ITAT allows professional fees deduction and reduces duplicate bills disallowance by Rs. 14.47 lakhs in survey case

ITAT Mumbai partly allowed the assessee's appeal regarding undisclosed income differences identified during survey. The tribunal found that professional fees deductions were already accounted for during survey and should have been granted. Out of duplicate bills totaling Rs. 11,07,238/-, only Rs. 4,22,595/- was properly disallowed while Rs. 6,84,643/- should have been allowed as repetitive bills. The assessee was granted total relief of Rs. 14,47,343/- comprising professional fees of Rs. 7,62,730/- and repetitive bills of Rs. 6,84,643/-. The AO was directed to retain addition of only Rs. 4,79,261/- from the original addition of Rs. 19,26,634/-.

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Issues Involved:

1. Confirmation of addition of Rs. 19,26,634/- without independent verification of impounded documents.
2. Rejection of Books of accounts u/s 145(3).

Summary:

1. Confirmation of Addition of Rs. 19,26,634/-:

The assessee, Gurukrupa Hospital and Polyclinic, contested the addition of Rs. 19,26,634/- made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT-A]. During a survey under section 133A, the AO found discrepancies in the gross receipts and expenses, leading to an addition of Rs. 19,26,634/- in the assessment order. The assessee claimed reductions for duplicate bill entries, discounts, and professional fees paid, but the AO allowed only partial reductions. The CIT-A upheld the AO's decision, noting that the assessee failed to substantiate claims for additional reductions, such as the professional fees of Rs. 7,62,730/- and certain discounts.

2. Rejection of Books of Accounts u/s 145(3):

The AO rejected the assessee's books of accounts under section 145(3), citing discrepancies found during the survey. The assessee argued that the AO did not consider the reconciliation of professional fees, ledger accounts, and sample bills provided. The Tribunal found that the AO and CIT-A had not found the details submitted by the assessee to be false. The Tribunal concluded that the professional fees of Rs. 7,62,730/- and additional repetitive bills of Rs. 6,84,643/- should be allowed as reductions, granting partial relief to the assessee.

Conclusion:

The Tribunal directed the AO to retain an addition of Rs. 4,79,261/- out of the total addition of Rs. 19,26,634/-, granting the assessee a relief of Rs. 14,47,343/-. The appeal was partly allowed.

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