY. 2009-10 and 2010-11 on the basis of the said HMS package, wherein Assessing Officer (AO) was of the opinion that assessee was paid substantial amounts which were not accounted by assessee. AO, after giving due opportunity to assessee, made various disallowances in other years from 2004-05 to 2008-09 and major additions in AY. 2009-10 and 2010-11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain incriminating materials as well as cash and jewellery were seized. Consequently, proceedings u/s. 153A are mandatory and accordingly, notices were issued for all the impugned assessment years. The provisions of Section 153A are as under: "153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating material was necessary for completing the assessments. It was held that : "Search and Seizure-Assessment in case of search-Undisclosed income-Addition-Validity-Assessee filed regular return of income showing income-In regular return of income, Assessee showed income from salary derived from 'X' Company in which Assessee himself submitted to be Director-Return of income was processed u/s. 143(1)-AO issued Notice u/s. 153A-During course of assessment proceedings AO found that gift received by minor children from various persons was sham transaction and that Assessee failed to prove genuineness of those gifts-AO made addition while completing assessment u/s. 153A-CIT(A) allowed Appeal of Assessee on ground that transaction of gift had taken place through banking channel where date, mode of payment and other details was duly recorded-ITAT held that since no incriminating materials in relation to gift deeds were found in search, no addition on such gift could be made in assessment proceedings u/s. 153A-Held, u/s 153A AO had been given power to assess or reassess total income of assessment years in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(a) of the Act. 7. Keeping the principles laid down on the subject and the provisions of law, we are of the opinion that there is no merit in assessee's contentions raised in the above grounds. Accordingly, the grounds are rejected. Appeals in AYs. 2004-05 to 2008-09: 8. In all the above appeals, the assessment orders were passed by the AO in pursuance of the notices and the returns of income are filed in response to notice u/s. 153A, even though no incriminating material was found. Assessee has filed returns of income declaring same incomes which were originally filed in respective years. The details of which are as under: Asst. Year Date of filing the original return Income originally returned (Rs) Agricultural Income (Rs) Date of filing return in response to notice U/s. 153A Incomes assessed Rs. 2004-05 03-11-04 4,41,770 1,47,910 11-11-10 11,77,770 2005-06 25-10-05 17,47,692 1,28,750 11-11-10 28,98,319 2006-07 31-10-06 22,78,770 80,000 11-11-10 31,91,788 2007-08 02-11-07 19,74,380 2,89,950 11-11-10 29,86,074 2008-09 30-09-08 13,99,560 4,64,425 11-11-10 54,10,223 8.1 AO as briefly stated has made additions of certain cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1,14,576/-) respectively and also stated that loan creditor and his wife were in Jamaica before returning to India. Out of his savings from Jamaica, his current income and from realization of amounts, he has advanced Rs. 1,00,000/- to assessee. Since, assessee has furnished all the relevant documents, he prays to delete the addition made by the AO. 9.4 Ld. CIT(A) confirmed the above Rs. 7 Lakhs in AY. 2004-05 agreeing with AO's contentions. 10. After considering the rival contentions and perusing the paper book, we are of the opinion that loan credits from Tandu Srinivas and D. Venu Madhav are to be accepted as genuine. In fact as seen from the impounding orders u/s. 132(3) of the Act issued on 24-03-2010 to the Manager SBI, Chikkadapally Branch by the Dy. Director of Income Tax, (Investigation) placed at page 3 of the paper book, it indicates that Tandu Srinivas has a bank account No.3185 in the said bank and prohibitory orders were issued for any lockers available in that name. This indicate that the said Tandu Srinivas is an existing person and is available in the address of assessee only. Therefore, the contentions of the CIT(A) that the said person is having the same addr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting that even if the contention of assessee is accepted, the other factors have also to be taken into consideration. Those factors are that assessee is rendering his service in well established corporate hospitals and also provides after care by the hospital itself. Since, they are corporate hospitals, there will be no dearth of assistants as claimed by assessee. Most of the payments made by assessee are in cash and number of persons paid is many. There are at least 10 to 20 names mentioned in the salaries account furnished by him. This is highly improbable, hence, keeping in view the above factors, 50% of the salaries paid by assessee are disallowed i.e. 50% of Rs. 72,000/- = Rs. 36,000/- for AY. 2004-05; 50% of Rs. 9,01,254/- = Rs. 4,50,627/- for AY.2005-06; 50% of Rs. 10,88,861=Rs.5,44,430/- for AY. 2006-07; 50% of Rs. 11,61,076 = Rs. 5,80,538/- for AY. 2007-08 and 50% of Rs. 12,48,270 = Rs. 6,24,135/- for AY. 2008-09 and added to the returned income. 12. Assessee before the CIT(A) stated that he is a surgeon by profession and requires entire team consisting of medical, para-medical, support staff etc. for performance of surgery and related matters for which he has to pay sala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the course of assessee's profession. Considering that assessee is a consultant surgeon and the hospital also certified that assessee is employing his own para-medical staff, which factor is also agreed by the Ld. CIT(A) we are of the opinion that there is no need to disallow any expenditure which was claimed in the original returns of income. There is no incriminating material found and assessee cannot be expected to produce the vouchers and persons after lapse of sufficient time when assessee's returns originally filed were accepted without any scrutiny. In view of this, we are of the opinion that no expenditure can be disallowed out of the salary claimed and accordingly, assessee's grounds are allowed. AO is directed to delete the disallowance so made in all the impugned assessment years. Disallowance of vehicle maintenance and depreciation : 15. Another issue contested by assessee in AYs. 2006-07 to 2010-11 is with reference to disallowance of depreciation on vehicles and vehicle maintenance. AO was of the opinion that in AY. 2006-07, the vehicles were purchased in a later half of the year and so depreciation of 50% of the eligible amount is only allowable. Further, he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue. 17.1 Now coming to the disallowance of 50% of the vehicle maintenance the reasons for disallowance as made out by the AO are not clear. AO expresses opinion that 'it appears that the expenses claimed on maintenance of vehicles is on higher side and hence 50% of the expenses on maintenance are disallowed as relatable to personal use'. He stated both reasons being higher side as well as personal use. There is no clarity in the opinion of the AO and no comparable expenditure was made out. There is no incriminating material also in the search. We are of the opinion that expenditure claimed is reasonable compared to the receipts disclosed by assessee from various hospitals. The AO cannot sit in judgment on the nature of expenditure unless he examine the expenditure on a day to day basis from the vouchers maintained. However, considering that assessee is a doctor and also a public figure some use of vehicles for personal use cannot be ruled out. Consistent with the view taken by co-ordinate Benches in number of cases, we are of the opinion that the disallowance for personal use can be restricted to 10% of the vehicle maintenance claimed in respective assessment years. Eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash: Asst. Year 2009-10 Asst. Year 2010-11 (as per Exhibit - I) Date Cheque (Rs) Date Cheque (Rs) 18.07.2008 7,87,527 15.04.2009 11,66,770 07.08.2008 12,64,283 30.04.2009 10,75,446 19.08.2008 2,01,300 11.06.2009 13,91,923 10.09.2008 08,83,468 08.07.2009 14,21,245 04.11.2008 02,51,955 09.08.2009 2,58,840 28.11.2008 01,89,150 25.08.2009 10,17,833 31.12.2008 1,27,715 02.09.2009 16,22,835 24.01.2009 33,000 24.09.2009 34,000 26.01.2009 01,96,700 08.10.2009 12,98,684 09.03.2009 01,35,780 29.10.2009 10,00,011 09.03.2009 09,07,266 13.11.2009 29,000 01.12.2009 12,20,512 12.12.2009 25,600 01.01.2010 4,62,949 01.01.2010 6,63,584 13.01.2010 43,000 25.01.2010 4,09,119 29.01.2010 8,98,730 06.02.2010 73,500 20.02.2010 1,11,900 20.02.2010 3,33,780 03.03.2010 7,67,944 12.03.2010 1,29,000 Total by Cheques 49,78,144 Total by Cheques 1,54,56,205 Balance by Cash 66,08,187 Balance by Cash 19,70,493 Total 1,55,86,331 Total 1,74,26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that: "(1) It is further submitted that it is not disputed that the seized material is nothing but an account maintained by the hospital and that certain amounts supposed to have been received from individual patients are recorded against the name of the assessee. The Assessing Officer and the Commissioner of Income Tax (Appeals) are of the view that these payments made in cash were actually received by the assessee over and above what is shown in the books of accounts of the hospital. It is submitted that part from the aforesaid seized material, there is no other documentary evidence or any other material to conclusively prove that the amounts mentioned in the seized documents were actually paid to the assessee by the hospital. In fact when the assessee was confronted with the seized material and specifically asked about the payments mentioned in the seized material, the assessee denied of having received the amounts mentioned therein and asserted that whatever amounts have been received by him are mentioned in the TDS certificate and nothing more has been received by him from the hospital for both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Paper Books placed on record. First of all, it is to be noted that the proceedings initiated against assessee are U/s. 153A and not U/s. 153C as was the case in the case of Dr. N. Pawan Kumar, in ITA Nos. 1568 and 1569/Hyd/2013, dt. 06-06-2014 (supra). The judicial principles on jurisdiction does not apply to assessee in whose case proceedings are u/s 153A. However, on merits, it is to be noted that the co-ordinate Bench has examined similar situation and has this to state "Having held so, let us now examine whether the addition can be sustained on merits. It is not disputed that the seized material is nothing but an account maintained by the hospital. A perusal of the seized material copies of which have been placed on record, would show that certain amounts supposed to have been received from individual patients are recorded against the name of the assessee. It is the case of the department that these payments made in cash was actually received by the assessee over and above what is shown in the books of accounts of the hospital. However, apart from the aforesaid seized material, there is no other documenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that adequate evidence or material have not been brought on record to conclusively prove the fact that the assessee has received cash payments as mentioned in the seized material". 21. Most of the contentions before us in assessee's case are also similar to the above case. Both are based on HMS package and both are based on the so called payments to doctors as recorded in HMS package as against Tally package. In that case also, Settlement Commission admitted the petition of M/s. Aditya Hospital and there were references to the payments to Dr. Pawan Kumar in those objections. However, assessee's name neither figured in Settlement Commission application nor there is any indication that payments to assessee were also included therein. Be that as it may, fundamental principle to examine in this case is whether the HMS package can be relied upon as proving the payments to assessee. 22. As contended, assessee's name might have been used as a referral name rather than a fee payment consultancy. Doctor is very popular and many of the known patients from his area could have been admitted in the hospital by referring to his name and hospital could have admitted the patient in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Annexure 1) Closing balance as per ledger 178 3,13,110 Annexure I Date Amount received from Banks Page No. Amount 11-06-08 ABN Amro Bank 1,40,783 12-08-08 ICICI Bank Ltd 262 3,41,344 14-08-08 SBI (Masab Tank) 255 1,02,258 01-10-08 SBI (Masab Tank) 255 1,42,500 01-10-08 SBI (Masab Tank) 255 2,86,480 30-10-08 SBI (Masab Tank) 255 2,26,044 01-12-08 ICICI Bank Ltd 263 1,69,668 28-12-09 ICICI Bank Ltd 263 1,14,560 04-02-09 ICICI Bank Ltd 263 1,76,440 04-02-09 ICICI Bank Ltd 263 33,668 Total: 17,33,077 B. Narasaiah - Statement of Reconciliation - F.Y. 2009-10 Particulars Page No. Amount Opening balance as per books 180 3,13,110 Add: Amount net off of TDS receivable from Aditya Hospitals (5824105-614016) 161 52,10,089 Less: Income actually received from banks 38,78,402 (As per Annexure 2) Closing balance as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exhibit 1 have been given to me, should figure in my bank accounts, which is not the case. All my bank accounts are available with you which can be verified. I have no other bank accounts other than what has been admitted and reflected in my Balance Sheets filed before the department and copies of which have been already given to you". 26. There is no rebuttal of assessee's contentions even by AO at the time of assessment itself. In view of the above, we are of the opinion that reliance on HMS package, without any verification or support from any other evidence cannot be accepted so as to make substantial additions in assessee's hands as was done by the AO. Following the principles laid down by coordinate Bench in the case of Dr. Pawan kumar (supra) unless there is some other evidence on record to show that the amount mentioned in the seized material was actually paid to the assessee, it cannot be said with certainty that the assessee has actually received the amounts as mentioned in the seized document. More so, when the hospital has issued a TDS certificate mentioning the amount actually paid to the assessee. The bank account of the assessee also reflected only those payments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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