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2015 (9) TMI 956 - AT - Income TaxDouble 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 consultation fee of the doctors which was passed on to respective persons. As far as assessee is concerned he is only a specialized doctor for the hospital being run in his wife s name and surgical fee is received by him. There is no evidence of how many patients are surgery patients and how many are non-surgery patients. Therefore AO has taken up roughly at about 25% as non-surgery cases as the nursing home was mainly run under the guidance of assessee being a surgeon. Since neither party is able 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 medical expenditure in which surgery fee was shown at 3, 500/-. Based on that it is fairly reasonable to estimate that amount as fee received for surgery in that year. Based on the above the receipts from surgery in AY. 2004-05 would be at 10 Lakhs (4, 000 X 2, 500) in AY. 2005-06 at 11, 49, 000/- (383 X 3, 000) and in AY. 2006-07 at 6, 93, 000/-. The estimation submitted by assessee at our instance is based on the statement from which the surgery fee at 3, 500/- could 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 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 raised. However while making the additions the aspect that proceedings U/s. 153C were initiated 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 ratio of expenditure claimed we are of the opinion that estimation of net receipts can be considered by increasing the receipts by another 50% i.e. about 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 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 to AY. 2004-05 the capital gains cannot be brought to tax in AY. 2003-04 accordingly the grounds are allowed. AO is directed to delete the amount made as an addition in this year. Agricultural Income - Held that - There is lot of variation of the agricultural income depending on the agricultural holdings. Assessee s husband Dr. S. Venkateswara Prasad also offered agricultural income and the same was accepted as such. Keeping that in mind 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.
Issues Involved:
1. Validity of proceedings under Section 153A and 153C of the Income Tax Act. 2. Taxation of Short Term Capital Gains vs. Long Term Capital Gains. 3. Estimation of unrecorded hospital receipts and income. 4. Double addition of income in the hands of both the assessee and his wife. 5. Validity of agricultural income claims. 6. Deletion of additions by CIT(A) and Revenue's appeal against it. Detailed Analysis: Validity of Proceedings under Section 153A and 153C: The proceedings under Section 153A were initiated following search and seizure operations on Dr. S. Venkateswara Prasad. Despite the assessee contesting these proceedings, the Tribunal upheld the initiation as mandatory due to the search and seizure operations. Similarly, the proceedings under Section 153C for the assessee's wife were deemed valid as the AO was satisfied with the incriminating material found, specifically an inpatient register from the hospital. Taxation of Short Term Capital Gains vs. Long Term Capital Gains: For AY 2003-04, the AO assessed Rs. 13,30,053/- as Short Term Capital Gain, arguing that the construction was completed before 01-04-2003. However, the Tribunal found that the possession of the constructed flats was taken on 12-07-2003, making the gains Long Term Capital Gains taxable in AY 2004-05. The Tribunal upheld the assessee's contention and directed the AO to treat the gains as Long Term Capital Gains in AY 2004-05. Estimation of Unrecorded Hospital Receipts and Income: During the search, notebooks containing patient details were seized. The AO estimated unrecorded income based on these records, assuming surgery and non-surgery cases with respective fees. The Tribunal found the AO's estimation on the higher side and adjusted the fees based on evidence, reducing the addition to more reasonable amounts. The Tribunal also noted the lack of corresponding investments or unaccounted wealth, suggesting the initial estimations were excessive. Double Addition of Income: The AO had made double additions of the same income in the hands of both Dr. S. Venkateswara Prasad and his wife. The CIT(A) deleted the double additions in the wife's case, and the Tribunal upheld this deletion, noting that the same income cannot be taxed twice. Validity of Agricultural Income Claims: The AO had partially treated the declared agricultural income as 'Income from Other Sources,' doubting the quantum of income from the agricultural land. The Tribunal found the AO's action unjustified, given the lack of incriminating material and the consistent agricultural income declared over the years. The Tribunal directed the AO to accept the agricultural income as declared by the assessee. Deletion of Additions by CIT(A) and Revenue's Appeal: The Revenue appealed against the deletion of additions by the CIT(A) in the wife's case. The Tribunal dismissed these appeals, affirming that there cannot be double additions of the same income and that the CIT(A)'s order was in accordance with the law and facts. The Tribunal also dismissed the Revenue's contention regarding non-deduction of TDS, noting that this issue was not raised by the AO in the assessment. Conclusion: - The Tribunal upheld the validity of proceedings under Sections 153A and 153C. - The capital gains were directed to be treated as Long Term Capital Gains in AY 2004-05. - The Tribunal adjusted the estimations of unrecorded hospital receipts to more reasonable amounts. - Double additions of income were deleted. - The Tribunal accepted the declared agricultural income. - The Revenue's appeals against the deletion of additions were dismissed. Final Order: - Appeals for AY 2003-04 were allowed. - Appeals for AYs 2004-05, 2005-06, and 2006-07 were partly allowed. - The Revenue's appeals in ITA Nos. 1717, 1718, and 1719/Hyd/2011 were dismissed.
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