GROVER NURSING HOME Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a petition for quashing of the notices dt. 4th March, 2000, issued by the ITO, Ward No. 1, Sirsa, (respondent No. 1) under S. 148 of the IT Act, 1961 (for short "the Act"), for assessment/reassessment of the income of the petitioner in relation to the asst. years 1993 94, 1994 95 and 1995 96.

(2.) THE facts of the case are that the petitioner, Grover Nursing Home, Sirsa, is a partnership firm consisting of two partners, namely, Dr. B.D. Grover and Dr. Ramesh Kumari, both of whom are assessees under the Act. The firm came into existence in pursuance of the deed of partnership executed on 10th Sept., 1992. Prior to this, Dr. B.D. Grover was carrying on independent practice and was filing returns in his capacity as the proprietor of Grover Maternity and Nursing Home, Sirsa. He filed a return on 30th Nov., 1993, for the asst. year 1993 94 declaring an income of Rs. 49,429. For the asst. year 1994 95, he filed the return on 18th Oct., 1994, showing an income of Rs. 55,222. For the asst. year 1995 96, he filed the return dt. 31st Jan., 1996, declaring an income of Rs. 75,580. All these returns were processed under S. 143(1)(a) of the Act. The return of income on behalf of the petitioner was filed for the first time on 31st Aug., 1995, for the asst. year 1995 96 (for the period from 24th Oct., 1994, to 31st March, 1995). The same was also processed by the competent authority under S. 143(1)(a) of the Act. In the meanwhile, the Assistant Director of Income tax, Investigation (respondent No. 2) issued letters/notices dt. 2nd Dec., 1993, 24th Oct., 1994, and 2nd Feb., 1995, to Dr. B.D. Grover asking the details and sources of investment on the building of a nursing home. Dr. Grover filed replies dt. 26th Dec., 1993, 30th Nov., 1994, and 9th Feb., 1995, and furnished the details of the constructed area of the plot, the break up of construction made in different years and the various outstanding loans. He also got done valuation from a registered valuer. Therefore, respondent No. 2 authorised Shri R.L. Aggarwal, Valuation Officer of the Department, to inspect the properties of Dr. B.D. Grover and to make investigation under S. 131(1)(d) of the Act. The Valuation Officer issued notice dt. 28th July, 1995 (annexure P 16) to Grover Hospital and Maternity Nursing Home, Dabwali Road, Sirsa, to furnish various documents and information mentioned therein. To this, a reply dt. 9th Nov., 1995, was sent by Dr. Grover in his capacity as partner of Grover Nursing Home. Along with the reply, he enclosed the documents mentioned at items Nos. 1 to 6 and 11 of the notice. He also stated that the report of the registered value has been misplaced and a copy thereof shall be submitted later on. The Departmental Valuation Officer submitted a report dt. 6th Aug., 1999, indicating therein that the cost of construction was Rs. 27,72,361. On receipt of the said report, respondent No. 1 issued three notices dt. 16th June, 1999, to Dr. B.D. Grover under S. 142(1) and (3) of the Act asking him to furnish information stipulated in the notices. Dr. Grover submitted a reply dt. 2nd Sept., 1999, stating therein that he had not made any construction whatsoever and had not concealed the particulars of his income in the returns filed for the years 1993 94, 1994 95 and 1995 96. After considering his assertions, respondent No. 1 filed the notices issued to Dr. B.D. Grover in his capacity as proprietor of Grover Maternity and Nursing Home, but at the same time, he issued the impugned notices to the petitioner under S. 148 of the Act for making assessment in relation to the asst. years 1993 94 and 1994 95 and reassessment in relation to the year 1995 96.

(3.) IN the written statement filed on behalf of the respondents, it has been averred that after collecting information regarding the loan obtained by the petitioner from the Haryana Financial Corporation, respondent No. 2 confronted it with the said information and called upon it to furnish details and source of investment on assets pledged with the Corporation. In reply, the petitioner submitted some information regarding the covered area and the total cost of construction. The matter regarding cost of construction was then referred by respondent No. 2 to the Departmental Valuation Officer. On receipt of his comments, notices dt. 27th March, 1998, under S. 148 of the Act were issued to Dr. B.D. Grover in his capacity as proprietor of Grover Maternity and Nursing Home, Sirsa, for the asst. years 1993 94, 1994 95 and 1995 96. In respondent to the notices, Dr. B.D. Grover filed the returns for the relevant assessment years and also submitted that he had not made any construction whatsoever. According to him, the construction had been raised by the petitioner firm in which he was a partner. In view of these assertions, notices issued to Dr. Grover were dropped and proceedings were initiated against the petitioner under S. 147 of the Act as no return of income had been filed for the asst. years 1993 94 and 1994 95 in order to bring to tax the unexplained investment which represented difference in the cost of construction shown over and above what was estimated by the Departmental Valuation Officer of the Department. Notice under s. 148 of the Act was also issued for the asst. year 1995 96 to bring to tax the difference in the return filed by the petitioner and the expenditure made. The respondents have further averred that the property of the petitioner was visited by the Valuation Officer along with Dr. B.D. Grover on 9th Nov., 1995, before estimating the cost of construction and he, i.e., Dr. Grover, did not raise any objection. According to the respondents, the writ petition should be dismissed being premature because the petitioner can raise all objections before the concerned authority. In paras. 13 and 15 of the written statement, the respondents have made the following averments :