Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI N.K. PRADHAN, AM (A.Y:2009-10) Dr. Mahesh V Balsekar Addl. Commissioner of Income Tax 7, Sindhula Building, Naoroji Range-11(3) [now Range-16(3)], Vs. Gamadia Road, Mahalaxmi, Mumbai Mumbai-400028 PAN No.AESPB7154E .. Appellant Respondent Assessee by .. Shri Satish Moody, AR .. Shri M.V. Rajguru, DR Revenue by Date of hearing .. 03-01-2017 .. Date of pronouncement 03-01-2017 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of CIT(A)-7, Mumbai, in appeal No. CIT(A)-7/IT.16/Rg. 16(3)/2014-15 dated 16-02-2015. The Assessment was framed by ACIT Central Circle -11(3), Mumbai for the A.Y. 2009-10 vide order dated 28- 12-2011 u/s 143(3)(ii) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The first issue in this appeal of assessee is against the order of CIT(A) confirming the order of rejecting the books of accounts and estimating the income. For this assessee has raised following ground No.1: - “1. On the facts and in the circumstances of the case and in law the CIT(A)erred in confirming the order of the AO in rejecting the books of accounts of the appellant and estimating the income without appreciating the facts of the case.”
3. At the outset, the learned Counsel for the assessee stated that he is not interested in prosecuting this ground and hence, the same is dismissed.
The next issue in this appeal of assessee is as regards to the estimation suppressed professional receipts added by the AO and confirmed by CIT(A) at Rs.10,00,000/-and another Rs. 1,00,000/- from out-patient department in Breach Candy Hospital. For this assessee has raised following ground No.2 and 3: -
2. On the facts and in the circumstances of the case and in law the CIT(A) erred in confirming the order of the assessing officer in making an addition of Rs. 10,00,000/- on estimated basis as suppressed professional receipts without appreciating the evidence brought on record.
On the facts and in the circumstances of the case and in law the CIT(A) erred in confirming the order of the assessing officer in making an addition of Rs. 1,00,000/- on account of suppressed receipts from out-patient’s department in Breach Candy Hospital without appreciating the facts of the case.”
Briefly stated facts are that the assessee is outpatient Doctor practicing from last 28 years. The assessee has consulting chamber at Bombay Mutual Terrace, Opera House Mumbai. The assessee also attends Breach Candy Hospital and HN hospital. The assessee maintains appointment diary which contains names of patient or of the parent/ guardian / relatives who called up for appointment. Admittedly, the assessee does not maintain the prescribed patient register as per the rule 6F of Income Tax Rules 1962. Even the appointment diary maintains by assessee is for the period of 02-01-2009 to 31-03-2009 relevant to the F.Y. 2008-09. The assessee was assisted Dr. Archana Sangekar in his clinic, whose statement was recorded u/s 131 of the Act and she informed the AO that the consulting charges are collected by the receptionist as told by the Dr. Mahesh V. Balsekar, the assessee, on intercom. The assessee accepted that receptionist collects consulting charges and hands over to the assessee at the end of the day and assessee after accumulating the cash from the clinic, deposit the same in the bank account. The assessee has given complete break up of receipts which reads as under: - Place Net amount Rs. TDS Gross Amount Rs. Breach Candy 37,34,777/- 4,77,331/- 42,12,108/- Reliance Indus 7,89,360/- 90,640/- 8,80,000/- Other Hospitals 66,042/- 5769/- 71,811/- Cheque 5,55,150/- 2556/- 5,57,706/- Cash collected at 8 88,73,250/- the Clinic Inclusive of Cost of Vaccine, medicine Total as per P&L 1,45,94,875/- Inclusive of Cost of Vaccine, medicine The cost of Medicine debited to P&L is Rs. 56,59, 637/- Opening Stock Rs. 57,500/- Closing Stock Rs. 19,700/- Cash collected at clinic Rs.88,73,250/- Cheques others Rs. 5,57,706/- Total collection in the clinic Rs.94,30,956/- Less cost of Medicines Rs. 37,800/- Actual Collection from clinic Rs.37,33,519/- Page 2 of 6
According to the AO the assessee is not maintaining the proper books of account or even OPD receipts register as prescribed under Rule 6F of the Rules. Accordingly, the AO rejected the books of account and estimated receipts at around Rs.50,00,000/- to 58,00,000/- by observing as under: -
It is not possible that during the year the assessee has seen patients only for vaccination. He has a separate Assistant Doctor who is a pediatrician, who dose vaccination It was informed by the Assistant Doctor that the consultation charges were Rs. 8001- per patient per visit and at times they were charging Rs. 5001- also. However subsequently the doctor filed a written submission that consultant Charges were between Rs. 600 to Rs. 700/- Since doctor has argued that two or three vaccines are administered to patient at a time) hence Even if we presume that only 3500 patients were administered vaccine by the doctor then also the consultation charges received by the doctor comes to 3500*700=24,500001-. Whereas the consultation charges shown by the assesse is only Rs. 37,33,5191-. However, as mentioned earlier that assessee has not just seen patients for vaccination but must have seen other patients. The difference is 3733519- 2450000=128519. If we divide 128519 by 700 than it is 1833. it means only 1833 patients were seen by the doctor during the year for other than Vaccine There were 280 working days, means only 6 patients were seen by doctor in a day for other than vaccine. Also for vaccines he has seen only 12(35001280=12.5) patients in a day. Thus total he has seen only 19 patients in a day. It has already been mentioned there was a pediatrician Assistant Doctor. In the appointment Diary there were around 28 to 35 patients in a day. However, it has already been mentioned that the appointment dairy do not contain all the name of the patients seen by doctor. Therefore, he must have seen more than 30 patients in the clinic per day. Even, by giving benefit of doubt, we can safely presume that they must have seen 30 patients per day, means for 280 working days 8400 patients It means receipts Rs. 50400001- (8400*Rs.600) to Rs, 58800001-. (8400 *7005880000/). It is important to mention here that during the inspection of receipt books not a single receipt was seen for less than Rs. 6001-. However, the receipts shown by the assessee is only Rs. 37335191-. Thus there seem to be suppression between Rs. 21464811- to 1306481. It is important to mention here that even in the absence of Dr. Balsekar his assistant doctor runs the clinic. It was argued by the doctor that they do not charge for follow patients; however, he could not file any support for the same. On the contrary from the receipt book for the January 2009) it was observed. that doctor had charged the patient on follow up also (receipt Number 13192 date 3-01-2009 Rs. 6001- patients Shiv Kaira and number 13197 for Rs.6001-, patient Shiv Kaira Dated 05- 01-2009.). Thus the argument of the doctor that he does not charge for follow up is factually incorrect. He argued that some patients were seen free of cost. Even, if we accept the argument, then also there is suppression of receipt. Therefore, after considering all the facts, arguments, after giving benefit of doubt to doctor that some patients may have been seen free, I am of the opinion that an estimated addition of Rs. 10,00,000/- will be just and appropriate. Therefore, an addition of Rs. 10,00,000/- is made to Total Income of the assessee on account of suppression of receipts.
Thereby, AO made reasonable estimation of addition at Rs. 10,00,000/-. On similar reasoning the AO also added a sum of Rs. 1,00,000/- being receipt of 525 OPD patients in Breach Candy hospital. Aggrieved assessee preferred the appeal before CIT(A).
Before CIT(A) assessee made submissions, but CIT(A) confirmed the estimation of the AO by observing in para 4.9 and 5.1 as under: - “4.9 Coming to the estimation of suppressed receipts by the AO, in my opinion, me AO has been very conservative in estimating the suppressed receipts only at Rs.10,00,000/-. This is so in view of the fact that i) the appellant charges a margin of Rs. 80-100/- for each vaccination ii) as concluded by the AO, the appellant must have seen at least 30 patients per day in his clinic for an average period of 280 working days which means the collection at the clinic (excluding the vaccination charges) would be more than Rs. 50 lakhs, iii) as ascertained by the AO, the appellant has given vaccination treatment to around 9000 children and if the margin charged by the appellant is considered, the profit element in the vaccination charges would be around more than Rs.9,00,000I-, iv) further, the AO has observed that the receipts shown by the appellant are only Rs.37,33,519/- and hence the suppression of receipts would be between Rs.21,46,481/- to Rs.13,06,481/-. On account of these facts therefore, the estimation of suppression of receipts by the AO at Rs.10,00,000I- is quite conservative and the same deserves to be upheld. I hold accordingly. page 21 CIT(A) .” 5.1 As discussed in the preceding ground of appeal, the AO collected information from the Breach Candy Hospital. It was informed by the Hospital that the appellant had seen 525 patients in the OPD of the Breach Candy Hospital, for which the consultation charges were directly collected by the appellant. These consultation charges were not shown by the appellant. The appellant explained that the amount appears in the total collection of the Clinic. However, the appellant could not substantiate it by evidence. The AO therefore did not accept the explanation of the appellant and after giving credit for the free patients, the AO estimated the undisclosed receipts of the appellant from the Breach Candy Hospital at Rs.1 ,00,000I- and added the same to the total income of the appellant.” Aggrieved against both the estimations, assessee is in second appeal before Tribunal.
Before us the learned Counsel for the assessee Shri Satish Moody only made request that the estimation made by the AO is without any basis and a very fair and reasonable estimation of Rs.2 to 3 lakh will meet the end of justice because there may be some leakage in the maintenance of accounts. He admitted that the entire cash receipts are deposited in the bank account and complete receipts of payments are accounted for. He stated that the some bonafide mistakes might have occurred and for that a reasonable
estimation can be made by the tribunal. On the other hand, the learned Sr. DR relied on the orders of the lower authorities.
We have heard the rival contentions and gone through the facts and circumstances of the case. Now the issue revolves only around estimation of income. We have gone through the assessment order, whereby, the AO has estimated a number of patients presumed at 8400 and by multiple the same to 280 working days estimated the receipts of the assessee at Rs. 58,00,000/-. The AO estimated suppression at Rs. 21,46,481/- to 13,06,481/- and even the CIT(A) confirmed the same without any basis. After going through the facts narrated by the AO, the same are only on the basis of conjunctures and surmises and not facts. The entire estimation is without any basis because the assessee on daily basis receives cash and deposits the same in the very same day in the bank account. This fact has been corroborated by the statement of Dr. Archana Sangeakar and the assessee himself, wherein, it is accepted by the Revenue that the receptionist collects consulting charges and the accumulated cash from the clinic is deposited in the bank account. Once this is the position that the estimation made by the AO and confirmed by the CIT(A) is without any basis. In view of the above facts, a reasonable estimate offered by the learned Counsel for the assessee at Rs. 3,00,000/- is fair and reasonable. This estimation is for both the addition and AO is directed to add a sum of Rs. 3,00,000/- instead of Rs. 11,00,000/-. This two connected issues are allowed partly.
The next issue in this appeal of assessee against the order of CIT(A) confirming the action of the AO in making disallowance of foreign travel expenses of wife. For this assessee has raised following ground No.4: - “4. On the facts and in the circumstances of the case and in law the CIT(A) erred in confirming the disallowance of Rs. 3,57,979/- incurred on foreign traveling by the appellant without appreciating the facts of the case.”
10. We have heard the rival contentions and gone through the facts and circumstance of the case. Briefly stated facts are that the assessee travelled to US along with his wife Dr. Sheila Balsekhar and incurred a total expenditure of Rs. 7,15,958/-. The assessee admitted that 50% expense pertains to assessee’s wife i.e. Rs. 3,57,797/-. According to AO, the assessee travelled to US for the purpose of profession but wife’s expenditure can be claimed only in the hand of the wife and not in the hands of the assessee. Accordingly, he disallowed the same. Aggrieved assessee preferred appeal before CIT(A), who also confirmed the action of the AO vide Para 7.3 of appellant’s order as under: -
7.3 I have considered the above submissions of the appellant as well as the facts of the case. It is seen that the appellant has claimed foreign travel expenditure in respect of his wife, who is also a professional and files income tax return. During the course of appellate proceedings, no evidence that both the appellant and his wife Dr. Sheila Balsekar were invited to the Childrens Hospital Los Angeles to study the process for setting up an obesity clinic for children has been furnished. Even otherwise, if at all any foreign travel expenditure has been incurred in respect of the wife of the appellant, she is entitled to claim the same in her income tax return. From the facts of the case, there appears to be no justification for the appellant to be claiming foreign travel expenditure in respect of his wife, even if it was for her (and not his) professional purposes. Therefore, in my opinion, the AO’s action deserves to be upheld. I order accordingly.
Aggrieved, now assessee is in second appeal before Tribunal.
We find that Dr. Sheila Balsekhar, wife of the assessee is a gynecologist and she is assessed to tax independently. The assessee’s contention for claim of this expenditure was that he travelled to US along with wife on the call of children’s hospital Los Angles to study the process of setting up of the obesity clinic for children, but no such evidence was produced before the lower authorities or even now before us. In view of the above facts, we also confirmed the action of the lower authorities and dismiss this issue of assessee’s appeal.
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 03-01-2017.