2017 (8) TMI 1071 - HC - Income Tax

High Court overturns Tribunal's decision on deductions for suppressed receipts, emphasizes need for clear evidence and proper guidelines.

The Commissioner of Income Tax, Chennai Versus Dr. Hakeem S.A. Syed Sathar

The High Court set aside the Tribunal's decision to grant a 42% deduction from the gross receipts to the medical practitioner for suppressed receipts, ... Addition made on account of suppressed receipts - Assessee is not entitled for the deduction of 42% from the gross receipts towards non receipt of fees and cost of medicines - block assessment - Held that:- There are no materials or guidelines or discussion of evidence with regard to deduction of 42% granted by the tribunal towards non receipt of fees and cost of medicines. Issues Involved:1. Suppression of Receipts2. Inflation of Expenses in the Purchase of Medicine3. Investing Unaccounted Income4. Bogus Sundry Debtors5. Omission to Account Advertisement Expenses6. Non-accounting of Income from Lodging House7. Relief Granted by Tribunal on Suppressed ReceiptsDetailed Analysis:Suppression of Receipts:The respondent, a medical practitioner in Unani medicine, was found to have suppressed receipts amounting to Rs. 2,59,57,634/-. The Tribunal granted a relief of Rs. 1,09,02,206/- by allowing a 42% deduction from the gross receipts, which the Revenue challenged as being without basis. The Tribunal accepted that the Assessee had been suppressing professional receipts but allowed the deduction based on an estimation that 42% of the gross receipts were not realized, which the Revenue argued was erroneous and not supported by evidence.Inflation of Expenses in the Purchase of Medicine:The Commissioner of Income Tax (Appeals) deleted a sum of Rs. 24,48,242/- on inflation or cost of medicines, which was confirmed by the Tribunal. The Tribunal's decision was based on the Assessee's contention that 42% of the gross receipts should be allowed as a deduction for the cost of medicines, a figure initially estimated by the Assessing Officer for the assessment year 2001-02.Investing Unaccounted Income:The search revealed the Assessee had invested unaccounted income generated by suppressing collections. However, the Tribunal's decision did not specifically address this issue in detail, focusing instead on the suppression of receipts and the cost of medicines.Bogus Sundry Debtors:The search also uncovered bogus sundry debtors, but this issue was not separately addressed in the Tribunal's decision or the subsequent appeal.Omission to Account Advertisement Expenses:The omission to account for advertisement expenses was another issue identified during the search. However, this issue was not a focal point in the Tribunal's decision or the High Court's judgment.Non-accounting of Income from Lodging House:The Assessee failed to account for income received from a lodging house. This issue was part of the overall assessment but was not separately addressed in the Tribunal's decision or the High Court's judgment.Relief Granted by Tribunal on Suppressed Receipts:The High Court found that the Tribunal's decision to grant a 42% deduction from the gross receipts was not supported by sufficient evidence or material. The Tribunal had based its decision on the Assessee's claim that a significant portion of the quoted fees was not realized due to various reasons, such as patients discontinuing treatment. However, the High Court noted that there was no substantial evidence to support this claim and that the Tribunal's decision lacked a proper discussion of the evidence. Consequently, the High Court set aside the Tribunal's order and remanded the matter for fresh consideration, emphasizing that any deductions should be based on clear evidence and proper guidelines.Conclusion:The High Court allowed the appeal, set aside the Tribunal's order, and remanded the matter for fresh consideration, directing the Tribunal to pass an appropriate order in accordance with the provisions of law. The Court emphasized the need for substantial evidence and proper guidelines in granting deductions for non-receipt of fees and the cost of medicines.