Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, CHANDIGARH BENCH ‘A’, CHANDIGARH
Before: SHRI SANJAY GARG & SMT.ANNAPURNA GUPTA
per the books the assessee had shown total cash receipts under the head professional receipts at Rs.2,53,87,697/-.
The Assessing Officer found that the professional receipts were not fully recorded in the final accounts of the assessee and the difference between the extrapolated receipts and that shown in the books of Rs.3,06,71,903/- was added to the income of the assessee
The Ld.CIT(A) noted that identical issue had been discussed by the Hon'ble ITSC in its order u/s 245D(4) of the Act pertaining to preceding and succeeding year, alongwith the issue of commission paid to fellow doctors and unaccounted expenditure at paras 7 to 8 of the order. He noted from the same that the Hon'ble ITSC had accepted the assessee’s plea before it that the impounded documents A.Y. 2013-14 Page 8 of 27 represented her unaccounted income. The Hon'ble ITSC had also accepted the assessee’s calculation of the same on the basis of taking financial year 2013-14 (assessment year 2014-15) as the base year since in that year documents representing unaccounted receipts for 10 months (June to March) were impounded. From these documents it had been worked out that only 54% of her actual receipts were accounted for in her books. For financial year 2013-14 the actual gross receipts were Rs.3.65 crores while only Rs.1.97 crores were recorded in regular books. The basis worked out at 54%, therefore, was then applied to financial years 2009- 10, 2010-11, 2011-12 and 2014-15 to project her total receipt irrespective of the fact that the papers with respect to full period of these years were impounded or not. Taking note of the same the Ld.CIT(A) in the impugned year calculated the undisclosed receipts of the assessee at Rs.2,20,38,026/- and after allowing the benefit of cash expenses, being 29% of the gross receipts as allowed by the Hon'ble ITSC also, calculated the addition to be sustained of Rs.82,84,275/- The relevant findings of the Ld.CIT(A) at paras 5.3.3 of the order is as under: A.Y. 2013-14 Page 9 of 27
“5.3.3. Following the Para 8.3 of Hon'ble 1TSC Order dated 22.12.2016, calculation has been made by considering the receipts for the month of November & December, 2012 and January, 2013 as worked out by the office of the undersigned, as per below : A) Total Cash receipts (accounted and unaccounted) Rs.1,18,16,367/-
Less Cash receipts as per Books Rs.61,58,105/- -------------------- Undisclosed cash receipts for three months as above Rs.56,58,262/- --------------------- B) The ratio as decided by Hon'ble ITSC as per para 8.3 page no 14 that the total unaccounted cash receipts were 46%. Total cash receipts for the balance period of nine months has to be taken into consideration excluding Nov 2012, Dec 2012 and Jan 2013 for which no record was impounded. The cash receipts as per books of accounts for the period of nine months were Rs.1 92,29,592/- and the same is extrapolated by 54% on the basis of seized material and the total cash receipts works to Rs.3,56,09,356/-(19229592/54%). Total extrapolated receipts for 9 months Rs.3,56,09,356/- Less cash Receipts as per books of Accounts Rs.1.92.29.592/- ----------------------- Balance undisclosed receipts for 9 months for F.Y. 12-13 Rs.1.63.79.764/- ----------------------- C) Total undisclosed receipts (B+C) = 56.58,262+1,63,79.764 Rs.2,20,38.026/- Less 29% on account of cash expenses from Rs.1,37,53,750/- Gross receipts as per as per para 8.3.3 page no 15 (47425723= 35609356+11816367) @ 29% as allowed by ITSC --------------------- Balance addition to be sustained Rs.82,84,275/- ---------------------- 9. The sole grievance of the Revenue before us is that the principle of res-judicata did not apply to income tax A.Y. 2013-14 Page 10 of 27 proceedings and, therefore, there was no reason to follow the order of the Hon'ble ITSC while calculating the undisclosed income on account of unaccounted receipts of the impugned year.
The Ld.Counsel for the assessee, on the other hand, relied upon the order of the Ld.CIT(A).
We have heard both the parties. We do not find any reason to interfere in the order of the Ld.CIT(A) who has ,we hold, rightly calculated the unaccounted receipts in the impugned year following the basis accepted by the ITSC in the preceding and succeeding years.
The Ld.CIT(A) has noted that the assessee had submitted its calculation to the ITSC of unaccounted receipts basis documents found relating to A.Y. 2014-15 since they represented unaccounted receipts for 10 months.
The percentage so worked out was applied to the rest of the years irrespective of the fact that documents relating to the whole of the said years was impounded or not. The ITSC found the said declaration of the assessee, as correct and in order for all the years and in fact found it to be more than the figures as worked out by the Department. The A.Y. 2013-14 Page 11 of 27 Settlement Commission has also accepted the assessee’s claim of expenses @ 29% of the receipts for all the years.
The Department, it has been stated at bar, has accepted the order of the ITSC estimating unaccounted receipts for the preceding and succeeding years .
The ITSC, accordingly, passed its order on the issue adopting and accepting the best possible method of estimating the unaccounted income, based on the documents found during survey revealing the unaccounted receipts. The same set of documents pertaining to the impugned year, form the basis of addition made in the impugned year. The facts and circumstances leading to the addition of unaccounted receipts in the impugned year therefore, we agree with the Ld.CIT(A), are identical to the years before the ITSC. The Revenue admittedly has accepted the basis adopted by the ITSC. There is no reason therefore why a different basis needs to be adopted for estimating unaccounted receipts for the impugned year.
We therefore do not find any merit in the impugned grounds 2 (a-d) raised by the Department before us and dismiss the same. A.Y. 2013-14 Page 12 of 27
Ground No.3 raised by the Revenue relates to the issue of addition made by the AO on account of receipts on which commission was paid by the assessee which was deleted by the Ld.CIT(A).
Brief facts relating to the issue are that during the survey, documents A-53, A-54, A-55 were impounded. These documents contained details of payments made to doctors as commission. This fact was confirmed by the assessee in her recorded statement during survey. She also indicated that rate of commission varied from 10-40%. The Assessing Officer worked out the total commission paid to various doctors at Rs.6,54,420/-. The Assessing Officer further made post survey inquiries and found out that the commission was paid to referring doctors at the rate of 10% of the total charges of the diagnostic tests prescribed.
Working backwards the Assessing Office, estimated the receipts of the appellant on the commission paid and projected the total unaccounted receipts of the assessee at Rs.65,44,200/- based on commission paid @ 10% and added it to the income of the assessee. A.Y. 2013-14 Page 13 of 27
The Ld.CIT(A) deleted the addition holding that the issue of addition on account of unaccounted receipts had already been made on the basis of impounded papers and same addition on the issue of unaccounted receipts by adopting a different method only tantamounted to double addition. While holding so, he adopted the view of the Hon'ble ITSC on the issue for the preceding and succeeding years. The relevant findings of the Ld.CIT(A) at para 6.2 of the order are as under:
“6.2. Held: I have examined the issues of addition of unaccounted receipts made by the Assessing Officer. The unaccounted receipts of the appellant have already been estimated on the basis of impounded papers. There cannot be double addition on the issue of unaccounted receipts using .two different methods of addition. This view is in line with the view taken by the Hon'ble ITSC. Hence, the addition of Rs.65,44,200/- is deleted Grounds of Appeal
Nos. 3 (a) & 3 (b) are allowed.”
18. Before us the Ld. DR relied on the order of the AO while the Ld.Counsel for the assessee relied on the order of the Ld.CIT(A).
We have heard both the parties and have also gone through the orders of the authorities below.It is not disputed that the addition on account of unaccounted receipts already stands made on the basis of cash receipts A.Y. 2013-14 Page 14 of 27 recorded in daily cash registers which were impounded during survey. The addition now being made of the same by estimation on the basis of documents revealing commission paid to doctors ,is as rightly stated by the Ld.CIT(A), nothing but adopting a different method for calculating the same, unless it is clearly and specifically demonstrated otherwise, which, we find, is not the case before us. Even the Settlement Commission we find, has, on identical issue, taken the same view of this being double addition in the preceding and succeeding year in the case of the assessee, which order has been accepted by the Revenue. We see no reason therefore to interfere in the order of the Ld.CIT(A) deleting the addition of Rs.65,44,200/- on account of unaccounted receipts.
The ground of appeal No.3 raised by the Revenue is, therefore, dismissed.
Ground of appeal No.4 raised by the assessee relates to addition made of Rs.9,94,760/- on account of difference in receipts under the head ‘ESIC’ which stood deleted by the CIT(A).
The facts relating to the issue are that the addition had A.Y. 2013-14 Page 15 of 27 been made on the basis of impounded documents A-16 and A-20, the total of which was worked out at Rs.22,02,184/- .
The amount of Rs.12,07,476/- was reflected in the Profit & Loss Account of the assessee. The AO accordingly added the difference amounting to Rs.9,94,760/- to the income of the assessee.
The Ld.CIT(A) deleted the same holding at paras 9.2 to 9.2.1 as under:
Held: I have perused the order of the Assessing “9.2. Officer and examined the reply of the appellant. On perusal of the assessment order, it is observed that there is a double taxation. In the table on page 52 of 56 of the assessment order a summarized total of A-16 and A-20, in the description, it is clear that there is an overlap period. The summarized total in A-16 is with respect to the receipts from April 2012 to February 2013. The summarized total of A-20 is a lump sum total for two periods April 2012 to Dec. 2012 and April 2013 to Dec. 2013. The Assessing Officer has made an average for a months and 3 months respectively. The details are summarized as under:-
Docu Period Total Differenc ment (In e (In Rs.) SI. 1. A-16 April, 2012 to Dec 2012 8,52,741/- A-20 2. April, 2012 to Dec. 2012 8,46.638/- (+) 7,103/- 3. A-16 Jan.2013toFeb.2013 2,02,4751- 4. A-20 Jan. 2013 to March 2013 3,01 ,330/- (+)1,988,855/-
9.2.1. Since the total of higher of the two amounts i.e. Rs.8,52,741/- and Rs.3,01,330/- amounts to Rs.11,54,071/- is covered by amount of Rs.12,07,476/- reflected in the books, therefore, the addition of Rs. 9,94,708/- made by the AO is hereby deleted. Ground of Appeal No. 7 is allowed.”
A.Y. 2013-14 Page 16 of 27
The revenue has contended that the Ld.CIT(A) has erred by deleting addition of Rs.9,94, 708/- treating it as double addition, when in fact the documents demonstrated they were altogether different.
We have gone through the order of the AO and also the Ld.CIT(A). On going through the facts in the said orders ,we find no infirmity in the order of the Ld.CIT(A) deleting the addition on finding it to be on account of mere duplication of figures mentioned in the two documents A-16 & A-20 impounded.
This fact, we find , is apparent from the summarized totals of the two annexures A-16 and A-20.
The two annexures are tabulated in the order of the AO at page 52 as under:
Annexure Period Description Amount Amount Relevant to No. the A.Y.2013-14 A-16 Apr- 12 ESIC BILLS 73141 73141 A-16 May- 12 ESIC BILLS 59771 59771 A-16 Jun-12 ESIC BILLS 77315 77315 A-16 Jul-12 ESIC BILLS BADDI 108059 108059 A-16 Aug-12 ESIC BILLS BADDI 93806 93806 A-16 Sep-12 ESIC BILLS BADDI 119245 19245 A-16 ESIC RAMDARBAR Oct-12 BILLS 5198 5198 A-16 Oct-12 ESIC BILLS BADDI 99732 99732 A-16 Nov-12 ESIC BILLS BADDI 95913 95913 A-16 De<;-12 ESIC BILLS BADDI 120561 120561 A-16 Jan-13 ESIC BILLS BADDI 113789 113789 A-16 Feb-13 ESIC BILLS BADDI 88686 88686 A-20 april20!2loDec ESIC BADDI 845638 845638 2012 A.Y. 2013-14 Page 17 of 27
A-20 JAN.+ 2013lo ESIC BADDI 1205328 301330 Dec. 2013 Total 2202184
The Ld.CIT(A) summarized this data at para 9.2 of his order as under:
Docu Period Total Differenc ment (In e (In Rs.) SI. 1. A-16 April, 2012 to Dec 2012 8,52,741/- A-20 2. April, 2012 to Dec. 2012 8,46.638/- (+) 7,103/- 3. A-16 Jan.2013toFeb.2013 2,02,4751- 4. A-20 Jan. 2013 to March 2013 3,01 ,330/- (+)1,988,855/-
The Revenue has not pointed to us any infirmity in the data as summarized by the Ld.CIT(A).The conclusion therefore drawn from the same by the Ld.CIT(A) that the two documents contained overlapping data is evident since A-16 document contained ESIC data for the period April 12 to Feb 13 while document A-20 contained ESIC data for the period April12 to mARCH13 ,the data relating to April 12 to Feb 13 therefore overlapping .The entire data relates to Baddi except for a meager amount of Rs.5198 which relates to Ramdarbar. The Ld.CIT(A), by adopting a conservative approach, has taken the greater of the overlapping figures and found the same as duly reflected in the books of the assessee, thus holding that no addition is called for on the basis of these two documents. We do not find any merit in the plea of the Revenue that the two documents were A.Y. 2013-14 Page 18 of 27 different since the facts as we have noted above do not demonstrate anything to arrive at this finding and the difference referred to by the Revenue relating to an entry related to Ramdarbar is too inconsequential to adversely effect the otherwise logical inference that the two documents contained overlapping data.
In view of the above we uphold the order of the Ld.CIT(A) deleting the addition made on account of unaccounted ESIC receipts amounting to Rs.9,94,760/-
Ground of appeal No.4 of the Revenue is therefore dismissed.
29. Ground Nos.5 & 5.1 raised by the assessee relates to the issue of addition made of Rs.1,29,255/- on account of unaccounted receipts as per documents A-14 & A-21 showing income received from “KUC” read as Kidney and Uro Centre a known hospital in Chandigarh sector-46.
The Ld.CIT(A) deleted the same finding merit in the contention of the assessee that all receipts as reflected in the said documents stood duly accounted for in its books and further considering the order of the ITSC on identical issue in the preceding and succeeding year holding as A.Y. 2013-14 Page 19 of 27 under:
“11.1 Per Contra: The appellant has made the following observation with respect to this amount: "i. The Assessing Officer has mentioned that a sum of Rs.3,27,275/- is on account of receipt from "KUC" and out of which, according to him, Rs. 1.93.020/- has been recorded and, as such, the addition as made by the Assessing Officer is incorrect. ii. ft is fact that Rs.2,77,550/- is duly recorded as per chart is being furnished herewith either in this year or in the next year. iii. With regard to figure of Rs. 25,225/-, i! is submitted that in the Annexure, the figure of Rs 13,000 stands recorded in the books of accounts and there is no figure of Rs 25225/- iv. The figure of Rs. 24.500/- is duly recorded in the books of account and hence no addition is called for." 11.1.1. In the remand report, the Assessing Officer has given the same observed as under; - 'During the course of assessment proceedings, the impounded documents were perused by the Assessing Officer. Annexure-14,16,21 & 23 of impounded documents relates to receipts from Indus Hospital, KUC & Mukut and some hand written workings. The total receipts from the same were not in correlation with regular books of accounts. Hence addition was made during the assessment proceedings by the A.O. The submissions of the assesses vide additional evidence are merely an afterthought and except the computerized ledger account of these parties, no other concrete evidence/ document/ confirmation etc. in this regard has been produced by the assesses. The A. 0. after a careful perusal of impounded documents and going through the statements recorded during the course of survey had made the requisite additions, which appears to be correct and therefore, no reliance can be made on the submissions of the assesses."
A.Y. 2013-14 Page 20 of 27
11.1.2. In reply filed on 19.07.2017, no additional arguments were extended by the appellant. “11.1.3 The Hon'ble Income Tax Settlement Commission, in its order made the following observation:- ..the applicant vide letter dated 7th December. 2016 submission in the spirit of cooperation. The letter can be quoted verbatim- "We have already submitted in the SOF and again in our rejoinder that there are no cash receipts from these hospitals and all the payments are by cheques and rather on account of non-recovering of amount, we have to write off the amount due from such hospitals as bad debts, which is very clear from our rejoinder and our earlier submission. The Department has not been able to point out cash receipts outside the books of accounts, if any, in spite of this, we hereby make a lump-sum offer of Rs.6 lakh on account of the above and, thus, the total offer is as under:-
AY Offer now made on account of 3 hospitals (Amount in Rs.) 2010-11 Nil 2011-12 2,00,000/- 2012-13 2,00,000/- 2014-15 2,00,000/- Total 6,00,000/-
14.3.2 in view of the above facts and circumstances, the above offer is being made in the spirit of settlement arid to avoid any protracted proceedings and the applicant has cooperated with the Settlement Commission during the course of various hearing and it is very humbly requested that the settlement be made by including the above said additional offer and oblige" 14.3.3 Summing up, the applicant has made this additional offer of additional income in respect of (he three hospitals to give quietus to the issue in the spirit of settlement. Accordingly, the said amount would be included in the income for settlement."
A.Y. 2013-14 Page 21 of 27
11.2 Held: I have perused the order of the Assessing Officer, examined the reply of the assessee and observation made by the Hon'ble Income Tax Settlement Commission. In view of above findings of the Hon'ble Settlement Commission, I find merit in the arguments of the appellant. Hence, the addition of Rs.1,29,255/- made by the AO is deleted Ground of Appeal
No. 9 is allowed.
31. Before us Ld.DR relied on the order of the AO while the Ld.Counsel for the assessee relied on the order of the Ld.CIT(A).
We have heard both the parties. We have also gone through the order of both the AO and the Ld.CIT(A).We find that the assessee had demonstrated from its books of accounts that all the amounts noted in the documents stood recorded in her books. The Ld.CIT(A) confronted the same to the AO who was unable to point any infirmity. Even before us the Revenue has been unable bring any material before us to controvert the aforesaid contention of the assessee. In view of the same, we hold, that there is no infirmity in the order of the Ld.CIT(A) holding no addition being called for on this account. Moreover we find that before the ITSC also the assessee had contended that the department had not been able to prove any cash receipts by the assessee outside its books from KUC and to give quietus to the issue had surrendered a sum of Rs.6,00,000/- in three years, which A.Y. 2013-14 Page 22 of 27 was accepted as such by the ITSC.
In view of the above therefore we hold that the Ld.CIT(A) has rightly deleted the addition made of unaccounted receipts from KUC of Rs.1,29,255/-
Ground of appeal No.5& 5.1 raised by the Revenue is accordingly dismissed.
34. Ground Nos.6 and 6.1 raised by the Revenue relate to addition of Rs.6,43 563/- on account of unaccounted receipts from Mukut Hospital made on the basis of documents A-146 & A-23.
The Ld.CIT(A) deleted the same finding merit in the assessee’s contention that all relevant amounts recorded in the said documents stood accounted for in the books of the assessee and further considering the order of the ITSC on the issue in the preceding and succeeding years. The findings of the Ld.CIT(A) at para 12.1to 12.2 of the order are as under:
“12.1 Per Contra: In her reply on 11.01.2016, the appellant has states as under:- 25. Ground No. 10 "That the Ld. Assessing Officer has made also erred in making the addition of Rs 6,43.563/- on account of 'Mukat Hospital' as per A.Y. 2013-14 Page 23 of 27 para 17.2 of his order." i. The Assessing Officer has made an addition of Rs. 6,43,563/~ and in this respect, it is submitted that we are submitting herewith a chart from where if is proved that the first three figures are not relatable to the year under consideration and all the other figures are duly recorded in the books of accounts and, therefore, no addition is liable to be made."
12.1.1. In the table filed with the reply, the appellant has made following observation:-
ANNEXURE—A. 14 & 23 (MUKUT HOSPITAL) MONTH DIFF. REMARKS-AS PER ACCOUNT BOOKS AMOUNT AMOUNT AMOUNT AS Per AO Relevant To AS Per AY 2013-14 Books 551450 413588 DEC This figure is a consolidated figure for 9 2011- months. However separate figures for each DEC month are available in A-23 and as such. 2012 this consolidated figure has got no relevance and cannot be separately added. 732700 183175 JAN This figure is a consolidated figure for 3 2013— months. However separate figures for each DEC month are available in A-23 and as such, 2013 this consolidated figure has got no relevance and cannot be separately added. , _ _ _ _ 596763 According to Ld. AO even if the total amount TOTAL received as per consolidated figures should be 596763/- whereas, the assessee has already credited in regular books of accounts a sum of Rs 580550/-. The minor difference can be on account of certain deductions having been made by mukata hospital. The difference can De due to hypothetical working of amount relatable to A. Y. 2013-14. However separate figures for each month are available in A-23 and as such: this consolidated figure has got no relevance and cannot be separately added.
12.1.2. In reply filed on 19.07.2017, the appellant has made no fresh arguments.
12.1.3. The observations of Hon'ble Income Commission have been reproduced in para 14.3.
"14.3 Commission's decision:-As can be seen, the accounts available with the applicant do not cover the entire period of the previous years. In both the matter, there are gaps of one to three months in the A.Y. 2013-14 Page 24 of 27
3 assessment period. The applicant took the plea that for this period there are no records nor did the Department detect any materials in the circumstance, the Department used the available data to extrapolate them to determine income for the remaining period. On a careful consideration of the facts and circumstances of the case, the extrapolation exercise carried out by the Department appears to be on the right line. In the meantime, the applicant vide letter dated 7th December, 2016 submission in the spirit of cooperation. The letter can be quoted verbatim: "We have already submitted in the SOF and again in our rejoinder that there are no cash receipts from these hospitals and all the payments are by cheques and rather on account of non-recovering of amount, we have to wright off the amount due from such hospitals as bad debts, which is very clear from our rejoinder and our earlier submission The Department has not been able to point out cash receipts outside the books of accounts, if any, in spite of this, we hereby make a lump-sum offer of Rs. 6 lakh on account of the above and, thus, the total offer is as under:
AY Offer now made on account of 3 hospitals 2010-11 Nil 2011-12 2,00,000 2012-13 2,00,000 2014-15 6,00,000
14.3.2 In view of the above said facts and circumstances, the above offer is being made in the spirit of settlement and to avoid any protracted proceedings and the applicant has cooperated with the Settlement Commission during the course of various hearing and it is very humbly requested that the settlement be made by including the above said additional offer and oblige. '' 12.2. Held: I have perused the order of the Assessing Officer, examined the reply of the appellant and observation made by the Hon'b'e Income Tax Settlement Commission. In view of above findings of the Hon'bie Settlement Commission, the addition of Rs.6,43,563/-made by the AC .s deleted Ground of Appeal No.10 is allowed.”
36. The Ld DR relied on the order of the AO while the Ld.Counsel for the assessee relied on the order of the A.Y. 2013-14 Page 25 of 27 Ld.CIT(A).
We have heard both the parties and have also gone through the order of the AO as well as the Ld.CIT(A). The Ld.CIT(A), we have noted, deleted the addition after examining and finding merit in the assessee’s contention that all amounts reflected in the documents stood accounted for in the books of the assessee. He also noted that the ITSC had accepted assessee’s lumpsum surrender on this account of Rs.6lacs made in three years to buy quietus to the issue on being pointed out that the department had been unable to point out cash receipts outside the books on this account in the years before the ITSC. The Revenue has brought nothing before us to controvert the factual contention of the assessee that all amounts recorded in the documents stood disclosed in the books of the assessee.
In view of the same and considering the order of the ITSC on similar issue in the preceding and succeeding ears wherein also the department was unable to point out any cash receipts outside the books on this account, we see no reason to interfere in the order of the Ld.CIT(A) deleting the addition made on account of alleged unaccounted receipts from Mukut Hospital amounting to Rs.6,43,563/- A.Y. 2013-14 Page 26 of 27
Ground of appeal No.6 & 6.1 of the Revenue is accordingly dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced on 4 th October, 2021.