Children's Clinic, Pune V. Income-tax Officer,

ITA 1486/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0991 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-08-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 25-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Document seized; Principle of natural justice; Documents seized
• Section: 143(3); 133A; 132

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NOS.1483 TO 1489/PN/2014 % % / ASSESSMENT YEARS : 2001-02 TO 2007-08 CHILDRENS CLINIC, MZSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, RIVERSIDE BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE -411 001 PAN :AAAFC9361J . / APPELLANT V/S ITO - WARD - 3(2), PUNE . / RESPONDENT . / ITA NOS.1490 TO 1496/PN/2014 % % / ASSESSMENT YEARS : 2001-02 TO 2007-08 ITO - WARD - 3(2), PUNE . / APPELLANT V/S CHILDRENS CLINIC, MZSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, RIVERSIDE BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE -411 001 PAN :AAAFC9361J . / RESPONDENT ASSESSEE BY : SHRI NILESH KHANDELWAL REVENUE BY : SHRI ANIL KUMAR CHAWARE / ORDER PER R.K. PANDA, AM : ITA NOS. 1483 TO 1489/PN/2014 FILED BY THE ASSESSEE AND ITA NOS. 1490 TO 1496/PN/2014 FILED BY THE REVENUE ARE CROSS / DATE OF HEARING :10.08.2016 / DATE OF PRONOUNCEMENT:31.08.2016 2 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 APPEALS AND ARE DIRECTED AGAINST THE COMMON ORDER DATE D 31-30- 2014 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2001-02 TO 2007-08 RESPECTIVELY. SINCE COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE B EING DISPOSED OF BY THIS COMMON ORDER. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN MEDICAL PROFESSION AS CONSULTANT IN PEDIATRICS. A SURVEY ACTION U/S 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE-FIRM ON 24-01-2007 AND SIMULTANEOUS SEARCH ACTION U/S 132 WAS CONDUCTED IN THE CASES OF THE PARTNERS OF THE ASSESSEE FIRM. 3. THE SEARCH AND SURVEY ACTION' LED TO SEIZURE OF CASH , IMPOUNDING OF VARIOUS INCRIMINATING DOCUMENTS AND UNEARTHING OF UNDISCLOSED EXPENDITURE WHICH WAS EXPLAINED TO BE OUT OF UNDISCLOSED INCOME BELONGING TO THE ASSESSEE FIRM. THE STAT EMENT OF THE PARTNERS AND STAFF MEMBERS WERE ALSO RECORDED DU RING THE SEARCH AND SURVEY ACTIONS. THE PROCEEDING U/S 153C WER E SUBSEQUENTLY INITIATED FOR THE PERIOD RELEVANT TO A.YS. 200 1-02 TO 2007-08. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO, AFTER EXAMINING THE VARIOUS SEIZED DOCUMENTS CAME TO THE CONC LUSION THAT THE ASSESSEE FIRM HAS SUPPRESSED 70% OF ITS PROFES SIONAL RECEIPTS. AFTER REDUCING THE AMOUNT ALREADY DECLARED BY THE ASSESSEE IN ITS RETURNS OF INCOME FOR THE YEARS OF RS. 19,8 1,551/-, THE AO ADDED THE BALANCE AMOUNT OF RS. 4,90,30,467/- (UPT O 24-1- 2007) TO THE TOTAL INCOME OF THE ASSESSEE FOR VARIOUS Y EARS. THE BASIS FOR ARRIVING AT THE AFORESAID CONCLUSION BY THE AO IS AS UNDER: 3 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 (I) THERE HAS BEEN OMISSION TO RECORD PART OF THE FEE S COLLECTED IN THE REGULAR BOOKS OF ACCOUNTS. (II) THE DOCTORS HAVE ADMITTED SUPPRESSION OF RECEIPTS. FURTHER, ON ANALYSIS OF PATIENTS CARD IT IS SEEN THAT THE PERCEN TAGE OF SUPPRESSION OF FEES RECEIVED IS SUBSTANTIAL. (III) THE ANALYSIS OF PATIENTS' CARD SHOWS THAT THERE MU ST HAVE BEEN AT LEAST 68.5 PATIENTS PER DAY UPTO THE YEAR 199 7. EXTRAPOLATING THIS TO THE A.YS 2001-02 TO 2007-08 IT IS REASONABLE TO ACCEPT THAT THE DOCTORS MUST BE SEEING AT LEAST 100-110 PATIENTS PER DAY (IV) THE BASIS OF ABOVE ESTIMATION OF NUMBER OF PATIE NTS WAS FURTHER SUPPORTED BY THE STATEMENTS OF THE STAFF OF THE CLINIC (V) THE FACT RELATING TO SUPPRESSION OF RECEIPT IS FURT HER CORROBORATED BY THE FACT THAT THE CASH FOUND AT THE CLINIC ON THE DAY OF SURVEY WAS RS.47,000/-. THE TOTAL CASH AS PER THE DAI LY CASH REGISTER WAS RS. 14,000/- THEREFORE, OUT OF THE TOTAL CASH OF RS. 47,000/-, ONLY RS. 14,000/- STOOD EXPLAINED. THUS, ONL Y AROUND 30% OF ACTUAL RECEIPTS ARE RECORDED IN THE BOOKS OF ACCOU NTS. (VI) THE FACT THAT THE CASH COLLECTION IS MORE THAN W HAT HAS BEEN REFLECTED IN THE BOOKS OF ACCOUNTS IS EVIDENT FROM THE STATEMENTS OF VARIOUS EMPLOYEES AND THE PARTNERS OF THE FIRM. (VII) THE UNDERSTATEMENT OF CASH COLLECTION IS FURTHER EVIDENCED BY THE DISCREPANCY NOTICED IN THE APPOINTMENT DIARIE S. 5. THE ASSESSMENTS FOR THE ABOVE YEARS WERE THUS COM PLETED U/S 143(3) R.W.S. 153C BY MAKING ADDITIONS, THE DETAILS OF WH ICH ARE AS UNDER : ASSESSMENT YEAR RETURNED INCOME ADDITION(S) MADE 2001 - 02 7,84,742/ - 59,20,867/ - 2002 - 03 11,37,328/ - 61,00,358/ - 2003 - 04 11,80,410/ - 67,18,535/ - 2004 - 05 11,77,030/ - 71,52,778/ - 2005 - 06 12,29,870/ - 75,06,161/ - 2006 - 07 12,11,560/ - 85,03,886/ - 2007 - 08 11,90,320/ - 71,30,882/ - 6. THE ASSESSEE FIRM FILED APPEAL BEFORE CIT(A) FOR ALL THE SEVEN ASSESSMENT YEARS CHALLENGING THE ADDITION ON ACCOU NT OF UNDISCLOSED PROFESSIONAL INCOME OVER AND ABOVE THE AMOUNT S DISCLOSED BY THE ASSESSEE IN THE RESPECTIVE RETURNS OF IN COME. 4 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 THE LD CIT(A) AFTER CONSIDERING THE PLEA RAISED BY THE AS SESSEE ALLOWED PART RELIEF TO THE ASSESSEE RELATING TO THE QUANTIFIC ATION OF UNDISCLOSED PROFESSIONAL INCOME. THE CIT(A) HELD THAT THE PARTNER DOCTORS WHO PROVIDED CONSULTATION IN THE ASSESSEE-FIRM WE RE THEMSELVES SUFFERING FROM SOME MEDICAL PROBLEMS AND, THEREFOR E, THEIR CAPACITY TO GIVE CONSULTATION WAS GRADUALLY GOING DO WN AND HENCE THE ESTIMATION OF NUMBER OF PATIENTS PER DAY BY T HE AO WAS HIGH. THE CIT(A) THUS ESTIMATED THE SUPPRESSED RECEIP TS AT 60% AS AGAINST 70% ESTIMATED BY AO, AND FURTHER ALLOWED 10% OF SUPPRESSED RECEIPTS AS LIKELY EXPENDITURE INCURRED FOR EA RNING SUCH SUPPRESSED RECEIPTS. AS A RESULT THE CIT(A) COMPUTE D THE NET SUPPRESSED INCOME ON ACCOUNT OF UNDISCLOSED RECEIPTS AT RS. 2,95,15,834/- AND AFTER REDUCING THE ADDITIONAL INCOME OF RS.19,81,551/- DECLARED BY THE ASSESSEE ITSELF IN THE RESP ECTIVE RETURNS OF INCOME HELD THE BALANCE AMOUNT OF RS. 2,75,34,28 2/- AS ADDITIONAL INCOME LIABLE TO BE TAXED FOR VARIOUS ASSESSME NT YEARS AS UNDISCLOSED PROFESSIONAL INCOME OVER AND ABOVE T HE AMOUNTS ESTIMATED BY THE ASSESSEE. THUS AS AGAINST AN ADDITION OF RS. 4,90,37,467/- MADE BY THE AO, THE CIT(A) UPHELD AN ADDITION OF RS. 2,75,34,282/-. THE CIT(A) IN ARRIVING AT THE AB OVE CONCLUSION HOWEVER, HELD THAT BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR THE PERIOD WERE NOT COMPLETE, TRUE, COR RECT AND ACCURATE AND, THEREFORE, THEY DID NOT REPRESENT TRUE ST ATE OF AFFAIRS OF THE ASSESSEE WHICH FOUND SUPPORT FROM THE VARIOU S INSTANCES GIVEN BY THE AO IN THE ASSESSMENT ORDER WHICH HAD ALSO BEEN ACCEPTED BY THE ASSESSEE. THE DETAILS OF PART RELIEF GIVEN BY THE CIT(A) ARE AS UNDER : 5 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 ASSESSMENT YEAR ADDITION(S) MADE BY THE AO ADDITION RESTRICTED TO BY CIT(A) 2001 - 02 59,20,867/ - 33,21,843/ - 2002 - 03 61,00,358/ - 34,22,545/ - 2003 - 04 67,18,535/ - 37,69,367/ - 2004 - 05 71,52,778/ - 40,12,995/ - 2005 - 06 75,06,161/ - 42,11,257/ - 2006 - 07 85,03,886/ - 47,95,564/ - 2007 - 08 71,30,882/ - 42,11,257/ - 4,90,33,467/ - 2,77,44,828/ - 7. THE AO THEREAFTER INITIATED PENALTY PROCEEDINGS U/S.271(1 )(C) OF THE I.T. ACT, 1961. THE ASSESSEE SUBMITTED THAT SUBS TANTIAL RELIEF HAS BEEN GRANTED AND THE ASSESSEE HAS FILED APPEAL BEFO RE THE TRIBUNAL AND THEREFORE ASKED THE AO TO KEEP THE PENALTY PROCEEDINGS IN ABEYANCE TILL THE DECISION OF THE TRIBUNAL. 8. HOWEVER, THE AO WAS NOT SATISFIED WITH THE ABOVE PLEA O F THE ASSESSEE. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY TH E ASSESSEE THE AO LEVIED PENALTY U/S.271(1)(C) OF THE I.T. ACT, 1961 BEIN G 100% OF THE TAX SOUGHT TO BE EVADED FOR DIFFERENT ASSESSMENT YEARS WHICH ARE AS UNDER : ASSESSMENT YEAR RETURNED INCOME ADDITION(S) MADE ADDITION RESTRICTED TO BY CIT(A) PENALTY LEVIED 2001 - 02 7,84,742/ - 59,20,867/ - 33,21,843/ - 13,02,164/ - 2002 - 03 11,37,328/ - 61,00,358/ - 34,22,545/ - 12,21,849/ - 2003 - 04 11,80,410/ - 67,18,535/ - 37,69,367/ - 13,85,244/ - 2004 - 05 11,77,030/ - 71,52,778/ - 40,12,995/ - 14,39,683/ - 2005 - 06 12,29,870/ - 75,06,161/ - 42,11,257/ - 15,41,004/ - 2006 - 07 12,11,560/ - 85,03,886/ - 47,95,564/ - 16,14,185/ - 2007 - 08 11,90,320/ - 71,30,882/ - 42,11,257/ - 13,46,639/ - 2,77,44,828/ - 9. BEFORE THE CIT(A) THE ASSESSEE DREW HIS ATTENTION TO T HE OBSERVATION OF THE TRIBUNAL ON VARIOUS ISSUES RAISED BY T HE AO AND SUBMITTED THAT ALL ADDITIONS AND COMPUTATION OF TAX ARE BA SED ON ESTIMATIONS AND THERE IS NO CONCEALMENT OF INCOME AND TH E 6 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS WH ICH IS THE BASIC REQUIREMENTS OF SECTION 271(1)(C) TO GET TRIGGERED. VA RIOUS DECISIONS WERE ALSO BROUGHT TO THE NOTICE OF THE CIT(A). I T WAS ARGUED THAT THE AO HAS INITIATED PENALTY PROCEEDINGS BA SED ON A PARTICULAR METHOD OF COMPUTING ESTIMATED INCOME AND THE ENTIRE QUANTUM OF INCOME HAS CHANGED AND THAT THE METHOD OF COMPUTATION ON WHICH PENALTY PROCEEDINGS WERE INITIATED HAS NOT BEEN ACCEPTED BY THE TRIBUNAL AND THAT THE TRIBUNAL H AS ALSO ESTIMATED THE INCOME ON COMPLETELY DIFFERENT FOOTING. THE A SSESSEE FURTHER SUBMITTED THAT THE BASIC REASON FOR WHICH PENALTY PROCEEDINGS WERE INITIATED HAS FAILED. THE ASSESSEE IN HIS A LTERNATE CONTENTION SUBMITTED THAT IF FOR ANY REASON, THE PENALTY IS HELD TO BE TENABLE IN THAT CASE APPROPRIATE REDUCTION BE GRANTE D BASED ON THE REDUCTION OF QUANTUM OF ADDITION ON THE BASIS OF THE O RDER OF ITAT. 10. HOWEVER, THE CIT(A) ALSO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE ACTION OF THE AO IN LEVYING PENALTY U/S.271(1)(C) OF THE I.T. ACT. HE HOWEVER DIRECTED THE AO TO WORK OUT THE PENALTY U/S.271(1)(C) OF THE ACT ON THE BASIS OF THE QUANTUM FINALLY SUSTAINED BY THE TRIBUNAL. WHILE UP HOLDING THE LEVY OF PENALTY FOR THE QUANTUM SUSTAINED BY HIM, THE LD.CIT(A) OBSERVED AS UNDER : 8.1 THEREFORE, THE PRESUMPTION OF CONCEALMENT AS CON TAINED IN EXPLANATION 1 TO SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 IS CLEARLY ATTRACTED IN CASE OF THE ASSESSEE. ON FACTS OF TH E CASE, IT IS ABSOLUTELY CLEAR THAT THE ASSESSEE HAS FAILED TO REBUT TH IS PRESUMPTION OF CONCEALMENT CONTAINED IN EXPLANATION 1 TO SECTION 271 (1)(C) BY ADDUCING RELEVANT, RELIABLE AND COGENT MATERIAL IN THIS REGARD. IT IS, THEREFORE, CLEAR THAT ALL THE FACTS RELATING TO THE EXPLANATION FOR THE INCOME IN RESPECT OF WHICH PENALTY HAS BEEN IMPOSED HA VE NOT BEEN DISCLOSED BY THE ASSESSEE. THE ASSESSEE HAS ALSO FAILED TO DISCL OSE ALL THE FACTS MATERIAL TO COMPUTATION OF TOTAL INCOME. I N VIEW OF THE ABOVE, 7 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 THE EXPLANATION OF THE ASSESSEE FOR NOT SHOWING THE INCO ME IN THE RETURN, WHICH ARE SUBJECT MATTER OF PENALTY U/S. 271( 1)(C) CANNOT BE SAID TO BE BONAFIDE. IT IS, THEREFORE, HELD THAT THE ASSESSEE HAS COMMITTED DEFAULT CONTEMPLATED U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 AND THE LEARNED ASSESSING OFFICER WAS JUSTIFIED IN FACTS AND IN LAW TO HOLD THAT ASSESSEE'S CASE IS FIT FOR IMPOSITION OF PENAL TY U/S. 271 (1 )(C) OF THE INCOME TAX ACT, 1961. ACCORDINGLY, IT I S HELD THAT THE AO IS FULLY JUSTIFIED IN IMPOSING PENALTY FOR ALL THE YEARS UNDER CONSIDERATION AT THE MINIMUM RATE. THE PENALTY LEVIED U/S 271 (1) (C) IS, THEREFORE, LIABLE TO BE SUSTAINED. HOWEVER, THE CONTENTION RAISED BY THE ASSESSEE THAT APPROPRIATE REDUCTION MAY BE GRANTED ON THE RE DUCTION OF QUANTUM OF ADDITION ON THE BASIS OF THE ORDER OF THE ITAT DESERVES MERIT. THIS IS BECAUSE THE PENALTY U/S 271 (1 )(C) HAS BEEN LEVIED BASED ON THE AMOUNT OF ADDITION CONFIRMED BY THE LD. CIT (APPEALS) WHICH WORKED OUT TO A TOTAL INCOME OF RS. 3,54,45,535/- AS AGAINST RS. 5,69,44,720/- WORKED OUT BY THE AO FOR ALL THE YEAR S. HOWEVER, THE HON'BLE ITAT HAS NOW REDUCED THE TOTAL INCOME FOR AL L THE YEARS AT RS. 1,65,25,126/- (AS SUBMITTED BY THE ASSESSEE) AND THE ADDI TIONAL INCOME AT RS. 86,13,876/-. THE AO IS, THEREFORE, DIRE CTED TO VERIFY THE ABOVE FACTS AND ACCORDINGLY WORK OUT THE AMOUNT OF P ENALTY LIABLE TO BE LEVIED U/S.271(1)(C) FOR EACH OF THE ASSESSMENT YEAR S INVOLVED IN THE LIGHT OF THE FINDING AND REDUCTION OF QUANTUM O F ADDITION IN CONSEQUENCE TO THE ORDER OF THE HONBLE ITAT. 11. AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE CIT(A) THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 12. GROUNDS RAISED BY THE ASSESSEE IN A.Y. 2001-02 READ AS UNDER : 1. ON FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & A S PER PROVISIONS OF LAW, IT BE HELD THAT THE PENALTY OF RS.1 3,02,164/- IMPOSED U/S.271(1)(C) FOR ALLEGED DEFAULT FOR CONCEALING THE PARTICULARS OF INCOME AND THAT CONFIRMED BY THE IST APPELLATE AUTHO RITY AS IMPROVER, UNJUSTIFIED ERRONEOUS AND NOT IN ACCORDANCE WITH THE SCHEME AND PROVISIONS OF THE ACT & FACTS OF THE CASE. IT FURTHER BE HELD THAT THE CASE OF THE APPELLANT IS NOT COVERED BY MISCHIEF OF PROVISI ONS OF SECTION 271(1)(C) OF THE ACT WARRANTING IMPOSITION OF PENALT Y THEREIN. THE PENALTY IMPOSED BY THE AO AND THAT WARRANTING IMPOSIT ION OF PENALTY THEREIN. THE PENALTY IMPOSED BY THE AO AND THAT CON FIRMED BY THE IST APPELLATE AUTHORITY BE DELETED. THE APPELLANT BE G RANTED JUST AND PROPER RELIEF AS PER PROVISIONS OF LAW AND FACTS PREVAI LING IN THE CASE. 2. ON FACTS & CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, PENALT Y PROCEEDINGS FINALIZED BY THE AO WITHOUT GRANTING PROPER AND ADE QUATE OPPORTUNITY AND IN VIOLATION OF RULES OF NATURAL JUSTICE. THE AP PELLANT BE GRANTED JUST AND PROPER RELIEF AS PER PROVISIONS OF LAW AND FAC TS PREVAILING IN THE CASE. 8 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 3. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE, RAISE ANY GROUNDS OF APPEAL AT THE T IME OF HEARING. 13. GROUNDS RAISED BY THE REVENUE IN A.Y. 2001-02 READ AS UNDER : 1. THE LD.CIT(A) ERRED IN REDUCING THE PENALTY U/S. 271(1)(C) OF THE I.T. ACT MERELY ON THE BASIS OF REDUCTION OF UND ISCLOSED INCOME BY THE HONBLE ITAT IN QUANTUM PROCEEDINGS, WHICH HAS BE EN DISPUTED BEFORE THE HONBLE HIGH COURT OF JUDICATURE, IGNORI NG THE FACTS & EVIDENCES BROUGHT ON RECORD BY THE AO IN THE PENALTY ORDER U/S.271(1)(C) OF THE ACT. 2. THE LD.CIT(A) ERRED IN REDUCING THE PENALTY U/S.2 71(1)(C) ON THE BASIS OF THE FINDINGS & REDUCTION OF UNDISCLOSED INC OME IN THE QUANTUM APPEAL DECIDED BY THE HON TRIBUNAL WHICH W AS DISPUTED WITHOUT EXAMINING THE FACTS & EVIDENCES AVAILABLE ON RECORD AND BROUGHT OUT BY THE AO IN THE PENALTY ORDER IN SUPPO RT OF LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. IDENTICAL GROUNDS HAVE BEEN RAISED BY THE ASSESSEE AND REVENUE FOR ALL OTHER YEARS. 14. SO FAR AS THE APPEALS FILED BY THE ASSESSEE ARE CONC ERNED, THE LD. COUNSEL FOR THE ASSESSEE MADE TWO FOLD ARGUMENTS. HE SUBMITTED THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATE D FOR CONCEALING THE PARTICULARS OF INCOME. HE SUBMITTED THAT THE SOURCE OF INCOME FOR EACH YEAR HAS BEEN DECLARED. THE AO AS WE LL AS THE CIT(A) HAVE FELT THAT THE INCOME DECLARED BY THE ASSESSEE IS MUCH LESS THAN WHAT THE ASSESSEE HAS EARNED. THE TRIBUNAL HAS ALSO TO SOME EXTENT UPHELD THE ABOVE VIEW OF THE AO AND THE CI T(A). HE SUBMITTED THAT IF THE ASSESSEE HAD GIVEN THE SOURCE OF INCOME OR DECLARED THE SOURCE, THEN IN THAT CASE, THE QUESTION THA T ARISES IS WHETHER THE PENALTY IS FOR CONCEALMENT OF INCOME OR FOR FUR NISHING THE INACCURATE PARTICULARS. IF THE ASSESSEE WOULD HAVE DECLARED 9 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 SOME OTHER SOURCE AND THE AO HAS TAXED THE SAME AS PROFESSIONAL RECEIPT THEN IN THAT CASE THE ASSESSEE WOULD HAVE CONC EALED THE SOURCE OF INCOME. THEREFORE, THE BASIS ON WHICH THE PENA LTY PROCEEDINGS ARE INITIATED AND LEVIED IN THE INSTANT CASE IS WRONG. 15. NOW COMING TO THE ALTERNATE ARGUMENT, THE LD. COUNSE L FOR THE ASSESSEE REFERRING TO PAGE 92 OF THE PAPER BOOK DR EW THE ATTENTION OF THE BENCH TO THE SEIZED DOCUMENT. REFERRING TO THE SAID DOCUMENT HE SUBMITTED THAT THE NUMBER OF PATIENTS MENTIONED IN THE MORNING SESSION AS WELL AS EVENING SESSIO N ARE LESS THAN 20 PATIENTS. HE SUBMITTED THAT A CLOSE LOOK AT THE SAID PAPER WOULD SHOW THAT IN THE MORNING SESSION THE PATIENT S SHOULD COME FROM 8.20 AM TO 9.00 AM. SIMILARLY, IN THE EVENING SES SION THEY SHOULD COME FROM 3.00PM TO 7.00PM. HE SUBMITTED THAT OUT OF THE ABOVE PATIENTS SOME OF THE PATIENTS ARE FREE PATIENT S FOR WHICH NO PROFESSIONAL RECEIPT IS CHARGED BY THE DOCTOR. SIMILARLY , CERTAIN PATIENTS DO NOT TURN UP EVEN THOUGH THEY HAVE REGISTE RED THEIR NAME. THUS, THE ENTIRE EXERCISE HAS BEEN DONE ON THE B ASIS OF ESTIMATE. IT IS NOT HUMANELY POSSIBLE FOR THE DOCTORS TO SEE SO MANY PATIENTS ON DAILY BASIS. FURTHER, THE PREMISES OF TH E ASSESSEE HAS BEEN SEARCHED. HAD THERE BEEN GENERATION OF HUGE INCOME AS ESTIMATED BY THE REVENUE AUTHORITIES THERE WOULD HAVE B EEN CORRESPONDING ASSETS/EXPENDITURE. HOWEVER, NO SUCH THIN G HAS BEEN FOUND. THEREFORE, MERELY BECAUSE SOME ADDITION HAS BEEN SUSTAINED BY THE ORDER OF THE TRIBUNAL, IT DOES NOT CALL FO R LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT. FURTHER, IT HAS BEEN H ELD IN VARIOUS DECISIONS THAT WHILE ADDITION CAN BE MADE ON ESTIMA TE BASIS, HOWEVER, PENALTY SHOULD NOT BE LEVIED ON THE BASIS O F ESTIMATION OF INCOME. SINCE TO THE EXTENT OF RS.19 LAKHS AS SETS 10 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 HAVE BEEN FOUND THE ASSESSEE HAS DECLARED ADDITIONAL INCO ME IN ITS RETURN OF INCOME TO THIS EXTENT FOR DIFFERENT ASSESSMENT Y EARS. HOWEVER, THE BALANCE ADDITION THAT HAS BEEN FINALLY SUSTAIN ED BY THE ORDER OF THE TRIBUNAL IS PURELY ON THE BASIS OF ESTIM ATION AND GUESS WORK. HE ACCORDINGLY SUBMITTED THAT PENALTY U/S.2 71(1)(C) OF THE I.T. ACT SHOULD NOT BE LEVIED. 16. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT THE ASSESSEE HAS SUPPRESSED ITS PROFESSIONAL RECEIPTS BY NOT SHOWING THE ENTIRE RECEIPTS IN ITS REGULAR BOOKS OF ACCOUNT. IT IS ONLY BECAUSE OF THE SEARCH THAT IT CAME TO LIGHT THAT ASSESS EE IS SUPPRESSING SUBSTANTIAL PART OF ITS PROFESSIONAL RECEIPTS. E VEN A PART OF THE INCOME HAS BEEN ESTIMATED BY THE ASSESSEE FOR WHICH IT HAS DECLARED ADDITIONAL INCOME FOR DIFFERENT YEARS. MERELY BECAUSE NO ASSET HAS BEEN FOUND OVER AND ABOVE THE AMOUNT TH AT HAS BEEN DECLARED BY THE ASSESSEE THE SAME CANNOT BE A GROUND TO CANCEL THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT. HE ACCORDINGLY SUBMITTED THAT THE PENALTY FINALLY SUSTAINED BY THE CIT(A) SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD B E DISMISSED. 17. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED T HE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INSTANT CASE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINES S OF CARRYING OUT MEDICAL PRACTICE IN THE FIELD OF PEDIATRICS. A S URVEY U/S.133A OF THE I.T. ACT WAS CARRIED OUT ON THE BUSINES S PREMISES 11 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 OF THE ASSESSEE FIRM ON 24-01-2007 AND SIMULTANEOUS SEAR CH ACTION U/S.132 OF THE I.T. ACT WAS ALSO CONDUCTED IN THE CASE OF THE PARTNERS OF THE ASSESSEE FIRM. WE FIND DURING THE COURSE O F SUCH SEARCH ACTION DOCUMENTS PERTAINING TO THE ASSESSEE FIRM WERE ALSO SEIZED WHICH SHOWED THAT ASSESSEE IS SUPPRESSING ITS PR OFESSIONAL RECEIPTS. THE AO, THEREFORE, CAME TO THE CONCLUSION THAT ASSESSEE HAS SUPPRESSED 70% OF ITS PROFESSIONAL RECEIPTS. HE, THERE FORE, ENHANCED THE INCOME OF THE ASSESSEE AND MADE ADDITIONS THE DETAILS OF WHICH ARE GIVEN AT PARA 5 OF THIS ORDER. 18. WE FIND IN APPEAL THE LD.CIT(A) HELD THAT THE ASSESSEE HAS DECLARED 40% OF ITS ACTUAL RECEIPTS AND THEREBY HAS SUPP RESSED 60% OF ITS TOTAL PROFESSIONAL RECEIPTS. HE ALSO ALLOWED 10% OF THE SUPPRESSED RECEIPTS AS EXPENDITURE FOR EARNING SUCH SUP PRESSED INCOME. THE AO, THEREAFTER, INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) AND LEVIED PENALTY @ 100% OF TAX SOUGHT TO BE EVADED ON THE SUPPRESSED INCOME. WE FIND WHEN THE MATTER TRAV ELLED UPTO THE TRIBUNAL THE TRIBUNAL GAVE SOME RELIEF BY HOLDING THAT ASSESSEE HAS ACCOUNTED FOR 65% OF ITS TOTAL RECEIPTS AND THEREBY HAS CONCEALED 35% OF THE TOTAL RECEIPTS. THE CIT(A) IN THE APP EAL FILED BY THE ASSESSEE AGAINST THE PENALTY LEVIED BY THE AO U PHELD THE ACTION OF THE AO IN LEVYING PENALTY U/S.271(1)(C) OF THE I.T. A CT. HE, HOWEVER, DIRECTED THE AO TO RECOMPUTE THE PENALTY ON T HE AMOUNT FINALLY SUSTAINED BY THE ORDER OF THE TRIBUNAL. IT IS THE C ASE OF THE LD. COUNSEL FOR THE ASSESSEE THAT ALTHOUGH CERTAIN AMOUN T HAS BEEN FINALLY SUSTAINED BY THE ORDER OF THE TRIBUNAL, HOWEVE R, THAT DOES NOT CALL FOR AUTOMATIC LEVY OF PENALTY. IT IS HIS SUBMIS SION THAT ENTIRE EXERCISE IS BASED ON ESTIMATION AND NO CORRE SPONDING ASSETS HAVE BEEN FOUND BY THE SEARCH PARTY OVER AND ABOVE THE 12 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 ADDITIONAL INCOME DECLARED BY THE ASSESSEE FOR DIFFERENT ASSESSMENT YEARS. IT IS ALSO HIS SUBMISSION THAT IT IS NOT POSSIBLE FOR THE DOCTORS TO SEE SUCH NUMBER OF PATIENTS AS ESTIMATED BY THE AO. 19. WE FIND SOME FORCE IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. A PERUSAL OF PAGE 92 OF THE PAPER BO OK WHICH IS THE COPY OF THE PATIENT REGISTER SHOWS THAT THE PAGE IS NOT FILLED UP ENTIRELY. FOR THE MORNING SESSION THERE ARE 16 PATIENTS WHEREAS FOR THE EVENING SESSION THERE ARE ONLY 10 PATIENTS. FURTHE R, WE ALSO FIND SOME FORCE IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT CERTAIN PATIENTS ARE FREE PATIENTS FOR WHICH NO AMOU NT IS RECEIVED BY THE DOCTORS. SECONDLY CERTAIN PATIENTS DO NOT TURN UP ALTHOUGH THEY HAVE REGISTERED THEIR NAMES. SINCE THE DO CTOR IS A REPUTED PERSON OF PUNE, THEREFORE, IT IS QUITE POSSIBLE THAT THERE MIGHT BE CERTAIN FREE PATIENTS DUE TO RECOMMENDATION ETC . IT IS ALSO POSSIBLE THAT SOME PATIENTS ALTHOUGH REGISTERED DO N OT TURN UP. WE FURTHER FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT HAD THERE BEEN SO MUCH INCOME EARNED B Y THE DOCTORS AS HELD BY THE AO/CIT(A) OR THE TRIBUNAL, THERE W OULD HAVE BEEN SOME CORRESPONDING ASSETS/EXPENDITURE FOUND DURING THE COURSE OF SEARCH/SURVEY. HOWEVER, NO SUCH CORRESPOND ING ASSETS OR CORRESPONDING EXPENDITURE HAVE BEEN FOUND EITHER FROM THE RESIDENTIAL PREMISES OR FROM THE BUSINESS PREMISES OTHER T HAN WHAT HAS BEEN DISCLOSED BY THE ASSESSEE AS ADDITIONAL INC OME. THEREFORE, MERELY BECAUSE ADDITION HAS BEEN SUSTAINED, TH AT TOO ON ESTIMATE BASIS, THE SAME DOES NOT CALL FOR LEVY OF PENALTY. 20. IT HAS BEEN HELD IN VARIOUS DECISIOINS THAT THE PROVISIO NS OF SECTION 271(1)(C) ARE NOT ATTRACTED IN CASES WHERE INCOME OF AN 13 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITIONS AR E MADE THEREIN ON THAT BASIS. FOR THE ABOVE PROPOSITION, WE DE RIVE SUPPORT FROM THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH VS. CIT REPORTED IN 258 ITR 85 WH ERE SIMILAR VIEW HAS BEEN TAKEN. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN VIEW OF THE ABOVE DISCUSSION WE HOLD THAT PENALTY U/S.271(1)(C) IS NOT LEVIABLE ON THE ADDITIONS FINALLY SUSTAINED B Y THE ORDER OF THE TRIBUNAL WHICH IS ON ACCOUNT OF ESTIMATED ADDITION. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY T HE ASSESSEE ARE ACCORDINGLY ALLOWED. 21. SIMILAR GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN THE REMAINING APPEALS. FOLLOWING OUR REASONINGS GIVEN ABOVE WE HOLD THAT PENALTY IS NOT LEVIABLE ON ACCOUNT OF SUCH ESTIMATED ADDITIONS. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 22. SO FAR AS THE GROUNDS RAISED BY THE REVENUE ARE C ONCERNED, WE FIND THE TRIBUNAL HAS GIVEN CERTAIN RELIEF TO THE ASSESS EE BY CONSIDERING SUPPRESSED RECEIPTS AT 35% MEANING THEREBY THAT RECEIPTS SHOWN IN THE REGULAR BOOKS OF ACCOUNT CONSTITU TE 65% OF THE TOTAL RECEIPTS. SINCE THE CIT(A) HAS DIRECTED THE AO TO REDUCE THE PENALTY ON THE BASIS OF THE FINAL AMOUNT SUSTAINED BY THE ORDER OF THE TRIBUNAL, THEREFORE, MERELY BECAUSE THE REVENUE HA S NOT ACCEPTED THE ORDER OF THE TRIBUNAL AND HAS FILED AN APPEA L BEFORE THE HONBLE HIGH COURT, THE SAME IN OUR OPINION CANNOT BE THE BASIS FOR INTERFERING IN THE ORDER OF THE DIRECTION OF THE CI T(A). THE LD. DEPARTMENTAL REPRESENTATIVE ALSO COULD NOT POINT OUT ANY APPARENT ERROR IN THE ORDER OF THE CIT(A) BY GIVING DIRECT ION TO THE AO TO RECOMPUTE THE PENALTY ON THE BASIS OF THE FINAL AM OUNT 14 ITA NOS. 1483 TO 1489 & 1490 TO 1496/PN/2014 SUSTAINED BY THE ORDER OF THE TRIBUNAL. IN ANY CASE WE HAVE ALREADY DELETED THE PENALTY FINALLY SUSTAINED BY THE CIT(A) WHILE DEC IDING THE APPEALS OF THE ASSESSEE. IN VIEW OF THE ABOVE ALL T HE APPEALS FILED BY THE REVENUE ARE DISMISSED. 23. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLO WED AND APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-08-2016. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 31 ST AUGUST , 2016. LRH'K ' (*+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # ( ) - THE CIT(A)-IT/TP, PUNE 4. # S / THE CIT-IT/TP, PUNE 5. & ))* , * , IQ.KS / DR, ITAT, A PUNE; 6. . / GUARD FILE. / BY ORDER , & ) //TRUE COPY// 01 ) * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE