2024 (1) TMI 105 - AT - Income Tax

Undisclosed income - difference of income worked out during the course of survey and the amount of income declared in the return of income - HELD THAT - The details produced by the assessee before AO were not found to be in any way false. Thus there is no reference of professional fees paid during survey. The debit of professional fees which was reduced from the gross receipts, was already accounted for at the time of survey and therefore, that reduction should have been granted to the assessee, this also because of the reason that sum of Rs. 30 lakhs reduced contained only the discount and repetitive bills. Further, as per paragraph No.10 of the order of the Learned CIT-A, the finding was given that the difference of Rs. 56,666/- only remains unexplained. With respect to paragraph No.13 of the order of the Learned CIT-A, he has found the error in the duplicate bills, amounting to Rs. 4,22,595/- out of the claim of Rs. 11,07,238/-. In view of the above facts, out of the addition of Rs. 11,07,238/- of the duplicate bills, the relief could not have been granted only to the extent of Rs. 4,22,595/-. Therefore, the assessee should have been granted the reduction of Rs. 6,84,643/- out of repetitive bills over and above Rs. 30 lakhs. As per the information available on record, the assessee should be granted reduction of the professional fees paid of Rs7,62,730/- and repetitive bills of Rs. 6,84,643/-. Therefore, the assessee deserves the benefit of Rs. 14,47,343/- out of the total addition made of Rs. 19,26,634/-. Therefore, we direct the Learned Assessing Officer to retain the addition of Rs. 4,79,261/- out of the total addition of Rs. 19,26,634/-. Appeal of the assessee is partly allowed.

Summary

Issues Involved:

1. Confirmation of addition of Rs. 19,26,634/- without independent verification of impounded documents.
2. Rejection of Books of accounts u/s 145(3).

Summary:

1. Confirmation of Addition of Rs. 19,26,634/-:

The assessee, Gurukrupa Hospital and Polyclinic, contested the addition of Rs. 19,26,634/- made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT-A]. During a survey under section 133A, the AO found discrepancies in the gross receipts and expenses, leading to an addition of Rs. 19,26,634/- in the assessment order. The assessee claimed reductions for duplicate bill entries, discounts, and professional fees paid, but the AO allowed only partial reductions. The CIT-A upheld the AO's decision, noting that the assessee failed to substantiate claims for additional reductions, such as the professional fees of Rs. 7,62,730/- and certain discounts.

2. Rejection of Books of Accounts u/s 145(3):

The AO rejected the assessee's books of accounts under section 145(3), citing discrepancies found during the survey. The assessee argued that the AO did not consider the reconciliation of professional fees, ledger accounts, and sample bills provided. The Tribunal found that the AO and CIT-A had not found the details submitted by the assessee to be false. The Tribunal concluded that the professional fees of Rs. 7,62,730/- and additional repetitive bills of Rs. 6,84,643/- should be allowed as reductions, granting partial relief to the assessee.

Conclusion:

The Tribunal directed the AO to retain an addition of Rs. 4,79,261/- out of the total addition of Rs. 19,26,634/-, granting the assessee a relief of Rs. 14,47,343/-. The appeal was partly allowed.