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TMI Blog2018 (12) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... to the AO, during the course of survey certain loose papers reflecting unaccounted receipts were found and impounded as Annexure A/1 to Annexure- A/6. These loose papers pertained to the period of 1.9.2013 to 3.3.2014 i.e. for six months. Sum total of these loose papers was worked out by the AO at Rs. 1,62,77,798/-. According to the AO, the assessee failed to explain as to how these unaccounted receipts have been recorded in the regular books of accounts. On the basis of these evidences, pertaining for period of six months, he interpolated receipts for the whole year and worked out such unaccounted receipts at Rs. 3,25,55,596/-. The AO thereafter observed that trial balance sheet from regular books of accounts, was drawn out and receipts for nine months have been shown by the assessee in the regular books at Rs. 51,10,384/-. Figure of completed year-wise was worked out at Rs. 65,13,845/-. The AO has given credit of this, plus Rs. 50 lakhs declared by the assessee during the search. The balance of Rs. 2,57,41,751/- has been added to the total income of the assessee as unexplained receipts. 4. Dissatisfied with this addition, the assessee carried the matter in appeal before the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as notified under sub-section (2), have not been regularly followed by the assessee], the Assessing Officer may make an assessment in the manner provided in section 144.]" 7. A bare reading of Section 145 would reveal that it provide the mechanism how to compute the income of the Assessee. According to sub-section 1, the income chargeable under the head profit and gains of business or profession or income from other source shall be computed in accordance with the method of accountancy employed by an Assessee regularly, subject to sub-section 2 of Section 145 of the Act. Sub-section 2 provides that the Central Government may notify in the official gazette from time to time, the Accounting Standard required to be followed by any class of Assessee in respect of any class of income. Thus, it indicates that income has to be computed in accordance with the method of accountancy followed by an Assessee i.e. cash or mercantile, such method has to be followed keeping in view the Accounting Standard notified by the Central Government from time to time. Sub clause 3 provides a situation, that is, if the Assessing Officer is unable to deduce the true income. On the basis of method of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count and bills, clearly shows that the actual receipts are substantially more than that recorded in the regular books. - . b) The total receipts worked by the AO are also disputed, and the appellant did not agree with the figures worked out. I have carefully gone through the seized register and the regular books. The following facts and observations are very relevant to the issue: 1) The receipts in the regular books are taken into different heads; (i) Consulting fees (where fees received with respect to collection center like Me & Mummy etc. are recorded; the total of this amount recorded in the books of account for A.Y. 2014-15 is Rs. 38,84,048/-. The other receipts of the nature corresponding to fee income register Rs. 40,40,998/-.Out of these, payments received from Jeevanshaili in form of test fees, Rs. 21,79,420/- (Ledger polio 158) and in form of consultancy fee, Rs. 60,000/- (LF 157); consultancy fees received from Doctors Clinical Lab (LF 154) Rs. 5,76,750/- and testing fees received from Miraj Health Care (LF 163) Rs. 4,17,000/- do not form part of the Kachba Register of receipts in cash seized during the search. Therefore, out of Rs. 79,25,046/- (Rs. 38,84,048/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ajit Kumar 135 Taxman 180 (Madhya Pradesh) 5) Kishor Mohnalal Telwala Vs. AC/T (1999)^7 foxmann.com 86 (Ahd) The decision in the case of Sairam Multi Speciality Hospital Vs. ACIT, (2014) 40 CCH 0132 Hyd. Trib. which relates to similar, business also supports this view. The final accounts of past years and the ratio of receipts to the variable expenses (excluding the fixed or fully disclosed expenses like interest, depreciation, electricity bills etc.) would give a very good guidance to the actual profits on average additional receipts of the business and therefore; the suppression of profits which have been done by the appellant in the relevant previous year. I have worked out the net profit on total receipts, for A.Y. 2009- 10 to 2013-14, excluding the following fixed or fully disclosed expenses like interest, depreciation, electricity bills etc.: - 1) Rent 2) Insurance charges 3) Electricity expense 4) Municipal and Professional tax 5) Financial charges & Vehicle loan and House loan interest expenses 6) Depreciation as per Income Tax Act 7) Telephone bill (Landline) Therefore, the net profits for different years considering only the variable expenses is wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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