2017 (1) TMI 1373 - AT - Income Tax

Tribunal reduces suppressed receipts addition but upholds disallowance of foreign travel expenses. Lack of evidence cited.

The Tribunal partially allowed the assessee's appeal by reducing the addition for suppressed receipts from Rs. 11,00,000/- to Rs. 3,00,000/-, based on ... Estimation suppressed professional receipts - Held that:- AO estimated suppression at ₹ 21,46,481/- to 13,06,481/- and even the CIT(A) confirmed the same without any basis. After going through the facts narrated by the AO, the same are only on the basis of conjunctures and surmises and not facts. The entire estimation is without any basis because the assessee on daily basis receives cash and deposits the same in the very same day in the bank account. This fact has been corroborated by the statement of Dr. Archana Sangeakar and the assessee himself, wherein, it is accepted by the Revenue that the receptionist collects consulting charges and the accumulated cash from the clinic is deposited in the bank account. Once this is the position that the estimation made by the AO and confirmed by the CIT(A) is without any basis. Thus a reasonable estimate offered by the learned Counsel for the assessee at ₹ 3,00,000/- is fair and reasonable. This estimation is for both the addition and AO is directed to add a sum of ₹ 3,00,000/- instead of ₹ 11,00,000/-. This two connected issues are allowed partly. Disallowance of foreign travel expenses of wife - Held that:- We find that Dr. Sheila Balsekhar, wife of the assessee is a gynecologist and she is assessed to tax independently. The assessee’s contention for claim of this expenditure was that he travelled to US along with wife on the call of children’s hospital Los Angles to study the process of setting up of the obesity clinic for children, but no such evidence was produced before the lower authorities or even now before us. In view of the above facts, we also confirmed the action of the lower authorities and dismiss this issue of assessee’s appeal. Issues Involved:1. Rejection of books of accounts and estimation of income.2. Estimation of suppressed professional receipts.3. Disallowance of foreign travel expenses of the assessee's wife.Issue-Wise Detailed Analysis:1. Rejection of Books of Accounts and Estimation of Income:The first issue pertains to the CIT(A) confirming the order of the AO in rejecting the books of accounts of the appellant and estimating the income. The assessee raised ground No.1 against this confirmation but later decided not to prosecute this ground, leading to its dismissal.2. Estimation of Suppressed Professional Receipts:The second and third issues involve the estimation of suppressed professional receipts added by the AO and confirmed by CIT(A). The AO estimated an addition of Rs. 10,00,000/- for suppressed professional receipts and another Rs. 1,00,000/- from the outpatient department in Breach Candy Hospital. The AO based this estimation on the fact that the assessee did not maintain the prescribed patient register and relied on an appointment diary. The AO observed discrepancies in the number of patients seen and the consultation charges collected, leading to the estimation of suppressed receipts. The CIT(A) upheld the AO’s estimation, considering it conservative based on the facts presented.Before the Tribunal, the assessee's counsel argued that the estimation was without basis and suggested a reasonable estimation of Rs. 2 to 3 lakh. The Tribunal found that the AO’s estimation was based on conjectures and surmises without substantial evidence. It accepted the assessee's counsel's suggestion and directed an addition of Rs. 3,00,000/- instead of Rs. 11,00,000/-, partially allowing the appeal on this issue.3. Disallowance of Foreign Travel Expenses of the Assessee's Wife:The fourth issue concerns the disallowance of Rs. 3,57,979/- incurred on foreign travel by the assessee’s wife. The AO disallowed this expense, stating that while the assessee traveled to the US for professional purposes, his wife's expenses could only be claimed in her tax return. The CIT(A) upheld this disallowance, noting that no evidence was provided to justify the claim that the wife's travel was for professional purposes related to the assessee's profession.The Tribunal confirmed the lower authorities' decision, noting that the assessee failed to provide evidence supporting the claim that the travel expenses were related to his professional activities. Consequently, this issue was dismissed.Conclusion:The appeal of the assessee was partly allowed, with the Tribunal directing a reduced addition for suppressed receipts and confirming the disallowance of the foreign travel expenses of the assessee's wife. The order was pronounced in the open court on 03-01-2017.