Income Tax Appellate Tribunal - Mumbai
Dr Anjali A. Malpani, Mumbai vs Assessee on 14 September, 2016
आयकर अपील
य अ धकरण "A" यायपीठ मब
ंु ई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI
BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER
AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No.7617/Mum/2013
( नधा रण वष / Assessment Year : 2002-03)
Dr. Anjali A. Malpani, बनाम/ The Asstt. Commissione r
6 t h floor,Jamu na Sagar, of Income Tax - Circle
v.
Bhagatsingh Road, 11(2),
Colab a, Aayakar Bhavan,
Mumbai - 400 005. M.K. Road,
Mumbai - 400 020.
थायी ले खा सं . /PAN : AAHPM0693E
(अपीलाथ /Appellant) .. ( यथ / Respondent)
आयकर अपील सं./I.T.A. No.7618/Mum/2013
( नधा रण वष / Assessment Year : 2002-03)
Dr. Aniruddha N. Malpani, बनाम/ The Asstt. Commissione r
6 t h floor,Jamu na Sagar, v. of Income Tax - Circle
Bhagatsingh Road, 11(2),
Colab a, Aayakar Bhavan,
Mumbai - 400 005. M.K. Road,
Mumbai - 400 020.
थायी ले खा सं . /PAN : AACPM9738M
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Assessee by Shri Hari Raheja
Revenue by : Shri A. Ramachandran
ु वाई क तार ख / Date of Hearing
सन : 15-6-2016
घोषणा क तार ख /Date of Pronouncement : 14-09-2016
आदे श / O R D E R
PER RAMIT KOCHAR, Accountant Member
These two appeals, filed by the two different assessees being ITA No. 7617/Mum/2013 & ITA No. 7618/Mum/2013, are directed against the two 2 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 separate appellate orders both dated 24th October, 2013 passed by the learned Commissioner of Income Tax (Appeals)- 3, Mumbai (hereinafter called "the CIT(A)"), for the assessment year 2002-03, the appellate proceedings before the learned CIT(A) arising from the assessment orders both dated 31st January, 2005 passed by the learned Assessing Officer (hereinafter called "the AO") u/s 143(3) of the Income Tax Act,1961 (Hereinafter called "the Act").
First, we shall take ITA No. 7617/Mum/2013 for the assessment year 2002-03.
2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called "the Tribunal") read as under:-
"1. On the facts and in the circumstances of the case and in law the CIT (A) was not justified in allowing the claim of the appellant in respect of double addition made by the Assessing Officer to the extent of Rs. 7,56,955/- and Rs. 8,15,800/- amounting to Rs. 15,72,755/- only.
2. The appellant submits that the CIT(A) ought to have allowed relief in respect of the entire addition amounting to Rs. 27,91,810/- looking to the fact that the Assessing Officer has in the remand proceedings accepted the claim of double addition of the entire amount confirming that the "the total amount received by each has been shown in their return of income in the relevant year."
3. The appellant submits that having produced some patients even after a period of 10 years the Assessing Officer has not brought any material on record to show any error in the receipts maintained and declared by the appellant nor established that the appellant has received more than what has been declared thus justifying the deletion of the entire addition of Rs. 27,91,810/-.
4. The appellant prays that inspite of the Assessing Officer not making any adverse finding, the CIT(A) has erred in not granting relief in respect of the entire addition of Rs. 27,91,810/-."
3 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013
3. The Brief facts of the case are that the assessee, Dr. Anjali A. Malpani, is in medical profession and is a gynecologist specialized in the treatment of infertility. She is also a partner in Malpani Infertility Clinic. A survey action u/s 133A of the Act was conducted by the Revenue on 17th January, 2002 at the premises of the assessee. During the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the assessee was asked to produce the receipt books found and inventorised during the course of survey. On verification of the receipt book, the A.O. noted that in many cases there were amounts written as received on the reverse of the receipts , which were higher than the amounts of fees recorded in the receipts issued to the patients. These receipts were impounded u/s 131(3)(a) of the Act vide orders dated 21-12-2004. On comparison of the receipt books with the regular books of accounts maintained by the assessee , the AO observed that there is a difference in amount of Rs. 76,81,210/- which has not been recorded in the books of account. With regard to this, the assessee explained that the inscription written in the reverse side of the receipt indicates that total fees received from the patient on a particular day in all the three entities i.e. Dr. Aniruddha Malpani , Malpani Infertility Clinic and the assessee. It was observed by the AO from the receipt book of Dr. Aniruddha Malpani, that similar amounts have been inscribed as the amount received at the reverse of the receipts. When it was confronted to the assessee , the assessee submitted that similar amounts written on the back side of the receipt of Dr. Aniruddha Malpanai and the assessee proved that the amounts indicates the total amounts of fees received from patient on a particular day and it could not be inferred from the writing on the back of the receipts that the amounts were received individually per entity. The assessee furnished the details of treatment given to the patients in many of the receipts. The A.O. accepted the explanation of the assessee wherever these amounts have been found to have come within the range of fees referred by the assessee in the book "How to have a Baby - Overcoming infertility" which book was authored by the 4 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 assessee and her husband Dr. Aniruddha Malpani. It is mentioned in the book that the range of fees referred to in the chart are approximate costs for procedure , tests and treatments . Comparative rates were also obtained from the leading practitioners in the same field. The argument of the assessee that the amount written on the back of the receipt is the actual fees received by the all the three entities were accepted wherever these amounts have been found to be within the range of fees referred to by the assessee. It is the argument of the assessee that if the amount written at the back of receipt is taken as the actual receipt of fees in the hands of each of the three entities , it will lead to absurd situation according to rate card. The AO gave benefit of doubt in these cases. However, where they are coming within range of fees as given in the book, the argument of the assessee that she has received a lesser amount of fees was not accepted by the AO. For example, vide receipt no. 1402 dated 30-06-2001 , the assessee had shown to have received a sum of Rs. 39,200 from Ms. Shweta S. Singh , whereas in the back of the receipt it is written as 'received 100' . The assessee contended that vide receipt no. 2984 dated 30-06-2001 , Dr. Anirudha Malpani has also received Rs.39,200/- , and vide receipt no. 951 M/s Malpani Infertility Clinic had received Rs.19,600/- while Rs.20,000/- was received as anesthetist's fees. The treatment as mentioned by the assessee is Pre-implantation Genetic Diagnosis , for which the rate card shows the range of professional fees of Rs.1,50,000-Rs.2,00,000. Thus , it was observed by the AO that the amount inscribed at the back of receipt no 1402 of the assessee and receipt no. 2984 of Dr. Anirudha Malpani of Rs.1,00,000/- each only shows that the assessee has actually received the differential amount which has not been recorded in the regular books of accounts. Further, no supplementary evidences has been submitted by the assessee in support of her contention that the actual fees received is a lesser amount than as compared to the rate card. The A.O. observed that the fact that the professional charges being charged for the treatment given by the assessee and her related entities are more than the fees given in the rate card 5 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 is evident form receipt no 2031 of the assessee and receipt no 1820 of Dr. Anirudha Malpani , wherein combined all the three entities have accepted the professional fees of Rs. 98,000/- ( in addition to the anesthetist's fees of Rs. 2,000) for the treatment referred to as IVF, whereas in the rate card the professional fees were Rs. 25,000/- to Rs. 60,000/-. The A.O. observed that in certain cases , the assessee has not furnished the nature of the treatment or the range of fees being collected for the treatment. In such cases and also in the cases where there is considerable difference between the amount reflected in the books of accounts and the range of fees as summarized in the book "How to have a Baby - Overcoming infertility" which book was authored by the assessee and her husband Dr. Aniruddha Malpani. , the benefit of doubt cannot be given to the assessee as per the observation of the AO. The AO summarized all such cases being 127 in numbers of which details are given by the A.O. in the assessment order u/s 143(3) of the Act dated 31-01- 2005 vide page 5 to 7. The difference in such cases were to the tune of Rs. 27,91,810/- which was added by the A.O. to the total income of the assessee as undisclosed income of the assessee , after rejecting books of accounts of the assessee vide assessment order dated 31-01-2005 passed by the AO u/s 143(3) of the Act. The assessment order dated 31-01-2005 was confirmed by learned CIT(A) wherein he upheld the action of AO in first round of litigation vide appellate orders dated 17-10-2005 passed by ld. CIT(A) . On appeal to the Tribunal in first round of litigation, the Tribunal set aside the matter in ITA No. 7546/Mum/2005 for the assessment year 2002-03 in the case of the assessee vide orders dated 30th July, 2008 by holding as under:-
"11. We have considered the submissions made by both the parties, material on record and orders of the authorities below. It is noted that both the assessees are qualified Doctors in their individual capacity and they are also partners in one Partnership Firm that provides the infrastructure and the facilities for the treatment of the patients. It is also
6 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 noted that in the cases of operation, the assessee avails the services of Anesthetist and the difference in the range of Rs.1,000/- to 4,000/- in the amount recorded in the receipt and back side of such receipts has been claimed to have been collected on behalf of the Anesthetics, hence, amounts mentioned on reverse side of receipts are net of such charges. It is also claimed that total fee is received as package and the total amount mentioned on the back of the receipts denotes total amount received from the patients which is bifurcated in the 3 entities and receipt of such bifurcated amount is issued in the hands of 3 entities. It has also been claimed that the amounts mentioned in the backside of the receipt are of each of the entities was taken independently then it would give manifestly absurd results. The assessee has further claimed that explanation of the Accountant as well as name and address of 55 patients, were submitted to the AO vide letter dated 22-1-2005, hence, the same could not be treated as additional evidence and the AO should have conducted necessary enquiries as directed by the Ld.CIT(A). It has also been contended that the addition cannot be mode on the basis of rates published in one Book particularly when the amount written on the back of the receipt was accepted by the AO himself where these amounts were found to be within the range of fees received by all the 3 entities. It has also been contended that cross-verification of the patients could have been supplementary evidence which inspite of specific request, was not carried out, hence, the addition was merely based on conjectures and surmises. In this background, we find that the addition has been made on account of difference in amounts acknowledged on the reverse side of the receipts not falling within the range as published in the Book and in respect of a few cases where no details of treatment have been mentioned. We further find that there are instances where the amount distributed amongst the three entities is more than the amounts to have been received from the patients, hence, it cannot be said that the books of 7 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 account hove been correctly maintained or the assessee has reconciled the differences in an accurate manner. It is also noted that, in this case, the survey action was taken on 17th January, 2002, and the bills, vouchers / receipts have been impounded u/s.131 of the Act on 21st December, 2004, after more than 2 and a half years, hence, we find no substance / merit in the contention of the assessee that details in respect of 127 cases could not be furnished to the AO for the reason that the receipts / vouchers were not with the assessee. Because the assessee could have reconciled the amounts in the intervening period. This contention is also not acceptable for the reason that in the Medical Profession, elaborate records are maintained in respect of patients which contain addresses, other particulars, treatment given to such patients, hence, this conduct of the assessee indicates that there is something to hide. At the same time, we find that the AO has also not mentioned instances of comparative cases neither in the assessment order nor in the remand proceedings. It is also noted that in the 2nd remand proceedings, the Ld.CIT(A) has specifically asked the AO to make necessary verification in respect of 55 patients whose particulars had been given to the AO and give report on the results thereof. However, the AO in the remand report has merely reported that it was an after-thought, hence, there is certainly non-compliance of the directions issued by the Ld.CIT(A), and, therefore, in respect of these 55 patients addition is apparently unjustified. We also find that the Ld.CIT(A) has also accepted the fact that it was a mistake on the part of the AO in not bringing on record the comparative cases and also there was no case of additional evidence or tutoring of patients by the assessee. However, the Ld. CIT{A} has confirmed action of the AO for the reason that the over-all circumstances justified the same, which, in our opinion, is not correct particularly when the patient appearing in the list of patients in both assessment orders are common. Thus, detailed exercise is required to 8 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 avoid the situation of double addition. Further, in our view, both the sides have failed to discharge their duties /onus and as per the material on record, we are not in a position to find out the quantum of addition which could be sustained, hence, we are of the view that the matter should be restored to the file of the Ld.CIT(A) for fresh adjudication of both the cases as per law. Accordingly, we restore the same to the file of the Ld.CIT(A) for this purpose to do so after giving adequate opportunity of hearing to the assessee and after taking into consideration our findings hereinabove. Thus, the ground of both assessees stand allowed for statistical purposes."
In order to meet with the directions of the tribunal, the learned CIT(A) in the second round of litigation forwarded to the AO , the written submissions filed by the appellant, asking the AO to "make further enquiries by calling the concerned parties for examination Accordingly, the AO filed his remand report before the learned CIT(A) on 17.10,2012, as follows:
"Assessee submitted confirmation from 22 parties vide letter dated 15.3.2012. It was noticed that out of 22 parties 11 were out of Mumbai.
Initially 133(6} was issued to 2 parties Out of those 1I parties in Mumbai, both were returned unserved.
Further, an attempt was made by issuing letter u/s 133(6) to 13 more parties out of list of 88 parties submitted by the assessee vide letter dated 21.2.2012. Out of these 13 parties Inspector was deputed to serve letter to two parties. However, it was submitted by the Inspector that the name and the address of the patient given by the assessee is factually 9 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 incorrect and only created to mislead the department (Copy of the report enclosed). The precise status of the 15 parties are as under:-
Sr Name of the patient Letter u/s 133(6) Remarks No. served/unserved 1 Vimla Bhansali served Undergone treatment in F/Ys 2001-02.
Confirmation of amount paid towards treatment Rs. 1,25,000/-. (copy of receipts disposed off) 2 Suruchi A Choksi served Undergone treatment in F/Ys 2001-02.
Confirmation of amount paid to ..
Dr. Aniruddha Malpani-
Rs. 8,000/-
Dr. Anjali Malpani- Rs.
8,000/-
3 Lata Served Undergone treatment in
Radhakrishnan F/Ys 2001-02.
Confirmation of amount
paid to ..
Dr. Aniruddha Malpani-
Rs. 7,200/-.
Dr. Anjali Malpani- Rs.
7,200/-
Amount in Malpani
Infertility clinic - Rs.
19,360/-.
4 Jayshree M/ Shah unserved Unclaimed
5 Madhumati H unserved Not known
6 Niti S. Sharma unserved Addressee left
7 Pallavi Jain unserved Not known
8 Pramilas Jain unserved Inspectors report
9 Falguni K. Salija unserved Inspectors report
10 Harshita N. Thakar unserved Undergone treatment in
F/Ys 2001-02. Amount
paid and made of
payment could not be
remembered
11 Palavi S. Jhingrani unserved Unclaimed
10 ITA 7617/Mum/2013 &
ITA No. 7618/Mum/2013
12 Sangeeta Lahate unserved Not known
13 Manju M. Jain served No reply from party,
assessee directly
brought confirmation
14 Naffesa Begum Unserved Not known
15 Reshma Tagore served No reply
It is therefore, submitted that most of the patients could not be traced. Hence, the authenticity of the transactions could not be verified. Thus, the issue may be decided on merits."
The above report was confronted by the learned CIT(A) to the assessee for rebuttal. The assessee, vide letter dated 17.12.2012, submitted as follows:
1. " The appellant has in accordance with the direction of the Hon. Tribunal given the address of patients wherever available and the details of various receipts and how the same are accounted for in the hands of the 3 entities and also the comparative analysis of the same with the rate card.
2. In the fresh remand proceedings the assessing officer has merely summoned 15 patients out of which 4 patients have confirmed the payment as per the appellant's records.
3. In two cases the assessing officer state that the summons have served but there is no reply. The appellant submits that in such a situation the assessing officer ought to have enforced attendance or penalized the person for not complying with the summons.
4. In respect of certain patients where the assessing officer state that the summons were not served, the assessee's 11 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 representative has tried to find out the reason and the following facts appear:-
a) Jayshree M Shah- in this case it is found that the address of the patient has changed from Flat no. 25 to that and flat No. 26 on the same floor. A photograph of the door and the nameplate of the patients showing the name of her husband is attached. The assessee has now also obtained a confirmation which is also attached herewith.
b) Mrs. Madhumati H. - in this case the confirmation had already been submitted, and inquiries reveal that the building (CHAWL) has been demolished. Hence it is but natural that after so many years it would be difficult to trace this patient.
c) Niti S. Sharma - as per the remark of the assessing officer it is very clear that the patient does not live there anymore the remark being "Addessee left" which shows that she did in fact stay but has left. This confirmed address and the fact that a person by that name lived there.
d) Pallavi Jain - inquiries revealed that this person has shifted to Delhi and the flat now stands in the name of her relative Rajat Gupta.
e) Pramila Jain - as per the inspectors report he had visited the location Nivesia Road, and could not find the building "Prathiba".
The building actually stands on A K Vaidya Rood, and not on Nevesia Road. A photograph of the building is attached. However 12 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 inquiries revealed that she has shifted out from this place and had present whereabouts are not known.
f) Falguni Saluja - the inspector could not find the location at the address given.
g) Pallavi Jingrani - the summons could not be served. Inquiries revealed that the flat has been rented in the patient has shifted to Hyderabad. However the photograph of the nameplate in the building revealed the name of Mr. Sunil Jingrani her husband and therefore the claim of the appellant stands fortified that she did in fact live there.
h) Sangeeta Lohate - the summons could not be served. Inquiries revealed that she had shifted residence and after contacting her at the new residence, the appellant had been able to obtain a confirmation from her. The same is attached herewith. The new address of the patient is as follows:- 204, second floor, Rashmi Avenue Cooperative Housing Society Ltd. Kandivali East, Mumbai.
i) Nafissa Begum - inquiries revealed that she is left from there.
5. From the above it would be seen that the assessing officer has sent summons to a few people some of whom have responded, some whether summons had been served have chosen not to respond, and in some cases where patients have moved out from the respective residences, it is not possible to locate the after so many years."
13 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 After considering the above reply of the assessee, the learned CIT(A) directed the A.O. to verify the remaining parties ; out of the 55 names provided by the assessee. The A.O. was also asked to examine the claim of the assessee with regard to the double addition in the hands of the assessee and his wife. The A.O. accordingly submitted his second remand report dated 05-06-2013 which is as under:-
"It is submitted that, initially notices u/s 133(6) were sent to 15 parties out of 88 parties, status of the same was discussed in detail vide remand report dated 17.10.2012. Vide letter dated 24.12.2012 assessee was asked to produce the parties for examination. However, assessee could not produce any of the patients. Further, as per your directions notice u/s 133(6) were once again sent to all the 88 parties. However, except for 4 parties mentioned below, notice u/s 133(6) remained unserved or no reply was received by this office.
Sr Name of the patient Letter u/s 133(6) Remarks No. served/unserve d 1 Harshita N. Thacker served Undergone treatment. However, amount paid and mode of transaction could not be remembered as receipts are not available. Later on on 26.12.12 Mr. Mehul Shah, CA of the patient confirmed the payment of Rs. 10,000/- to Malpani 2 Mrs. Moolchand served Mr. Moolchand Seinmal Seinmal confirmed that his wife had 14 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 undergone treatment and held that expenditure incurred in 2001 was around Rs. 20,000/-. 3 Mrs. Jayashree Shah unserved Mr. Manoj Shah husband of Mrs. Jayshree Shah claimed that they had changed residence in December,2002. He confirmed that his wife had undergone treatment and also confirmed that he had paid Rs. 78,000/- to Malpani's and the mode of payment was cash only and the treatment was advanced form of IVF. Mrs.Nalini Rathod served Mr. Balwant Rai 4. Rathod husband of Mrs. Nalini Rathod attended and produced cash receipts of test tube treatment. 5 Mrs. Geetanjali B. served Vide letter Vyas submitted on 24.1.2013 Mrs. Geetanjali B. Vyas held that since the details called for pertain to matter more than 10 years, she is not in a position to trace any records. 15 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013
Vide noting dated 25.4.2013 and 2.5.2013 assessee was granted opportunity to provide further submission or produce parties in order to prove the claim. Since no further submission or parties have been produced, it is submitted that the issue may be decided on merits.
As far as double addition is concerned, assessee produced the chart showing how receipts have been distributed among Aniruddha N. Malpani, Anjali A. Malpani and Malpani Infertility Clinic/MNH. It is seen that total amount received by each has been shown in their return of income in relevant financial years.
Moreover many of the entries in chart were reconciled on test check basis with the bill/receipt books impounded during survey. It was found that amount which has been written behind the receipt is the cumulative figure which has been further distributed among Aniruddha Malpani, Anjali Malpani & Malpani Infertility clinic and same amount is getting reflected in receipts in their name. Hence the some may be decided on merits."
Against the above remand report of the A.O. the assessee submitted the reply before learned CIT(A) which is as under:-
"a) As directed by the tribunal, the AO has not given instances of comparative cases.
(b) The tribunal has held that addition in the case of 55 patients is unjustified. Therefore, the directions to examine these patients is not justified.
16 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013
(c) In the case of 77 patients, there has been a double addition, as their names appeared in both the appellant's and Anjali's order. The assessee has attached a list of such cases.
(d) In the case of 8 patients, if aggregate addition in both the cases is considered, the resultant fee charged would be extremely high and unjustified. The assessee has attached a list of such cases.
(e) In some of the cases, payments for the same treatment are received on different dates. If these payments are totaled up, the resultant fee would be within the range of fees shown in the published book. The assessee has attached a list of such cases.
(f) I would like to also mention that the detailed addresses of the 55 patients was given along with the letter dated 21 Jan 2005 enclosed herewith, requesting the assessing officer to call the patients by issuing summons u/s 133(6) and to verify the amount of fees given, but the assessing officer never called them. Even the CIT Appeals vide its letter dated 30 August 2005 , enclosed herewith, asked the assessing officer to cross verify those patients, but the officer never did that. Subsequently during the remand proceedings in 2009 the assessee had sent confirmation letters to most of these patients as will be seen from acknowledgments of the courier company copies of which are attached herewith. At that stage some of the patients sent confirmations while others did not respond. There are also patients whose confirmation letters were returned back by the postal authorities on the ground that they were not available at the said address. Copies of the returned envelopes are attached herewith on your record. In this regard I have to state that the assessment relates to the assessment year 17 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 2002 -- 03 and almost 7 years there after the assessee was required to produce patients which is not only unfair but also asking for a near impossibility. The assessee has maintained a record of all the addresses given to him by the patient and it was not a duty of the assessee to verify the actual residence as there is no such provision in income tax act requiring the same. If a patient does not give the correct address in order to hide her identity looking to the fact that the nature of treatment she has come for is not only sensitive and highly confidential, the burden should not be shifted to the assessee to produce the patient for examination. Further many patients come from outstation cities and have a temporary place of residence in Mumbai which is the only address available with the assessee. In fact there is no reason for the assessee to maintain addresses of the patient because the assessee does not need to contact them any time and on the contrary they have to contact the doctors in case they have any further consultation to do.
(g) The appellant has relied upon the following decisions:
1. 87 ITD 69 (Mum) (TM) Kumar Agencies
2. C1T v . Calcutta Discount Co. Ltd. [1973]91 ITR 8 (SC)
3. Marghabai Kishabai Patel & Co. v. CIT [1977] 108 ITR 54 (Guj)
(h) The appellant has objected to relying upon the rate list published in his book, on the grounds, that the same was only indicative."
18 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 The assessee also filed before learned CIT(A) a comprehensive reconciliation of the amounts charged in the books of account, amounts reflected behind the receipts, reason for the difference, complete address of the patient and the instances of double addition.
The ld. CIT(A) observed that the receipts books were impounded two years after the date of the survey u/s.133A of the Act on 17th January, 2002. It was not mentioned in the assessment order of any statement which was recorded during the survey operations wherein these receipt books, having apparently incriminating notings were confronted to the assessee. It appears that the A.O. kept silent for two years, these receipt books were summoned u/s.131 of the Act and were impounded under the provisions of the Act after two years of conducting survey u/s 133 A of the Act. The assessee explained before the A.O that the amounts mentioned behind the receipts were the sum total of the amounts entered in the books of the assessee, her husband, Aniruddha Malpani, M/s. Malpani Fertility Clinic and the amount paid to the anesthetist. The AO has agreed with the assessee's explanation , except in the case of 127 patients wherein the AO found that the amounts mentioned in the books of accounts did not tally with the rates mentioned in the book published by the assessee : "How to have a baby-Overcoming Infertility" . During the first appellate proceedings the A.O was asked to verify the facts by producing the address of the patients for cross verification. The assessee had supplied a list of 55 such cases to the A.O, but he could not produce the patients for examination. The ld. CIT(A) had confirmed the addition in first round of litigation. The Tribunal in first round of litigation observed that both the A.O and the assessee had defaulted in their investigations. The Tribunal held that the A.O should have complied with the CIT(A)'s directions in cross verification of the patients. On the other hand , the Tribunal found fault with the assessee in as much as the assessee should have reconciled the difference. The Tribunal also noted that the AO failed to mention instances of 19 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 comparative cases. The Tribunal directed the first appellate authority to carry out an exercise to avoid double addition and also re-examine the issue. The ld. CIT(A) accepted the contention of the assessee that there is double addition in the hands of the assessee and also her husband. The learned CIT(A) gave relief of Rs. 7,56,955/- to the assessee being 50% of the double addition w.r.t. 77 patients.
It was further observed by learned CIT(A) that the Tribunal has given direction to afford opportunity to the assessee to reconcile the differences between the rate list and the amounts charged in the receipts. The learned CIT(A) observed that the assessee had filed a complete reconciliation chart with addresses and reasons for differences. The AO observed to the said reconciliation chat as under :
"Moreover many of the entries in the chart were reconciled on test check basis with the bill/receipt books impounded during the survey . It was found that amounts which has been written behind the receipt is the cumulative figure which has been further distributed among Aniruddha Malpani, Anjali Malpani & Malpani infertility clinic and same amount is getting reflected in receipts in their name. Hence the same may be decided on merits."
The assessee filed three charts to reconcile the differences. The first chart comprises double additions. Second chart comprises the cases where the amount credited to the books is more than the rate list. The third list shows list of the cases where additions have been made even though the amounts credited to the books is as per the range of the rate list.
The ld. CIT(A) observed that the only issue now is with respect to verification from the patients. The ld. CIT(A) observed that the A.O. had sent notices u/s 20 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 133(6) of the Act to 88 patients , out of which only four parties responded and the remaining parties did not responded to the notice or the notices could not be served. The four parties who responded confirmed the amount. As per learned CIT(A), there is no instance which has come to the light that there is a discrepancy between the amounts reflected in the books and the amounts confirmed by the patients. The ld. CIT(A) observed that it is a different matter that after a span of 10 years, most of the patients did not respond or could not be traced. The AO had observed that the assessee did not account for the entire receipts. While the assessee explained that the entire receipts mentioned behind the voucher are accounted for in the hands of four different entities ie. the assessee, secondly her husband, thirdly Malpani Fertility Clinic and fourthly the anesthetist. The ld CIT(A) observed that the A.O. has agreed with the assessee's contention that wherever the published rate list and the amounts tally and the AO made additions only where the amounts do not tally with the published rate list .The ld. CIT(A) observed that the Tribunal's direction were to eliminate double additions and to give an opportunity to the assessee to reconcile the discrepancies . The learned CIT(A) observed that the both the AO and the assessee were unable to verify all the cases , inspite of efforts, it cannot be said that discrepancies noted have been fully reconciled. The ld. CIT(A) observed that some benefit of doubt has to be given to the assessee. The ld. CIT(A) gave relief to the assessee of Rs. 7,56,955/- with respect to double addition and a further relief of Rs. 8,15,800/- was also given on account of charts of reconciliation submitted by the assessee as detailed above, aggregating to Rs. 15,72,755/- and balance addition of Rs. 12,19,065/- was confirmed by the ld. CIT (A) vide appellate order dated 24.10.2013 passed in second round of litigation.
4. Aggrieved by the appellate order dated 24.10.2013 passed by the ld. CIT(A), the assessee is in appeal before the Tribunal in second round of litigation.
21 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013
5. The ld. Counsel for the assessee submitted that there is no discrepancy in the amount recorded behind the receipt book and the amount recorded in the books of account as the said amount represented consolidated amount received which has been accounted for in the books of accounts of four entities namely the assessee, assessee's husband Dr Aniruddha Malpani, Malpani Fertility Clinic and anesthetist . The ld. Counsel for the assessee submitted that the assessee and her husband are Doctors being infertility specialists. There was a survey u/s 133 A of the Act conducted by the Revenue on 17.01.2002 in the premises of the assessee. No incriminating material was found and seized. No statement was recorded by the Revenue. The ld. Counsel submitted that the books of account were produced before the Revenue during the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act. The receipts books were produced during the course of assessment proceedings which were impounded by the AO on 21.12.2004 during the course of assessment proceedings on the grounds that the amount inscribed at the back of the receipt is not tallying with books of accounts while the fact of the matter is that the amount inscribed at the back of the receipt consisted of four components viz. assessee's fees, assessee's husband fee (Dr. Aniruddha Malpani), Malpani Infertility Clinic charges and anesthetist fee. The total fees is accounted for in the hands of all the four persons which has been offered for taxation and there is no shortfall in the recording of fee as inscribed at the back of receipt book viz.-z-viz. books of accounts of all four persons. It is also the say of the revenue that the fees charged is less than the range of fee specified in the book namely "How to have a baby-Overcoming Infertility" . written by the assessee and her husband Dr. Aniruddha Malpani which the assessee submitted that fees is charged based on the nature of treatment to the patient . The ld. Counsel submitted that a comprehensive reconciliation chart has been submitted from where it can be seen that there is no discrepancy in the fee charged by the assessee. The Revenue has verified the fee charged from some of the patients 22 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 and none of the patients has stated that they have paid fees more than what is recorded by the assessee in her books of accounts along with three other persons on account of whom the total consolidated fees was charged namely assessee's husband fee (Dr. Aniruddha Malpani), Malpani Infertility Clinic charges and anesthetist fee. The only issue now left is verification with the remaining patients to confirm that the amounts are correctly recorded in the receipt books and books of accounts and there is no discrepancies as to the amount received from patients and the amounts recorded in the books of accounts , as the revenue is alleging that the fee charged is less than rate of fee published in the book authored by the assessee along with her husband Dr. Aniruddha Malpani namely "How to have a Baby - Overcoming infertility". It is submitted that the patients are now not available as the matter is very old which is almost 14-15 years old and the Revenue is also not able to make verification or seek confirmation from the said patients . It is submitted that after 14-15 years now it is not possible for the assessee to trace patients so that verifications can be made as it is virtually impossible to trace the patients after a long lapse of time of 14-15 years. It is submitted that the patients come to the assessee from different parts of India as well outside India. The assessee did not know them and keep their details in normal course of business without verifying their details.The treatment of curing infertility is also confidential and sensitive and some time patients does not reveal their true details and there is no mechanism available with the assessee to verify their details and also there is no requirement under law also to do so. The said patients who come from outside Mumbai have their temporary addresses in Mumbai while getting treatment from the assessee and thereafter they move to their places. Many patients with the lapse of time had changed their addresses in this interim period and it is virtually now impossible for both Revenue and the assessee to trace them to get their confirmation / verification of fees paid. It was submitted that an honest attempt was made by the assesssee to seek confirmations from the patients 23 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 which is borne out from the records. The Tribunal directed to get confirmations from the patients and also to reconcile the fee as stated at the back of receipt book and books of accounts of all the four entities for which the consolidated fees was received by the assessee. It is submitted by the learned counsel of the assessee that it is an old litigation which is now 14-15 years old and this is second round of litigation. The ld. Counsel for the assessee submitted keeping in view virtual impossibility of complying with the orders of the Tribunal in first round of litigation to get verification / confirmation from patients on the part of the assessee as well Revenue , and also in order to buy peace of mind and to end this protracted litigation which is time consuming and also expensive , the assessee in its sincere desire want to settle this matter and accept the addition as may be decided and sustained by the Bench and does not want to pursue any further litigation on this matter . It was prayed that this litigation should be decided in a manner so that the litigation ends and the assessee showed her willingness to pay all due taxes and accrued interest thereon as per provisions of the Act and concession was accorded by learned counsel for the assesssee to be binding on the assessee as decided by the Bench.
6. The ld. D.R. relied on the order of the A.O. and the ld. CIT(A).
7. We have considered the rival contentions and also perused the material available on record. We find that the assessee is a Doctor specialized in treatment of infertility. A survey action was conducted u/s 133A of the Act by the Revenue in the premises of the assessee on 17-01-2002. No incriminating material were found and seized by the Revenue during the course of survey action. As per the details submitted during the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act, receipt book as were inventorised during survey operations were impounded by the AO u/s 131(3)(a) of the Act. There was a difference between the amount mentioned in 24 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 the back side of the receipt book and the books of accounts maintained by the assessee. The assessee explained that the inscription written on the back of the receipts indicates the total consolidated fees received from the patient for all the four entities, i.e. the assessee, her husband Dr. Aniruddha Malpani, Malpani Infertility Clinic and fourthly the anesthetists. It is the say of the assessee that there is no discrepancy in the amounts recorded at the back of receipt book and the amount recorded by all the four entities in their books of accounts which was offered for taxation. The assessee has submitted a detailed reconciliation chart which is placed in the file. It is also the say of the Revenue that the assessee has charged lower amount of fees from patients as compared to the rate list in the book "How to have a Baby - Overcoming infertility" which book was authored by the assessee and her husband Dr. Aniruddha Malpani and hence to that extent income has not been recorded in the books of accounts and hence the undisclosed income which is brought to tax as confirmed by learned CIT(A). Now this is the second round of litigation before the Tribunal. The Tribunal in first round of litigation has , inter-alia, directed to get these amounts confirmed/verified from patients. The Revenue and the assessee both made an attempt to get the amount confirmed but the same could not be confirmed from all the patients as the patients after a long gap of period are now not available/traceable. The patients from whom confirmation was received confirmed the amount which is recorded in books of accounts by these four entities and nothing incriminating has come on record as their confirmation did not reflect any discrepancies in the amount paid by them and the amounts recorded in the books of accounts of these four entities. Rest of the patients are now not available/traceable despite efforts made by the assessee and the Revenue and virtually it has gone into realm of impossibility as the patients have either moved/changed addresses or were out of Mumbai/India and hence their present location is not traceable as around 14-15 years have elapsed. We could see the difficulty of both the revenue as well the assessee to get 25 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 confirmation/verification from all the patients now after a gap of 14-15 years as the patients are now not traceable/available. The assessee has come forward and expressed her desire not to go for further litigation and to settle the matter to end this protracted litigation by offering a concession that keeping in view the entire facts and circumstances reasonable disallowance be sustained by the Tribunal which will be accepted by the assessee to end this litigation. Nothing incriminating which is conclusively confirmed by Revenue is on record but there is no doubt possibility of leakage which can only be confirmed once patients confirmation/ verification are on record. We have observed that the matter is very old and it is now almost an impossible task to get confirmations/ verification from patients at this stage after 15 years and also that this is the second round of litigation before the Tribunal, We have also observed that the remaining addition sustained is of Rs. 12,19,055/- on this account in the hands of the assessee which is subject matter of litigation before us. The assessee has stated that she will not pursue further litigation if the matter is settled by the Tribunal and the learned counsel for the assessee has given concession in this regard. Keeping in view peculiar facts and circumstances of the case as enumerated above as well concession offered by the assessee and in exercise of our power u/s 254(1) of the Act with a view to render substantial justice to both the parties , we confirm/sustain the addition to the tune of Rs. 7 lacs as undisclosed income in the hands of the assessee as against the addition of Rs. 12,19,055/- sustained by the ld. CIT(A). Thus, the assessee will get relief of addition of Rs.5,19,055/- as undisclosed income as confirmed/sustained by the learned CIT(A) with the conditions that the assessee will deposit all due taxes and interest accrued thereon as per provisions of the Act on the additions sustained by us within 60 days of the receipt of this order. We order accordingly.
ITA No. 7618/Mum/2013 for the assessment year 2002-03.26 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013
8. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called "the Tribunal") read as under:-
"1. On the facts and in the circumstances of the case and in law the CIT (A) was not justified in allowing the claim of the appellant in respect of double addition made by the Assessing Officer to the extent of Rs. 7,56,955/- and Rs. 76,400/- amounting to Rs. 8,33,355/- only.
2. The appellant submits that the CIT(A) ought to have allowed relief in respect of the entire addition amounting to Rs. 17,56,110/- looking to the fact that the Assessing Officer has in the remand proceedings accepted the claim of double addition of the entire amount confirming that the "the total amount received by each has been shown in their return of income in the relevant year."
3. The appellant submits that having produced some patients even after' a period of 10 years the Assessing Officer has not brought any material on record to show any error in the receipts maintained and declared by the appellant nor established that the appellant has received more than what has been declared thus justifying the deletion of the entire addition of Rs. 17,56,110/-.
4. The appellant prays that inspite of the Assessing Officer not making any adverse finding, the CIT(A) has erred in not granting relief in respect of the entire addition of Rs. 17,56,110/-."
9. The facts in the instant appeal are identical to the facts of the case in appeal in the case of wife of the assessee, Dr Anjali A Malpani which we have adjudicated in ITA no. 7617/Mum/2013 vide our orders in preceding para's and our above decision in ITA No. 7617/Mum/2013 vide this common order shall apply mutatis mutandis to the assessee's appeal in ITA No. 7618/Mum/2013 wherein the facts are identical. The addition in the case of Dr. Aniruddha N. Malpaniis is confirmed/sustained in ITA no. 7618/Mum/2013 to the tune of Rs.5,50,000/- as undisclosed income in the hands of the assessee , as against the addition confirmed/sustained by learned CIT(A) to the tune of Rs.9,22,755/-. Thus, In this case the assessee 27 ITA 7617/Mum/2013 & ITA No. 7618/Mum/2013 will get relief of addition of Rs. 3,72,755/- as undisclosed income in the hands of the assessee Dr. Aniruddha N Malpani on the same terms and conditions which we have stipulated in ITA No. 7617/Mum/2013 as set out above.
10. In the result, both the appeals filed by the assessee's in ITA N0. 7617/Mum/2013 and ITA No. 7618/Mum/2013 for the assessment year 2002-03 are treated as partly allowed in accordance with the terms indicated above.
Order pronounced in the open court on 14th September, 2016. आदे श क घोषणा खुले #यायालय म% &दनांकः 14-09-2016 को क गई ।
Sd/- sd/-
(MAHAVIR SINGH) (RAMIT KOCHAR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
मुंबई Mumbai; &दनांक Dated 14-09-2016
[
व.9न.स./ R.K., Ex. Sr. PS
आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु:त(अपील) / The CIT(A)- concerned, Mumbai
4. आयकर आयु:त / CIT- Concerned, Mumbai
5. =वभागीय 9त9न?ध, आयकर अपील य अ?धकरण, मुंबई / DR, ITAT, Mumbai "A" Bench
6. गाडC फाईल / Guard file.
आदे शानुसार/ BY ORDER, स या=पत 9त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai