Income Tax Appellate Tribunal - Jaipur
Dr. P.R. Gupta vs Deputy Commissioner Of Income Tax on 13 February, 2006
Equivalent citations: (2006)102TTJ(JP)845
ORDER
B.P. Jain, A.M.
1. These are two cross-appeals of the Revenue and the assessee which arise from the order of learned CIT(A)-Central, Jaipur dt. 20th Aug., 2004 for the block period from 1st April, 1989 to 1st Feb., 2000.
The grounds raised by the assessee are as under:
1. The learned CIT(A) erred in not declaring bad in law and annulling the assessment order dt. 29th April, 2002 passed under Section 158BC r/w Section 143(3) of the IT Act, 1961 for the block period asst. yr. 1990-91 to asst. yr. 1999-2000 and asst. yr. 2000-01 upto 1st Feb., 2000 and he failed to appreciate that the block assessment order has been passed in violation of Section 158BB of IT Act and is based on the information or evidence found as the result of survey under Section 133A of IT Act or on the basis of subsequent inquiries made on the matters found as the result of survey under Section 133A of IT Act.
2. The assessee did not press the ground No. 1, same is dismissed as not pressed by the counsel for the assessee.
3. Ground Nos. 2 and 3 of assessee's appeal [IT(SS)A No. 74/Jp/2004] and ground No. 1 of Revenue's appeal [IT(SS)A No. 79/Jp/2004] are common and hence all the grounds are being taken up together as under.
4. Ground No. 2 of the assessee: On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the suppression in number of patients by estimating the number of patients at 2,250 for asst. yr. 1999-2000 and 2,000 for asst. yr. 1998-99 more so when no material was found to show that the assessee was suppressing the number of patients particularly when the number of patients for asst. yr. 2000-01 (upto 31st Jan., 2000) was taken at 2,223, at the same figure which is shown by seized patients' diary kept by the assessee in normal course of business.
5. Ground No. 3 of the assessee: On the facts and in the circumstances of the case the learned CIT(A)-Central erred in confirming the addition of Rs. 1,25,000 (asst. yr. 1998-99), Rs. 1,29,000 (asst. yr. 1999-2000) and Rs. 1,11,150 (asst. yr. 2000-01 upto 31st Jan., 2000) totalling to Rs. 3,65,150 on account of the undisclosed consultation fees.
6. Ground No. 1 of the Revenue: On the facts and circumstances of the case, the learned CIT(A) has erred in deleting the suppression of professional receipts for the asst. yrs. 1990-91 to 1997-98 ignoring the facts that several materials and evidences gathered in the form of statements of patients and employees for the asst. yrs. 1998-99 to 2000-01 which were sufficient to estimate income for the period falling under block period.
7. The brief facts of ground Nos. 2 and 3 of the assessee and ground No, 1 of the Revenue are that search and seizure proceedings were carried out at residence and business premises (clinic) of the assessee located at A-66-AB, Subhash Nagar Shopping Centre, Shastri Nagar, Jaipur on 1st Feb., 2000 which were concluded on 28th April, 2000. Before that survey proceedings were carried out on the assessee on 31st Jan, 2000. Certain assets along with loose papers and documents were found. The assessee is a Doctor by profession and working as professor in T.B. Hospital, Jaipur, During the block period, in addition to income from salary, he has also derived income from private practice of consulting patients at his clinic. The assessee was founder member and secretary of M/s Agrasen Medical & Research Society and the society's office was located in his house. During the search proceedings it was observed that the assessee was engaged in suppression of receipts from his private practice and was also receiving commission from diagnostic centre for referring patients and this commission income has not been disclosed in the regular returns. Such undisclosed income has been invested mostly in construction of residential house and clinic, etc. and part of the undisclosed income was converted by the assessee in tax-free export income in the name of his wife.
8. As per para 5.1 of AO's order, in the case of doctors working in Government, fee for visiting a patient is governed by State Government Service Rules. From April, 1989 to July, 1994, it was prescribed at Rs. 30 and from July, 1994 to March, 1995 it was Rs. 40 and from March, 1995 onwards it was Rs. 50 and during non-visiting hours the prescribed fee from April, 1989 to July, 1994 was Rs. 40 and from July, 1994 to March, 1995 it was Rs. 50. The non-Governmental doctors, in view of AO were charging Rs. 100 to 200 during this period whereas the Governmental doctors also charged the similar amount but did not issue the receipt to the patients in general. The receipt for the prescribed fees is issued, if demanded by the patient.
9. During the course of survey on 31st Jan., 2000 the statements of Sh. Ramlal, a patient (paper book-119) and Sh. Ravi Anand Kaushik, the employee (paper book 120-122) were recorded. As per the statement of Sh. Ram Lai the patient as per question Nos. 3 and 4 asked during the course of survey, the assessee had charged Rs. 100 from the said patient. As per the statement of Sh. Ravi Anand Kaushik, the employee as per question No. 7 the assessee is receiving Rs. 100 but issuing the receipt of Rs. 50 only. Through verbal conversation with other patients and assessee himself confirmed that visiting/consultation fees of Rs. 100 were charged per patient. During the course of search proceeding on 1st Feb., 2000, the statement of Sh. Jitendra Sahni S/o late Sh. S.R. Sahni R/o 417-B, Adarsh Nagar, Jaipur (paper book 130-132) was recorded that when he came for first time in January, 1999 to the clinic of the assessee, he had paid Rs. 100 for visiting and receipt which was not issued to-him and on each of 15 to 16 occasions he had paid Rs. 100 and no receipt was ever issued to him. A patients' diary was furnished by the assessee to the AO during the course of assessment proceeding showing number of patients as 2,232 from 1st April, 1999 to 31st Jan., 2000. The AO gave a show-cause notice to the assessee estimating number of patients at 2,600 and total receipts for 10 years at Rs. 26,00,000 plus fees for the period 1st April, 1999 to 31st Jan., 2000 at Rs. 2,23,200 i.e., total receipts at Rs. 28,23,200. And the assessee's reply in response to the said show-cause as per para 5.5 of AO's order at pp. 5 to 8 was as under:
5.5 Assessee in his letter dt, 5th Feb., 2002 submitted as follows:
(i) We object to your observation that the assessee is charging Rs. 100 as consultation fee but showing receipt of Rs. 50 only because of restriction of State Government Service Conduct Rules. The assessee has shown receipt from private practice according to the fee charged by him. The assessee charged fee of Rs. 30 (Rs. 40 after consultation hours) from April, 1989 to July, 1992, Rs. 40 (Rs. 50 after consultation hours) from July, 1994 to March, 1995 and Rs. 50 from March, 1995 to till date as consultation fee from patients.
(ia) In the receipt book seized at A-l to A-10 from April, 1999 to 22nd Nov., 1999 some of the original receipts are lying in receipt books due to the reason that some patients do not take receipt and thus the original receipt remains in book. The assessee has issued receipt for the amount which he has charged from patients as consultation fee. There is no suppression of professional receipt.
(ii) You have mentioned that during the course of search, statement of one of patients Shri Jitendra Sahni was recorded who. stated, that the assessee has charged fee at Rs. 100 from him. He has also stated that the assessee has not issued receipt to him. This is true that from this patient the assessee charged fee of Rs. 100 for the reason that the patient was suffering from a rare disease called sarcoidosis. In fact the assessee has done spromemetry test (PFT) of this patient and hence Rs. 50 is charged for such test. Thus on account of consultation the fee charged is Rs. 50 only. The assessee has clarified this fact in his statement recorded on 15th May, 2000 in reply to question No. 4 himself that he has never asked for receipt. He also stated that he visit to assessee's clinic for his treatment and he is not concerned with receipt. We may further mention that the assessee donated the PFT machine to a blind Sanasthan known as M/s Louis Braille Dristihin Vikas Sansthan. From 1st April, 1999, it was installed at the clinic of assessee and it was decided that whatever receipt would be there on account of PFT test, it would be receipt of that Sansthan (trust). For this purpose the receipt book of Sansthan is also kept at the clinic of assessee.
(iii) You mentioned that statements of other patients including Ramlal of Achrol were recorded during survey under Section 133A wherein they have admitted of paying fee of Rs. 100 as consultation fee and for that no receipt is issued. We request you to provide the copy of statements of patients recorded during survey proceedings so that we can give our reply. So far as statement of Ramlal is concerned we may mention that the statement was taken under pressure. His affidavit stating the fact that the assessee charged fee of Rs. 50 only is enclosed. We may also mention that during search the Departmental authorities examined other patients and recorded statements who have stated that they paid fee of Rs. 50 as consultation fee. The assessee in his statements recorded on 15th May, 2000 in reply to question No. has stated the fact that statements of 4-5 patients were recorded who stated that the assesses charged fee of Rs. 50 as consultation fee. The affidavits of 3 patients who were examined by the Departmental authorities during search are enclosed.
(iv) During survey statement of employee Mr. Ravi Anand was recorded on 31st Jan., 2000, wherein he stated that the assessee charges fee of Rs. 100 and gives receipt of Rs. 50 only. This statement was recorded by survey party under pressure. Mr. Ravi in his statement in reply to Q.No. 4 has clearly mentioned that there are two receipt books, one is of doctor himself for consultation fee and Anr. is of M/s Louis Braille Dristihin Vikas Sansthan of PFT test done to patient. When ever the PFT test is done the Ravi clarifying (sic) the above fact has already been filed with return. Even otherwise there is no signature of the officer who has taken the statements and therefore no credence to such statement be given. Further you yourself have also examined Mr. Ravi Anand on 23rd Jan., 2002 to 25th Jan., 2002 at your office. We request you to provide the copy of his statement recorded by you.
(v) There is no documentary evidence found in search to indicate that the assessee charges fee of Rs. 100 as consultation fee from patients. Simply on the basis of statement of one patient that assessee charged consultation fee at Rs. 100 from patients. The assessee in his statements has clarified the fact that why Rs. 100 is charged from this patient. At the time of search 4-5 patients present there were examined by the search party. They all stated that the assessee charged consultation fee at Rs. 50 per visit. Their affidavits are enclosed.
(vi) In statements of assessee recorded on 31st Jan., 2000 during survey proceedings in reply to question No, 11 it is noted by the survey party that the assessee charges Rs. 100 as fee from patients but receipt is being given for Rs. 50. This was written by the survey party at their own in spite of reply of assessee that he charges Rs. 50 only. The assesses, therefore, while signing statements has mentioned the correct fact and noted in his handwriting at the end of the page that he charges only Rs. 50 as consultation fee from the patients.
(vii) From the above it is very much clear that the assessee charges Rs. 50 as consultation fee. Whenever test is carried out to any patient from PFT machine the assessee charged Rs. 50 for such test. However after April, 1999 the receipt from such machine accrued to Louis Braille Dristihin Sansthan as the assessee donated the PFT machine to this Sansthan. The office bearer of Sansthan kept a receipt book of Sansthan at the clinic of assessee so that whenever any test is done from this machine the receipt is issued from the receipt book. This receipt is income of this Sansthan. The assessee has nothing to do with such receipt. The office bearer of this Sansthan visits every month to the clinic of assessee and collects the amount and makes sign on the backside of last receipt. The receipts are recorded in the books of account of Sansthan. This is a registered society under Section 12A of IT Act. It files its return regularly. You yourself have called and verified the books of Sansthan on 25th Jan., 2002.
(viii) In your letter you have estimated the professional receipt of assessee for the block period at Rs. 28,23,000 by estimating the number of patients at 2,600 per year and fee charged at Rs. 1,000 each. We object to this estimation for the following reasons:
(a) There is no basis of estimating the number of patients seen at 2,600 in preceding years on the basis of number of patients seen in current year, i.e., year of search. You have mentioned that from the patient diary found it reveals that the assessee provided consultancy to about 2,232 patients during financial year' 1999-2000 (upto date of search) This is correct and reflected in regular return. However this cannot be basis for estimating number of patients for preceding years. Further there is no evidence found. For this purpose reliance can be placed on following decisions:
(i) CIT v. Rajendra Prasad Gupta ;
(ii) Ramraj Soni v. Asstt. CIT 21 TW 667 (Jp);
(iii) Mustaq Ahmed and Ors. v. Asstt. CIT (2000) 66 TTJ (Jp) 305 : 22 TW 25 (Jp).
(b) During the block period the assessee was posted at various places as mentioned in chart enclosed herewith. At the new places like Bikaner, Udaipur where the assessee was quite unknown there cannot be consultancy to the extent which is provided at Jaipur. At Bikaner the assessee was residing at the residence of District Collector, Bikaner and was not providing any consultancy. Further during the period July, 1992 to June, 1994 the assessee was at Chandigarh and doing DM course and at that time he was not providing consultancy. This fact also corroborates from the return of assessee wherein he has mentioned that there was no income from private practice from 25th July, 1992 to 30th June, 1994. Thus the estimation of 2,600 patients per year over the block period is imaginary and has no basis.
(c) You have presumed the fee charged from each patient at Rs. 100 which is incorrect. As explained above the assessee is charging fee of Rs. 50 as consultation fee at the time of search. Thus the presumption of charging fee of Rs. 100 from each patient over the block period is imaginary, arbitrary and without any basis.
(d) In the block assessment no addition can be made on the basis of assumption and presumption. The scheme of Chapter XIV-B does not give power to draw presumptions in regard to undisclosed income. For this purpose reliance is placed on following decisions:
(i) Smt. Neena Sayal v. Asstt. CIT (2000) 69 TTJ (Chd) 516: (1999) 70 ITD 62 (Chd);
(ii) Khyali Lal Chaplot v. Asstt. CIT 22 TW 276 (Jp);
(iii) Ashwani Kumar Bhardwaj v. Dy. CIT 21 TW 358 (Jp);
(iv) Holiday India Travels 'N' Tours v. Asstt. CIT 22 TW 494 (Jp);
(v) Premalata Kedia v. Dy. CIT 22 TW 481 (Jp);
(vi) Smt. Rajrani Gupta v. Dy. CIT (2000) 66 TTJ (Mumbai) 582.
In view of above the professional receipt estimated by you at Rs. 28,23,000 for the block period is hypothetical, imaginary, arbitrary and without any basis.
10. Sh. Jitendra Sahni was again examined by the AO on 22nd Feb., 2000 where Jitendra Sahni expressed that fees of Rs. 100 was paid by him on every visit. The relevant part of the statement recorded of Sh. Jitendra Sahni is as per para 5.6 at pp. 9 and 10 of AO's order. The assessee furnished affidavit of Sh. Ravi Anand Kaushik in which Ravi Anand Kaushik had stated that whenever PFT test was being done, only then Rs. 50 receipt was issued from M/s Louis Braille Dristihin Vikas Sansthan and accordingly Sh. Ravi Anand Kaushik was examined again on 24th Jan., 2000. As per question No. 7 at p. 11 of AO's order Sh. Ravi Anand Kaushik stated that the assessee had charged Rs. 100 from the patient and a receipt of Rs. 50 was being prepared by him. Mr. Ravi Anand Kaushik during examination said to the AO (not part of his statement) that he will not speak against the assessee, else he shall be deprived of his job. Therefore the AO was of the view that earlier statement of Mr. Ravi Anand Kaushik was denied under pressure of relinquishment of his job. Sh. Ramlal was not produced again by the assessee for examination. The assessee produced the affidavits of the following three persons/patients:
1. Sh. Laxman Singh S/o Shri Ram Swaroop Singh
2. Shri Sita Ram S/o Shri Bhanwar Lal
3. Smt. Uma Devi W/o Shri Ratan Lal Gupta All these three persons came to visit assessee on the date of search, i.e., on 1st Feb., 2000 and they had conveyed the search party of IT Department of paying Rs. 50 only as visiting fees. However their statements were not recorded by the search party. These three persons were produced before the AO and were examined by the AO who had confirmed to have paid Rs. 50 as consultation fees to the assessee. The statement of Smt. Uma Devi that in the search party people were wearing black coat and with this statement of Smt. Uma Devi the AO made an observation that the statements of all the persons are not genuine and are not believable and the affidavits have been collected under undue influence of the assessee. On 18th Feb., 2000 the assessee produced some affidavits confirming that Rs. 50 had been charged as consultation fees by the assessee. The AO disbelieved the affidavits because the language of all the affidavits was similar and uniform and nothing had been mentioned about specific dates, on which date they visited the clinic of the assessee and no receipt was produced by the persons who had given the affidavits. The AO made an observation that these affidavits also appeared to be corrected under influence of the patient and the doctor-assessee.
11. Certain patients were also referred from Government dispensaries to the assessee and one of such patients Smt. Jamila Bano was examined on 7th March, 2002 who had confirmed to have paid Rs. 100 but no receipt of the consultation fees and of the test from Louis Braille Dristihin Vikas Sansthan was given (refer pp. 14-15 of AO's order).
12. Smt, Chhoti Devi was also examined who had also confirmed to have paid Rs. 100 to the assessee and no receipt was issued to her (refer p. 15 of AO's order).
13. The secretary Sh. O.P. Aggarwal along with his associate Sh. Dharam Pal Jain of M/s Louis Braille Dristihin Vikas Sansthan were examined by the AO and have confirmed to the AO that the assessee had agreed to donate the machine to the said institution and the receipt book was placed with the assessee at his clinic and income from the machine was used to be collected on monthly basis and entered in books of account of institution. The AO was of the view that the agreement is fabricated and there is irregularity in the maintenance of the said institution as per reasons mentioned in his order, vide para 5.7 at pp. 16-18 of AO's order. The AO further pointed out certain irregularity in the maintenance of receipt books of consultancy fees as per para 5.8 of his order. After considering the contention of the assessee the AO estimated the consultancy fees at Rs. 11,30,200 out of which the assessee had declared Rs. 3,49,280 and balance of Rs. 6,46,746 was calculated as net undisclosed receipts by the assessee as per para 5.10 at pp. 22-23 of his order as under:
5.10 As far as the objection of estimation of number of 2,600 patients in all the years of the block period is concerned, it has been considered sympathetically, in view of the reply that he remained on higher studies at Chandigarh for some period and his posting at other stations like Bikaner and Udaipur leading to lesser amount of consultation fee. Therefore, for the period from 1st April, 1989 to 31st March, 1999, the number of patients has been estimated keeping in view the patients already shown by the assessee in regular returns and progressive growth in number of patients. Further, in view of the above discussion, I hold that assessee has charged Rs. 100 from each patient for the period from 1st April, 1999 to 31st Jan., 2000. During this period 2,223 patient have been consulted by assessee. Therefore assessee has suppressed consultation fee of 2,223 x 50 = Rs. 1,11,150 for this period.
For the remaining period of the block period from 1st April, 1989 to 31st March, 1999, the estimation of the professional receipts is done on the point that the assessee charged double the fees as prescribed by the Government. The assessee himself has shown a growth in professional receipts till the period 1993-94. However after 1995-96 a sharp decline in the professional receipts has been observed. The receipts for the period 1995-96 to 1997-98 are even less than the receipts shown for the earlier years, whereas the prescribed fees had been raised by the Government to Rs. 50 from Rs. 30. Further the course assessee pursued at PGI, Chandigarh added to his reputation. There would have been increase in the numbers of patients. Therefore the estimation has been done considering two points, one suppression on account of the fees taken and secondly, the suppression on account of the number of patients. The estimation for the period from 1st April, 1989 to 31st March, 1999 made is as per p. 23 of the AO's order.
14. The learned CIT(A) after considering the submission of the counsel for the assessee had retained the addition of Rs. 3,65,150, i.e., addition of Rs. 1,25,000 in the asst. yr. 1998-99, Rs. 1,29,000 in the asst. yr. 1999-2000 and Rs. 1,11,150 in the asst. yr. 2000-01 and deleted the balance, as per reasons mentioned in his order from pp. 40 to 45.
15. We have heard the parties. Initially the assessee's premises were surveyed on 31st Jan., 2000 and thereafter the search was carried on the assessee on 1st Feb., 2000. During the course of survey the statements of one patient Sh. Ramlal (paper book 119) and Sh. Ravi Anand Kaushik, the employee of the assessee (paper book 120-122) were recorded. During the search and seizure operation the statement of Sh. Jitendra Sahni a patient was recorded on 1st Feb., 2000 (paper book 130-132). No incriminating document was found by the search party during the course of search. The assessment by the AO under Section 158BC is based on the statements taken at the time of survey and search, and during the course of assessment proceedings and as per various affidavits/statements or other material produced by the assessee during the course of assessment proceedings. As per AO's observation the assessee has suppressed number of patients and also the consultancy fees. The number of patients suppressed as estimated by AO as against number of patients declared by the assessee in the regular return worked out by AO are as under:
Asst. yr. Number of patients shown Number of
In regular return as patients
worked out by AO estimated by AO
1999-2000 1920 2500
1998-99 1500 2100
1997-98 536 1000
1996-97 504 1200
1995-96 460 1000
1994-95 0
1993-94 512 600
1992-93 924 1200
1991-92 1781 1000
1990-91 485 600
16. The argument of the counsel for the assessee in this regard was that there was no information or material with the AO that the assessee has suppressed the number of patients. The AO has worked out number of patients as 2,223 for the period 1st April, 1999 to 31st Jan., 2000 on the basis of patients' diary (para 5.3) of AO's order where the assessee had furnished during the course of assessment proceedings a photocopy of patients' diary claiming as it maintained in regular course of profession of the assessee. This working leads to conclusion that AO himself has accepted that there was no suppression of patients in the year 1999-2000. As per AO the assessee has suppressed number of patients in the asst. yr. 1990-91 to asst. yr. 1999-2000 as per chart discussed above and the large variation in the number of patients is without any material seized during the course of search proceedings or even survey proceedings and, therefore, all these estimations by AO are based without any cogent evidence and material, and based on purely suspicion, surmises, conjectures and imagination as argued by the counsel of the assessee.
17. The AO had made the observation that the assessee charged Rs. 100 fees as consultation over and above as prescribed by the Government in all the years falling in the block period and his fees depends upon name and fame in the market which does not remain constant in all the years. There was no material with the AO for making the estimation for the asst. yrs. 1990-91 to 1999-2000 in the absence of any information or material with the AO or the search/survey party. As argued by counsel for the assessee and also as submitted by the assessee before the AO vide his letter dt. 5th Feb., 2000 (refer para 5.5 of AO's order) that the assessee during the block period was posted at various places mentioned in the chart submitted before the AO at places like Bikaner, Udaipur where the assessee was quite unknown and could not carry the consultancy at those places. In view of this the additions made by the AO for the asst, yr. 1990-91 to asst. yr. 1997-98 were rightly considered by the learned CIT(A) to be without any cogent material and, therefore, the learned CIT(A) has rightly deleted the said addition. As regards balance of additions the AO has relied upon various statements recorded at different times which are discussed hereunder:
1. Statement of Sh. Jitendra Sahni: As per the statement of Sh. Jitendra Sahni (paper book 130-132), recorded on 1st Feb., 2000 during search proceedings, Sh. Jitendra Sahni has confirmed to have paid Rs. 100 to the assessee and no receipt for the same was asked by Sh. Jitendra Sahni from the assessee or any employee of the assessee. The bifurcation of Rs. 100 was clarified by the assessee in his statement recorded on 15th May, 2000 in reply to question No. 9 (paper book 165-166). The lung now test (PFT test) was carried out by the assessee on every visit and the assessee charged Rs. 100 on every visit have been confirmed by Sh. Jitendra Sahni in his statement recorded on 1st Feb., 2000.
The assessee does not dispute that Rs. 100 per visit were not charged from Sh. Jitendra Sahni. The search party has not asked any question to Sh. Jitendra Sahni about the bifurcation of Rs. 100 paid by him to the assessee. At the same time he has confirmed that lung flow test is done by the assessee on each occasion he visits the assessee. Therefore, a presumption can be easily made that whatever tests are done by the assessee along with consultation, the total charges of the same are Rs. 100 which has been paid by Sh. Jitendra Sahni to the assessee. The AO has not brought any material of whatsoever kind, to prove that the assessee has charged Rs. 100 as consultation fees and balance Rs. 50 have been charged for lung flow test (PFT test). In such circumstances, the statement of Sh. Jitendra Sahni and clarification by the assessee in his statement recorded as discussed above gives the presumption that the assessee is charging from the patient Sh. Jitendra Sahni Rs. 50 for consultancy and balance of Rs. 50 are charged for lung flow test and AO was not justified in coming to the conclusion that Rs. 100 are charged from the patient Sh. Jitendra Sahni as Rs. 100 and accordingly has wrongly made the application in general for calculation of suppression of receipts. Regarding the lung flow test (PFT test) the matter shall be discussed later in the part of this order.
2. Statement of Sh. Ravi Anand Kaushik: The statement of Sh. Ravi Anand Kaushik, the employee of the assessee was recorded on 31st Jan., 2000 during the course of survey (paper book 120-122). As per the statement, Sh. Ravi Anand Kaushik has stated in Q. No. 7 (paper book 121) that the assessee is charging Rs. 100 but a receipt of Rs. 50 is issued by the said employee for giving to the patient. In this regard the assessee had clarified by way of an affidavit of Sh. Ravi Anand Kaushik (paper book 133). In the affidavit Sh. Ravi Anand Kaushik has stated that his job is to weigh the patient, to measure the respiration counts in the PFT machine and to issue the receipt of the fees and the assessee received Rs. 50 as his fees for which the receipt is issued by Sh. Ravi Anand Kaushik and balance of Rs. 50 for the PFT test taken are given to M/s Louis Braille Dristihin Sansthan. Sh, Ravi Anand Kaushik has clarified the bifurcation of Rs. 100 which has been stated by him during the course of statement on 31st Jan., 2000 by way of affidavit as discussed above. Sh. Ravi Anand Kaushik was examined by AO on 24th Jan., 2000 where he has said that if he would speak against the assessee, he will be deprived of his job. The assessee asked for the statement given by Sh. Ravi Anand Kaushik dt. 24th Jan., 2000 which was never given (paper book 91). This time also Sh. Ravi Anand Kaushik has stated that Rs. 100 are charged from the patients. After appreciation of the facts as discussed above, the survey party or the AO has never put up a question before Sh. Ravi Anand Kaushik regarding bifurcation of the fees of Rs. 100 and verbal statement which has not been recorded by the AO that Sh, Ravi Anand Kaushik has said that he will be deprived of his job if he speaks against his employer, does not carry any evidentiary value in the absence of any confirmation from Sh. Ravi Anand Kaushik during the course of his statement. The affidavit submitted by Sh. Ravi Anand Kaushik has not been disproved by the AO and AO has not brought any material against what has been stated in the affidavit by Sh. Ravi Anand Kaushik. In such circumstances, the assessee cannot be said to have been charging Rs. 100 as consultation fees as against what is declared by the assessee, i.e., Rs. 50. The presumption can very well be made that the assessee was charging Rs. 100, i.e., Rs. 50 as consultation fees and balance of Rs. 50 for PFT test. There is no dispute as regards charging of Rs. 100 from the patients as stated by Sh. Ravi Anand Kaushik. Therefore, the presumption by the AO for calculating the suppression of receipts on the basis of statement of Sh. Ravi Anand Kaushik is not justified.
3. Statement of Sh. Randal (paper book 119): The statement of Sh. Ramlal, the patient was recorded on 31st Jan., 2000 during the course of the survey where he has confirmed to have paid Rs. 100 to the assessee as fees. The counsel for the assessee has argued that the said statement has not been recorded on oath. No question was asked by the survey party regarding bifurcation of Rs. 100 paid by the patient Sh. Ramlal, to the assessee. In this regard the assessee has filed an affidavit of Sh. Ramlal (paper book 133-A) wherein Sh. Ramlal had stated that Rs. 50 are charged for examination and consultancy and he has denied that he had stated that Rs. 100 were paid by him. Sh. Ramlal was the witness of the Department who had retracted earlier by a sworn affidavit and it was the duty of the AO to issue summons under Section 131 to Sh. Ramlal and the assessee had made a specific request to summon him under Section 131 and call him for examination (paper book 110, para 2) but the AO did not summon Sh. Ramlal, has been argued by the counsel for the assessee. In view of above discussion the patient Sh. Ramlal has paid Rs. 50 as against what has been stated during course of survey which has been rebutted by him by way of an affidavit and the AO did not examine Sh. Ramlal thereafter in spite of specific request made by the assessee. Therefore, the AO is not justified in making the calculation of suppression of receipts by the assessee on the basis of the statement of Sh. Ramlal, the patient.
4. Statements of other patients claimed as present on the date of search : The assessee claimed that during the course of search following persons were also present and they have confirmed that Rs. 50 are paid to the assessee as consultancy fees and they have filed the affidavit before the AO as under:
(a) Sh. Laxman Singh (paper book 134)
(b) Sh. Sita Ram (paper book 135)
(c) Smt. Uma Devi (paper book 136) The AO examined Laxman Singh and Sh. Sita Ram but no discrepancy has been found in the affidavits submitted by them. As far as the statement of Smt. Uma Devi is concerned, the AO has noticed one discrepancy that Smt. Uma Devi stated that persons present during search were wearing black coat. The AO's presumption in this regard was that all the persons of search party were not wearing black coats and accordingly made further presumption that the statement of Smt. Uma Devi is false. The explanation of the assessee in this regard was that Sh. Laxman Singh who is an advocate was also wearing the black coat and on this discrepancy the whole of the statement of Smt. Uma Devi cannot be rejected. By appreciation of the fact as discussed above, we are of the view that the AO has not brought any material from the statement of Smt. Uma Devi, which could prove that the assessee has been charging Rs. 100 from each patient as consultancy fees. Since there was no mention of Rs. 100 in the affidavit or the statement given by Smt. Uma Devi, in such circumstances the AO was not justified in coming to conclusion that the assessee had charged Rs. 100 as consultancy fees over and above Rs. 50 as stated by Smt. Uma Devi.
5. Affidavits of other patients filed before the AO: The assessee filed affidavits of following persons confirming the payment of Rs. 50 only as consultancy fees:
(i) Sh. Vishnu Agarwal (paper book 150)
(ii) Smt. Sampat Devi (paper book 151)
(iii) Sh. Devendra (paper book 152)
(iv) Sh. Jagdish Prasad Sharma (paper book 153)
(v) Sh. Ramesh Chand Agarwal (paper book 154)
(vi) Asha Singhal (paper book 155)(vii) Sh. Laxman Prasad Singhal (paper book 156)
(viii) Smt. Geeta Devi (paper book 157)
(ix) Sh. Sita Ram Bansal (paper book 158)
(x) Sh. Om Prakash Sharma (paper book 159) The AO rejected these affidavits. The explanation of the assessee in this regard was that the assessee was prepared to produce these persons but AO was never interested in recording the statement of these persons. One of the above persons Sh. Om Prakash Sharma came to office of AO on 5th April, 2002 and again on 10th April, 2002, but his statement was not recorded. However Sh. Om Prakash Sharma directly sent a letter to the AO confirming that he has paid Rs. 50 to the assessee as consultancy fees and balance of Rs. 50 were paid for the PFT test.
6. The AO had collected information that from Government dispensaries patients are referred to the assessee and the AO has examined two of them as under:
(i) Sh. Abdul Jabbar was examined on 7th March, 2002 where he stated to have been charged Rs. 100 and he has not been given any receipt of the same either by the assessee or by Louis Braille Dristihin Vikas Sansthan. Similarly the other patient Smt. Chhota Devi was also examined by the AO who has also confirmed to have given Rs. 100.
The argument of counsel for the assessee in this regard is that Sh. Abdul Jabbar, husband of Smt. Jamila Bano conveyed that total fee of Rs. 100 was paid to the assessee and there was only one visit. Whereas the patient (Smt. Jamila Bano) visited first time on 29th Sept., 1999, accompanying her son in emergency without referral by P&T. She was given drugs, based on prescription of the assessee dt. 29th Sept., 1999 by P&T and P&T also referred her to the assessee on next day, i.e., 30th Sept., 1999. On 2nd Oct., 1999, she again visited accompanying her husband. She paid total Rs. 100 and the assessee issued two receipts of Rs. 50 each, one is dt. 29th Sept., 1999 and other is dt. 2nd Oct., 1999. Therefore, there is no discrepancy in the total amount recorded in the books of account of the assessee. The copy of the receipts was filed before AO by the assessee. As regards the statement of Smt. Chhota Devi, the arguments of the counsel for the assessee were that the material gathered from Smt. Chhota Devi was not brought to the notice of the assessee and opportunity to cross-examination was not provided to the assessee. Therefore, material whatsoever gathered from Smt. Chhota Devi cannot be used against the assessee. The dates of her visit have not been given in the so-called letter. Why Smt. Chhota Devi was not called for examination, the learned AO is silent on this vital issue. It is not ascertainable that whether Smt. Chhota Devi has stated on oath. The assessee never charged Rs. 100 from Smt. Chhota Devi as visiting fees.
After considering the facts of the statement in the case of Abdul Jabbar and Smt. Chhota Devi, we are of the view that no cogent material has been brought by the AO, which could prove that the assessee has been charging Rs. 100 as consultation fees over and above the PFT test. Therefore, the presumption by the AO in calculating the suppression of receipts on the basis of statements of Sh. Abdul Jabbar and Smt. Chhota Devi is without any material and evidence.
7. M/s Louis Braille Dristihin Vikas Sansthan: As per statement of the secretary of the said Sansthan, Sh. O.P. Aggarwal who had stated and confirmed before the AO that the machine has been donated by the assessee to said Sansthan and the receipts of the PFT test are collected by the said Sanstha on monthly basis. The AO alleged that the agreement letter was fabricated and in this regard the counsel for the assessee had argued that there was oral acceptance of the machine by the said Sansthan and the said oral acceptance was confirmed through a written letter, which the assessee received in September-October, 1999. The letter is dated through rubber stamp as 8th Feb., 1999. This discrepancy is nothing but stamping of a wrong date or use of a letterhead pre-stamped for 8th Feb., 1999. The secretary Sh. O.P. Aggarwal was examined by the AO and the AO did not put any question regarding the said discrepancy, The suspicion by the AO, when the secretary of the Sansthan had been examined and no question with regard to the suspicion in the mind of the AO was clarified by the AO cannot lead to a conclusion that the PFT machine belonged to the assessee and all the receipts therefrom belonged to the assessee thus coming to a final conclusion that Rs. 100 are being charged as consultancy fees by the assessee.
8. The AO has pointed out certain irregularities in the maintenance of account like certain receipts were lying in the receipt books. The argument of counsel for the assessee in this regard was that most of the patients are in hurry and they do not take the receipts while leaving the clinic and only such receipts were lying in the receipt book.
18. We are convinced with the arguments of counsel for the assessee because as per statements of many persons recorded as referred to as various pages of the paper book placed before us by the counsel for the assessee and as per order of the AO, it is clear that the receipt of the consultancy fees either was not given to the patients or was not demanded by the patients. Therefore, such receipts are bound to remain with the assessee, Therefore, finding of such receipts during the course of search/survey does not lead to a conclusion adverse to the assessee. Moreover the assessee had been maintaining a diary in which number of patients had been computed from that diary by the AO as 2,223. That means the AO has accepted the part of the contents, i.e., number of the patients of the diary. The AO is not justified in not accepting the rest of the content which does not suit him and which is without any cogent material which could be used against the assessee as discussed above. Therefore as per irregularity of the accounts, the AO is not justified in coming to conclusion for calculation of suppression of the receipts by the assessee.
19. With the above discussion, we are very clear that the AO has made the additions only on the basis of the suspicion, surmises and conjectures and without any material found during the course of search or even any post-search material. The counsel for the assessee has relied upon various judgments which have been taken into consideration. In such circumstances the AO is not justified in making any calculation of suppression of receipts on any account as against as submitted by the assessee in the returns of the block period filed by the assessee. This , ground Nos. 2 and 3 of the assessee are allowed in favour of the assessee and ground No. 1 of the Revenue is dismissed in view of discussions made above.
20. Ground No. 4 of the assessee and ground No. 2 of the Revenue are common and, therefore, both the grounds are discussed together as under.
21. Ground No. 4 of the assessee: On the facts and in the circumstances of the case the learned CIT(A)-Central erred in confirming the addition of Rs. 1,70,000 on account of alleged commission received from M/s Rajdhani X-RaysRs. 68,000 and from M/s A.B. Diagnostic Centre Rs. 1,02,000 for the period from 1st April, 1997 to the date of search.
22. Ground No. 2 of the Revenue: On the facts and circumstances of the case, the learned CIT(A) has erred in deleting the addition made on account of commission receipts.
23. The brief facts in ground No. 4 of the assessee and in ground No. 2 of the Revenue are that as per AO's observation vide para 6,1 of his order at pp. 23-26 are as under:
It is generally found that doctors charge commission from the diagnostic centres on the basis of test referred by them. It is prevalent practice that commission is paid to doctors by the diagnostic centres who refer the case to them for test. The evidences gathered during search and post-search inquiries also prove the fact that assessee also received such commission. The relevant evidences gathered during the search and post-search inquiries are as follows:
A. During the course of search printed notepads of various diagnostic centres bearing their names and addresses had been found at assessee's residence which revealed that these were being used to refer the patients to these centres.
B. The facts emerging from the survey operation on 24th May, 2000 at M/s Rajdhani X-Rays are as follows:
(i) When asked about the rates of commission payment, Shri Kailash Sharma stated that he was paying 50 per cent of total receipts of various tests except X-Rays on which Rs. 25 per X-ray was paid as commission to the doctors including Dr. Gupta.
(ii) When asked about modus operand Shri Kailash Sharma categorically admitted that he used to put the name of the doctors on the receipt that referred the patients and after a fixed period he calculated the total commission to be paid to the doctors. He further stated that the doctors to whom the commission payment was high, payment was given as on weekly basis while the others were paid on monthly basis.
(iii) In response to question No. 15 Shri Kailash Sharma told that he was paying commission to Dr. Gupta for last 2-3 years because earlier Dr. Gupta was posted at Udaipur.
(iv) When asked to quantify the commission paid to Dr. Gupta, Shri Kailash Sharma furnished the relevant details according to which total commission payment to Dr. Gupta between 1st April, 1999 to 1st Feb., 2000 works 'out to Rs. 15,680, i.e., approximately Rs. 1,750 per month.
(v) It is further seen that assessee has not stopped of this practice of taking commission from diagnostic centres fees each after search and seizure operation. For the period between 2nd Feb., 2000 to 23rd May, 2000 the total commission of Rs. 4,265 has been received by you from M/s Rajdhani X-Rays as calculated and submitted by Shri Kailash Sharma.
(c) The relevant facts and evidences emerged from the survey at the business premises of M/s A.B. Diagnostic Centre, B-4, Subhash Nagar Shopping Centre, Jaipur on 24th May, 2000 are as follows:
(i) During the course of survey on 24th May, 2000 statement of Sh. Harish Agarwal, partner of M/s A.B. Diagnostic Centre was recorded. The accounts and primary records have been maintained in peculiar manner at this centre so that the commission to various doctors can be paid and still it does not appear in the regular books of account. The patients were being issued receipt on lab slips and not through regular receipt books. A patients record register was maintained in which details of receipt and name of the referring doctor are also maintained along with other details. Such patients record registers having nine columns found at the time of survey for the months of April and May, 2000 along with some lab slips. Importantly the regular- receipt books are written only upto April, 2000, Receipts corresponding to many lab slips were not issued and accordingly the corresponding receipts were suppressed in regular books of account which were being written on the basis of these receipt books and not on the basis of lab slips or patients' record register. It has been admitted by Shri Harish Agarwal in his statement (which was confirmed by other partner Dr. Charanjeet Bharara) that they were making receipts for the entire month only once, i.e., after completion of each month on the basis of patients record register after suppressing certain receipts. On the basis of these receipts they used to make collection register which in turn were kept as a primary record on the basis of which regular books of account such as cash book and ledger were being prepared once the receipt book and collection register are made and commission payment is made, the original primary records i.e., patients record register and lab slips were being destroyed by them. Thus, neither total receipts of the diagnostic centre nor the receipts corresponding to the patients referred by a particular doctor will appear in collection register or in receipt book. Later on it was. admitted by Dr. Harish Agarwal that out of these suppression receipts, commission payments were being made to various doctors.
(ii) When asked about payment of commission to the referring doctors, he admitted that M/s A.B. Diagnostic Centre paid commission to all doctors who referred patients regularly (question No. 11 of statement dt. 24th May, 2000), In reply to this question he specifically admitted that Dr. Gupta was also being paid commission by them on regular basis. This is also corroborated by the fact that names of patients as per patients record register of M/s A.B. Diagnostic Centre were also appearing in the patient-diary of Dr. Gupta for financial year 1999-2000 of which photocopy was furnished in the course of post-search inquiries.
(iii) Regarding method and the rate of payment commission he stated that they pay 30 per cent of total receipts of tests as commission to the referring doctors in cash on monthly basis. At the rate of 30 per cent the commission on one X-ray comes to Rs. 24 by M/s Rajdhani X-Rays. Laser commission (30 per cent in stead of 50 per cent) payment of other tests by M/s A.B. Diagnostic Centre can be understood in view of the fact that partners of M/s A.B. Diagnostic Centre are qualified doctors while proprietor of M/s Rajdhani X-Rays is non-qualified person.
(iv) When asked regarding the source of payment of commission to the doctors, Dr. Harish Agarwal stated that some receipts of the amount equal to the commission amount were not entered in the collection register. The amount collected on account of such receipts was used to made commission payments to doctors. When he was asked to quantify the amount of commission paid during financial year 1999-2000, he admitted that commission of approximately Rs. 2000-3000 per month was being paid to Dr. Gupta. In April, 2000 total commission payment to Dr. Gupta on the basis of actual patients register admittedly made by M/s A.B. Diagnostic Centre was Rs. 1,596 (question No. 2 of statement dt. 29th May, 2000).
D. On broad estimate commission received by assessee from M/s A.B. Diagnostic Centre comes to Rs. 1,02,000 approximately from 1st April, 1997 to date of search at the rate of Rs. 3,000 per month, similarly the commission received from M/s Rajdhani X-Rays approximately comes to Rs. 68,000 from 1st April, 1997 to date of search at the rate of Rs. 2,000 per month. From the two diagnostic centres, it has been conclusively proved that assessee was taking commission from them for the patients referred for various tests. Thus it can be inferred that assessee was charging such commission from other diagnostic centres/labs as well both at Jaipur and even Udaipur where assessee was posted from March, 1995 to March, 1997. This is further corroborated by the fact that blank printed reference pads/letterhead of Dr. Wahi's Central Diagnostic Clinic, A-5, Chandpole, Jhotwara, Opposite Pareek School, near Power House and those of other laboratories were also found at your residence.
(e) In view of all these facts and circumstances assessee was called upon to show cause why commission income from tests referred may not be estimated during the entire block period in addition to Rs. 68,000 and Rs. 1,02,000 received from M/s Rajdhani X-Rays, M/s A.B. Diagnostic Centre, respectively for the period from 1st April, 1997 to date of search.
24. The assessee had filed a written submission before the AO during the course of assessment proceedings on 5th Feb., 2002 which is reproduced vide para 6.2 at pp. 26 to 27 of AO's order as under:
The assessee has never received any commission from any diagnostic centre as alleged by you. In fact the assessee does not recommend the name of diagnostic centre to the patients. The patient is free to get his test done from any diagnostic centre which is suitable to him. The assessee has no control over it. There is no documentary evidence found in survey/search of the premises of assessee which indicate that the assessee has charged commission from diagnostic centres. During course of search, blank printed notepads of diagnostic centres found from clinic/residence of assessee. These notepads are being left by various diagnostic centres that come to meet with assessee. The assessee however, has never used these notepads for referring test to patients. Thus, simply on the basis of blank notepad it cannot be alleged that the assessee has charged commission from diagnostic centres.
You have mentioned that survey has been conducted at the premises of M/s Rajdhani X-Rays from where it has been established that the assessee has received commission from them. You have also mentioned that statement of Mr. Kailash Sharma was recorded who told that he was paying commission to assessee from last 2-3 years and according to him the total commission paid between period 1st April, 1999 to 1st Feb., 2000 works out to Rs. 15,680 and for the period 2nd Feb., 2000 to 23rd May, 2000 works out to Rs. 4,265. In this regard we have to submit as under:
(a) The assessee requests to provide the copy of evidence gathered from premises of M/s Rajdhani X-Rays, which establishes that the assessee has received commission. It is also requested to provide copy of statements of Kailash Sharma. The assessee would also like to cross-examine Mr. Sharma for which a suitable date and time may be fixed.
(b) There is no evidence found from the premises of assessee, which indicates that the assessee has received commission from M/s Rajdhani X-Rays. On the basis of survey conducted at premises of other party or statement recorded of third person it cannot be alleged that the assessee has received commission. We request you to provide copy of P&T account of the diagnostic centres to establish that they have paid commission to assessee.
2. You have further mentioned that survey has been conducted at the premises of M/s A.B. Diagnostic Centre and the evidence gathered during survey proves that the assessee has received commission from them. You have also mentioned that statement of Mr. Harish Agarwal, partner was recorded who admitted that during financial year 1999-2000 commission of Rs. 1,596 has been paid on the basis of patients register. In this regard we have to submit as under:
(a) The assessee requests to provide the copy of evidence gathered from premises of M/s A.B. Diagnostic Centre, which proves that the assessee has received commission. It is also requested to provide copy of statements of Harish Agarwal. The assessee would also like to cross-examine Mr. Agarwal for which a suitable date and time may be fixed.
(b) There is no evidence found from the premises of assessee in survey/search which indicates that the assessee has received commission from M/s Rajdhani X-Ray. On the basis of survey conducted at premises of other party or statement recorded of third person it cannot be alleged that the assessee has received commission. Kindly provide us the copy of P&T account wherein the commission payment is recorded by them.
(c) The assessee is not concerned as how the books of account and other records are being maintained by the diagnostic centre. You yourself have mentioned that Dr. Harish Agarwal admitted that out of suppressed receipts, commission payment was made to doctors. This establishes that there is no authentic record, which suggests payment of commission. The said commission is being paid out of suppressed receipts on which they have to pay tax.
25. The AO after considering the submission of the assessee vide para 6.3 of his order at pp. 27 to 28 held as under:
I have considered submission of the assessee carefully. Assessee was provided copy of assessment of Shri Kailash Sharma, proprietor of M/s Rajdhani X-Rays and Shri Harish Agarwal, partner of M/s A.B, Diagnostic Centre. Assessee was allowed cross-examination of Shri Harish Agarwal. He again affirmed the payment of commission to assessee during cross-examination. Assessee has asked to show the commission in the books of account. The claim of the assessee to show the record of commission payment is not tenable as such payments have already been admitted as made out of books of account by Shri Harish Agarwal and Kailash Sharma. Sh. Harish Agrawal has already informed the manipulation of books of account to give commission to doctors including Dr. P.R. Gupta therefore it is established beyond doubt that he was engaged in receiving commission from these two laboratories. Since letterheads of other laboratories have also been found from residence of assessee therefore receipt of commission from other laboratories cannot be denied. The statements of Sh. Kailash Sharma and Sh. Harish Agarwal are the valid evidences or the material for determination of undisclosed income in view of the various decisions discussed while dealing with issue of suppression of fee, therefore, receipt from commission is estimated as follows:
Sl. Sources and period of income Income
No. estimated
1. Commission income from Rajdhani X-Rays for the period 1- 68,000
4-1997 to the date of search
2. Commission income from M/s A.B. Diagnostic Centre for 1,02,000
the period 1-4-1997 to the date of search
3. Commission income from other diagnostic centres for the 1,50,000
block period 1-4-1990 to 1-2-2000 excluding the period for
pursuing course at Chandigarh
________
4. Total 3,20,000
________
26. The learned CIT(A) after considering the submission of the counsel for the assessee deleted the addition of Rs. 1,50,000 but confirmed the addition of Rs. 1,70,000 as per reasons mentioned in his order at pp. 51 to 55.
27. We have heard the parties. The AO observed that there is an established practice in medical profession that doctors charge commission from diagnostic centres on the basis of tests referred by them. During the course of search printed notepads of various diagnostic centres were found at the assessee's residence. A survey operation was carried out on 24th May, 2000 on M/s Rajdhani X-Rays and M/s A.B. Diagnostic Centre, Jaipur. As regards survey on M/s Rajdhani X-Rays Sh. Kailash Sharma had stated that 50 per cent of total receipts except X-Rays are paid as commission to doctors including the assessee. And he was paying commission to the assessee from the last 2-3 years and he has mentioned about the amount of commission paid to the assessee (refer p. 24 of AO's order). The argument of the counsel for the assessee in this regard was that printed notepads of various diagnostic centres found at the residence of the assessee do not reveal that these were used by the assessee to refer to the patients to these centres and the assessee has never received any commission from any diagnostic centre. These letterheads must have been left by the diagnostic centres and blank letterheads found at the residential premises of the assessee do not serve any purpose that the assessee had referred the patients to various diagnostic centres' and received commissions. If the assessee has to refer the patients to various diagnostic centres then the normal practice which is acceptable can be that the name of the diagnostic centre has to be referred on the letterhead of the assessee. And if such letterheads of the assessee are found at the premises of the diagnostic centres, only then a presumption can be made that the names of diagnostic centres have been referred by the assessee. It is rather a reverse way that letterheads that too the blank letterheads are found at the premises of the assessee, which does not prove anything that the assessee has received commissions from such diagnostic centres. The statement of Sh. Kailash Sharma that a commission is paid to the doctors without any evidence cannot be relied upon. The assessee had requested the AO to give the copy of the P&L a/c or any other evidence to prove that the commission had been paid to the assessee but the AO has not done so. In such circumstances the only statement of third parties cannot be relied upon and cannot be used against the assessee without any corroborative evidence. The assessee had relied upon the judgment in the cases of:
(a) Alok Agarwal v. Dy. CIT (2000) 67 TTJ (Del) 109;
(b) Monga Metals (P) Ltd. v. Asstt. CIT (2000) 67 TTJ (All) 247.
where it has been held that statement of third parties cannot be used without cross-examination which is in the violation of principles of natural justice and such statement is a nullity.
28. As regards survey on M/s A.B. Diagnostic Centre, Jaipur the statement of Sh. Harish Agarwal, partner was recorded who has confirmed to have paid commission to the assessee. When asked by the AO whether the said commission is being reflected in their regular books of account or not, Sh. Harish Agarwal, the partner stated that it does not appear in the regular books of account and receipts of M/s A.B. Diagnostic Centre are suppressed and after suppression records are maintained. The original primary reports, i.e., patients record register and lab slips were being destroyed. Sh. Harish Agarwal further stated that out of the suppressed receipts, commission payment is paid to various doctors (pp. 24-25 of AO's order). Few names of the patients appearing in the registers of M/s A.B. Diagnostic Centre were also appearing in the registers of the assessee. Sh. Harish Agarwal has further stated that approximately Rs. 2000-3000 are being paid to the assessee.
29. After appreciation of the fact in the case of M/s A.B. Diagnostic Centre, we are of the view that M/s A.B. Diagnostic Centre is maintaining books of account which are made after making suppression of receipts and as stated by Dr. Harish Agarwal after suppression of receipts, commission is paid to various doctors same does not hold good, in the absence of any evidence produced by Dr. Harish Agarwal. His statement cannot be relied upon since he himself is maintaining books of account after making adjustments like suppression of receipts and no commission payment has been shown to have been paid to the assessee. The statement of Dr. Harish Agarwal was taken at the back of the assessee. Therefore any statement in the absence of any positive or cogent evidence cannot be used against the assessee by drawing adverse inference against the assessee as held in the case of Alok Agarwal v. Dy. CIT (supra). Similarly no addition can be made on the basis of information gathered from the records of another person without establishing those belong to the assessee and counsel for the assessee has relied upon the following decisions:
(a) Premlal Kedia v. Dy. CIT 22 TW 481 (Jp);
(b) T.S. Venkatesan v. Asstt. CIT (2000) 69 TTJ (Cal) 66 : (2000) 74 ITD 298 (Cal);
(c) Prarthana Construct (P) Ltd. v. Dy. CIT (2001) 70 TTJ (Ahd) 122.
Dr. Harish Agarwal in his statement stated that practice of giving commission was started in April, 1998 and the AO has estimated the commission from 1st April, 1997 which means the AO himself is not relying upon completely on the statement of Dr. Harish Agarwal. The observation of AO is that the assessee has been receiving commission both at Jaipur and Udaipur whereas the assessee was posted from March, 1995 to March, 1997 both at Jaipur and Udaipur.
30. Regarding the commission from other diagnostic centre the AO has made the addition of Rs. 1,50,000 without any basis from 1st April, 1990 to 1st Feb., 2000. No material has been found at the premises of the assessee or even with any third party. The addition is purely on surmises and conjectures and based on purely suspicion. The learned CIT(A) has deleted the addition. We affirm the decision of learned CIT(A) in this regard.
31. As regards the additions sustained by learned CIT(A) with regard to the commission alleged to have been made by M/s Rajdhani X-RaysRs. 68,000 and M/s A.B. Diagnostic Centre-Rs. 1,02,000 have been discussed above and therefore in such circumstances and discussions held above, the estimation made by the AO is without any basis, cogent material or evidence which could prove that the assessee has received the commission. No material has been, found during the course of search at the premises of assessee which could prove that the assessee has received the commission. Therefore the counsel for the assessee has relied upon the decision in the case of Umacharan Shaw and Bros. v. CIT where it has been held that the suspicion however strong cannot take place of proof. In such circumstances, the AO was not justified in making the additions on account of commission, as undisclosed income of the assessee. Therefore, we reverse the order of learned CIT(A) to the extent of the addition sustained by the learned CIT(A). Thus ground No. 4 of the assessee is allowed in favour of the assessee and ground No. 2 of the Revenue is dismissed.
32. Ground No. 5 of the assessee is general in nature and does not require any adjudication.
33. In the result the IT(SS)A No. 74/Jp/2004 appeal of the assessee is partly allowed and IT(SS)A No. 79/Jp/2004 appeal of the Revenue is dismissed.