Income Tax Appellate Tribunal - Chandigarh
M/S Alfa Radiological Centre Pvt. Ltd., ... vs Ito, Patiala on 14 June, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "एस.एम.सी" ,च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, "SMC" CHANDIGARH ी एन.के.सैनी,उपा य! BEFORE: SHRI. N.K.SAINI, VICE PRESIDENT आयकर अपील सं./ ITA No.62/Chd/2019 नधा रण वष / Assessment Year : 2010-11 M/s Alfa Radio logical Centre Pvt. बनाम The ITO Ltd. Ward-4 #1, Jagdish Ashram Road Patiala, Punjab Patiala, Punjab थायी लेखा सं./PAN NO:AADCA7768D अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राज व क! ओर से/ Revenue by : Shri Modit Srivastava, Sr. DR सन ु वाई क! तार&ख/Date of Hearing : 12/06/2019 उदघोषणा क! तार&ख/Date of Pronouncement : 14/06/2019 आदे श/Order PER N.K. SAINI, VICE PRESIDENT This is an appeal by the Assessee against the order dt.22/11/2018 of Ld. CIT(A), Patiala.
2. In the present appeal Assessee has raised the following grounds:
1. That the Ld. CIT(A) has erred in rejecting the book result and sustaining the part addition and while estimating the suppressed receipts @ 30% of the total receipts as disclosed in the books of accounts, against the suppression of receipts as estimated by the Assessing Officer @ 50%.
2. That the action of the Ld. CIT(A) in restricting the addition of Rs. 21,88,689/-
against the addition of Rs. 36,47,815/- as made by the Assessing Officer is not proper.
3. That the addition has been made against the facts and law without considering the detailed submissions as made before the Ld. CIT(A).
4. That the Ld. CIT(A) has not considered properly the copy of the affidavit of the employee, Sh. Kapil Kumar, whose statement was recorded, during survey operations and which had been made the sole basis for drawing the conclusions against the assessee.
5. Notwithstanding the above ground of appeal, it is submitted that the action of the CIT(A) in adopting the suppression of receipts @ 30% of the total received is very much excessive and on the higher side.
6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
3. Brief facts of the case are that the assessee filed return of income on 18/09/2010 declaring NIL income which was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). Thereafter the survey operation under section 133A of the Act was carried out by the Department on the 2 business premises of the assessee on 25th and 26th March, 2010. During the course of survey operation certain discriminating documents / papers were found and impounded and the statement of one of the Director namely Shri Sandeep Garg was also recorded, in his statement Shri Garg categorically admitted that no patient register, case register had been maintained by the assessee company and that the books of accounts were not maintained at the registered office of the Company except cash memos issued to the patients. Shri Kapil Kumar (Receptionist) who was working with the assessee company since 2002, also admitted that he was preparing list of patients daily in kacha register which was found during the course of survey operation. He also admitted that as a receptionist he daily prepared a sheet on which the name of the patients and the tests, which were to be undertaken and the fee charged from them was written the same were handed over alongwith cash to Dr. Sandeep Garg, however the receipts were only issued to the patient who demanded the same. The A.O. asked the assessee to explain as to why on account of suppression of receipts i.e. 63% an amount of Rs. 51,06,943/- may not be added to the income of the assessee. A detailed questionnaire was issued by the A.O. which reads as under:
" In t h i s con n ect i on , i t i s n ot i ced t h at duri n g t h e re co rdi n g of st at em en t of Sh . San dee p Ga r g, S / o S h , K ri sh an Lal Ga r g, R / o Ho u se N o. 71, Si b i a C ol on y, Pat i al a re ve a l s t h at , an am o u n t of R s. 7, 77, 90 0 /- h a s b e en st at ed t o b e r ec ei ved f r om on e Sh . Pa wan Na r ul a , N RI, a s f ri en dl y l oan an d t h e sa m e h a s b e en st at ed t o b e gi ven t o M/ s Al f a Ra di ol o gi cal C en t re Pri vat e Li m i t ed, Jagdi sh A sh ram R oa d, Pat i al a b y h i m wh i ch wa s n ot r et u rn e d t i l l dat e. Y o u a re req u e st ed t o p l ea s e gi ve t h e c redi t wo rt h i n es s of s uch p er s on al on g wi t h d oc um en t a r y evi den c e of s uch l o an .
2) Duri n g t h e s urv e y op erat i on s u / s 13 3 A of t h e In com e Ta x Act , 19 61 c on d uct e d on 25 t o 2 6/ 03 / 20 10, A k ach a regi st e r m ai n tai n ed b y t h e r ec ep t i on i st wa s f o un d i n wh i ch a l i st of p at i en t s vi si t ed on t h e da y of s u rv e y o n l y wa s a vai l ab l e. E a rl i er da y s ' s uch l i st s we r e f ou n d de st r o y ed. In t hi s regi st er, t h e am ou n t of f ee ch a rg ed h a s b een sh o wn at 1 /1 0 t h of t h e act ual f e e rec ei ved b y i gn o ri n g ze r o di gi t a s v eri fi ed f rom t h e ref e rr ed t e st sl i p s f o un d f r om t h e b u si n es s p rem i ses a s al so adm i tt ed b y t h e r ecep t i on i st . H o we v er, t h e rec ep t i on i st f urt h er adde d t h at t h e ave rag e r ecei p t s of t h e a s se s see c om e s t o Rs .6 00 00- 70 00 0 /- ap p ro x. p e r da y. A ca sh of Rs. 54, 8 40 /- wa s f o un d f rom t h e re cei p t co un t e r wh i ch wa s st at ed t o h ave b een re cei ve d u p t o 1. 45 P . M. on t h e d a y of s ur ve y an d t h e rec ep t i on i st i n h i s st at em en t adm i tt ed cat eg ori cal l y t h at t h ese rec ei p t s rep r e sen t a m ou n t s, rec ei ved f r o m t h e p ati en t s wh o vi si t ed on l y on t h e da y of sur ve y, wh er ea s ca s h m em os we r e i ss ue d b y t h at t i m e f or R s. 20, 2 80 / - on l y. Th u s, a s um of R s. 34, 5 60 /- wa s f ou n d del i b erat el y un a cc o un t e d f or u p t o 1. 45 P . M. of 25 /0 3 /2 01 0 i n t h e f orm of dai l y s up p re ssi on of re cei p t s, It sh o ws t h at t h e a ss e s se e i s decl a ri n g rec ei p t s t o t h e e xt en t of on l y 37 % of t h e act ua l r ecei p t s an d 63 % h av e b ee n s up p r e ss ed a s t h e a s se s se e h a ve b e en sh o wi n g i t s recei p t s of R s. 20, 00 0/- ap p r o x. p er da y at i t s s we et wi l l an d n ot on act ual rec ei p t b a si s"3
Fr om t h e ab ov e f a ct s, t h e m od us- o p e ran di of t h e a ss es s ee t o s up p r e ss r ecei p t s i s v er y m uch cl e a r.
F urt h e r, du ri n g t h e co u rs e of s ur ve y o p erat i on , st at em en t of Dr. San de ep Ga rg, o n e of t h e di rect or s, wa s r ec or de d i n wh i ch h e st at ed t h at n o p at i en t regi st er /ca se re gi st er h a s b een m ai n t ai n ed b y t h e a ss e ss ee c om p an y. He f urt h e r st at ed t h at t h e a ss es s ee doe s n ot m ai n t ai n an y b o ok s of acc o un t s a t Regi st er ed Of f i ce of t h e com p an y ex cep t C a sh Mem o s i ss u ed t o t h e p at i en t s. E ve n t h e a s se s see f ai l ed t o p ro d uce t h e ca sh m em o s f or t h e F. Y. 2 00 9- 1 0 exc ep t f or t h e p e ri o d 03 / 09 /2 00 9 t o 2 5 / 03 /2 01 0 on l y. D r. Sa n de ep Ga rg al s o st at e d t h at t h e b o ok s of a cc o un t s of ea rli er 6 y e a rs a r e l yi n g wi t h h i s C . A. S h . A n i l Ji n dal wh er e a s Sh . An i l Ji n dal c l a ri fi ed t h at n o re co rd i n cl u di n g b o ok s of ac c o u n t s of t h e pr ece di n g ye a r s of t h e com p an y a re l yi n g i n hi s of fi ce. Ap a rt f rom i t , t h e Re cep t i on i st wh o i s wo rk i n g wi t h t h i s com p an y si n ce 20 0 2 h a s adm i tt ed t h at h e i s p rep a ri n g a l i st of p at i en t s dai l y i n t h e Kach a Re gi st er, a s f o un d du ri n g s u rv e y op e ra t i on s, si n ce h i s j oi n i n g t h i s com p an y i n 20 02 an d t h i s m odu s- op eran di h a s b een l ea r n t b y h i m f rom h i s- p r ed ece s s or . Fr om t h e se f act s, i t i s cl ea r t h at t h e a b o ve m od u s- o p e ran di Of s up p re s si on of rec ei p t s i s c on t i nue d i n t h e ea rl i er y ea r al s o . D u r i n g t h e y ea r u n de r c on si derat i on , t h e a s s es se e h a s sh o wn re cei p t s of Rs.72,95,630/-. B y ap p l yi n g t h e sam e r at i o of s up p r e ssi on of re cei p t s i .e. 63% d uri n g t h e ye a r un de r c on si derat i on , t h e s up p r e ss ed r ec e i p t s f or t h e ye a r un der c on si der at i on i .e. A. Y. 2010-11 wo r k o ut t o Rs.51,06,941/-. Y o u a re req u est e d t o p l ea s e st at e wh y t h e s u ch am o u n t of Rs .5 1, 06, 9 41 /- m ay n ot b e ad de d i n t ot al i n com e.
In t h e sch ed ul e of f i xed a s set s, t h e re a re h uge ad di ti on s m ade du ri n g t h e ye a r un d er c on si der at i on , y o u a re req u e st ed t o p l ea se gi ve t h e d oc um en t a r y e vi den c e i .e. p ur ch a se b i l l s m a y a l s o b e s up p l i ed f or m y v eri f i cat i on ."
4. In response the assessee submitted that all the professional receipts were in respect of various diagnostic tests conducted during the period under consideration and had dully been recorded in books of accounts maintained by the assessee, those books of accounts were got audited and that the statement of Shri Kapil Kumar was never having any statement of under recording the receipts for the period under consideration nor any specific instance had been detected. It was requested that in the absence of any evidence it would be wrong to presume that the assessee company had received amount other than the amount of Rs. 72,95,630/- representing the actual receipt as recorded in books of accounts.
5. The A.O. however did not find merit in the submissions of the assessee and made the addition of Rs. 36,47,815/- by observing as under:
(i) As has been discussed above, a kacha register was maintained by the receptionist in which a list of patients/customers visiting on the day of survey was available. For earlier days such lists were found destroyed. A kacha register maintained by the receptionist was found in which a list of patients/customers visited on the day of survey was available. Earlier days such lists were found destroyed. In this register, the amount of fee charged was shown at 1/10th of the actual fees received by ignoring zero digit as verified from the referred test slips found from the business premises which fact has, also been admitted and confirmed by the Receptionist/Counter Clerk of the business premises.4
(ii) During survey, the Receptionist also admitted that the daily average receipts of the company for conducting various tests/lab tests comes, to Rs.60,000/- to Rs.70,000/-. A cash of Rs.54,840/-was also found from the receipt counter which was stated to have been received up to 1.45 P.M. on the day of survey. The Receptionist also categorically admitted in his statement that these receipts represent amounts received from the patients/customers who visited only on the day of survey operation whereas cash memos issued were of the amount of Rs.20,280/- only, by that time. Thus, a sum of Rs.34,560/- was deliberately unaccounted for up to 1.45 P.M. on 25/03/2010 in the form of daily suppression of receipts, which shows that the assessee is declaring receipts to the tune of 37% of the actual receipts and by that way 63% of receipts have been suppressed.
(iii)Further, it was also found that daily average receipts shown by the assessee company were Rs.20,000/- approx. per day on its sweet will and not on actual receipt basis, meaning thereby that there was suppressing daily receipts to the tune of Rs.60,000/- to 70,000/- per day or at least 63% less then actually received.
(iv) By adopting the above modus operandi by the company, it was very much clear that the company was not recording the actual receipts but suppress the daily receipts in its record.
During the year under consideration i.e. for the Assessment Year 2010-11, the assessee has shown gross receipts of Rs.72,95,630/-. Therefore, by applying a ratio of 63% as discussed above, the suppression of receipts for the assessment year 2010-11 works out to Rs,51,26,639/-. However, taking, a very lenient view in the matter and considering all the material available on the record.' I estimate the receipts by applying 50% only, which works out to Rs. 1,09,43,445/- [(50% x 72,95,630=Rs.36,47,680) + 72,95,630] as against the gross receipts shown by the assessee at Rs.72,95,360/- in his books of accounts.
The A.O. made the addition of Rs. 36,47,815/- in the hands of the assessee.
6. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and furnished the written submissions which are reproduced in para 5.2 of the impugned order, for the cost of repetition the same is not reproduced herein. On the aforesaid submission, the Ld. CIT(A)asked the Remand Report from the A.O. which was received on 25/05/2017 and incorporated in para 5.2.1 of the impugned order. The assessee also filed its counter comments which had been reproduced by the Ld. CIT(A) in para 5.2.2 of the impugned order, for the cost of repetition the same are not reproduced herein. The Ld. CIT(A) after considering the submission of the assessee, restricted the suppressed sale at 30% as against 50% estimated by the A.O. The relevant observation of the Ld. CIT(A) reads as under:
I have carefully considered the submissions of the Ld AR, the case laws cited and the finding and counter comments of the Ld AO , the facts of the case and the above discussion. It is my considered view that the appellant's story that the one zero was mentioned less in the kachcha register and that all cash receipts were issued ( in non PNDT cases after the tests were concluded), does not, given the pre-ponderance of probabilities, ring true; further the appellant did not maintain any core patient register other than in PNDT case where there is criminal liability for breach and was unaware where the books of accounts were maintained and the CA refused that the books were with him as 5 stated. It is thus my considered view that the operation of the appellant were not completely transparent and all receipts were not accounted for. Thus given the above, I confirm the rejection of the otherwise audited books of account as these books are predicated upon the actual cash receipts issued and do not represent a true and fair picture of the total receipts.
As regards the estimation of income; it is a matter of fact that almost all machines doing radiological tests during the period of survey had a computerised core where details of the tests done are recorded and the same need to be retained for PNDT, AMC and other purposes. However, neither did the appellant offer to give details of the tests done as per the records in each machine nor did the Ld AO seek the same either during survey and thereafter. These records could have become a basis for estimating the tests done by the appellant during the previous of the impugned order albeit giving relief for failed investigations /testing/ complimentary tests. This has not been the case. However considering the mitigating circumstances of the date of survey being other than a normal day for the appellant, that the CAT Scan and MRI machines came later during the previous year( thus probably skewing the daily collections after Dec 2009) and discounting the statement of the receptionist and further given that the appellant has shown an increase of nearly 40 % receipts over the earlier FY. it is my considered view that estimating the suppressed sales at 50% of the total sales disclosed is on the higher side. It is my considered view that the interest of justice shall be served if the suppressed sales are taken at 30% of the total sales. The Ld AO is directed to recalculate the suppressed sales after substitution 30% for 50%. ( the addition is thus directed to be restricted to Rs. 21,88,689) Thus ordered. The appellant partly succeeds on these grounds of Appeal.
7. Now the assessee is in appeal.
8. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that there was no basis for estimating the receipt of the assessee particularly when all the receipts were entered in the books of accounts which were duly audited by the Chartered Accountant therefore the addition made by the A.O. and sustained by the Ld. CIT(A) without any basis was not justified.
9. In his rival submissions the Ld. Sr. DR strongly supported the orders of the authorities below.
10. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the A.O. estimated the income by observing that a cash of Rs. 54,840/- was found from the receipt counter whereas the cash memo issued were of the amount of Rs. 20,280/- only. Thus sum of Rs. 34,560/- was deliberately unaccounted for. He therefore held that the assessee was declaring receipt to the tune of 37% of the actual receipt [ 20280/- x 100 / 54840] and the recipt were suppressed by 63%. As the assessee had shown receipt of Rs. 72,95,630/-, by applying the ratio of 63%, The A.O. worked out the suppression of the receipt at Rs. 51,26,639/-. However he estimated receipt by applying the 50% ratio to the gross receipt of Rs. 72,95,630/- and made the addition of Rs. 36,47,680/-. Thereafter when the matter was taken to the Ld. CIT(A) in first appeal, he considered that 50% estimate of the assessee was excessive. The Ld. CIT(A) 6 considered the suppressed sale @30% of the total sales and restricted the addition to Rs. 21,88,689/-. In my opinion neither the A.O. nor the Ld. CIT(A) were justified in estimating the suppressed sale by applying the ratio of 50% and 30% respectively, particularly when it was not brought on record that the shortage of cash in hand found during the course of survey was the same for all the days. Secondly the A.O. on the one hand stated that there was suppression of receipt by 63% but he estimated the suppressed receipt by applying the ratio of 50% which shows that the view taken by the A.O. was without any basis. Similarly the Ld. CIT(A) also applied 30% ratio without any basis particularly when he himself stated that the addition was made by considering the mitigating circumstances of the date of survey being other than the normal days for the assessee. At the same time the assessee did not maintain any core patient register and was unaware where the books of accounts were maintained. Therefore, in such type of cases some addition is required to be made particularly when the books of accounts were rejected by the A.O. However the addition sustained without any basis by the Ld. CIT(A) at Rs. 21,88,689/- appears to be excessive. I therefore, to meet the ends of justice and by considering the peculiar facts of this case deem it appropriate to restrict the addition of Rs. 10 Lacs to cover up the leakage of revenue, if any.
11. In the result, appeal of the assessee is partly allowed.
(Order pronounced in the open Court on 14/06/2019).
Sd/-
एन.के.सैनी, ( N.K. SAINI) उपा य! / VICE PRESIDENT AG Date: 14/06/2019 आदे श क! त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय/ ु त/ CIT
4. आयकर आय/ ु त (अपील)/ The CIT(A)
5. -वभागीय त न4ध, आयकर अपील&य आ4धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File