2006 (2) TMI 232 - AT - Income Tax

Tribunal rules in favor of assessee, dismissing Revenue's appeal. Importance of evidence for undisclosed income.

The Tribunal partially allowed the assessee's appeal and dismissed the Revenue's appeal. The Tribunal found the Assessing Officer's additions lacking in ... Search And Seizure Issues Involved:1. Legality of the block assessment order.2. Suppression of the number of patients and undisclosed consultation fees.3. Suppression of professional receipts.4. Alleged commission received from diagnostic centers.Detailed Analysis:1. Legality of the Block Assessment Order:The assessee argued that the block assessment order dated 29th April 2002, passed under section 158BC read with section 143(3) of the Income Tax Act, 1961, was in violation of section 158BB and based on information or evidence from a survey under section 133A. However, this ground was not pressed by the assessee and was dismissed.2. Suppression of the Number of Patients and Undisclosed Consultation Fees:The assessee contended that the CIT(A) erred in confirming the suppression of the number of patients by estimating the number at 2,250 for AY 1999-2000 and 2,000 for AY 1998-99 without any material evidence. The AO based the estimation on statements from patients and employees, such as Sh. Ramlal and Sh. Ravi Anand Kaushik, who indicated that the assessee charged Rs. 100 but issued receipts for Rs. 50. The AO estimated total receipts for 10 years at Rs. 28,23,200, which the assessee disputed, arguing there was no material evidence for such estimation. The CIT(A) retained the addition of Rs. 3,65,150 for undisclosed consultation fees but deleted the balance.The Tribunal found that the AO's estimations were based on suspicion, surmises, and conjectures without cogent evidence. The AO's reliance on statements without corroborative material was deemed unjustified. The Tribunal allowed the assessee's grounds, dismissing the Revenue's ground on this issue.3. Suppression of Professional Receipts:The AO alleged suppression of professional receipts for AYs 1990-91 to 1997-98 based on statements from patients and employees. The assessee argued that there was no material evidence for such suppression and that the AO's estimations were arbitrary. The CIT(A) deleted the additions for these years, which the Tribunal affirmed, finding no cogent material to support the AO's estimations.4. Alleged Commission Received from Diagnostic Centers:The AO observed that the assessee received commissions from diagnostic centers like M/s Rajdhani X-Rays and M/s A.B. Diagnostic Centre. Statements from representatives of these centers indicated commission payments to the assessee. The AO estimated commission income at Rs. 1,70,000 for the period from 1st April 1997 to the date of search and an additional Rs. 1,50,000 from other centers for the block period.The assessee denied receiving any commission and requested cross-examination of the representatives, which the AO allowed. The CIT(A) confirmed the addition of Rs. 1,70,000 but deleted the Rs. 1,50,000 addition. The Tribunal found the AO's estimations without basis or corroborative evidence, reversing the CIT(A)'s order on the sustained addition and dismissing the Revenue's ground.Conclusion:The Tribunal allowed the assessee's appeal in part and dismissed the Revenue's appeal, finding the AO's additions based on suspicion and without material evidence. The Tribunal emphasized the need for cogent evidence in making additions for undisclosed income.