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TMI Blog2017 (11) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the jurisdiction, is dismissed. In the statement of oath u/s. 132(4) of the Act recorded on 24.1.2011, i.e., the date of search, Smt. Madhu Chopra, the director of the company has clearly admitted to the estimate of such unaccounted income already made by Dr. Ashok Chopra said to be to the tune of ₹ 1.74 crores for two years. This admission during search corroborates the statement given by Dr. Ashok Chopra the performing surgeon which was duly based upon register found by the Revenue which disclosed surgeries performed and unaccounted cash payments. From the above, it is amply evident that the additions in this case are based upon cogent materials found during search. - Decided in favour of assessee. - I.T.A. Nos. 2525 & 2526/Mum/2015, C.O. Nos. 232 And 233/Mum/2017 - - - Dated:- 15-11-2017 - SHRI SHAMIM YAHYA, AM AND SHRI SANDEEP GOSAIN, JM For The Revenue : Shri Rahul Raman For The Assessee : Shri Naresh Kumar with Shri Yogesh Joijode ORDER Per Shamim Yahya, A. M.: These are appeals by the Revenue and the cross objections by the assessee emanating out of the respective orders of the Commissioner of Income Tax (Appeals), Mumbai ( CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal appeal, the cross objection against the said appeal remained to be filed before due date in respect of the Assessment Year 2010-11 on account that we were advised by the Chartered Accountants during the said time that since we have won the appeal there is no need to file the appeal or cross objection. 3. That I state that it is only when we were able to hire the present counsel for attending the hearing before the Hon ble ITAT just few days before the date of hearing, he advised us to file the cross objection against the said departmental appeal and hence has resulted in delay in filing the instant Cross Objection. 4. That I state that because of filing of the said cross objection the interest of the revenue has not been adversely affected in any manner and we have not received any undue advantage in the said matter. 6. From the above, it transpires that the assessee s claim is that the assessee s consultant, i.e., Chartered Accountant advised that there is no need to file any appeal or cross objection. However, the present ld. Ld. Counsel of the assessee advised to file the cross objection. Upon careful consideration, on the facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining to surgery such as OT cost, surgeon cost etc. is paid. In addition to the same some cash is directly received by Dr. Ashok Chopra as surgery charges. The details of both types of receipts that is received at the front office and that received directly by Dr. Ashok Chopra is known to me. The receipt at the front office are sent to me by way of a list. The cash received directly by Dr. Chopra is handed over to me. The amount received at front office is reflected in the books of accounts. The cash received directly by Dr. Ashpk Chopra and handed over to me is not reflected in the books of account and the same is used for making certain necessary payments in cash such as giving cash incentives to doctors, surgical fees to doctors and cash remaining is unaccounted income. A rough estimate of such unaccounted income has already been done by Dr. Ashok Chopra and the same is to the tune of ₹ 1.74 crores for 2 years. 9. The statement of Smt. Madhu Chopra, correlates with the statement of Shri Ashok Chopra recorded on 24.01.2011. His statement may be referred as under: Q.11 As per Annex A-2, you have performed more than 230 surgeries since July 2009 (Since the formati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our field. / admit that such cash payments are unaccounted and were made from the unaccounted cash receipt of ₹ 174 lakhs as I have already admitted above. Q.14. Do you want to state anything else? Ans. I once again reiterate that I am offering unaccounted receipt estimated at ₹ 75.85 lakhs for F.Y. 2000-10 and 98.15 lakhs for F.Y. 10-11 as additional income for the said years in the hands of the company Studio Aesthetique Pvt. Ltd. of which I am a Director. I also state that certain unaccounted cash payments have been made from such receipts. The balance has been spent on various lifestyle and other personal expenses which I am unable to recollect. To sum up I am offering an additional income of ₹ 174 lakhs on account of unaccounted receipts in the hands of the company for the respective financial years. Considering my stand, I pray that no penalty proceedings should be initiated with respect to this additional income offered. 10. From the above, the Assessing Officer noted that the above statement recorded of the Directors it was admitted that most of the cash payments received from the patients are not accounted in the books of the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 132(4), had surrendered the said cash component as undisclosed income for the block period and further expressed his willingness to pay the taxes worked out against the surrendered undisclosed income. Smt. Madhu Chopra had further stated that she was signing her statement after reading and understanding the same without any coercion. The assessee did not retract her statement immediately after the search and seizure / survey was over however in the letter filed in this office on 06-06-2011 Smt. Madhu Chopra had retracted the statement recorded u/s. 132(4) of the I T Act. No explanation was offered for the cash component at the time of survey/ search seizure operations under section 132(4). The allegation of duress and coercion was made in the above said letter and affidavit filed along with it. The assessee surrendered undisclosed income only when she/ he was not able to explain the sources of payments made to the other doctors as incentive and other documents and loose papers found during search and by voluntary surrender of undisclosed income, it induced the survey / search party not to proceed with collection of other evidence and to accept the surrendered amount and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the Assessing Officer referred to the statement and other details and concluded as under: 20. From the above facts, judicial pronouncements and the discussion the retraction made by Smt.Madhu Chopra is not acceptable and as admitted the assessee company is receiving cash receipts and most of them are riot accounted for in its books of account. Therefore, as admitted by Smt. Madhu Chopra and Shri Ashok Chopra the directors of assessee company, the income undisclosed income of ₹ 1.74 crores is distributed to A.Y.2010-11 and A.Y. 2011-12 as under: 8.5 x 174 lakhs = 75.85 lakhs for F.Y. 2009-10 a. + 11 11 x 174 lakhs = 98.15 lakhs for F.Y. 2010-11 8.5 For the year under consideration the, undisclosed income is determined at ₹ 75,85,000 and the same is added the income of the assessee. Penalty proceedings u/s.271(l)(c) of the I T Act are initiated for furnishing inaccurate particulars of income and thereby concealing the said income. 15. Against the above order, the assessee appealed before the ld. CIT(A). 16. The ld. CIT(A) observed that it is seen that during the search action, no incriminating documents were found by the department and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containing the details of operations performed. It is seen that at the premises of the appellant company various types of surgeries are performed and applying an average rate for all the surgeries is absurd and not acceptable. It is held that since the appellant company had already offered the income in the respective years, there is no question of any undisclosed income earned by appellant company fur this year. Since the Assessing Officer has made the addition of ₹ 75,85,000/- based on the declaration made at the time of search action without considering the clarificatory statements filed subsequently and completely ignoring the submissions made during the assessment proceedings, the addition made is deleted. 4.6 No addition can be made on basis of loose papers found or register found which is further not corroborated by evidence. In support of the same I rely on the decision of CIT vs F.V.Kalyanasundaram (2007) 294 ITR 49 (SC), wherein the Hon'ble Supreme Court upheld the findings of the High Court and the Tribunal that loose pieces of paper on the basis of which the initial suspicion with regard to the undervaluation had been raised are vague. Furthermore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee submitted that the addition in this case cannot be sustained. For the proposition that a statement obtained on survey de hors any corroborative material, cannot lead to any addition, the ld. Counsel of the assessee placed reliance upon the Hon ble Apex Court decision in the case of S. Kadar Khan 352 ITR 480 (SC). 19. Per contra, the ld. Departmental Representative submitted that the assessee has never contended before any of the authorities below that the addition has not been based upon any search material. He submitted that in both the orders of the Assessing Officer as well as the ld. Commissioner of Income Tax (Appeals), there is clear mention that the incriminating material were found during search and clear admission was made u/s. 132(4) during search on the basis of which this addition has been made. Hence, the ld. Departmental Representative submitted that this is clearly an afterthought by the assessee, not emanating out of the records. Furthermore, the ld. Departmental Representative submitted that the addition is not based upon any arbitrary reasoning. He submitted that a register was duly found which clearly mentioned surgeries were formed by Dr. Ashok Chop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r making certain necessary payments in cash such as giving cash incentives to doctors, surgical fees to doctors and cash remaining is unaccounted income. A rough estimate of such unaccounted income has already been done by Dr. Ashok Chopra and the same is to the tune of ₹ 1.74 crores for 2 years. 21. Dr. Ashok Chopra on the same day has been confronted with the register found which detailed the unaccounted surgeries performed. Thereafter, Dr. Ashok Chopra gave a statement wherein he detailed the modus operandi and admitted the earning of undisclosed income. 22. From the above, it is clear that there was clear admission and statement of oath u/s. 132(4) of the Act by the director of the company that the assessee was receiving income which was not disclosed in the books of account. Furthermore, the Assessing Officer has duly recorded in his order that the assessee s representative was duly called upon to verify the seized documents and the ld. Counsel of the assessee appeared on 02.03.2012 and he has been provided with the documents seized. Upon this, the assessee has not made any comment before the Assessing Officer whatsoever. 23. Before the ld. Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the patient. I am from medical background and it is possible that certain number of entries of cash receipt has been inadvertently left out, since we do not have a full time accounting staff. Since I am unable to reconcile the exact amount which has been left unaccounted, I am offering the sum of ₹ 1.74 crores, which is shortfall in the amount of receipts as the unaccounted income of my company for financial year 2009-10 and 2010-11. Q.12 Kindly give the details of how the unaccounted receipts, as admitted above by you in the above question, should be accounted for F.Y. 2009-10 and 2010-11? Ans. As stated earlier, I have not maintained the details of cash receipts and hence cannot exactly account the same as per financial year. I offer that the same may be divided of ratio of months in F.Y.2009-10 and 2010-11 till date (i.e. 8.5 months for F.Y.2009-10 and n months for F.Y. 2010-11). The working is as under: __8.5__ x 174 lakhs ~ 75.85 lakhs for F.Y.2009-10 8.5 + 11 _11_ x 174 lakhs = 98.15 lakhs for F.Y.2010-11 8.5 + 11 Q.13. I am showing various loose papers impounded vide Annexure A-3. It is seen that your concerns are pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of undisclosed income. She is only disputing quantification of amount involved. She is stating that working of the unaccounted income will be done based upon the seized papers and books of account and the unaccounted income will be declared as undisclosed income . Subsequently, the assessee s representative vide letter dated 11.09.2012 and 17.09.2012 has mentioned that Smt. Madhu Chopra has duly retracted and that the addition was unjustified. Here we note that there were no retraction whatsoever by Smt. Madhu Chopra that there was no undisclosed income. She had only disputed the estimate of ₹ 1.74 crores and she had unambiguously submitted that the working of unaccounted income will be done based upon the seized materials and books of account. Later on, the Assessing Officer has clearly noted that the ld. Counsel of the assessee was provided with document seized on 03.11.2012 and no submission whatsoever was made by the assessee. As evident from the above, the above can by no stretch of imagination be treated as retraction of income already offered by the assessee. In the said retraction filed after 5 months, the director of the assessee company is only stating that the est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable on the facts of this case. The ld. Commissioner of Income Tax (Appeals) has placed reliance upon the Hon ble Apex Court decision in the case of CIT vs. P.V. Kalyanasundaram [2007] 294 ITR 49 (SC). In our considered opinion, the said case law is not at all applicable on the facts of the present case. In the said case, i.e., P.V. Kalyanasundaram (supra), the issue was relating to jottings in loose sheets and contradictory statement of the seller with regard to on-money in the case of sale of immovable property. We find that in the present case, facts are clearly distinguishable. The ld. Commissioner of Income Tax (Appeals) has mentioned that register or loose papers cannot be made basis for the addition. That the Assessing Officer has not brought anything on record to substantiate the addition. We find this clearly contradictionary. The register detailing surgeries performed and cash receipt was very much found. It was based upon this register, that Dr. Ashok Chopra has given his admission which was subsequently corroborated and admitted by Smt. Madhu Chopra. 28. Furthermore, we find that the case law from the Hon ble Apex Court decision in the case of S. Kadar Khan (s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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