1997 (2) TMI 166 - AT - Income Tax

Issues Involved:
1. Estimation of business income and addition of Rs. 30,000 towards indoor and miscellaneous receipts.
2. Addition of Rs. 35,000 on account of suppression of professional receipts.
3. Department's grievance regarding CIT(A)'s restriction of addition on indoor and miscellaneous income from Rs. 60,000 to Rs. 30,000.
4. Department's grievance regarding CIT(A)'s relief of Rs. 74,148 instead of confirming the addition made by the AO.

Detailed Analysis:

1. Estimation of Business Income and Addition of Rs. 30,000 Towards Indoor and Miscellaneous Receipts:
The assessee, a child specialist practicing at Aggarwal Nursing Home, faced an addition of Rs. 30,000 towards indoor and miscellaneous receipts. The AO noted discrepancies in the daybook and other records, such as the DPT and Polio register, which did not mention the nature of professional services rendered. The AO found that the receipts declared were on a low scale compared to the charges and that certain receipts were not fully disclosed. The CIT(A) estimated unaccounted indoor and miscellaneous receipts at Rs. 30,000, considering the history of income under these heads for the assessment years 1990-91 and 1991-92.

2. Addition of Rs. 35,000 on Account of Suppression of Professional Receipts:
The AO made an addition of Rs. 1,19,148 for suppression of professional receipts, citing discrepancies in the maintenance of books of accounts and non-disclosure of certain patient receipts. The CIT(A) reduced this addition to Rs. 35,000, based on the assessee's explanation and the history of income for the assessment years 1988-89 and 1989-90. The CIT(A) found that the assessee had successfully explained most discrepancies, except for a few, such as the income proportion before and after September 1988 and the non-inclusion of income from the Path. lab.

3. Department's Grievance Regarding CIT(A)'s Restriction of Addition on Indoor and Miscellaneous Income from Rs. 60,000 to Rs. 30,000:
The Department was aggrieved by the CIT(A)'s decision to restrict the addition on indoor and miscellaneous income from Rs. 60,000 to Rs. 30,000. The CIT(A) considered the history of income for the assessment years 1990-91 and 1991-92 and found that the assessee had explained most discrepancies satisfactorily. The CIT(A) accepted that the assessee's explanation regarding the free treatment of some patients and the seasonal impact on income was reasonable.

4. Department's Grievance Regarding CIT(A)'s Relief of Rs. 74,148 Instead of Confirming the Addition Made by the AO:
The Department was also aggrieved by the CIT(A)'s relief of Rs. 74,148, reducing the addition for suppression of professional receipts from Rs. 1,19,148 to Rs. 35,000. The CIT(A) found that the assessee had reconstructed the cash book from impounded papers, which showed no significant discrepancies. The CIT(A) noted that the income from the Path. lab was owned by the assessee's husband and included in his income, which was not considered by the AO. The CIT(A) also found that the assessee had explained the discrepancies in the treatment register and the seasonal variation in income.

Conclusion:
The Tribunal, after considering the rival submissions and the material on record, found that the assessee had successfully explained the discrepancies pointed out by the AO and CIT(A). The Tribunal noted that the assessee had maintained complete records of original entries regarding patient treatment and fees, even though not in the exact form required. The Tribunal concluded that there was no justification for sustaining any addition, as the income declared was better than in previous years. Therefore, the appeal filed by the assessee succeeded, and the appeal filed by the Department failed.

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