2013 (6) TMI 397 - AT - Income Tax

Addition made on the basis of statement - proper books of account - assessee herein is an ENT surgeon - evidentiary value of statement taken during survy - Held that - The statement taken from the assessee as well as staff member of the assessee, has further been corroborated by the AO by bringing the fact on record that the assessee did not maintain proper books of accounts. Further, AO has pointed out that the assessee could not bifurcate the professional receipts of Rs.12.54 lakhs under various heads of activities. The assessee also could file only the cash flow statements to substantiate his investments and other cash outflow. These facts clearly show that all is not well with the assessee. These facts, clearly support the case of the AO meaning thereby, the addition of Rs.2.00 lakhs could still be made by the AO without drawing any support from the Statements taken during the course of survey. Hence CIT(A) has misdirected himself in assuming that the impugned addition was made on the basis of statements alone. It is well settled proposition of law that the retraction should be made at the earliest possible opportunity. In view of the huge time gap, the affidavit filed by Smt. K. Laseena is liable to be rejected. Thus AO was justified in making the addition. Against assessee. Addition of cash credit received from Smt. Mini, spouse of the assessee - CIT(A) deleted the addition - Held that - AO has added the amount without examining either the assessee or the spouse of the assessee & CIT(A) has deleted the addition without carrying out any such examination. Thus, both the tax authorities, has proceeded to deal with this issue on surmises by making certain presumptions failing to examine the above said cash credit as mandated by the provisions of sec. 68 - restore the same back to the file of AO for reconsideration. Addition of cash credit received from a concern named M/s. Priya Health Care - CIT(A) deleted the addition Held that - AO did not accept the genuineness of credit without carrying out any verification & CIT(A) has also deleted the addition without making any examination of the claim of the assessee. Thus, both the tax authorities, has proceeded to deal with this issue on surmises by making certain presumptions failing to examine the above said cash credit as mandated by the provisions of sec. 68 - restore the same back to the file of AO for reconsideration. Addition relating to the sale of furniture and fittings - Held that - Assessee could not furnish any evidence to substantiate the claim of receipt on sale of furniture and fittings. Before the CIT(A), though the assessee claimed that the furniture and fittings were accumulated over a period by spending a sum of Rs. 20,000/- per year, yet it turned out to be a oral explanation, as the assessee could not furnish any evidence in support of the said claim. Thus, the credit of Rs.1,53,165/- turns out to be a mere cash credit. As assessee could not discharge the initial burden placed upon him u/s 68 AO was right in assessing the amount of as the income of the assessee. Against assessee.

Issues Involved:
1. Addition to Professional Income
2. Addition of Cash Credit from Spouse
3. Addition of Cash Credit from Priya Health Care
4. Addition of Cash Credit Relating to Sale of Furniture
5. Disallowance under Section 80C(5)(iii)
6. Addition of Contribution from Father and Wife

Issue-wise Detailed Analysis:

1. Addition to Professional Income:
The first issue pertains to the addition of Rs.2.00 lakhs to the professional income for the assessment year 2006-07. During the survey, it was noted that the assessee did not maintain proper books of account, and a staff member admitted that part of the collections was unaccounted. The AO estimated the suppression of professional receipts at Rs.2.00 lakhs based on the materials gathered. The Ld CIT(A) deleted this addition, relying on the decision of the jurisdictional High Court in the case of Paul Mathew & Sons, which states that statements taken during surveys do not have evidentiary value. However, the tribunal noted that the AO's addition was supported by the lack of proper books of accounts and the inability to provide a breakup of professional receipts. The tribunal restored the AO's addition, stating that the Ld CIT(A) misdirected himself by assuming the addition was based solely on statements.

2. Addition of Cash Credit from Spouse:
The second issue involves the addition of Rs.4.00 lakhs received from the assessee's spouse. The AO added this amount as income, suspecting it was used for the medical college admission of the assessee's son. The Ld CIT(A) deleted the addition, but the tribunal found that neither the AO nor the CIT(A) examined the cash credit as required by Section 68 of the Act. The tribunal set aside the Ld CIT(A)'s order and directed the AO to re-examine the issue.

3. Addition of Cash Credit from Priya Health Care:
The third issue is the addition of Rs.10.00 lakhs received from Priya Health Care. The AO did not verify the genuineness of the credit, and the Ld CIT(A) deleted the addition without examination. The tribunal noted that both authorities failed to examine the issue properly and set aside the Ld CIT(A)'s order, directing the AO to re-examine the issue.

4. Addition of Cash Credit Relating to Sale of Furniture:
The fourth issue pertains to the addition of Rs.1,53,165/- from the sale of furniture and fittings. The AO rejected the assessee's claim due to a lack of documentary evidence and assessed it as income. The Ld CIT(A) accepted the assessee's oral explanation and deleted the addition. The tribunal found that the assessee failed to substantiate the claim and upheld the AO's addition, setting aside the Ld CIT(A)'s order.

5. Disallowance under Section 80C(5)(iii):
The assessee conceded the ground relating to the disallowance made under Section 80C(5)(iii) of the Act. Consequently, the tribunal set aside the Ld CIT(A)'s decision and restored the AO's order on this issue.

6. Addition of Contribution from Father and Wife:
For the assessment year 2007-08, the AO added Rs.5.00 lakhs received from the assessee's father and wife, noting that deposits of identical amounts were made the previous day and neither were income tax assessees. The Ld CIT(A) deleted the addition without further examination. The tribunal found that the issue was not properly examined and set aside the Ld CIT(A)'s order, directing the AO to re-examine the issue.

Conclusion:
The tribunal allowed both appeals of the revenue for statistical purposes and dismissed the cross objections filed by the assessee. The orders of the Ld CIT(A) were set aside on several issues, and the matters were remanded to the AO for re-examination and appropriate decisions in accordance with the law.

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