2021 (11) TMI 704 - AT - Income Tax

Addition made on account of unaccounted professional receipts - assessee had filed an application before the Hon'ble Income Tax Settlement Commission (ITSC) for the preceding years - AO found that the professional receipts were not fully recorded in the final accounts of the assessee and the difference between the extrapolated receipts and that shown in the books as added to the income of the assessee - addition on basis accepted by the ITSC in the preceding and succeeding years - sole grievance of the Revenue before us is that the principle of res-judicata did not apply to income tax proceedings and, therefore, there was no reason to follow the order of the Hon'ble ITSC while calculating the undisclosed income on account of unaccounted receipts of the impugned year - HELD THAT - We do not find any reason to interfere in the order of the Ld.CIT(A) who has ,we hold, rightly calculated the unaccounted receipts in the impugned year following the basis accepted by the ITSC in the preceding and succeeding years. CIT(A) has noted that the assessee had submitted its calculation to the ITSC of unaccounted receipts basis documents found relating to A.Y. 2014-15 since they represented unaccounted receipts for 10 months. The percentage so worked out was applied to the rest of the years irrespective of the fact that documents relating to the whole of the said years was impounded or not. ITSC found the said declaration of the assessee, as correct and in order for all the years and in fact found it to be more than the figures as worked out by the Department. Settlement Commission has also accepted the assessee s claim of expenses @ 29% of the receipts for all the years. The Department, it has been stated at bar, has accepted the order of the ITSC estimating unaccounted receipts for the preceding and succeeding years . ITSC, accordingly, passed its order on the issue adopting and accepting the best possible method of estimating the unaccounted income, based on the documents found during survey revealing the unaccounted receipts. The same set of documents pertaining to the impugned year, form the basis of addition made in the impugned year. The facts and circumstances leading to the addition of unaccounted receipts in the impugned year therefore, we agree with the Ld.CIT(A), are identical to the years before the ITSC. The Revenue admittedly has accepted the basis adopted by the ITSC. There is no reason therefore why a different basis needs to be adopted for estimating unaccounted receipts for the impugned year. Addition made by the AO on account of receipts on which commission was paid by the assessee - during the survey, documents were impounded which contained details of payments made to doctors as commission - CIT(A) deleted the addition holding that the issue of addition on account of unaccounted receipts had already been made on the basis of impounded papers and same addition on the issue of unaccounted receipts by adopting a different method only tantamounted to double addition - HELD THAT - .It is not disputed that the addition on account of unaccounted receipts already stands made on the basis of cash receipts recorded in daily cash registers which were impounded during survey. The addition now being made of the same by estimation on the basis of documents revealing commission paid to doctors ,is as rightly stated by the Ld.CIT(A), nothing but adopting a different method for calculating the same, unless it is clearly and specifically demonstrated otherwise, which, we find, is not the case before us. Even the Settlement Commission we find, has, on identical issue, taken the same view of this being double addition in the preceding and succeeding year in the case of the assessee, which order has been accepted by the Revenue. We see no reason therefore to interfere in the order of the Ld.CIT(A) deleting the addition. Addition of difference in receipts under the head ESIC - CIT-A deleted the adition - HELD THAT - Revenue has not pointed to us any infirmity in the data as summarized by the Ld.CIT(A).The conclusion therefore drawn from the same by the Ld.CIT(A) that the two documents contained overlapping data is evident since A-16 document contained ESIC data for the period April 12 to Feb 13 while document A-20 contained ESIC data for the period April12 to mARCH13 ,the data relating to April 12 to Feb 13 therefore overlapping .The entire data relates to Baddi except for a meager amount of ₹ 5198 which relates to Ramdarbar. The Ld.CIT(A), by adopting a conservative approach, has taken the greater of the overlapping figures and found the same as duly reflected in the books of the assessee, thus holding that no addition is called for on the basis of these two documents. We do not find any merit in the plea of the Revenue that the two documents were different since the facts as we have noted above do not demonstrate anything to arrive at this finding and the difference referred to by the Revenue relating to an entry related to Ramdarbar is too inconsequential to adversely effect the otherwise logical inference that the two documents contained overlapping data - We uphold the order of the Ld.CIT(A) deleting the addition made on account of unaccounted ESIC receipts - Decided against revenue. Unaccounted receipts as per documents showing income received from KUC read as Kidney and Uro Centre a known hospital in Chandigarh sector-46 - CIT(A) deleted the same finding merit in the contention of the assessee that all receipts as reflected in the said documents stood duly accounted for in its books and further considering the order of the ITSC on identical issue in the preceding and succeeding year - HELD THAT - We find that the assessee had demonstrated from its books of accounts that all the amounts noted in the documents stood recorded in her books. CIT(A) confronted the same to the AO who was unable to point any infirmity. Even before us the Revenue has been unable bring any material before us to controvert the aforesaid contention of the assessee. In view of the same, we hold, that there is no infirmity in the order of the CIT(A) holding no addition being called for on this account. Moreover we find that before the ITSC also the assessee had contended that the department had not been able to prove any cash receipts by the assessee outside its books from KUC and to give quietus to the issue had surrendered a sum of ₹ 6,00,000/- in three years, which was accepted as such by the ITSC. - CIT(A) has rightly deleted the addition made of unaccounted receipts from KUC. Unaccounted receipts from Mukut Hospital made on the basis of documents found in search - CIT-A deleted the addition - HELD THAT - CIT-A deleted the addition after examining and finding merit in the assessee s contention that all amounts reflected in the documents stood accounted for in the books of the assessee. He also noted that the ITSC had accepted assessee s lumpsum surrender on this account of ₹ 6lacs made in three years to buy quietus to the issue on being pointed out that the department had been unable to point out cash receipts outside the books on this account in the years before the ITSC. The Revenue has brought nothing before us to controvert the factual contention of the assessee that all amounts recorded in the documents stood disclosed in the books of the assessee. As considering the order of the ITSC on similar issue in the preceding and succeeding ears wherein also the department was unable to point out any cash receipts outside the books on this account, we see no reason to interfere in the order of the Ld.CIT(A) deleting the addition made. - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition on account of unaccounted professional receipts.
2. Addition on account of receipts on which commission was paid.
3. Addition on account of difference in receipts under the head "ESIC."
4. Addition on account of unaccounted receipts from Kidney & Uro Centre.
5. Addition on account of unaccounted receipts from Mukut Hospital.

Issue-wise Detailed Analysis:

1. Addition on Account of Unaccounted Professional Receipts:
The Revenue challenged the CIT(A)'s decision to restrict the addition of ?3,06,71,903/- made by the AO to ?82,84,275/-. The AO had extrapolated the unaccounted receipts based on impounded registers (A-22, A-24, and A-25) for three months, projecting annual gross receipts and comparing them with the actual receipts recorded in the books. The CIT(A), however, followed the Hon'ble ITSC's method from preceding and succeeding years, which accepted that only 54% of the actual receipts were accounted for in the books. The CIT(A) calculated the undisclosed receipts at ?2,20,38,026/-, allowing 29% for cash expenses, resulting in an addition of ?82,84,275/-. The Tribunal upheld the CIT(A)'s decision, noting no reason to deviate from the method accepted by the ITSC for other years.

2. Addition on Account of Receipts on Which Commission Was Paid:
The AO added ?65,44,200/- based on the commission paid to doctors, estimating unaccounted receipts by working backwards from the commission rate. The CIT(A) deleted this addition, stating it would result in double addition since unaccounted receipts were already estimated based on impounded documents. The Tribunal agreed, noting that the Settlement Commission had also considered such additions as double in preceding and succeeding years, thus upholding the deletion.

3. Addition on Account of Difference in Receipts under the Head "ESIC":
The AO added ?9,94,760/- based on differences in receipts recorded in impounded documents A-16 and A-20. The CIT(A) deleted the addition, finding that the documents contained overlapping data for the same period, and the higher of the overlapping figures was already reflected in the books. The Tribunal upheld this finding, noting no infirmity in the CIT(A)'s conclusion that the addition was due to duplication of figures.

4. Addition on Account of Unaccounted Receipts from Kidney & Uro Centre:
The AO added ?1,29,255/- based on documents A-14 and A-21. The CIT(A) deleted the addition, finding that all amounts in the documents were recorded in the books and considering the ITSC's order for preceding and succeeding years, which accepted a lump-sum offer from the assessee. The Tribunal upheld this decision, noting that the Revenue failed to demonstrate any unaccounted cash receipts outside the books.

5. Addition on Account of Unaccounted Receipts from Mukut Hospital:
The AO added ?6,43,563/- based on documents A-146 and A-23. The CIT(A) deleted the addition, accepting the assessee's contention that all amounts in the documents were accounted for in the books and considering the ITSC's order, which accepted a lump-sum offer for preceding and succeeding years. The Tribunal upheld the deletion, noting the Revenue's failure to prove any unaccounted cash receipts outside the books.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds, finding no merit in the Revenue's contentions and noting the consistency with the ITSC's orders for other years. The order was pronounced on 4th October 2021.