Dr. Raj Mehrotra, Lucknow V. Asst. Commissioner of Income Tax, Lucknow

ITA 1371/LKW/1997

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83322 (ITAT-LUCKNOW)
• Duration Of Justice: 6 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-08-2014
• Assessment Year: misc
• Appeal Filed On: 28-10-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Document seized; Principle of natural justice; Block assessment; Documents seized

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1371/LKW/97 BLOCK PERIOD : 01 /04/86 TO 25/09/96 DR. RAJ MEHROTRA, 9, SHAHMINA ROAD, LUCKNOW. VS. A.C.I.T., CIRCLE - 2(1), LUCKNOW. (APPELLANT) (RESPONDENT) ITA NO.1372/LKW/97 BLOCK PERIOD: 01/04/86 TO 25/09/96 DR. ANITA MEHROTRA, 9, SHAHMINA ROAD, LUCKNOW. VS. A.C.I.T., CIRCLE - 2(1), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. BOTH THESE APPEALS ARE FILED BY TWO DIFFERENT ASSESSEE S , WHICH ARE DIRECTED AGAINST T WO BLOCK ASSESSMENT ORDER S PASSED BY THE ASSESSING OFFICER FOR THE BLOCK PERIOD FROM 01/04/86 TO 25/09/96 IN THE CASE OF DR. RAJ MEHROTRA AND DR. ANITA MEHROTRA. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF T HIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE MODIFIED/CONCISE GROUNDS OF APPEAL IN THE CASE OF DR. RAJ MEHROTRA IN I.T.A. NO.1371/LKW/97 ARE AS UNDER: APPELLANT BY SHRI P. K. KAPOOR, C.A. RESPONDENT BY SHRI A. K. NIGAM, CIT, D.R. DATE OF HEARING 22/08/2014 DATE OF PRONOUNCEMENT 1 8 /09/2014 2 1. BECAUSE THE APPELLANT, 'INDIVIDUALLY' SPEAKING, COULD NOT HAVE BEEN TREATED TO THE 'PERSON' SUBJECTED TO SEARCH UNDER SECTION 132(1) AND BLOCK ASSESSMENT ORDER UNDER SECTION 158 BC DATED 29.9.1997 AS PASSED IN HIS NAME, IS WHOLLY ILLEGAL.' (ADDITIONAL GROUND) WITHOUT PREJUDICE TO THE AFORESAID 2. BECAUSE THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT - : 'THE ASSESSEE IS FOUND TO BE SUPPRESSING HIS RECEIPTS BY ABOUT 50%' AND IN WORKING OUT THE SUPPRESSED RECEIPTS FOR THE ASSESSMENT YEAR 1996 - 97 AT RS.1,69,375/ - (AFTER ALLOWING A MARGIN OF 25% FOR FREE AND CONCESSIONAL TESTS) AND TREATING THE SAME AS 'UNDISCLOSED INCOME' OF THE APPELLANT IN THE 'BLOCK ASSESSMENT'. 3. BECAUSE DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS, THE APPELLANT HAD SUBMITTED DETAILED RECONCILIATION OF ALL THE TESTS FOUND TO BE EN TERED IN THE TECHNICIANS HAND BOOK, WITH THE COLLECTIONS FROM THE PATIENTS AND IN VIEW OF THE FACT THAT NO DISCREPANCY OR DEFECTS WAS FOUND IN SUCH RECONCILIATION / INFORMATION SUBMITTED BEFORE THE LEARNED ASSESSING OFFICER, THERE WAS NO JUSTIFICATION FOR HOLDING THAT THE APPELLANT WAS FOUND TO BE SUPPRESSING HIS PROFESSIONAL RECEIPTS BY ABOUT 50%. 4. BECAUSE ALL SUCH RECEIPTS AS HAD ACTUALLY RECORDED THE APPELLANT HAVING BEEN FOUND TO BE FULLY ACCOUNTED FOR, NO ADDITION TO THE 'DECLARED VERSION' WAS CALLE D FOR, EITHER ON FACTS OR IN LAW. 5. BECAUSE IN ANY CASE AND AFTER GIVING DUE MARGIN TO THE FACT THAT THE 'TESTS THAT WERE FOUND TO BE ENTERED IN THE TECHNICIANS HAND - BOOK INCLUDED TESTS (A) C ARRIED OUT FOR VERIFICATION OF AUTO - ANALY Z ER, WHICH IS A CONTINUOUS EXERCISE; (B) FOR QUALITY CONTROL OF REAGENTS; 3 (C) FOR RE - VERIFICATION OF THE PROGRAMME, FOR SETTING UP OF NEW TESTS IN RA - 50 - AUTO ANALY Z ER; AND (D) FALLING IN THE F REE GROUP' OF WHICH A DETAILED LIST WAS SUBMITTED BEFORE THE LEARNED ASSESSING OFFICER THE PROFESSIONAL RECEIPTS AS SHOWN BY THE APPELLANT SHOULD HAVE BEEN ACCEPTED AND NO ADDITION WAS CALLED FOR EITHER ON FACTS OR IN LAW. 6. BECAUSE IN ANY CASE THE ESTIMATE OF 'UNDISCLOSED INCOME' AS MADE BY THE LEARNED ASSESSING IS MUCH TOO HIGH AND EXCESSIVE, AS BEING BASED ON IRRELEVANT MATERIAL AND CONSIDERATION. 7. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. SIMILARLY , THE CONCISE GROUNDS FILED BY THE ASSESSEE IN THE CASE OF DR. ANITA MEHROTRA IN I.T.A. NO.1372/LKW/97 ARE AS UNDER: 1. BECAUSE THE APPELLANT, 'INDIVIDUALLY' SPEAKING, COULD NOT BE TREATED TO THE PERSON' SUBJECTED TO SEARCH UNDER SECTION 132( 1 ) AND, THER EFORE, BLOCK ASSESSMENT ORDER UNDER SECTION 158 BC DATED 29.9.1997 AS MADE IN HER NAME, IS WHOLLY ILLEGAL. (ADDITIONAL GROUND) WITHOUT PREJUDICE TO THE AFORESAID 2. BECAUSE THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT - 'THE ASSESSES IS FOUND TO BE SUPPRESSING HIS RECEIPTS BY ABOUT 50%' AND AFTER ALLOWING 15% MARGIN FOR FREE AND/OR CONCESSIONAL TESTS, IN WORKING OUT THE SUPPRESSED RECEIPTS OF THE APPELLANT AT RS.9,15,120/ - FOR DIFFERENT YEARS AS PER DETAILS GIVEN BELOW: - ASSESSMENT YEAR AMOUNT (RS.) 1993 - 94 2,00,531 1994 - 95 1,92,517 1995 - 96 2,30,076 1996 - 97 2,92,000 (PART) 9,15,124 4 SAY 9,15,120 AND IN TREATING THE SAME AS 'UNDISCLOSED INCOME' OF THE APPELLANT FOR BLOCK PERIOD. 3. BECAUSE WHEREVER THE APPELLANT HAD RECEIVED PAYMENTS FOR CARRYING OUT THE TEST ON PRESCRIPTION OF DR.(MRS.) LAXMI SINGH (NOW DECEASED) THE SAME HAD BEEN DULY ACCOUNTED FOR AS PROFESSIONAL RECEIPTS AND NO ADVER SE INFERENCE SHOULD HAVE BEEN DRAWN AGAINST THE APPELLANT, ON THE GROUND THAT IN SOME CASES (MENTIONED IN LP 18) NO FEES FOR CARRYING OUT 'TEST HAD BEEN ACCOUNTED FOR'. 4. BECAUSE DURING THE COURSE OF EXTENSIVE ASSESSMENT PROCEEDINGS/ THE APPELLANT HAD SUBMITTED DETAILED RECONCILIATION OF ALL THE 'PATHOLOGICAL TESTS' FOUND TO BE ENTERED IN THE TECHNICIAN'S HAND BOOK, WITH THE COLLECTIONS FROM THE PATIENTS AND IN VIEW OF THE FACT THAT NO DISCREPANCY OR DEFECT WAS FOUND IN SUCH RECONCILIATION/INFORMATION S UBMITTED BEFORE THE LEARNED ASSESSING OFFICER, THERE WAS NO JUSTIFICATION FOR HOLDING THAT THE APPELLANT WAS FOUND TO BE SUPPRESSING HIS PROFESSIONAL RECEIPTS BY ABOUT A 50% AND FOR MAKING AN 'ESTIMATED ADDITION' BY WAY OF 'UNDISCLOSED INCOME'. 5. BECAUSE IN ANY CASE AND AFTER GIVING DUE MARGIN TO THE FACT THAT THE 'TESTS' THAT WERE FOUND TO BE ENTERED IN THE TECHNICIANS HAND - BOOK INCLUDED TESTS ( A ) CARRIED OUT FOR VERIFICATION OF AUTO - ANALY Z ER WHICH IS A CONTINUOUS PROCESS; ( B ) FOR QUALITY CONTROL OF REAGENTS; ( C ) FOR RE - VERIFICATION OF THE PROGRAMME, FOR SETTING UP OF NEW TESTS IN RA - 50 - AUTO ANALY Z ER; ( D ) FOR IMPARTING INDOOR TRAINING TO THE TECHNICIANS; AND ( E ) FALLING IN THE 'FREE GROUP' OF WHICH A DETAILED LIST WAS SUBMITTED BEFORE THE LEARNED ASSESSING OFFICER THE PR OFESSIONAL RECEIPTS AS SHOWN BY THE APPELLANT SHOULD HAVE BEEN ACCEPTED AND NO ADDITION WAS CALLED FOR EITHER ON FACTS OR IN LAW. 6. BECAUSE IN ANY CASE AND WITHOUT PREJUDICE TO THE CONTENTIONS RAISED IN THE FOREGOING GROUNDS, THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER SUFFERS FROM 5 ARBITRARINESS, WHIMS, SURMISES AND CONJECTURES AND EFFECT OF THE SAME DESERVES TO BE DELETED. 7. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 4. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT GROUND NO. 1 AS PER CONCISE GROUNDS IN BOTH THE CASES IS NOT PRESSED. ACCORDINGLY, THIS GROUND IS REJECTED AS NOT PRESSED IN BOTH THE CASES. 5. REGARDING MERIT OF THE ADDITIONS AS PER GROUND NO. 2 IN BOTH THE CASES, IT WAS SUBMITTED THAT VARIOUS TYPE OF CONCESSIONS WERE ALLOWED TO THE PATIENTS AND THEREFORE, ONLY ACTUAL NET RECEIP TS WERE ACCOUNTED FOR AND HENCE, NO ADDITION IS JUSTIFIED. OUR ATTENTION WAS DRAWN TO VARIOUS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AS AVAILABLE ON PAGE NO. 211 TO 215 AND 217 TO 220 OF THE PAPER BOOK BEING DATED 15/09/97 AND 23/09/97 RESPECTIVELY. 6. ON THE OTHER HAND, LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER S . 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT ON PAGE NO. 199 OF THE PAPER BOOK IS A DETAIL OF DATE WISE ENTRY IN THE SEIZED MATERIAL. ON THIS PAGE, AGAINST ENTRY NO. 1 DATE D 01/07/96, IT IS NOTED THAT AGAINST RECEIPTS SHOWN OF RS.330/ - , RECEIPT WAS ISSUED FOR RS.200/ - ONLY. EVEN THIS DISCREPANCY WAS NOT EXPLAINED PROPERLY BY THE ASSESSEE BEFORE THE ASSESSING OFFICER OR BEFORE US. IN COURSE OF HEARING, THIS QUESTION WAS ALS O PUT TO LEARNED A.R. OF THE ASSESSEE THAT WHETHER THE ASSESSEE CAN CORRELATE ALL THE RECEIPTS AS PER THE SEIZED MATERIAL HAVING BEEN RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND IN REPLY, LEARNED A.R. OF THE ASSESSEE COULD NOT SHOW US THAT ANY SUC H ATTEMPT WAS MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. BEFORE US ALSO, NO SUCH ATTEMPT WAS MADE. WE ALSO FIND THAT VARIOUS CONTENTIONS WERE RAISED BY THE ASSESSEE BEFORE THE ASSESSING 6 OFFICER AND SAME WERE DULY CONSIDERED BY THE ASSESSING OFFIC ER AND REGARDING THE CLAIM OF SOME FREE TESTS AND CONCESSIONAL CHARGES, BENEFIT WAS ALSO ALLOWED BY THE ASSESSING OFFICER IN COMPUTING THE SUPPRESSED RECEIPT. THE RELEVANT PARAS OF THE ASSESSMENT ORDER ARE PARA NO. 7 & 8 IN THE CASE OF DR. ANITA MEHROTRA, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 7. THE ASSESSEES REPLIES HAVE BEEN FULLY CONSIDERED. FIRSTLY, IT MAY BE MENTIONED THAT THERE IS NO BASIS OF DETAILS WHICH ARE NOW FURNISHED BY THE ASSESSEE VIDE HER REPLY DATED 21/08/97. THI S IS JUST AN ATTEMPT ON HER PART TO SOMEHOW EXPLAIN THE DISCREPANCIES NOW POINTED OUT TO HER. SECONDLY, IF SOME TESTS ARE CARRIED OUT FOR QUALITY CONTROL OR FOR SETTING OWN STANDARDS OR NORMS, IT WOULD BE REFLECTED SO IN THE TECHNICIANS NOTE BOOK BECAUSE IT CANNOT BE ACCEPTED THAT THE TECHNICIAN CONCERNED WOULD NOT BE AWARE OF SUCH TESTS. REGARDING FREE TESTS AND CONCESSIONAL CHARGES, OF COURSE, THERE MAY BE SOME MERIT IN WHAT THE ASSESSEE CLAIMS. NOW COMING TO CLAUSE D ABOVE, IT IS NOT POSSIBLE TO A CCEPT THAT THE MONEY ACTUALLY CHARGED FROM THE PATIENTS WAS NOT MADE OVER TO THE ASSESSEE BY THE TECHNICIAN AND THEREFORE, THE SAME WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. IT HAS BEEN SPECIFICALLY NOTICED THAT THE PART PAYMENTS MENTIONED IN THE ANNEXURE I, II & III WERE NOT AT ALL ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. IT WOULD BE TOO SIMPLISTIC A VIEW TO TAKE THAT ALL SUCH PART PAYMENTS WERE NOT ACCOUNTED FOR BECAUSE THE ASSESSEES TECHNICIANS PREFERRED NOT TO HANDOVER THE MONEY IN QUESTION TO HER PAR TICULARLY WHEN THE ASSESSEE IS PUTTING HER INITIALS ON THESE DAILY SHEETS AGAINST A GOOD NUMBER OF ENTRIES. IT APPEARS THAT THE INITIALS OF THE ASSESSEE ARE PUT ONLY IF MONEY RECEIPT IS ISSUED AND NOT OTHERWISE. AT A NUMBER OF PLACES IN THESE DAILY SHEET S, THERE IS SPECIFIC MENTION THAT RECEIPT HAS BEEN ISSUED. THE NECESSITY OF SUCH MENTION ARISES ONLY IF ALL THE RECEIPTS ARE NOT ISSUED. FURTHER, IF ASSESSEES CLAIM IS ACCEPTED THAT THE MONEY RECEIPTS ARE ISSUED INVARIABLY IN ALL CASES OF PAYMENTS THE R ECEIPTS SHOULD HAVE BEEN ISSUED IN A SERIATIM AS PER THE DAILY SHEETS AND NOT IN A HAPHAZARD MANNER. IT HAS EARLIER BEEN MENTIONED THAT HARDLY 5% RECEIPTS HAVE BEEN FOUND TO HAVE BEEN ACTUALLY ISSUED AND THE REMAINING RECEIPTS ARE FOUND INTACT IN THE RECE IPT BOOKS. IT IS THUS CLEAR THAT THE ASSESSEES BOOKS OF ACCOUNT SO FAR THEY RELATE TO RECEIPTS CANNOT BE RELIED UPON AND AN ESTIMATE OF THE GROSS RECEIPTS HAS TO BE MADE ON THE BASIS OF SEIZED DOCUMENTS. SIMILARLY, ASSESSEES 7 EXPLANATION IN REGARD TO SU PPRESSION OF RECEIPTS IN FINANCIAL YEAR 1992 - 93 AND 1993 - 94 IS NOT ACCEPTABLE. IT IS NOT BELIEVABLE THAT THE ASSESSEE CONTINUED TO DO TESTS EVEN WHEN NO CHARGES WERE BEING RECEIVED BY HER AND SHE WAS NOT AWARE OF THE EMBEZZLEMENT BY THE TECHNICIANS. THE ALLEGED EMBEZZLEMENT BY THE TECHNICIANS IS JUST A LAME EXCUSE IN ASSESSEES ATTEMPT TO EXPLAIN THE SUPPRESSION OF RECEIPTS. 8. IT HAS EARLIER BEEN MENTIONED THAT THE ASSESSEE IS FOUND TO BE SUPPRESSING HER RECEIPTS BY ABOUT 50%. HOWEVER, AFTER CONSIDERI NG ASSESSEES REPLY AND KEEPING IN VIEW THE FACT THAT FREE AND/OR CONCESSIONAL TESTS CANNOT BE TOTALLY RULED OUT. I ESTIMATE THE SUPPRESSION TO THE EXTENT OF 35%. ACCORDINGLY, THE SUPPRESSION OF INCOME FOR THE FINANCIAL YEAR 1992 - 93, 1993 - 94, 1995 - 96 AND FINANCIAL YEAR 1996 - 97 (FROM 01/04/96 TO 24/09/96) FOR WHICH THE SEIZED RECORDS INDICATING SUCH SUPPRESSION ARE RELEVANT IS ESTIMATED AS UNDER: FINANCIAL YEAR 92 - 93 93 - 94 95 - 96 96 - 97 TOTAL RECEIPT AS 5,72,946 5,50,049 6,68,790 8,34,295 SHOWN IN BOOKS OF ACCOUNT ESTIMATED SUPP - 2,00,531 1,92,517 2,30,076 2,92,000 RESSION OF RECEIPTS SINCE THE TESTS IN RESPECT OF WHICH THESE RECEIPTS HAVE BEEN ESTIMATED HAVE ACTUALLY BEEN DONE & EXPENDITURE ON THESE TESTS ALREADY ACCOUNTED FOR IN THE BOOKS OF A CCOUNT, THE AFORESAID SUPPRESSED RECEIPTS ARE TO BE TAKEN AS UNDISCLOSED INCOME OF THE FOUR YEARS. 7.1 FROM THE ABOVE PARAS FROM THE ASSESSMENT ORDER, WE FIND THAT THIS CLAIM OF THE ASSESSEE REGARDING FREE TESTS AND CONCESSIONAL CHARGES IS DULY ACCEPTED BY THE ASSESSING OFFICER AND FOR THIS REASON, THE ASSESSING OFFICER HAS CONSIDERED ONLY 35% OF THE RECEIPT AS SUPPRESSED RECEIPT AS AGAINST HIS FINDING OF 50%. REGARDING THIS CLAIM OF THE ASSESSEE THAT THERE WAS EMBEZZLEMENT BECAUSE OF CONNIVANCE BETWEEN HER TECHNICIAN S AND TECHNICIAN S OF DR. LAXMI SINGH, A CLEAR FINDING IS GIVEN BY THE ASSESSING OFFICER THAT WHEN THE ASSESSEE IS PUTTING HER INITIAL ON ALL THE RECEIPTS AGAINST GOOD NUMBER OF ENTRIES, IT CANNOT BE ACCEPTED THAT THE MONEY RECEIVED WAS 8 NOT PA RTLY HANDED OVER TO THE ASSESSEE BY THE TECHNICIAN S . REGARDING THIS CLAIM THAT ALL THE RECEIPTS WERE ISSUED, IT IS NOTED IN THE ASSESSMENT ORDER IN PARA 7 AS REPRODUCED ABOVE THAT AT A NUMBER OF PLACES IN THESE DAILY SHEETS, THERE IS SPECIFIC MENTION THAT RECEIPT S HA VE BEEN ISSUED. THE ASSESSING OFFICER HAS NOTED THAT THE NECESSITY OF SUCH MENTION ARISES ONLY IF ALL THE RECEIPTS ARE NOT ISSUED. WE FIND FORCE IN THIS CONTENTION OF THE ASSESSING OFFICER AND LEARNED A.R. OF THE ASSESSEE COULD NOT CONTROVERT THIS FINDING OF THE ASSESSING OFFICER. WHEN AS PER THE FACTS FOUND DURING THE COURSE OF SEARCH, IT IS FOUND THAT THE ASSESSEE WAS SUPPRESSING THE RECEIPTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ASSESSMENT ORDER BECAUSE THE ASSESSING OFFICER HAS M ADE A VERY REASONABLE ESTIMATE ON THE BASIS OF FACTS AND MATERIAL BROUGHT ON RECORD. WE, THEREFORE, DECLINE TO INTERFERE IN THE ASSESSMENT ORDER. ACCORDINGLY, GROUND NO. 2 IS REJECTED IN BOTH THE CASES. 8. THE REMAINING GROUNDS ARE GENERAL GROUNDS, WHIC H DO NOT REQUIRE ANY SEPARATE ADJUDICATION. 9. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 /09/2014 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR