DINESH JAIN, MUMBAI V. A.C.I.T.11(2), MUMBAI

ITA 6811/MUM/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48379 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Keywords: Reopening of assessment; Unexplained investment; Value adopted by valuation officer; Income from undisclosed sources; Loose papers; Fair market value; Corroborative evidences; Valuation report; Block assessment; Retraction; Revised return
• Section: 143(3); 142(1); 133A; 147

Judgement Text

IN THE INCOME TAX APPELLATE APPELLATE APPELLATE APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER & SHRI T.R.SOOD, ACCOUNTANT MEMBER I.T.A.NOS.6812/MUM/11, 6811/MUM/11, 8121/MUM/2010 & 936/MUM/2011 A.YRS. 2004-05, 2005-06, 2006-07 & 2007-08 DR. DINESH JAIN, 104, RIZVI CHAMBERS 2 JAIN MANDIR MARG, OFF HILL RD., BANDRA (WEST), MUMBAI 400 050. PAN: AAAPJ 8040 0 VS. DY. COMMISSIONER OF I.T. 11(2), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJESH SANGHVI. RESPONDENT BY : SHRI C.G.K.NAIR. DATE OF HEARING: 22-03-2012. DATE OF PRONOUNCEMENT: 10-04-2012. O R D E R PER T.R.SOOD, AM: ALL THESE APPEALS ARE CONSOLIDATED AND HEARD TOGETH ER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. I.T.A.NO.8121/MUM/10 A.Y 2006-07 : IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED BY THE ASSESSEE OUT OF WHI CH GROUND NO.3 WAS NOT PRESSED AND, THEREFORE, SAME IS BEING DISMISSED AS NOT PRESSED. FURTHER, LD. COUNSEL OF THE ASSESSEE POINTED OUT TH AT ONLY ONE DISPUTE IS INVOLVED FOR WHICH OTHER GROUNDS HAVE BEEN RAISED A ND THE DISPUTE IS REGARDING ADDITION ON ACCOUNT OF CERTAIN DOCUMENTS FOUND DURING THE SURVEY ON ACCOUNT OF SUPPRESSED RECEIPTS. ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 2 3. A SURVEY WAS CONDUCTED IN THE PREMISES OF THE AS SESSEE ON 30-8-2007. THE ASSESSEE IS A PRACTICING DENTIST AND IS RUNNING A CLINIC WHERE THE SURVEY WAS CONDUCTED. DURING SURVEY SOME DIARIES AND LOOSE DOCUMENTS WERE FOUND WHICH DEPICTED THAT ASSESSEE W AS UNDERSTATING THE REAL PROFESSIONAL RECEIPTS. ONE SUCH TYPE OF DI ARY WAS MARKED AS A1 FANTASSY. IN THIS DIARY PROFESSIONAL RECEIPTS FROM 6-8-2007 TO 30-8-2007 WERE RECORDED. HOWEVER, IT WAS NOTICED THAT PAGES B EFORE 6-8-2007 WERE TORN. A STATEMENT OF MS. BRENDA M. DSOUZA, RE CEPTIONIST OF THE ASSESSEE WAS RECORDED DURING THE SURVEY. IN THIS ST ATEMENT IT WAS CLEARLY STATED THAT RECEIPTS FROM EACH PATIENT ARE RECORDED IN THIS DIARY AND BY THE END OF THE DAY THE RECEIPTS ALONG WITH T HE DIARY WERE HANDED OVER TO DR. JAIN, I.E. THE ASSESSEE. MS. BRENDA M. DSOUZA FURTHER STATED THAT SHE HAS NOT TORN THE PAGES BECAUSE THE NOTE BO OK WAS BEING HANDED OVER TO THE DOCTOR ON DAILY BASIS. IT WAS NO TICED THAT IN THE NOTE BOOK FEE STATED WAS MUCH HIGHER THAN THE FEES RECOR DED IN THE BOOKS OF ACCOUNTS AND TALLY AND THROUGH QUESTION NOS.7 & 8 T HESE DISCREPANCIES WERE POINTED OUT TO THE ASSESSEE WHICH ARE AS UNDER : DATE 1. 8.07. 4.8.07 7.8.07 9.8.07 17.8.07 28.8.07 AMOUNT RECORDED IN THE NOTE BOOK 13,100 18,000 7,200 26,500 29,600 15,800 15,700 AMOUNT RECORDED IN THE BOOKS OF ACCOUNTS. 1,100 12,300 1150 4300 11,500 1900 - IN RESPONSE TO A QUERY REGARDING THE DISCREPANCIES, IT WAS STATED BY THE ASSESSEE THAT HE WILL HAVE TO CHECK OUT WITH THE AC COUNTANT AND IT WAS ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 3 ADMITTED THAT THE AMOUNTS WERE BEING COLLECTED BY T HE RECEPTIONIST AND WERE BEING ENTERED INTO THE NOTE BOOK. IN ADDITION TO THE ABOVE, ANOTHER LOOSE PAPER TITLED AS PAGE NO.17 WAS FOUND IN WHI CH MONTHLY RECEIPTS WERE RECORDED FROM APRIL, 2003 TO JUNE 2006. THE AS SESSEE WAS CONFRONTED WITH THIS DOCUMENT DURING THE SURVEY AS WELL AS DURING THE POST SURVEY PROCEEDINGS. INITIALLY ASSESSEE HAD AGR EED TO OFFER THE ADDITIONAL RECEIPTS WHICH WERE SHOWN IN THE LOOSE P APER NO.17 AND LATER ON IT WAS STATED THAT ASSESSEE HAD ENGAGED A FINANC IAL CONSULTANT ONE MR. RAMESH SHETTY WHO WAS TO PREPARE A PROJECT REPO RT BECAUSE ASSESSEE WANTED TO INSTALL SOME MAJOR EQUIPMENTS FO R HIS PRACTICE. DURING THE EXERCISE OF PREPARATION OF SUCH PROJECT REPORT THE CONSULTANT HAD ENHANCED THE MONTHLY RECEIPTS AND HAD INCREASED THE FIGURES TO SHOW COSMETIC APPEARANCE BEFORE THE BANKER. 4. ON THE BASIS OF LOOSE DOCUMENTS AO CONCLUDED THA T ASSESSEE WAS CHANGING HIS STAND AND HE HAD SPECIFICALLY ACCEPTED IN STATEMENT RECORDED ON 6-9-2007 TO OFFER THE EXTRA RECEIPTS. T HE AO ALSO NOTED THAT IN THE RECEIPTS ALREADY RECORDED THERE WAS AN INCRE ASE OF 30.63%, 24.47% AND 38.30% IN A.YRS. 2005-06, 2006-07 AND 20 07-08 RESPECTIVELY, WHEREAS DURING THE YEAR OF SURVEY THE RECEIPTS HAVE SUDDENLY JUMPED BY 64% AND, THEREFORE, IT IS CLEAR THAT ASSESSEE EARLIER WAS HIDING HIS RECEIPTS AND AFTER THE SURVEY ACTION HAS SHOWN THE CORRECT FIGURE. THE AO ALSO EXAMINED THE FINANCIAL TRANSACT IONS OF THE ASSESSEE AND NOTED THAT ASSESSEE HAS PURCHASED A RESIDENTIAL FLAT IN JOANNA VILLA, 28 TH ROAD, BANDRA (WEST), MUMBAI, ON 14-7-2004 FOR RS.9 2,50,000/- WHEREAS THE MARKET VALUE AS PER THE STAMP DUTY VALU ATION WAS ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 4 RS.1,18,56,653/-. THE ASSESSEE HAS ALSO PURCHASED A SHOP IN GROUND FLOOR IN BINDIYA HILL ROAD, BANDRA IN THE YEAR 2007 FOR RS.21,50,000/- BUT THE MARKET VALUE AS PER THE STAMP DUTY VALUATION WA S RS.48,86,057/-. ON THE BASIS OF THESE OBSERVATIONS, AO CONCLUDED TH AT ASSESSEE MUST HAVE PAID ON MONEY WHICH WAS GENERATED OUT OF UNDER STATEMENT OF PROFESSIONAL RECEIPTS. IN THIS BACKGROUND, AO ADDED A SUM OF RS.24,36,191/-, WHICH WAS A DIFFERENCE BETWEEN THE RECEIPTS SHOWN BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT AND THE R ECEIPTS SHOWN IN PAGE NO.17 AT SR.NOS.25 TO 36. 5. ON APPEAL, IT WAS MAINLY STATED BEFORE THE LD. C IT(A) THAT THE STATEMENT OF THE ASSESSEE WAS RECORDED IN A FATIGUE D STATE OF MIND ON THE DATE OF SURVEY. IT WAS ALSO CONTENDED THAT STAT EMENT RECORDED FROM MS. BRENDA M. DSOUZA WAS NEVER CONFRONTED TO THE A SSESSEE. IT WAS MAINLY ARGUED THAT ADDITION HAS BEEN MADE ON THE BA SIS OF CONJECTURES AND SURMISES AND VARIOUS ASSUMPTIONS. THE RECEIPTS HAD INCREASED IN THE LATER YEAR BECAUSE OF THE PROFESSIONAL EFFORTS AND NOT DUE TO THE IMPACT OF THE FEAR OF THE SURVEY. SOME FRESH RECONCILIATIO N ON ACCOUNT OF SUPPRESSED PROFESSIONAL RECEIPTS WERE FILED RECONCI LING THE RECEIPTS SHOWN IN THE BLACK DIARY WITH THE BOOKS OF ACCOUNTS . THIS WAS A FRESH MATERIAL AND, THEREFORE, SAME WAS SENT FOR REMAND R EPORT. IN THE REMAND REPORT AO REFUSED TO ACCEPT THE EXPLANATION OF THE ASSESSEE. AT THIS STAGE, WE MAY MENTION THAT WE DONT NEED TO DE AL WITH THIS REMAND REPORT BECAUSE A SEPARATE ADDITION WAS MADE ON ACCO UNT OF FIGURE NOTED IN THE BLACK DIARY AMOUNTING TO RS.12,00,000/- WHIC H HAS BEEN DELETED BY THE LD. CIT(A) BY HOLDING THAT THIS WOULD AMOUNT TO DUPLICATION OF THE ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 5 ADDITION AND SINCE THIS GROUND HAS BEEN NOT PRESSED BEFORE US, THEREFORE, THERE IS NO FURTHER NEED TO DEAL WITH TH IS ISSUE. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE THE FOLLOWIN G OBSERVATIONS IN PARA 2.3: 1. APPELLANTS RETURN OF INCOME AND AUDIT REPORT U/ S 44 ABWERE FILED AFTER THE DATE OF SURVEY. 2. THOUGH A CLEAR ADMISSION WAS MADE BY APPELLANT A BOUT ADJUSTING HIS RECEIPTS TO TAKE CARE OF VARIOUS CASH COMPONENTS INVOLVED IN THE SYSTEM THEY WERE LIVING IN INCLUDIN G CORRUPTIONS AT VARIOUS LEVELS, APPELLANT APPARENTLY HAS NOT DECLAR ED SUCH ADJUSTMENT NOR SUPPRESSED INCOME FOR IMPUGNED YEAR WHILE FILING HIS RETURN OF INCOME. 3. THE IMPOUNDED DOCUMENTS DIARIES/NOTEBOOKS VIZ. P AGE NO 17, BLACK DIARY AND FANTASSY NOTE BOOK WERE ALL FOUND A T APPELLANTS PREMISES AND PERTAINED TO APPELLANTS AFFAIRS WHICH IS ACCEPTED BY HIM. APPELLANT IN HIS AFFIDAVIT ALSO ACCEPTS THAT L OOSE PAPER PAGE NO. 17 PERTAINED TO HIM THOUGH EXPLAINS ITS CONTENT S AS COSMETIC OR ALTERED. 4. THERE WAS A CLEAR DIFFERENCE OF AMOUNTS AND ENTR IES BETWEEN THOSE IN THE IMPOUNDED MATERIAL AND APPELLANTS BOOK S OF ACCOUNTS, WITH THE AMOUNTS PERTAINING TO APPELLANTS RECEIPTS IN IMPOUNDED MATERIAL BEING SUBSTANTIALLY HIGHER. 5. APPELLANTS RECEPTIONIST MS. DSOUZAS REPLIES H AVE BEEN SUBSTANTIALLY CORROBORATED BY APPELLANT. APPELLANT ADMITTED IN THE STATEMENTS RECORDED THAT HE AND HIS ASSOCIATES PLAC ED DETAILS OF THE FEE TO BE COLLECTED AGAINST PATIENTS NAMES WHI CH WERE COLLECTED BY THE RECEPTIONIST ON HIS BEHALF. APPELL ANT HAD ALSO BEEN ASKED ABOUT THE TORN PAGES OF THE NOTEBOOK, WH EN THE ONUS OF TEARING PAGES HAD BEEN PUSHED BY APPELLANT ON HI S ACCOUNTANT STATED TO HAVE NOT BEEN ATTENDING OFFICE SINCE 11.8 .2007. 6. AS TO HOW THE FEES RECEIVED ACCOUNT IN APPELLANT S FEES RECEIVED ACCOUNT SHOWED VARIOUS AMOUNTS ENTERED ON 17.8.07, 28.8.07 AND NIL ENTRY ON 29.8.07 WHEN THE ACCOUNTAN T WAS NOT COMING TO WORK SINCE 11.8.2007, REMAINS TO BE EXPLA INED BY APPELLANT. IT IS EVIDENT THAT APPELLANT WAS IN THE KNOW OF FACTS AND POSSIBLY OPERATING/WRITING THE ACCOUNTS ALSO, A S APPELLANT HAS NOT IDENTIFIED ANY OTHER PERSON TO WHOM THIS JOB WA S ASSIGNED BY HIM. 7. THERE IS NO DENIAL THAT PAGE NO. 17 PERTAINED TO APPELLANT. APPELLANT HAS SOUGHT TO EXPLAIN IT BY STATING THAT THESE WERE ESTIMATES OF RECEIPTS ARTIFICIALLY DRESSED UP AND T HEREFORE, TO BE IGNORED. THE SAID PAPER DENOTES MONTHWISE RECEIPTS OF APPELLANT FOR A FEW FINANCIAL YEARS. TO SUPPORT HIS CLAIM, AP PELLANT HAS FURNISHED TWO AFFIDAVITS ONE BY HIMSELF AND SECON D BY ONE MR. RAMESH SHETTY, PURPORTED CONSULTANT FOR A SUPPOSED PROJECT FOR ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 6 BUYING EQUIPMENT BY APPELLANT, WHICH PROJECT WAS SU BSEQUENTLY DROPPED BY APPELLANT. APPELLANT STATES THAT FIGURES WERE ARTIFICIAL, MEANT FOR TENTATIVE BANKERS. 7.1 APPELLANT HAS NOT FURNISHED ANY DETAILS OR DOCU MENTS RELATING TO MR. SHETTYS APPOINTMENT, ANY FEES PAID TO HIM, ANY OTHER DETAIL OF THE SUPPOSED PROJECT, NONE OF THE NAMES O F THE BANKS BEING CONSIDERED OR EVEN THE KIND OF EQUIPMENT APPE LLANT HAD CONSIDERED BUYING. APPELLANT STATES THAT THOUGH HE SHOULD HAVE, NO FEE WAS PAID TO SAID MR. SHETTY. SAID MR. SHETTY ALSO AFFIRMS THE SAME. THIS EFFECTIVELY TAKES CARE OF ANY QUESTI ONS REGARDING EXPENSES PERTAINING TO APPOINTMENT OF CONSULTANT TH AT COULD BE RAISED, AS CLEARLY THERE ARE NO ENTRIES FOR THE SAM E IN APPELLANTS BOOKS OF ACCOUNTS. 7.2 IT IS GENERALLY THE CASE THAT BANKS ASK FOR PAS T PERFORMANCE AND FUTURE EARNING POTENTIALS WHEN CONSIDERING LOAN S OR FINANCING, BUT NOT FOR DETAILED BREAKUP OF MONTHLY RECEIPTS FO R PAST FINANCIAL YEARS. THE CLAIM OF DETAILED MONTHLY RECEIPTS BEING ARTIFICIALLY DOCTORED FOR THE PURPOSE OF SUBM ITTING TO A BANK, SEEMS FARFETCHED. 7.3 NO CLAIM OF PROJECT OR CONSULTANT MR. RAMESH SH ETTY WERE MADE DURING SURVEY PROCEEDINGS. 7.4 IN VIEW OF LACK OF ANY SUPPORTING EVIDENCE OR P ROOF, APPELLANTS AND SAID MR. SHETTYS AFFIDAVITS CANNOT BE RELIED UPON. APPELLANTS AFFIDAVIT IS CONSIDERED TO BE A SELF SE RVING AFFIDAVIT AND MR. SHETTYS AFFIDAVIT CORROBORATING APPELLANTS SEL F SERVING AFFIDAVIT. IT THIS BACKGROUND, IT CAN ONLY BE CONSI DERED THAT THE LOOSE PAPER PAGE NO. 17 INDICATES APPELLANTS RECEIP TS FROM HIS PROFESSION BUT NOT A MANIPULATED OR DOCTORED VERSIO N OF THE SAME. THE AO RIGHTLY RELIED ON THE SAME. MOREOVER, IT IS ALSO ACCEPTED BY HONBLE COURTS THAT THE ESTIMATES ETC. GIVEN BY AN ASSESSEE TO BANKS FOR FINANCING/LOANS/OVERDRAFTS ETC. CAN BE CO NSIDERED EVIDENCE TO INDICATE TOTAL SALES/TURNOVERS/RECEIPTS ETC. 8. THE RECONCILIATION BETWEEN THE BLACK DIARY AND A PPELLANTS BOOKS OF ACCOUNTS INCLUDES VARIOUS AMOUNTS STATED T O BE RECEIVED ON OTHER DAYS OF MARCH 2006, AMOUNTS BY CREDIT CARD S AND OTHERS. THESE DO NOT MATCH ENTIRELY THE AMOUNTS RECORDED AG AINST VARIOUS NAMES IN THE DIARY. APPELLANT HAD PRODUCED CASH AND BANK BOOKS DURING APPELLATE PROCEEDINGS. THESE DID NOT HAVE THE IDENTIFYING MARKS MADE DURING SURVEY PROCEEDINGS. A FEW ENTRIES OF CASH AND CHEQUE WERE TEST CHECKED AND FOUND TO B E RECORDED AS PER THE BLACK DIARY. HOWEVER, THERE ARE A LARGE NUMBER OF ENTRIES REGARDING CREDIT CARDS WHERE THE SUM RECORD ED WAS NOT THE SUM DUE AS PER THE DIARY. IT, THEREFORE, CANNOT BE CONCLUDED THAT THOSE AMOUNTS PERTAINED TO THE DIARY AMOUNTS. IT IS ALSO UNEXPLAINED AS TO WHY A PATIENT WOULD PAY MORE THAN WHAT WAS DUE. 8.1 THERE ARE ADDITIONALLY, MANY ENTRIES WHICH ARE CLAIMED TO HAVE NOT BEEN RECEIVED, REASONS BEING ONE OF THE MA NY ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 7 THEORETICALLY POSSIBLE ONES ENUMERATED BY THE APPEL LANT. THE BLACK DIARY ALSO DOES NOT INDICATE THAT SUCH PATIEN TS HAD NOT MADE PAYMENTS, NOR WAS SUCH EXPLAINED BY APPELLANT DURIN G SURVEY AND/OR IN POST SURVEY STATEMENTS. HOWEVER, THE ISSU E SINCE BEGINNING IS THE AMOUNTS NOT RECORDED BY APPELLANT IN HIS BOOKS OF ACCOUNTS, WHICH WERE SUPPRESSED RECEIPTS AND NEE D TO BE CONSIDERED IN VIEW OF APPELLANTS ADMISSION OF ADJ USTING RECEIPTS. 8.2 IT IS NOT THE APPELLANTS CASE THAT HE ADJUSTED RECEIPTS ONLY FOR THE MONTH OF MARCH 2006 OR THE FEW DAYS BEFORE THE DATE OF SURVEY. HIS RESPONSES, IN THE STATEMENTS RECORDED, TELL OF HIS PRACTICE REGARDING RECORDING OF RECEIPTS. THE FACT OF APPELLANT STATING THAT HIS ACCOUNTANT TEARS OUT PAGES ALSO IN DICATES THE PRACTICE GENERALLY FOLLOWED BY HIM IN THIS REGARD A ND OF HIS CONSENT AND/OR INSTRUCTION FOR REGULAR DESTRUCTION OF THE BASIC DOCUMENT RECORDING HIS RECEIPT COLLECTION. 9. THOUGH APPELLANTS AUTHORISED REPRESENTATIVE CAL LS THE ENTIRE ISSUE AN INTRICATE ACCOUNTING ISSUE WHICH APPELLANT COULD NOT UNDERSTAND, POINTS BROUGHT OUT ABOVE CLEARLY INDICA TE THAT APPELLANTS CASE IS ONE OF SUPPRESSION OF RECEIPTS AND ADMITTED ADJUSTMENTS OF RECEIPTS MADE. THAT THIS IS MERELY AN ARGUMENTATIVE GROUND IS EVIDENT FROM THE FACT THAT EVEN DURING SURVEY PROCEEDINGS APPELLANT HAD ADMITTED TO ADJUST ING RECEIPTS - A FACT CONVENIENTLY FORGOTTEN BY APPELLANT, WHILE M AKING SUBMISSIONS DURING THE APPELLATE PROCEEDINGS. IN FA CT, APPELLANT HAD EVEN GIVEN AN EXPLANATION FOR ADJUSTED RECEIPTS . AS TO HOW, AN ADMISSION REGARDING SUPPRESSION OF RECEIPTS OR N OT RECORDING THEM IN ENTIRETY IN THE BOOKS OF ACCOUNTS NOR DECLA RING THEM FULLY IN THE RETURN OF INCOME FILED IS AN UNFATHOMABLE IN TRICATE ACCOUNTING ISSUE HAS NOT BEEN EXPLAINED EITHER BY A PPELLANT OR HIS AUTHORISED REPRESENTATIVE. ON THE BASIS OF ABOVE OBSERVATIONS, IT WAS CONCLUDE D THAT DIRECT EVIDENCE FOR SUPPRESSION OF RECEIPTS WAS THERE AND THERE WAS A MISMATCH BETWEEN THE RECORDED RECEIPTS AND THOSE AS SHOWN IN THE IMPOUNDED DOCUMENTS. THE CIT(A) ALSO DISCUSSED THE CASE LAWS RELIED ON BY THE ASSESSEE AND ULTIMATELY CONFIRMED THE ADD ITION VIDE PARA 2.3.4 WHICH IS AS UNDER: 2.3.4 IN THIS BACKGROUND, IT IS HELD THAT IN THE I MPUGNED MATTER, AO HAD SUFFICIENT EVIDENCE AND REASONS TO HOLD THAT APPELLANT HAD SUPPRESSED RECEIPTS AND NOT DISCLOSED INCOME CORREC TLY AND TO CALCULATE SUCH UNDISCLOSED RECEIPTS AND INCOME FOR THE ENTIRE YEAR THE ADDITION OF RS. 24,36,191/- IS SUSTAINED. NEVER THELESS, A SEPARATE ADDITION OF RS.12,00,000/- OVER AND ABOVE THE ADDITION ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 8 OF RS. 24,36,191/- IS NOT JUSTIFIED IN THE FACTS OF THE CASE. THE ENTIRE ADDITION ON THE ISSUE OF SUPPRESSED RECEIPTS AND UNDISCLOSED INCOME IS, THEREFORE, RESTRICTED TO THE HIGHER FIGURE OF RS. 24,36,191/-. 6. BEFORE US LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSEES STATEMENT WAS RECORDED DURING SURVEY AFTER THE MIDN IGHT AND THEREFORE NO CREDENCE SHOULD HAVE BEEN PLACED ON THIS STATEME NT. IN THIS REGARD HE REFERRED TO PAGES 358 TO 365 OF THE PAPER BOOK W HICH IS A COPY OF THE STATEMENT AND POINTED OUT THAT IT HAS BEEN SHOWN TH AT THE STATEMENT WAS RECORDED ON 30-8-07 BUT THE SAME HAS BEEN SIGNE D BY THE ASSESSEE ON 31-8-07 WHICH MEANS THE STATEMENT WAS SIGNED AFT ER THE MIDNIGHT. IT FURTHER BECOMES CLEAR IN ANSWER TO QUESTION NO.40 W HERE ASSESSEE HAS STATED THAT HE WOULD REQUEST THE SURVEY TEAM TO TEM PORARILY CONCLUDE THE PROCEEDINGS SINCE HE WAS WORKING RIGHT FROM 6.0 0 A.M. IN THIS REGARD HE ALSO RELIED ON THE DECISION OF THE HON'BL E GUJARAT HIGH COURT IN THE CASE OF KAILASHBEN MANHARLAL CHOKSI VS. CIT [22 0 ITR 138]. THEN HE REFERRED TO PAGE-17 WHICH WAS SEIZED BY THE REVENUE ON WHICH MAIN RELIANCE HAS BEEN PLACED [PLACED AT PAGE 357 OF THE PAPER BOOK] AND POINTED OUT THAT THIS IS NOT IN THE HANDWRITING OF THE ASSESSEE AND IT WAS CLEARLY STATED THAT THIS IS BASICALLY AN ESTIMATE P REPARED BY THE CONSULTANT SHRI RAMESH SHETTY FOR THE PURPOSE OF AC QUISITION OF SOME NEW MACHINES ETC. EVEN AN AFFIDAVIT OF SHRI RAMESH SHETTY WAS FILED BUT THE SAME HAS NOT BEEN DEALT WITH BY THE LOWER AUTHO RITIES. IN FACT IN ANSWER TO QUESTION NO.7 IN THE STATEMENT RECORDED O N 3-9-07 IT WAS SPECIFICALLY STATED THAT ASSESSEE HAD A CONSULTANT APPOINTED FOR RESTRUCTURING OF THE BUSINESS AND, THEREFORE, HE CA N RESPOND IN RESPECT ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 9 OF PAPER NO.17 ONLY AFTER VERIFYING WITH THE STAFF AND THE CONSULTANT. HE ALSO SUBMITTED THAT THE COPY OF THE STATEMENT OF MS . BRENDA M. DSOUZA RECORDED WAS NEVER GIVEN TO THE ASSESSEE. HOWEVER, ON QUERY BY THE BENCH HE ADMITTED THAT COPY OF THIS STATEMENT WAS H ANDED OVER TO HIM DURING THE APPEAL PROCEEDINGS. BY REFERRING TO VARI OUS PORTIONS OF THE STATEMENT HIS MAIN THRUST OF THE ARGUMENT WAS THAT ASSESSEE HAS NOT MANIPULATED THE FIGURE OF THE RECEIPTS AND NO CREDI BLE EVIDENCE IS AVAILABLE TO SHOW THAT RECEIPTS HAVE BEEN UNDERSTAT ED AND ADDITIONS HAVE BEEN MADE ON THE BASIS OF PRESUMPTIONS, CONJEC TURES AND SURMISES. WHATEVER MATERIAL WAS FOUND IS NOT SUFFIC IENT TO SUSTAIN THE ADDITIONS. HE POINTED OUT THAT IT IS TO BE NOTED TH AT NO UNACCOUNTED CASH OR DOCUMENT FOR ANY INVESTMENTS WERE FOUND TO SHOW THAT ASSESSEE HAS SUPPRESSED THE RECEIPTS. HE ALSO POINTED OUT THAT S OME OTHER DOCUMENTS WERE ALSO FOUND DURING THE SURVEY WHICH HAVE BEEN L ISTED IN THE STATEMENT OF FACTS AT PAGE 76 AND NONE OF THESE DOC UMENTS REFLECT THE UNACCOUNTED RECEIPTS. IN ANY CASE, ADDITIONS COULD NOT HAVE BEEN MADE ON GROSS BASIS AND ONLY A PROFIT ELEMENT COULD HAVE BEEN ADDED AND IN THIS REGARD HE RELIED ON THE DECISION OF THE HON'BL E GUJARAT HIGH COURT IN THE CASE OF CIT VS. GURUBACHHAN SINGH JUNEJA [4 DTR 20]. HE ALSO RELIED ON THE FOLLOWING DECISIONS: A) CIT VS. MAULIKKUMAR K. SHAH 307 ITR 137 (GUJ) B) CIT VS. ATAM VALVES (P) LTD. 184 TAXMAN 6 (P&H) C) RAVINDER KUMAR VS. DCIT 33 SOT 251 (DEL) D) DY. CIT VS. PREMSONS 130 TTJ (MUM) 159 ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 10 7. ON THE OTHER HAND, THE LD. DR WHILE STRONGLY SUP PORTING THE ORDERS OF THE AO AND THE CIT(A) SUBMITTED THAT THE CONDUCT OF THE ASSESSEE ITSELF SHOWS THAT THERE WERE SUPPRESSED RE CEIPTS. FIRST OF ALL ASSESSEE HAS BEEN CHANGING HIS STAND. LATER ON HE H AS ALSO FILED A REVISED RETURN FOR THE A.Y 2007-08 IN WHICH A SUM O F RS.9,20,000/- WAS DECLARED AS INCOME OUT OF THE WORKSHOP BUT NO EVIDE NCE WAS PRODUCED FOR CONDUCTING OF ANY WORKSHOP. THIS CLEARLY SHOWS THAT ASSESSEE WAS TRYING TO COVER UP THE RECEIPTS. HE POINTED OUT THA T MS. BRENDA M. DSOUZA WHO WAS THE RECEPTIONIST OF THE ASSESSEE AN D SHE IN HER STATEMENT HAS ADMITTED THAT SHE WAS RECEIVING THE M ONEY FROM PATIENTS AND RECORDING THE SAME IN THE DIARY. HE POINTED OUT THAT IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT ASSESSEE HAS NOT BEE N CONFRONTED WITH THIS STATEMENT BUT IT WAS ALSO ADMITTED THAT THIS S TATEMENT WAS GIVEN TO THE ASSESSEE DURING THE APPEAL PROCEEDINGS AND NO C OMMENTS OR MATERIAL HAS BEEN PRODUCED BEFORE THE FIRST APPELLA TE AUTHORITY OR EVEN BEFORE THE TRIBUNAL TO SHOW THAT STATEMENT OF MS. B RENDA M. DSOUZA WAS NOT CORRECT. IN FACT, THE SAME DIARY WAS SHOWN TO THE ASSESSEE ALSO AND ASSESSEE HAS ACCEPTED IN ANSWER TO QUESTION NO. 6 THAT A DIARY WAS BEING KEPT SHOWING NAMES OF PATIENTS AND AMOUNTS RE CEIVED AND THE MONEY WAS BEING COLLECTED BY THE RECEPTIONIST. IN R EGARD TO DISCREPANCIES, IN ANSWER TO QUESTION NO.8 HE HAS SI MPLY STATED THAT HE WOULD ASK HIS ACCOUNTANT WHO WAS NOT COMING IN THOS E DAYS ABOUT THE DISCREPANCIES. THIS CLEARLY SHOWS THAT ASSESSEE HAS ADMITTED THAT FEES WERE BEING COLLECTED BY THE RECEPTIONIST AND WERE B EING ENTERED INTO THE DIARY MAINTAINED BY THE RECEPTIONIST. IN FACT LATER ON ASSESSEE HAS VERY ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 11 CLEARLY STATED IN THE STATEMENT RECORDED ON 6-9-07 IN ANSWER TO QUESTION NO.12 THAT HE WOULD OFFER THE DIFFERENCE IN RECEIPT S VOLUNTARILY AS ADDITIONAL INCOME. THEREFORE IT IS NOT ONLY A CASE OF MERE STATEMENT BUT EVIDENCE IN THE FORM OF A DIRECT STATEMENT OF THE R ECEPTIONIST MS. BRENDA M. DSOUZA, PAGE NO.17 SHOWING THE MONTHLY RECEIPTS WAS ALSO AVAILABLE FOR MAKING THE ADDITION. AS FAR AS CASE LAW RELIED ON BY THE ASSESSEE IS CONCERNED ALL THE CASES ARE CLEARLY DISTINGUISHABLE BECAUSE THEY HAVE BEEN RENDERED UNDER THE SEARCH PROVISIONS OR THEY A RE DISTINGUISHABLE ON FACTS. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY IN THE LIGHT OF THE MATERIAL ON RECORD AND THE JUDGMENTS CITED BY T HE PARTIES. WE FIND NO FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF T HE ASSESSEE. THE FIRST SUBMISSION IS THAT THE STATEMENT DURING THE SURVEY WAS RECORDED AT MIDNIGHT AND THEREFORE THE SAME CANNOT BE MADE THE BASIS OF THE ADDITION. FIRST OF ALL THERE IS NO EVIDENCE TO SHOW THAT THE STATEMENT WAS RECORDED DURING THE MIDNIGHT BECAUSE NORMALLY SURVE Y TAKES PLACE BETWEEN SUNRISE AND SUNSET. THE LD. COUNSEL OF THE ASSESSEE HAS RELIED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT I N THE CASE OF KAILASHBEN MANHARLAL CHOKSI VS. CIT [SUPRA]. THE HE AD NOTE OF THIS DECISION READS AS UNDER: INCOME FROM UNDISCLOSED SOURCESADDITION-ADDITION ON THE BASIS OF RETRACTED STATEMENT UNDER S. 132(4)STAMEN T UNDER S. 13 2(4) RECORDED AT MIDNIGHT ON THE DATE OF SEARCHSAM E RETRACTED BY ASSESSEE AFTER TWO MONTHS ON THE GROUND THAT IT WAS RECORDED UNDER COERCION AND DURESSEXPLANATION IN THE FORM O F AFFIDAVIT ALSO FURNISHED AO DID NOT CONSIDER THE EXPLANATION ON T HE GROUND THAT RETRACTION WAS MADE AFTER A DELAY OF TWO MONTHS AND MADE ADDITION ON THE BASIS OF STATEMENT UNDER S. 132(4) NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASEIT IS TOO M UCH TO GIVE ANY ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 12 CREDIT TO A STATEMENT RECORDED AT MIDNIGHT WHEN A P ERSON MAY NOT BE IN A POSITION TO MAKE ANY CORRECT OR CONSCIOUS_D ISCLOSURE FURTHER, VIEWED IN THE LIGHT OF EVIDENCE FURNISHED ALONG WITH AFFIDAVIT, THERE WAS PROPER EXPLANATION IN RESPECT OF ALL THE ITEMS ON WHICH DISCLOSURE WAS SOUGHT TO BE MADE RULING OUT A LL REASONS FOR MAKING ADDITION OF RS. 4 LACS ON THE BASIS OF ALLE GED DISCLOSURE ON ACCOUNT OF BUNGALOWNO EVIDENCE IS BROUGHT ON RECOR D BY THE REVENUE IN SUPPORT OF SAID DISCLOSUREAS REGARDS GO LD JEWELLERY, IN THE LIGHT OF CBDT INSTRUCTIONS, ANY MIDDLE CLASS IN DIAN FAMILY MAY BE HAVING JEWELLERY AND GOLD ORNAMENTS TO THE EXTEN T OF 25 TOLAS AS REGARDS UNDISCLOSED INVESTMENT IN FURNITURE, DET AILED SOURCE OF INVESTMENT WITH DUE CONFIRMATION FROM THE PARTY CON CERNED WAS FILEDNONE OF THE AUTHORITIES BELOW CONSIDERED THIS EXPLANATION OF THE ASSESSEE ADDITION OF RS. 1 LAC ON ACCOUNT OF UNACCOUNTED CAS H CONFIRMED AND ADDITION OF RS. 6 LACS DELETED. THE ABOVE CLEARLY SHOWS THAT THE CASE BEFORE THE HO N'BLE GUJARAT HIGH COURT IS RELATED TO STATEMENT U/S.132[4] AND MOREOV ER THAT STATEMENT WAS RETRACTED, WHEREAS ASSESSEE HAS NEVER ALLEGED A T ANY STAGE HE HAS BEEN FORCED TO GIVE CERTAIN STATEMENT DURING THE SU RVEY. IN THE ABOVE CASE AN AFFIDAVIT WAS ALSO FILED EXPLAINING ALL INV ESTMENTS, WHEREAS NO SUCH AFFIDAVIT HAS BEEN FILED IN THE PRESENT CASE. MOREOVER THE ADDITION REGARDING SUPPRESSED SALES IS NOT BASED ONLY ON THE STATEMENT OF THE ASSESSEE BUT IS ALSO BASED ON PAGE-17, WHICH WE SHA LL DEAL WITH IT LATER AS WELL AS THE CONTENTS OF THE DIARY IN WHICH RECEI PTS ARE RECORDED BY THE RECEPTIONIST WHICH CLEARLY SHOWS THE SUPPRESSED REC EIPTS. FINALLY THE OFFER TO DISCLOSE THE ADDITIONAL INCOME ON ACCOUNT OF DIFFERENCE IN THE RECEIPTS WAS RECORDED ON 6-9-07 I.E. MUCH AFTER THE SURVEY WHEREIN IN RESPONSE TO QUESTION NO.12 ASSESSEE HAD OFFERED TO DECLARE THE DIFFERENCE IN RECEIPTS VOLUNTARILY. 9. THE DECISION IN THE CASE OF CIT VS. MAULIKKUMAR K. SHAH [SUPRA] IS TOTALLY DISTINGUISHABLE BECAUSE THAT RELATES TO ON MONEY FOR WHICH ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 13 EVIDENCE REQUIRED WAS TOTALLY DIFFERENT. IN THE DEC ISION IN THE CASE OF CIT VS. ATAM VALVES (P) LTD. [SUPRA], THE FACTS ARE TOT ALLY DISTINGUISHABLE. IN THAT CASE DURING THE SURVEY CERTAIN INCRIMINATING D OCUMENT WAS FOUND INCLUDING SLIP PAD CONTAINING PAYMENT OF WAGES TO VARIOUS PERSONS. THE SLIP PAD WAS WRITTEN BY ONE SHRI MANOHAR JAIN, AN EMPLOYEE OF THE ASSESSEE WHO WAS CONFRONTED WITH THE SLIP PAD ALONG WITH THE DIRECTOR. SHRI MANOHAR JAIN AS WELL AS THE DIRECTOR OF THE CO MPANY EXPLAINED THE POSITION AS TO HOW THE SLIP PAD HAD BEEN WRITTEN AN D THE STAND OF THE ASSESSEE WAS THAT SAME DID NOT REPRESENT PAYMENT OF WAGES BUT THE SLIP PAD WAS FOR EARLIER YEAR. THE AO DID NOT ACCEPT THI S EXPLANATION AND MADE THE ADDITION. THE CIT(A) AS WELL AS THE TRIBUN AL PARTLY SET ASIDE THE DECISION BY HOLDING THAT EVEN THOUGH THE EXPLAN ATION OF THE ASSESSEE THAT LOOSE PAPERS DID NOT RELATE TO THE PAYMENT OF WAGES DURING THE YEAR COULD NOT BE ACCEPTED BUT IN THE ABSENCE OF OTHER M ATERIAL LOOSE SHEETS ITSELF WERE NOT ENOUGH TO MAKE ADDITION. THEREFORE, THE QUESTION BEFORE THE HON'BLE COURT WAS WHETHER THE REDUCED ESTIMATE MADE BY THE TRIBUNAL WAS CORRECT AND THE HON'BLE HIGH COURT OBS ERVED AS UNDER: NOW THE QUESTION IS REGARDING ESTIMATING THE INCOM E ON THE BASIS OF THESE LOOSE SLIPS. IN OUR OPINION, THE AU IS NOT JUSTIFIED IN ESTIMATING THE SALES ON THE BASIS OF LOOSE SLIPS WI THOUT SUBSTANTIATING THAT THE ASSESSEE HAS ACTUALLY MADE THE SALES TO THAT EXTENT OF ESTIMATION MADE BY THE AU AND HAVING NO I OTA OF EVIDENCE IN THE FORM OF SALE BILLS OR BANK ACCOUNT OR MOVABLE AND IMMOVABLE PROPERTY WHICH REPRESENT EARNING OF UNACC OUNTED INCOME BY THE ASSESSEE. AS SUCH, THE LEARNED CIT(A) TO THAT EXTENT IS JUSTIFIED IN HOLDING THAT ESTIMATION OF SALES ON THE BASIS OF LOOSE SLIPS REPRESENTED PAYMENT OF WAGES IS NOT POSSIBLE. THUS, IT IS CLEAR THAT ONLY THE ADDITION WAS REDUCE D DEPENDING UPON THE CIRCUMSTANCES OF THE CASE. AS OBSERVED EARLIER, IN THE CASE BEFORE US IN ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 14 ADDITION TO THE ADMISSION OF THE ASSESSEE THERE ARE VARIOUS OTHER MATERIALS WHICH CLEARLY SHOW THE SUPPRESSED RECEIPT S. 10. AS FAR AS THE DECISION OF DELHI BENCH OF THE TR IBUNAL IN THE CASE OF RAVINDER KUMAR VS. DCIT [SUPRA] IS CONCERNED, IN TH AT CASE THE ADDITION WAS MADE MERELY ON THE BASIS OF THE SURRENDER MADE DURING THE SURVEY, WHEREAS IN THE CASE BEFORE US IN ADDITION TO THE OF FER BY THE ASSESSEE VARIOUS DOCUMENTS WERE ALSO FOUND SHOWING THE SUPPR ESSED RECEIPTS. SIMILARLY, THE DECISION OF DY. CIT VS. PREMSONS [SU PRA] IS TOTALLY DISTINGUISHABLE BECAUSE IN THAT CASE THE ADDITION W AS MADE ON ACCOUNT OF SURRENDER STATEMENT AND SOME ADDITIONAL INCOME W AS OFFERED TO COVER UP ANY OTHER DISCREPANCIES, BUT AS NOTED EARLIER IN THE CASE BEFORE US VARIOUS OTHER DOCUMENTS WERE FOUND. THEREFORE, THE CASE LAWS CITED BY THE ASSESSEE ARE TOTALLY DISTINGUISHABLE AND IRRELE VANT. 11. IN THE CASE BEFORE US A DIARY KNOWN AS FANTASS Y WAS FOUND IN WHICH ADDITIONAL RECEIPTS WERE REFLECTED, WHICH ARE AS UNDER: DATE 1. 8.07. 4.8.07 7.8.07 9.8.07 17.8.07 28.8.07 AMOUNT RECORDED IN THE NOTE BOOK 13,100 18,000 7,200 26,500 29,600 15,800 15,700 AMOUNT RECORDED IN THE BOOKS OF ACCOUNTS. 1,100 12,300 1150 4300 11,500 1900 - THE STATEMENT OF THE RECEPTIONIST MS. BRENDA M. DS OUZA WAS RECORDED AND SHE CLEARLY ADMITTED THAT FEES RECEIVED FROM VA RIOUS PATIENTS WERE BEING RECORDED IN THE DIARY AND AT THE END OF THE D AY THE FEES COLLECTED AS WELL AS THE DIARY WERE BEING HANDED OVER TO THE ASSESSEE. SOME ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 15 PAGES WERE FOUND TO BE TORN AND IT WAS STATED BY TH E RECEPTIONIST THAT SHE HAS NOT TORN THE PAGES. THOUGH IT WAS STATED TH AT ASSESSEE HAS NOT BEEN GIVEN THE COPY OF THE STATEMENT, BUT SIMULTANE OUSLY IT WAS ADMITTED THAT COPY OF THE STATEMENT WAS GIVEN DURIN G THE APPEAL PROCEEDINGS AND NO COMMENTS HAVE BEEN MADE BEFORE T HE FIRST APPELLATE AUTHORITY OR EVEN BEFORE US REGARDING THE STATEMENT OF MS. BRENDA M. DSOUZA. IN ANY CASE, THE CONTENTS OF THI S DIARY WERE CONFRONTED TO THE ASSESSEE ALSO VIDE QUESTION NOS.6 , 7, 8, 19 & 20 WHICH HAVE BEEN REPRODUCED BY THE AO AS UNDER: Q.6. PLEASE EXPLAIN HOW THE FEES ARE COLLECTED BY W HOM AND HOW THEY ARE RECORDED IN BOOKS ANS. WE KEEP THE DAIRY SHOWING NAMES AND AMOUNT RECEIVED . THE MONEY IS COLLECTED BY THE RECEPTIONIST AS NOTED BY ME OR BY ASSOCIATES AND MAKE NOTE OF IT IN THE DAIRY. THE ACCOUNTANT TAKES TOTAL RECEIPTS FROM THIS. Q. 7. CAN YOU PLEASE GO THROUGH YOUR DIARY FOR AUGU ST 2007 AND GIVE FEES DAY WISE? ANS. DATE 1. 8.07. 4.8.07 7.8.07 9.8.07 17.8.07 28.8.07 AMOUNT 13,100 18,000 7,200 26,500 29,600 15,800 15,700 Q.8. AS PER THE INFORMATION AVAILABLE IN FEES RECEI VED A/C IN TALLY THE RECEIPTS ARE ACTUALLY SHOWN ARE AS FOLLOWS 1. 8.07. 4.8.07 7.8.07 9.8.07 17.8.07 28.8.07 1,100 12,300 1150 4300 11,500 1900 - HOW ARE YOU RECONCILING THE DIFFERENCE? ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 16 ANS. I HAVE TO ASK THE ACCOUNTANT TO KNOW THE DISCR EPANCY IF ANY. THE ACCOUNTANT HAS NOT COMING TO JOB SINCE 11.8.2007. Q. 19 I AM SHOWING YOU THE NOTE BOOK FANTASY WHIC H SHOWS RECEIPTS WRITTEN BY RECEPTIONIST FOR 6.8.07 TO 30.08.07. PLE ASE STATE WHAT IS THE PURPOSE OF THIS REGISTER? ANS. THE AMOUNT COLLECTED BY THE RECEPTIONIST IS MA INTAINED IN THIS REGISTER FOR THE ACCOUNTANT TO VERIFY AND ENTER IN THE LEDGE R. Q.20. AS PER THIS NOTE BOOK THE RECEIPTS ARE MUCH H IGHER THAN WHAT IS ACCOUNTED SAY FOR INSTANCE ON 7.8.07 AND 17.8.07, P LEASE CLARIFY THE DIFFERENCE. ANS. AS STATED EARLIER THE ACCOUNTANT HAS NOT BEEN COMING SO ACCOUNTS ARE YET TO BE COMPLETED. THE ABOVE CLEARLY SHOWS THAT ASSESSEE IS NOT DENYIN G THE CONTENTS OF THE DIARY. HE HAS ALSO ADMITTED THAT HE WILL HAVE TO CH ECK-UP WITH THE ACCOUNTANT REGARDING THE DISCREPANCIES. THE LD. CIT (A) HAS CLEARLY OBSERVED THAT IF THE ACCOUNTANT WAS NOT COMING THEN HOW VARIOUS AMOUNTS HAVE BEEN ENTERED INTO THE ACCOUNTS BOOK ON 17-8-07, 20-8-07 AND 29-8-07 VIDE OBSERVATION NO.6 WHICH HAS BEEN EX TRACTED BY US ABOVE. THIS CLEARLY SHOWS THAT THE ASSESSEE WAS VER Y MUCH AWARE OF SUPPRESSION OF RECEIPTS. THE MODUS OPERANDI IS VERY SIMPLE. THE CORRECT RECEIPTS COLLECTED FROM THE PATIENTS BY THE RECEPTI ONIST ARE MENTIONED IN THE DIARY AND THE DIARY ALONG WITH THE MONEY IS HAN DED OVER TO THE ASSESSEE-DOCTOR AND LATER ON LESS AMOUNT OF RECEIPT S ARE ENTERED INTO THE BOOKS OF ACCOUNTS MAINTAINED FOR THE PURPOSE OF TAXATION. APART FROM THIS DIARY ANOTHER DOCUMENT NO.17 PLACED AT PA GE 357 OF THE PAPER BOOK WAS FOUND WHICH CONTAINS THE MONTHLY RECEIPTS FROM APRIL 2003 TO JUNE 2006. IT HAS NOT BEEN DENIED AT ANY POINT OF T IME THAT THIS DOCUMENT DOES NOT BELONG TO THE ASSESSEE AND HE HAS SIMPLY STATED IN RESPONSE TO QUESTION NO.35 THAT HE WILL HAVE TO VER IFY. THE QUESTION AND ANSWER IS REPRODUCED BELOW: ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 17 Q.35 I AM SHOWING YOU A LOOSE PAPER NUMBER 17, PLEA SE GO THROUGH IT AND SAY WHAT P & S ANDS. I WILL HAVE TO VERIFY WITH MY ACCOUNTS. MAY B E IT IS ESTIMATED FIGURE OF RECEIPTS IN THE RESPECTIVE STATED PERIOD. LATER ON DURING THE ASSESSMENT PROCEEDINGS IT WAS R EPRESENTED ON BEHALF OF THE ASSESSEE THAT THIS DOCUMENT IS BASICA LLY AN ESTIMATE PREPARED BY THE CONSULTANT MR. RAMESH SHETTY. THIS CANNOT BE GIVEN ANY CREDENCE BECAUSE AS OBSERVED BY THE LD. CIT(A) NO E VIDENCE WAS FURNISHED REGARDING APPOINTMENT OF SHRI RAMESH SHET TY AS CONSULTANT. NO FEES IS STATED TO HAVE BEEN PAID TO SHRI RAMESH SHETTY AND NO MENTION REGARDING THE PRESENCE OF CONSULTANT WAS MA DE DURING THE SURVEY. IN ANY CASE, THE PERUSAL OF THIS DOCUMENT S HOWS THAT RECEIPTS HAVE BEEN GENERALLY MADE OF MULTIPLE OF 10, FOR EXA MPLE, RS.3,54,650/-, RS. 5,69,850/- IN THE MONTH OF FEBRUARY, 2004 AND M ARCH, 2004. EVEN ODD AMOUNTS HAVE BEEN MENTIONED, FOR EXAMPLE, FOR T HE MONTH OF MAY, 2004 RECEIPTS HAVE BEEN SHOWN AT RS.4,40,049/-, RS. 6,99,982/- FOR THE MONTH OF APRIL, 2006. IT IS HIGHLY IMPROBABLE THAT THESE FIGURES ARE ONLY THE ESTIMATE. FIRST OF ALL AS OBSERVED BY THE LD. C IT(A) THERE WAS NO NEED TO MENTION MONTHLY FIGURE FOR PREPARING A ROSY PICT URE FOR THE BANK, BECAUSE BANK WOULD REQUIRE ANNUAL FIGURE AND EVEN I F MONTHLY FIGURES WERE ESTIMATED THEN ODD FIGURES WOULD NOT BE THERE AND FIGURES WOULD HAVE BEEN IN TERMS OF LAKHS OR THOUSANDS. THEREFORE , IT CANNOT BE ACCEPTED THAT THESE FIGURES ARE MERELY ESTIMATES PR EPARED BY THE CONSULTANT. IN ANY CASE, IN THE STATEMENT RECORDED ON 6-9-07 IN THE OFFICE OF THE ITO ANSWER TO QUESTION NO.12 READS AS UNDER: Q. 12. DURING THE COURSE OF SURVEY DISCREPANCIES I N FIGURES OF RECEIPTS AS PER YOUR BOOKS AND ACTUAL COLLECTION NOTED IN TH E DIARY MAINTAINED WERE NOTICED. THE ANSWER GIVEN TO THE SAME WAS AS F OLLOWS: ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 18 TO TAKE CARE OF VARIOUS CASH COMPONENTS, INVOLVED IN THE SYSTEM WE ARE LEAVING, INCLUDING CORRUPTIONS AT VARIOUS LEVELS. T HE RECEIPTS HAVE BEEN ADJUSTED. PLEASE STATE HOW ARE GOING TO RECONCILE THAT UNACCO UNTED RECEIPTS PICKED FOR A MONTH ON RANDOM BASIS? YOU MAY GIVE YOU REPLY TAKING INTO ACCOUNT THE FIGURES OF COLLECTION AS NOTED IN LOOSE PAPER PAGE NO.17 ANS. I AM NOT AWARE OF THE TECHNICALITIES. I WILL H AVE TO SHOW THE PAPER TO THE ACCOUNTANT CHARTERED ACCOUNTANT. WHATEVER THE D IFFERENCE THAT MAY COME ON THE BASIS OF THE PAPER, I WILL OFFER THE SA ME VOLUNTARILY AS ADDITIONAL INCOME. THE ABOVE CLEARLY SHOWS THAT ASSESSEE HAS ADMITTED AND PROMISED TO DECLARE THE DIFFERENCE IN RECEIPTS VOLUNTARILY. WE FIND NO FORCE IN THE SUBMISSION THAT NO CASH OR UNDISCLOSED ASSETS WERE FOUND BECAUSE IT IS MERELY A CASE OF SURVEY AND IN CASE OF PROFESSIONAL S OFFICE THE CASH IS BEING COLLECTED ON DAILY BASIS AND THERE IS NO CHAN CE OF ANY UNDISCLOSED CASH BEING FOUND AND IN THIS REGARD EVEN AO HAS TRI ED TO POINT OUT THAT ASSESSEE HAS MADE CERTAIN UNDISCLOSED INVESTMENTS I N PROPERTY BY POINTING OUT HOW THE STAMP DUTY VALUATIONS WERE MOR E THAN THE CONSIDERATION SHOWN BY THE ASSESSEE. THEREFORE, WE ARE OF THE OPINION THAT IN THE LIGHT OF VARIOUS DOCUMENTS FOUND AS WEL L AS THE STATEMENT OF THE ASSESSEE RECORDED ON 6-9-07, IT IS CLEAR THAT A SSESSEE HAD SUPPRESSED HIS RECEIPTS AND HAD NOT DECLARED THE SA ME DESPITE PROMISING TO VOLUNTARILY DECLARE THE SAME. 12. AS FAR AS THE ARGUMENT THAT ONLY NET PROFIT CAN BE ASSESSED IN THE CASE OF UNDISCLOSED SOURCE IS CONCERNED, THE LD. CO UNSEL OF THE ASSESSEE HAS RELIED ON THE DECISION OF CIT VS. GURUBACHHAN S INGH J. JUNEJA [SUPRA]. IN THIS CASE IT HAS BEEN CLEARLY HELD THAT IN THE ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THAT THERE WERE ANY UNEX PLAINED INVESTMENTS, THEN ONLY THE NET PROFIT CAN BE ADDED ON ACCOUNT OF ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 19 UNDISCLOSED SOURCES. THERE CANNOT BE ANY QUARREL WI TH THIS ARGUMENT. BUT THE QUESTION IS WHETHER THIS ARGUMENT CAN BE AD OPTED IN THE CASE OF THE ASSESSEE. THE ANSWER SEEMS TO BE NO. BECAUSE IN THE CASE OF A NORMAL BUSINESSMAN IF HE SELLS EXTRA UNITS, THERE H AS TO BE SOME EXTRA COST OF THOSE UNITS AND IF THERE IS EVIDENCE REGARD ING UNEXPLAINED INVESTMENTS ON THE COST OF THOSE EXTRA UNITS AND IF THERE IS EVIDENCE REGARDING UNEXPLAINED INVESTMENT ON THE COST OF THO SE EXTRA UNITS, ONLY THEN ADDITION CAN BE MADE FOR THE WHOLE AMOUNT OTHE RWISE ONLY THE NET PROFIT CAN BE ASSESSED. BUT IN THE CASE OF THE PROF ESSIONAL THE SITUATION IS TOTALLY DIFFERENT BECAUSE THE PROFESSIONAL IS RECEI VING THE MONEY AS FEE FOR EXERCISE OF HIS PROFESSION AND NO COST IS INVOL VED. WHATEVER OVER- HEADS HAVE BEEN INCURRED FOR ANNUAL EXPENDITURE ARE ALREADY BOOKED BY THE ASSESSEE AND NOWHERE IT HAS BEEN SHOWN THAT THE RE WAS ANY EXPENDITURE WHICH WAS NOT BOOKED IN THE BOOKS OF AC COUNTS. THEREFORE, THE PRINCIPLE LAID DOWN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GURUBACHAN SINGH JUNEJA VS. CIT [SUPRA] CANNOT BE F OLLOWED IN THE CASE OF A PROFESSIONAL. HOWEVER, AT THE SAME TIME WE FIN D THAT DURING THE COURSE OF THE SURVEY IT WAS CLEARLY ADMITTED BY THE ASSESSEE THAT RECEIPTS HAVE BEEN SUPPRESSED TO TAKE CARE OF VARIO US CASH COMPONENTS INVOLVED IN THE ESTIMATE AND INCLUDING VARIOUS CORR UPTIONS AT VARIOUS LEVELS WHICH BECOMES CLEAR FROM THE ANSWER TO QUEST ION NO.12 REPRODUCED ABOVE. AS FAR AS CORRUPTION IS CONCERNED , WE CAN ONLY SAY THAT EVEN IF ANY CORRUPTION MONEY WAS PAID SAME CAN NOT BE TREATED AS EXPENDITURE IN VIEW OF EXPLANATION TO SEC.37 WHICH READS AS UNDER: ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 20 EXPLANATION .FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO H AVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUCT ION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE. THE ABOVE CLEARLY PROHIBITS ALLOWANCE OF ANY EXPEND ITURE INCURRED FOR THE PURPOSE OF ANY OFFENCE WHICH IS PROHIBITED BY LAW. AT THE SAME TIME THERE CAN BE SOME CASH COMPONENTS INVOLVED IN THE C ASE OF A DENTIST WHO IS REQUIRED TO USE CERTAIN MATERIALS FOR FILLIN GS ETC. THEREFORE TAKING A LENIENT VIEW, WE ARE OF THE OPINION, THAT IT WOUL D MEET THE ENDS OF JUSTICE IF RECEIPTS ARE REDUCED BY 10% OF THE AMOUN T FOR CASH SPENT ON MATERIALS. ACCORDINGLY, WE MODIFY THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO MAKE AN ADDITION ON ACCOUNT OF SUPPRESSED SALES AS MADE BY HIM ON THE BASIS OF DOCUMENTS. BUT HE SHOULD GIVE F URTHER RELIEF OF 10% OF THE SUPPRESSED RECEIPTS ON ACCOUNT OF THE MATERI ALS USED BY THE ASSESSEE WHICH MIGHT HAVE BEEN PURCHASED OUT OF THE CASH AVAILABLE FROM SUPPRESSED RECEIPTS. 13. IN THE RESULT, APPEAL IN I.T.A.NO.8121/M/10 FOR A.Y 2006-07 IS PARTLY ALLOWED. 14. I.T.A.NO.936/M/11 _ A.Y 2007-08 : IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED BUT AT THE TIME OF HEARING LD. COU NSEL OF THE ASSESSEE SUBMITTED THAT BASICALLY TWO ISSUES ARE INVOLVED , NAMELY, (1) CONFIRMATION OF ADDITION AMOUNTING TO RS.34,32,782/ - ON ACCOUNT OF SUPPRESSED RECEIPTS DETECTED DURING THE SURVEY AND (2) ENHANCEMENT OF INCOME ON ACCOUNT OF UNDERSTATED CONSIDERATION ON P URCHASE OF SHOP. 15. ISSUE NO.1 : THE LD. COUNSEL OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE WHILE ARGUING HIS APPEAL IN I.T.A. NO.8121/M/10 FOR ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 21 A.Y 2006-07. HE FURTHER ARGUED THAT IN THIS CASE EV EN IF DOCUMENT NO.17 WHICH WAS SEIZED DURING THE SURVEY WAS TO BE TREATE D AS SHOWING SUPPRESSED RECEIPTS, EVEN THEN THE DOCUMENT WAS ONL Y FOR THE MONTH OF APRIL TO JUNE 2006 AND ESTIMATE COULD NOT HAVE BEEN ADOPTED FOR THE WHOLE YEAR. IN THIS REGARD HE RELIED ON THE DECISIO N OF THE ALLAHABAD BENCH OF THE TRIBUNAL IN THE CASE OF DR. R M L MEHR OTRA VS. ACIT [63 ITD 288]. 16. ON THE OTHER HAND, LD. DR ALSO REITERATED THE S UBMISSIONS MADE EARLIER WHILE ARGUING THE APPEAL IN I.T.A.NO.8121/M /10 FOR A.Y 2006-07 AND SUBMITTED THAT ESTIMATES CAN BE MADE ONCE A DOC UMENT IS AVAILABLE FOR PART OF THE YEAR IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF SALES TAX VS. H.M.ES UFALI H.M.ABDULALI [90 ITR 271]. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND AS DISCUSSED ABOVE, PAGE-17 SEIZED DURING THE SURVEY C LEARLY SHOWS THE RECEIPTS FOR A PERIOD FROM APRIL 2003 TO JUNE 06. M OREOVER, DURING THE STATEMENT RECORDED ON 6-9-07 ASSESSEE HAS CLEARLY A GREED TO DECLARE THE FRESH RECEIPTS DETECTED DURING THE SURVEY. AS FAR A S THE DECISION OF DR. R M L MEHROTRA VS. ACIT [SUPRA] IS CONCERNED, IN THAT CASE THE TRIBUNAL WAS CONSIDERING THE ISSUE OF ESTIMATION OF INCOME I N CASE OF A SEARCH. IT WAS OBSERVED IN PARA-26 AS UNDER: 26. NOW PASSING ON TO THE MULTIPLICATION FORMULA AD OPTED BY THE AO, WE FIND OURSELVES UNABLE T0 ACCORD OUR NOD TO I T. IN THE FIRST PLACE, ONE SHOULD NOT FORGET THAT IT IS A SEARCH CA SE IN WHICH A SEARCH PARTY IS SUPPOSED AND EXPECTED TO FIND OUT A LL THE INCRIMINATING DOCUMENTS, MATERIAL AS ALSO UNDISCLOS ED ASSETS. A SEARCH ASSESSMENT, MUCH LESS A BLOCK ASSESSMENT, TH EREFORE, STANDS ON A FOOTING DIFFERENT THAN A NORMAL ASSESSM ENT MUCH LESS ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 22 AN ASSESSMENT BASED ON THE BEST JUDGMENT OF AN AO. IT IS FOR THIS REASON THAT THE RATIO OF THE APEX COURT DECISION IN THE CASE OF H.M. EUSUFALI H.M. ABDULALI (SUPRA) WOULD NOT COME TO TH E RESCUE OF THE DEPARTMENT, AS THERE IT WAS A SALES-TAX MATTER AND A BEST JUDGMENT ASSESSMENT WAS REQUIRED TO BE MADE. THE MATERIAL TH AT THE STO WAS POSSESSED OF WAS THE FIGURE OF 19 DAYS SALE BY THE ASSESSEE NOT ENTERED IN THEIR BOOKS OF ACCOUNT. THE SUPREME COURT HELD THAT IN SUCH SITUATION IT WAS NOT POSSIBLE FOR THE OFFIC ER TO FIND OUT PRECISELY THE TURNOVER SUPPRESSED AND HE COULD ONLY EMBARK ON ESTIMATING THE SUPPRESSED TURNOVER ON THE BASIS OF THE MATERIAL BEFORE HIM, IN WHICH SOME AMOUNT OF GUESSWORK WAS I NEVITABLE. IN CONTRADISTINCTION TO THESE FACTS, IN THE PRESENT CA SE, THE ASSESSEE WAS SEARCHED (EMPHASIS, ITALICISED IN PRINT, SUPPLI ED). DURING THIS SEARCH, FIRSTLY, NO OTHER DIARY OR OTHER RECORD COM PARABLE TO THE NOTE-BOOK MARKED AS B-1123 WERE FOUND BY THE SEAR CH PARTY FOR THE REMAINING PERIOD, WHICH NORMALLY WOULD HAVE BEE N, WERE IT BEING MAINTAINED AND KEPT. WE ARE CONSCIOUS THAT SU CH A RECORD COULD HAVE BEEN DESTROYED ALSO FROM TIME TO TIME. B UT IN SUCH A SITUATION ALSO, IF THE ASSESSEES HAD ACTUALLY MADE A FORTUNE OF SIMILAR RECEIPTS IN RESPECT OF THE REMAINING PART O F THE YEAR, THEY MUST BE REFLECTED BY CERTAIN ASSETS, MOVABLE OR IMM OVABLE OUGHT TO HAVE BEEN FOUND DURING THE COURSE OF SEARCH. NO SUCH ASSETS, DESPITE THE EXTREME STEP OF SEARCH WHICH AMOUNTS TO A SERIOUS INVASION OR. THE RIGHTS OF SUBJECTS AND WHICH IS PE RHAPS THE LAST WEAPON IN THE ARSENAL OF THE DEPARTMENT, WERE FOUND , WHICH COULD BE ATTRIBUTED TO ANY SUCH PATENTLY HYPOTHETICAL REC EIPTS. IN VIEW OF THIS WE ARE UNABLE TO CONCUR WITH THE DEPARTMENT TO THE MULTIPLICATION FORMULA ADOPTED BY THE LEARNED AO. THE ABOVE DECISION IS CLEARLY DISTINGUISHABLE BECAU SE IN THE CASE OF A SEARCH THE UNDISCLOSED INCOME CAN BE ASSESSED FOR T HE BLOCK PERIOD ONLY ON THE BASIS OF THE DOCUMENTS FOUND DURING THE SEAR CH, WHEREAS THE SAME PRINCIPLE CANNOT APPLY IN THE CASE OF SURVEY. IN THE CASE OF CST VS. H.M.ESUFALI H.M.ABDULALI [SUPRA] THE FLYING SQUAD F OUND CERTAIN LOOSE SHEETS SHOWING ADDITIONAL SALES WHICH WERE NOT INCL UDED IN THE SALES DECLARED BY THE ASSESSEE. THE QUESTION WAS WHETHER THE ASSESSING AUTHORITY COULD EXTRAPOLATE THE RECEIPTS ON THE BAS IS OF DOCUMENTS FOUND FOR 19 DAYS FOR THE WHOLE PERIOD. IN THIS REGARD TH E HON'BLE SUPREME COURT OBSERVED AS UNDER: ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 23 HELD, THAT THE REASSESSMENTS WERE VALID. FROM THE CIRCUMSTANCE THAT THE ASSESSEE HAD DEALINGS OUTSIDE THE ACCOUNTS OF THE VALUE OF RS. 31,171.28 FOR 19 DAYS, IT WAS OPEN TO THE OFFIC ER TO INFER THAT THE ASSESSEE HAD LARGE-SCALE DEALINGS OUTSIDE THE A CCOUNTS. IN SUCH A SITUATION, IT WAS NOT POSSIBLE FOR THE OFFICER TO FIND OUT PRECISELY THE TURNOVER SUPPRESSED AND HE COULD ONLY MAKE AN E STIMATE OF THE SUPPRESSED TURNOVER ON THE BASIS OF THE MATERIAL BE FORE HIM. SO LONG AS THE ESTIMATE MADE BY HIM WAS NOT ARBITRARY AND HAD A REASONABLE NEXUS WITH THE FACTS DISCOVERED, IT COUL D NOT BE QUESTIONED. IT WAS WRONG TO HOLD THAT THE OFFICER M UST HAVE MATERIAL BEFORE HIM TO PROVE THE EXACT TURNOVER SUP PRESSED. THEREFORE IT IS CLEAR THAT IN THE ABSENCE OF ANY OT HER MATERIAL, THE AO HAD TO ESTIMATE THE RECEIPTS ONLY ON THE BASIS OF T HE RECEIPTS ALREADY DECLARED IN PAGE-17. THE OTHER ASPECTS OF THE ISSUE S HAVE ALREADY BEEN DISCUSSED BY US WHILE ADJUDICATING THE APPEAL IN I. T.A.NO.8121/M/10 FOR A.Y 2006-07 IN DETAIL AND THERE IS NO NEED TO REPEA T THE SAME. FOLLOWING THE ORDER FOR A.Y 2006-07 WE UPHOLD THE ADDITION ON ACCOUNT OF SUPPRESSED RECEIPTS ONLY UPTO 90% OF SUCH RECEIPTS BECAUSE 10% OF THE RECEIPTS SHOULD BE TREATED COST OF MATERIAL ETC. US ED FOR EARNING THOSE RECEIPTS AS OBSERVED IN A.Y 2006-07. ACCORDINGLY, W E DIRECT THE AO TO ASSESS 90% OF THE SUPPRESSED RECEIPTS. 18. IN RESPECT OF THE SECOND ISSUE THE FOLLOWING GR OUNDS HAVE BEEN RAISED BY THE ASSESSEE: 7. IN THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED IN ENHANCING THE ASSESSME NT, BY CONFIRMING AN ADDITION WHICH WAS NEITHER MADE BY TH E AO NOR RAISED IN APPEAL BEFORE THE LD. CIT(A) AND WITH OUT FOLLOWING THE PROCEDURE FOR ENHANCEMENT U/S 251(2). 8. IN THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ASSESSI NG OFFICERS DECISION OF KEEPING THE ASSESSMENT ORDER U/S 143(3) SUBJECT TO REMEDIAL ACTION PURSUANT TO REPOR T OF THE DEPT VALUATION OFFICER, WITHOUT THERE BEING ANY SUC H REMEDIAL PROVISION UNDER THE LAW. 9. IN THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED BY APPRECIATING AND TREAT ING THE ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 24 DVO REPORT U/S 55A AS VALID, INSPITE OF NON-PRESENC E OF ANY CLAIM OF CAPITAL GAINS RELATED TO IMMOVABLE PROPERT Y IN THE COMPUTATION OF INCOME OF THE APPELLANT AND IN NOT APPRECIATING THE EVIDENCE FILED. 19. BOTH THE PARTIES WERE HEARD. 20. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT DURING THE ASSESSMENT PROCEEDINGS AO NOTICED THAT ASSESSEE HAD PURCHASED A SHOP VIDE SALE DEED DATED 12-3-07 FOR RS.22,50,000/- WHE REAS AS PER THE STAMP VALUATION AUTHORITIES THE VALUATION WAS RS.48 ,86,057/-. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE VAL UATION OF THE PROPERTY WAS REFERRED TO THE VALUATION OFFICER AND NO ADDITION WAS MADE BY OBSERVING THAT REMEDIAL ACTION WILL BE TAKEN ON RECEIPT OF REPORT FROM VALUATION OFFICER. 21. THE LD. CIT(A) CONFIRMED THE ADDITION VIDE PARA 2.4.5 WHICH IS AS UNDER: 2.4.5 THE COPY OF VALUATION REPORT BY DVO HAS N OW BEEN SUBMITTED BY APPELLANT. AFTER CONSIDERING APPELLANT S SUBMISSION REGARDING THE TRANSACTION I.E. SALE DEED, EXTRACT F ROM PROPERTY REGISTERED CARD, MINUTES OF SOCIETY, BALANCE SHEET, P & L A/C. OF APPELLANT, COPY OF THE SUIT FILED BETWEEN SOCIETY A ND APPELLANT WITH HIS PARTNER, DVO ESTIMATED FMV AT RS.47,37,500 /. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION I S, THEREFORE, SUSTAINED TO THIS EXTENT. AO MAY CALCULATE ACCORDIN GLY WHILE GIVING EFFECT TO THIS ORDER. AS CONTENDED BY THE LD. COUNSEL OF THE ASSESSEE, LD . CIT(A) SHOULD NOT HAVE MADE THIS ADDITION BECAUSE THIS WOULD AMOUNT T O ENHANCEMENT OF INCOME WITHOUT ISSUING NOTICE U/S.251[2]. BOTH THE PARTIES HAD AGREED THAT THIS ISSUE MAY BE RESTORED TO THE FILE OF THE CIT(A) TO BE ADJUDICATED AFRESH AFTER ISSUING THE NOTICE FOR ENH ANCEMENT OF INCOME. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) A ND DIRECT HIM TO RE- ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 25 EXAMINE THE ISSUE AFTER FIRST ISSUING A NOTICE U/S. 251[2] AND THEN PROVIDING NECESSARY OPPORTUNITY TO BOTH THE PARTIES . 22. IN THE RESULT, ASSESSEES APPEAL IN I.T.A.NO.93 6/M/11 FOR A.Y 2007-08 IS PARTLY ALLOWED. 23. I.T.A.NO.6812/M/11 A.Y 2004-05 : IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. IN THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN UPHOLDING THE DECISION OF AO OF RE OPENING AND COMPLETING THE ASSESSMENT U/S 147 R.W.S 143(3) A) WITHOUT ISSUING THE MANDATORY NOTICE U/S 143(2) B) HASTILY AND WITHOUT GIVING SUFFICIENT OPPORTUNIT Y TO THE APPELLANT C) WITHOUT FOLLOWING & APPRECIATING PRECEDENTS AND JUDGEMENTS. 2. IN THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN UPHOLDING AN ADDITION OF RS. 28,18 ,036/- ON ACCOUNT OF ALLEGED SUPPRESSED PROFESSIONAL RECEIPTS BASED ON A LOOSE PAPER MARKED AS PAGE NO 17 IMPOUNDED DURING A SURVEY U/S 133A CONDUCTED ON 30-8-0 7. 3. IN THE ALTERNATIVE AND IN THE FACTS & CIRCUMSTAN CES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED BY NOT APPRECI ATING THE FACT THAT THE AO HAS TREATED THE ENTIRE ALLEGED GROSS RE CEIPTS OF RS. 28,18,036/- AS NET INCOME EVEN AFTER REJECTING THE BOOKS OF ACCOUNTS AND BY TREATING GROSS RECEIPTS AS EQUIVALE NT TO TAXABLE INCOME. 24. GROUND NO.1 : AS FAR AS REOPENING OF THE ASSESSMENT IS CONCERNE D, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT HE DOES NOT WISH TO CHALLENGE THE ACTION OF REOPENING, HOWEVER, HE STIL L HAS OBJECTION THAT SUCH RE-ASSESSMENT WAS INVALID BECAUSE NOTICE U/S.1 43[2] WAS NOT SERVED ON THE ASSESSEE. IN THIS REGARD HE RELIED ON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. M/S. CEBON INDIA LTD., I.T.APPEAL NO.85 OF 2009 [COPY OF THE O RDER FILED], WHEREIN IT WAS HELD THAT IT WAS MANDATORY TO ISSUE NOTICE U/S. 143[2] AND ABSENCE OF NOTICE WAS NOT CURABLE U/S.292BB. HE ALSO RELIED ON THE DECISION OF ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 26 THE KOLKATTA BENCH OF THE TRIBUNAL IN THE CASE OF D CIT VS. NICCO UCO ALLIANCE CREDIT LTD. I.T.A.NO.1715/KOL/09 & ORS., W HEREIN FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F ACIT VS. HOTEL BLUE MOON [321 ITR 362] IT WAS HELD THAT PROVISIONS OF S EC.292BB COULD NOT CURE THE DEFECT OF ISSUING NOTICE U/S.143[2]. 25. ON THE OTHER HAND, LD. DR SUBMITTED THAT THIS I SSUE HAS BEEN DISCUSSED IN DETAIL BY THE CIT(A) IN PARA 2.3 OF HI S ORDER AND HE HAS GIVEN A CLEAR CUT FINDING THAT THE NOTICE WAS ISSUE D. IN ANY CASE, ASSESSEE HAS APPEARED BEFORE THE AO AND GOT THE OPP ORTUNITY TO FILE REPLY, THEREFORE, THE ISSUE WAS COVERED AGAINST THE ASSESSEE BY THE DECISIONS OF THE HON'BLE KERALA HIGH COURT IN THE C ASE OF K.J.THOMAS VS. CIT [301 ITR 304] AND HON'BLE DELHI HIGH COURT IN T HE CASE OF CIT VS. REGENCY EXPRESS BUILDERS PVT. LTD. [291 ITR 55]. 26. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. THERE IS NO DOUBT THAT IT IS MANDATORY TO ISSUE AND SERVE A NOT ICE U/S.143[2] EVEN DURING THE RE-ASSESSMENT PROCEEDINGS. THE LD. CIT( A) HAS DEALT WITH THIS ISSUE AT PARA 2.3 WHICH IS AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS CAREFULLY AND MAT RIAL ON RECORD AND REMAND REPORT O THE AC. IT IS SEEN FROM THE NOTINGS ON ORDER SHEET ENTRY DATED 13/8/10 THAT THE AC MENTION ED AS FRESH NOFICE U/S. 143 (2) AND 142(1) ARE ISSUED FIXING FO R 26/8/2010. FURTHER, THE PARA 04 OF PAGE 5 OF ASSESSMENT ORDER ALSO STATES THAT STATUTORY NOTICES U/S. 143(2) AND 142(1) WERE ISSUED TO THE ASSESSEE. IN RESPONSE TO THE ABOVE NOTICES, SHRI DE EPAK JAM CA, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, ATTENDED . IT IS ALSO SEEN FROM THE ORDER SHEET NOTING DATED 28/10/10 THA T SHRI DEEPOK JAM CA, REPRESENTATIVE OF THE ASSESSEE, HAS DULY ATTENDED BEFORE THE AC AND FILED A LETTER DATED 9/8 /10 AND POWER OF ATTORNEY DATED 27/10/08 AND THE CASE WAS DISCUSS ED WITH HIM. THESE FACTS MAKES AMPLY CLEAR THAT THE NOTICE UNDER SECTION 143(2) WAS ISSUED ALONG WITH NOTICE UNDER SECTION 1 42 (1). FURTHER THE ASSESSMENT HAS BEEN MADE AFTER DISCUSSI ON WITH THE ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 27 REPRESENTATIVE OF THE ASSESSEE, WHO IS POWER OF ATT ORNEY HOLDER OF THE ASSESSEE AND AFTER DISPOSING OF OBJECTION I OR REOPENING OF ASSESSMENT ON 28/10/10. THE ASSESSEE FILED REPLY VI DE LETTER DATED 27/10/10 WHICH HAS BEEN DULY REPRODUCED AT PA RA 4 PAGE 5 TO 9 OF THE ASSESSMENT ORDER. THUS, THE APPELLANT H AS BEEN ALLOWED REASONABLE OPPORTUNITY BEING HEARD, THEREF ORE, THE RULE OF AUDI ALTERAM PART HAS BEEN DULY COMPLIED WITH. THE PROVISION OF SECTION 292BB PROVIDES THAT WHERE THE ASSESSEE H AS APPEARED IN ANY PROCEEDINGS OR COOPERATED IN ANY ENQUIRY TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER SECTION IF ANY UNDER THE PROVISIONS OF THIS ACT, WHICH IS R EQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM IN T IME AND IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCE EDINGS OR ANY ENQUIRY UNDER THIS ACT THAT THE NOTICE WAS A) NOT S ERVED UPON HIM OR B) NOT SERVED UPON HIM IN TIME OR C) SERVED UPON HIM IN AND IN PROPER MANNER. FURTHER, THE PROVISION OF THAT SECTI ON ALSO PROVIDED THAT NOTHING CONTAINED IN THAT SECTION SHA LL APPLY WHERE THE ASSESSEE HAD NOT RAISED SUCH OBJECTIONS BEFORE COMPLETING OF SUCH ASSESSMENT, REASSESSMENT. I FIND THAT THE APPE LLANT HAS NOT RAISED ANY OBJECTION DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, NOR TOOK ANY OBJECTION THAT HE HAS NOT BEEN RECEIVED NOTICE UNDER SECTION 143(2) AND THE APPELL ANT HAS COOPERATED WITH IN THE ASSESSMENT PROCEEDINGS, APPE ARED THROUGH AUTHORIZED REPRESENTATIVE, DURING THE ASSES SMENT PROCEEDINGS. THEREFORE THE OBJECTION AT THIS STAGE IS NOT TENABLE IN LAW AND THE NOTICE UNDER SECTION 143 (2) IS DEEM ED TO HAVE BEEN ISSUED UPON HIM AND SERVED UPON HIM. THE DECIS ION IN THE CASE OF PREMIUM LIMITED V CIT IN WPN 2340 OF 2008 D ATED 22/10/08 OF BOMBAY HIGH COURT IS INAPPLICABLE AS I N THAT CASE, THE OBJECTION TO REOPENING OF THE ASSESSMENT WAS NO T DISPOSED OFF, WHEREAS ASSESSMENT WAS ATTEMPTED TO BE FINAILS ED BY ISSUE OF NOTICE UNDER SECTION 143 (2) AND 142 (1). HENCE, TH E HONOURABIE HIGH COURT QUASHED THAT NOTICE UNDER SECTION 143 (2 )1142 (1) WITH A DIRECTION TO DISPOSE OF FIRST THE OBJECTION OF REOPENING OF ASSESSMENT. THUS, THE FACTS OF THAT CASE ARE ENTIRE LY DIFFERENT AND DISTINGUISHABLE IN THE PRESENT CONTEXT. THE DECISIO N IN CIT V CPR CAPITAL SERVICES LTD. (SUPRA) WERE RELATED NOTICE U NDER SECTION 143 (2) WAS NOT FOUND TRACEABLE AS ADMITTED BY THE DEPARTMENT, AND THE PROVISIONS OF SECTION 292 BB NOT DISCUSSED, HENCE, THE FACTS OF THAT ARE DISTINGUISHABLE. SIMILARLY, IN TH E CASE OF CEBON INDIA LTD (SUPRA) NOTICE UNDER SECTION 143 (2) WAS NOT SERVED, HENCE, FACTS ARE DIFFERENT AND DISTINGUISHABLE. IN THE LIGHT OF ABOVE FACTS. I AM OF THE CONSIDERED OPINION THAT NO TICE UNDER SECTION 143 (2) WAS SERVED UPON THE ASSESSEE AS MEN TIONED IN THE ASSESSMENT ORDER AND NOTINGS ON THE ORDER SHEET DATED 13/8/10, AND IN THE ASSESSMENT ORDER. WITHOUT PREJU DICE TO THE ABOVE, THE NOTICE UNDER SECTION 143 (2) IS DEEMED T O HAVE BEEN ISSUED AND SERVED IN THE LIGHT OF PROVISIONS OF SEC TION 292 BB AS ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 28 NO OBJECTION WAS RAISED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE THIS GROUND OF AP PEAL IS NOT SUSTAINABLE IN LAW AND ON FACTS, HENCE, SAME IS TRE ATED AS DISMISSED. FROM THE ABOVE IT IS CLEAR THAT NOTICE WAS ISSUED B Y THE AO IN RESPONSE TO WHICH EVEN SHRI DEEPAK JAIN APPEARED BEFORE THE AO. THEREFORE, IT WOULD BE WRONG TO SAY THAT NOTICE WAS NOT SERVED. T HE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. REGENCY EXPRESS B UILDERS LTD. [SUPRA] HAS DEALT WITH THIS ISSUE. IN THAT CASE THE AO HAD ISSUED A NOTICE U/S.143[2] TO THE ASSESSEE AND SAME WAS SENT TO THE ADDRESS GIVEN BY THE ASSESSEE AND REPRESENTATIONS ON BEHALF OF THE A SSESSEE WERE MADE BEFORE THE AO. IT WAS CONTENDED BEFORE THE COURT TH AT NO NOTICE HAD BEEN RECEIVED. THE HON'BLE HIGH COURT OBSERVED AS U NDER: 13. EVEN ASSUMING FOR ARGUMENTS SAKE THAT NO NOTI CE UNDER SECTION 143(2) OF THE ACT HAS BEEN RECEIVED ON BEHALF OF TH E ASSESSEE ON DECEMBER 29, 2000, THEN THERE WAS NO OCCASION FOR T HE ASSESSEE OR HIS REPRESENTATIVE TO APPEAR BEFORE THE ASSESSING OFFIC ER ON JANUARY 11, 2001. 14 THE FACT THAT ON JANUARY 11, 2001, MR. HARISH B ANSAL, CHARTERED ACCOUNTANT, APPEARED BEFORE THE ASSESSING OFFICER A ND FILED HIS POWER OF ATTORNEY AND WAS ASKED TO FILE DETAILS/INFORMATION AND THEREAFTER ON FEBRUARY 7, 2001, ONE SHRI MOHAMMAD ASLAM, ASSISTAN T ALONG WITH M/S. S. PRASAD AND CO., CHARTERED ACCOUNTANT, APPEARED B EFORE THE ASSESSING OFFICER AND IFIED A LETTER SEEKING ADJOURNMENT, GOE S TO SHOW THAT NOTICE UNDER SECTION 143(2) OF THE ACT HAS BEEN DULY SERVE D ON THE ASSESSEE THROUGH HIS REPRESENTATIVE ON DECEMBER 29, 2000, AN D THAT IS WHY THE REPRESENTATIVES OF THE ASSESSEE HAVE BEEN APPEARING BEFORE THE ASSESSING OFFICER IN PURSUANCE OF THE NOTICE. IN THE CASE BEFORE US, THE RELEVANT QUESTION TO BE ASKED IS IF NO NOTICE WAS SERVED ON THE ASSESSEE THEN HOW ASSESSEE MADE T HE ARRANGEMENTS THROUGH HIS REPRESENTATIVE TO MAKE APPEARANCE BEFOR E THE AO. THIS FACT ITSELF SHOWS THAT NOTICE HAS BEEN SERVED ON THE ASS ESSEE. IN ANY CASE, THE HON'BLE KERALA HIGH COURT IN THE CASE OF K.J.TH OMAS VS. CIT [SUPRA] HAS OBSERVED AS UNDER: ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 29 HELD, THAT THE PROCEDURE UNDER SECTION 143(2) OF T HE INCOME-TAX ACT, 1961, IS TO ENSURE THAT AN ADVERSE ORDER IS ISSUED ONLY AFTER PROPER OPPORTUNITY IS GIVEN TO THE ASSESSEE. IN THIS CASE, IT IS CONCEDED THAT THE ASSESSEE GOT OPPORTUNITY TO FILE REPLY AND DETAILED REPLY WAS INFACT FILED AND REASSESSMENT NOTICE AND FINAL ORDER WERE ALSO I SSUED WITHIN THE TIME LIMIT PRESCRIBED UNDER THE ACT. THE ORDER OF REASSE SSMENT COULD NOT BE HELD INVALID ON THE GROUND THAT WRITTEN NOTICE WAS NOT ISSUED TO THE ASSESSEE BEFORE COMPLETION OF ASSESSMENT UNDER SECT ION 143(2). THEREFORE, FOLLOWING THE ABOVE PRECEDENTS, WE ARE O F THE OPINION THAT THE ASSESSEE HAS BEEN SERVED NOTICE AND CANNOT HAVE ANY GRIEVANCE AS SUCH. ACCORDINGLY GROUND NO.1 IS REJECTED. 27. GROUND NOS.2 & 3 : THE ISSUES RAISED IN THESE GROUNDS ARE IDENTICAL TO THE ISSUES INVOLVED IN I.T.A.NO.8121/M /10 FOR A.Y 2006-07 AND BOTH THE PARTIES HAD AGREED THAT DECISION IN TH AT CASE CAN BE APPLIED FOR THIS YEAR ALSO. HENCE FOLLOWING OUR DECISION IN I.T.A.NO.8121/M/10 FOR A.Y 2006-07 WE HOLD THAT 90% OF THE RECEIPTS AR E TO BE ADDED TO THE INCOME OF THE ASSESSEE AND ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO ASSESS 90% OF THE SUPPR ESSED RECEIPTS. 28. IN THE RESULT, ASSESSEES APPEAL IN I.T.A.NO.68 12/M//11 FOR A.Y 2004-05 IS PARTLY ALLOWED. 29. I.T.A.NO.6811/M/11 A.Y 2005-06 : IN THIS APPEAL FOLLOWING GROUNDS HAVE BEEN RAISED: 1. IN THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN UPHOLDING THE DECISION OF AO OF RE OPENING AND COMPLETING THE ASSESSMENT U/S 147 R.W.S 143(3) A) HASTILY AND WITHOUT GIVING SUFFICIENT OPPORTUNIT Y TO THE APPELLANT B) WITHOUT FOLLOWING & APPRECIATING PRECEDENTS AND JUDGERNENTS. 2. IN THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN UPHOLDING AN ADDITION OF RS. 27,54 ,703/- ON ACCOUNT OF ALLEGED SUPPRESSED PROFESSIONAL RECEIPTS BASED ON A LOOSE PAPER MARKED AS PAE NO 17 IMPOUNDED DURING A SURVEY U/S 133A CONDUCTED ON 30-8-07. 3. IN THE ALTERNATIVE AND IN THE FACTS & CIRCUMSTAN CES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED BY NOT APPRECI ATING THE FACT ITA NOS.8121,936,6811 & 6812 DR. DINESH JAIN . 30 THAT THE AO HAS TREATED THE ENTIRE ALLEGED GROSS RE CEIPTS OF RS. 27,54,703/- AS NET INCOME EVEN AFTER REJECTING THE BOOKS OF ACCOUNTS AND BY TREATING GROSS RECEIPTS AS EQUIVALE NT TO TAXABLE INCOME. 30. THE ISSUE REGARDING REOPENING OF THE ASSESSMENT WAS NOT PRESSED BEFORE US. THEREFORE, SAME IS BEING DISMISSED AS NO T PRESSED. 31. GROUND NOS.2 & 3 : THE ISSUES RAISED IN THESE GROUNDS ARE IDENTICAL TO THE ISSUES INVOLVED IN I.T.A.NO.8121/M /10 FOR A.Y 2006-07 AND BOTH THE PARTIES HAD AGREED THAT DECISION IN TH AT CASE CAN BE APPLIED FOR THIS YEAR ALSO. HENCE FOLLOWING OUR DECISION IN I.T.A.NO.8121/M/10 FOR A.Y 2006-07 WE HOLD THAT 90% OF THE RECEIPTS AR E TO BE ADDED TO THE INCOME OF THE ASSESSEE AND ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO ASSESS 90% OF THE SUPPR ESSED RECEIPTS. 32. IN THE RESULT, APPEAL IN I.T.A.NO.6811/M/11 FOR A.Y 2005-06 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 0/4/2012. SD/- SD/- (B.R.MITTAL) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 10/4/2012. P/-*