TaxTMI 
TaxTMI 
2006 (2) TMI 232
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....f IT Act. 2. The assessee did not press the ground No.1, same is dismissed as not pressed by the counsel for the assessee. 3. Ground Nos. 2 and 3 of assessee's appeal [IT(SS)A No. 74/Jp/2004] and ground No.1 of Revenue's appeal [IT(SS)A No. 79/Jp/2004] are common and hence all the grounds are being taken up together as under. 4. Ground No.2 of the assessee: On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the suppression in number of patients by estimating the number of patients at 2,250 for asst. yr. 1999-2000 and 2,000 for asst. yr. 1998-99 more so when no material was found to show that the assessee was suppressing the number of patients particularly when the number of patients for asst. yr. 2000-01 (upto 31st Jan., 2000) was taken at 2,223, at the same figure which is shown by seized patients' diary kept by the assessee in normal course of business. 5. Ground No.3 of the assessee : On the facts and in the circumstances of the case the learned CIT(A)-Central erred in confirming the addition of Rs. 1,25,000 (asst. yr. 1998-99), Rs. 1,29,000 (asst. yr. 1999-2000) and Rs. 1,11,150 (asst. yr. 2000-01 upto 31st Jan., 2000) totallin....
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....g this period whereas the Governmental doctors also charged the similar amount but did not issue the receipt to the patients in general. The receipt for the prescribed fees is issued, if demanded by the patient. 9. During the course of survey on 31st Jan., 2000 the statements of Sh. Ramlal, a patient and Sh. Ravi Anand Kaushik, the employee were recorded. As per the statement of Sh. Ram Lal the patient as per question Nos. 3 and 4 asked during the course of survey, the assessee had charged Rs. 100 from the said patient. As per the statement of Sh. Ravi Anand Kaushik, the employee as per question No. 7 the assessee is receiving Rs. 100 but issuing the receipt of Rs. 50 only. Through verbal conversation with other patients and assessee himself confirmed that visiting/consultation fees of Rs. 100 were charged per patient. During the course of search proceeding on 1st Feb., 2000, the statement of Sh. Jitendra Sahni S/o late Sh. S.R.Sahni R/o 417-B, Adarsh Nagar, Jaipur was recorded that when he came for first time in January, 1999 to the clinic of the assessee, he had paid Rs. 100 for visiting and receipt which was not issued to him and on each of 15 to 16 occasions he had paid Rs. ....
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....atment and he is not concerned with receipt. We may further mention that the assessee donated the PFT machine to a blind Sanasthan known as M/s Louis Braille Dristihin Vikas Sansthan. From 1st April, 1999, it was installed at the clinic of assessee and it was decided that whatever receipt would be there on account of PFT test, it would be receipt of that Sansthan (trust). For this purpose the receipt book of Sansthan is also kept at the clinic of assessee. (iii) You mentioned that statements of other patients including Ramlal of Achrol were recorded during survey under s. 133A wherein they have admitted of paying fee of Rs. 100 as consultation fee and for that no receipt is issued. We request you to provide the copy of statements of patients recorded during survey proceedings so that we can give our reply. So far as statement of Ramlal is concerned we may mention that the statement was taken under pressure. His affidavit stating the fact that the assessee charged fee of Rs. 50 only is enclosed. We may also mention that during search the Departmental authorities examined other patients and recorded statements who have stated that they paid fee of Rs. 50 as consultation fee. The a....
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....es Rs. 50 as consultation fee. Whenever test is carried out to any patient from PFT machine the assessee charged Rs. 50 for such test. However after April, 1999 the receipt from such machine accrued to Louis Braille Dristihin Sansthan as the assessee donated the PFT machine to this Sansthan. The office bearer of Sansthan kept a receipt book of Sansthan at the clinic of assessee so that whenever any test is done from this machine the receipt is issued from the receipt book. This receipt is income of this Sansthan. The assessee has nothing to do with such receipt. The office bearer of this Sansthan visits every month to the clinic of assessee and collects the amount and makes sign on the backside of last receipt. The receipts are recorded in the books of account of Sansthan. This is a registered society under s. 12A of IT Act. It files its return regularly. You yourself have called and verified the books of Sansthan on 25th Jan., 2002. (viii) In your letter you have estimated the professional receipt of assessee for the block period at Rs. 28,23,000 by estimating the number of patients at 2,600 per year and fee charged at Rs. 1.000 each. We object to this estimation for the follow....
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....s. Dy. CIT 21 TW 358 (Jp); (iv) Holiday India Travels 'N' Tours vs. Asstt. CIT 22 TW 494 (Jp); (v) Premalata Kedia vs. Dy. CIT 22 TW 481 (Jp); (vi) Smt. Rajrani Gupta vs. Dy. CIT (2000) 66 TTJ (Mumbai) 582. In view of above the professional receipt estimated by you at Rs. 28,23,000 for the block period is hypothetical, imaginary, arbitrary and without any basis." 10. Sh. Jitendra Sahni was again examined by the AO on 22nd Feb., 2000 where Jitendra Sahni expressed that fees of Rs. 100 was paid by him on every visit. The relevant part of the statement recorded of Sh. Jitendra Sahni is as per para 5.6 at pp. 9 and 10 of AO's order. The assessee furnished affidavit of Sh. Ravi Anand Kaushik in which Ravi Anand Kaushik had stated that whenever PFT test was being done, only then Rs. 50 receipt was issued from M/s Louis Braille Dristihin Vikas Sansthan and accordingly Sh. Ravi Anand Kaushik was examined again on 24th Jan., 2000. As per question No. 7 at p. 11 of AO's order Sh. Ravi Anand Kaushik stated that the assessee had charged Rs. 100 from the patient and a receipt of Rs. 50 was being prepared by him. Mr. Ravi Anand Kaushik during examination said to the AO (not part o....
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.... confirmed to the AO that the assessee had agreed to donate the machine to the said institution and the receipt book was placed with the assessee at his clinic and income from the machine was used to be collected on monthly basis and entered in books of account of institution. The AO was of the view that the agreement is fabricated and there is irregularity in the maintenance of the said institution as per reasons mentioned in his order vide para 5.7 at pp. 16-18 of AO's order. The AO further pointed out certain irregularity in the maintenance of receipt books of consultancy fees as per para 5.8 of his order. After considering the contention of the assessee the AO estimated the consultancy fees at Rs. 11,30,200 out of which the assessee had declared Rs. 3,49,280 and balance of Rs. 6,46,746 was calculated as net undisclosed receipts by the assessee as per para 5.10 at pp. 22-23 of his order asunder: "5.10 As far as the objection of estimation of number of 2,600 patients in all the years of the block period is concerned, it has been considered sympathetically, in view of the reply that he remained on higher studies at Chandigarh for some period and his posting at other stations li....
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....atient was recorded on 1st Feb., 2000. No incriminating document was found by the search party during the course of search. The assessment by the AO under s. 158BC is based on the statements taken at the time of survey and search, and during the course of assessment proceedings and as per various affidavits/statements or other material produced by the assessee during the course of assessment proceedings. As per AO's observation the assessee has suppressed number of patients and also the consultancy fees. The number of patients suppressed as estimated by AO as against number of patients declared by the assessee in the regular return worked out by AO are as under: ---------------------------------------------------- Asst. yr. Number of patients shown Number of In regular return as patients worked out by AO estimated &nb....
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....nformation or material with the AO that the assessee has suppressed the number of patients. The AO has worked out number of patients as 2,223 for the period 1st April, 1999 to 31st Jan., 2000 on the basis of patients' diary of AO's order where the assessee had furnished during the course of assessment proceedings a photocopy of patients' diary claiming as it maintained in regular course of profession of the assessee. This working leads to conclusion that AO himself has accepted that there was no suppression of patients in the year 1999-2000. As per AO the assessee has suppressed number of patients in the asst. yr. 1990-91 to asst. yr. 1999-2000 as per chart discussed above and the large variation in the number of patients is without any material seized during the course of search proceedings or even survey proceedings and, therefore, all these estimations by AO are based without any cogent evidence and material, and based on purely suspicion, surmises, conjectures and imagination as argued by the counsel of the assessee. 17. The AO had made the observation that the assessee charged Rs. 100 fees as consultation over and above as prescribed by the Government in all the years falli....
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....nd balance Rs. 50 have been charged for lung flow test (PFT test). In such circumstances, the statement of Sh. Jitendra Sahni and clarification by the assessee in his statement recorded as discussed above gives the presumption that the assessee is charging from the patient Sh. Jitendra Sahni Rs. 50 for consultancy and balance of Rs. 50 are charged for lung flow test and AO was not justified in coming to the conclusion that Rs. 100 are charged from the patient Sh. Jitendra Sahni as Rs. 100 and accordingly has wrongly made the application in general for calculation of suppression of receipts. Regarding the lung flow test (PFT test) the matter shall be discussed later in the part of this order. 2. Statement of Sh. Ravi Anand Kaushik : The statement of Sh. Ravi Anand Kaushik, the employee of the assessee was recorded on 31st Jan., 2000 during the course of survey. As per the statement, Sh. Ravi Anand Kaushik has stated in Q. No.7 that the assessee is charging Rs. 100 but a receipt of Rs. 50 is issued by the said employee for giving to the patient. In this regard the assessee had clarified by way of an affidavit of Sh. Ravi Anand Kaushik. In the affidavit Sh. Ravi Anand Kaushik has s....
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....been recorded on oath. No question was asked by the survey party regarding bifurcation of Rs. 100 paid by the patient Sh. Ramlal, to the assessee. In this regard the assessee has filed an affidavit of Sh. Ramlal wherein Sh. Ramlal had stated that Rs. 50 are charged for examination and consultancy and he has denied that he had stated that Rs. 100 were paid by him. Sh. Ramlal was the witness of the Department who had retracted earlier by a sworn affidavit and it was the duty of the AD to issue summons under s. 131 to Sh. Ramlal and the assessee had made a specific request to summon him under s. 131 and call him for examination but the AD did not summon Sh. Ramlal, has been argued by the counsel for the assessee. In view of above discussion the patient Sh. Ramlal has paid Rs. 50 as against what has been stated during course of survey which has been rebutted by him by way of an affidavit and the AD did not examine Sh. Ramlal thereafter in spite of specific request made by the assessee. Therefore, the AD is not justified in making the calculation of suppression of receipts by the assessee on the basis of the statement of Sh. Ramlal, the patient. 4. Statements of other patients claime....
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....ectly sent a letter to the AO confirming that he has paid Rs. 50 to the assessee as consultancy fees and balance of Rs. 50 were paid for the PFT test. 6. The AO had collected information that from Government dispensaries patients are referred to the assessee and the AO has examined two of them as under: (i) Sh. Abdul Jabbar was examined on 7th March, 2002 where he stated to have been charged Rs. 100 and he has not been given any receipt of the same either by the assessee or by Louis Braille Dristihin Vikas Sansthan. Similarly the other patient Smt. Chhota Devi was also examined by the AO who has also confirmed to have given Rs. 100. The argument of counsel for the assessee in this regard is that Sh. Abdul Jabbar, husband of Smt. Jamila Bano conveyed that total fee of Rs. 100 was paid to the assessee and there was only one visit. Whereas the patient (Smt. Jamila Bano) visited first time on 29th Sept., 1999,. accompanying her son in emergency without referral by P&T. She was given drugs, based on prescription of the assessee dt. 29th Sept., 1999 by P&T and P&T also referred her to the assessee on next day, i.e., 30th Sept., 1999. On 2nd Oct., 1999, she again visited accompan....
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....ion by the AO, when the secretary of the Sansthan had been examined and no question with regard to the suspicion in the mind of the AO was clarified by the AO cannot lead to a conclusion that the PFT machine belonged to the assessee and all the receipts therefrom belonged to the assessee thus coming to a final conclusion that Rs. 100 are being charged as consultancy fees by the assessee. 8. The AO has pointed out certain irregularities in the maintenance of account like certain receipts were lying in the receipt books. The argument of counsel for the assessee in this regard was that most of the patients are in hurry and they do not take the receipts while leaving the clinic and only such receipts were lying in the receipt book. 18. We are convinced with the arguments of counsel for the assessee because as per statements of many persons recorded as referred to as various pages of the paper book placed before us by the counsel for the assessee and as per order of the AO, it is clear that the receipt of the consultancy fees either was not given to the patients or was not demanded by the patients. Therefore, such receipts are bound to remain with the assessee. Therefore, finding ....
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.... commission is paid to doctors by the diagnostic centres who refer the case to them for test. The evidences gathered during search and post-search inquiries also prove the fact that assessee also received such commission. The relevant evidences gathered during the search and post-search inquiries are as follows: A. During the course of search printed notepads of various diagnostic centres bearing their names and addresses had been found at assessee's residence which revealed that these were being used to refer the patients to these centres. B. The facts emerging from the survey operation on 24th May, 2000 at M/s Rajdhani X-Rays are as follows: (i) When asked about the rates of commission payment, Shri Kailash Sharma stated that he was paying 50 per cent of total receipts of various tests except X-Rays on which Rs. 25 per X-ray was paid as commission to the doctors including Dr. Gupta. (ii) When asked about modus operandi Shri Kailash Sharma categorically admitted that he used to put the name of the doctors on the receipt that referred the patients and after a fixed period he calculated the total commission to be paid to the doctors. He further stated that the doctors to....
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....pletion of each month on the basis of patients record register after suppressing certain receipts. On the basis of these receipts they used to make collection register which in turn were kept as a primary record on the basis of which regular books of account such as cash book and ledger were being prepared once the receipt book and collection register are made and commission payment is made, the original primary records i.e., patients record register and lab slips were being destroyed by them. Thus, neither total receipts of the diagnostic centre nor the receipts corresponding to the patients referred by a particular doctor will appear in collection register or in receipt book. Later on it was. admitted by Dr. Harish Agarwal that out of these suppression receipts, commission payments were being made to various doctors. (ii) When asked about payment of commission to the referring doctors, he admitted that M/s A.B. Diagnostic Centre paid commission to all doctors who referred patients regularly (question No. 11 of statement dt. 24th May, 2000). In reply to this question he specifically admitted that Dr. Gupta was also being paid commission by them on regular basis. This is also co....
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....hotwara, Opposite Pareek School, near Power House and those of other laboratories were also found at your residence. (e) In view of all these facts and circumstances assessee was called upon to show cause why commission income from tests referred may not be estimated during the entire block period in addition to Rs. 68,000 and Rs. 1,02,000 received from M/s Rajdhani X-Rays, M/s A.B. Diagnostic Centre, respectively for the period from 1st April, 1997 to date of search." 24. The assessee had filed a written submission before the AO during the course of assessment proceedings on 5th Feb., 2002 which is reproduced vide para 6.2 at pp. 26 to 27 of AO's order as under: "The assessee has never received any commission from any diagnostic centre as alleged by you. In fact the assessee does not recommend the name of diagnostic centre to the patients. The patient is free to get his test done from any diagnostic centre which is suitable to him. The assessee has no control over it. There is no documentary evidence found in survey/search of the premises of assessee which indicate that the assessee has charged commission from diagnostic centres. During course of search, blank printed not....
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....ments of Harish Agarwal. The assessee would also like to cross-examine Mr. Agarwal for which a suitable date and time may be fixed. (b) There is no evidence found from the premises of assessee in survey/search which indicates that the assessee has received commission from M/s Rajdhani X-Ray. On the basis of survey conducted at premises of other party or statement recorded of third person it cannot be alleged that the assessee has received commission. Kindly provide us the copy of P&T account wherein the commission payment is recorded by them. (c) The assessee is not concerned as how the books of account and other records are being maintained by the diagnostic centre. You yourself have mentioned that Dr. Harish Agarwal admitted that out of suppressed receipts, commission payment was made to doctors. This establishes that there is no authentic record, which suggests payment of commission. The said commission is being paid out of suppressed receipts on which they have to pay tax." 25. The AO after considering the submission of the assessee vide para 6.3 of his order at pp. 27 to 28 held as under: "I have considered submission of the assessee carefully. Assessee was provide....
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....p; 1-4-1990 to 1-2-2000 excluding the period for pursuing course at Chandigarh ---------- 4. Total 3,20,000" ------------------------------------------------- 26. The learned CIT(A) after considering the submission of the counsel for the assessee deleted the addition of Rs. 1,50,000 but confirmed the addition of Rs. 1,70,000 as per reasons mentioned in his order at pp. 51 to 55. 27. We have heard the parties. The AO observed that there is an established practice in medical profession that doctors charge commission from diagnostic centres on the basis of tests referred by them. During the course of search printed notepads of various diagnostic centres were found at the assessee's residence. A survey operatio....
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....e violation of principles of natural justice and such statement is a nullity. 28. As regards survey on M/s A.B. Diagnostic Centre, Jaipur the statement of Sh. Harish Agarwal, partner was recorded who has confirmed to have paid commission to the assessee, When asked by the AO whether the said commission is being reflected in their regular books of account or not, Sh. Harish Agarwal, the partner stated that it does not appear in the regular books of account and receipts of M/s A.B Diagnostic Centre are suppressed and after suppression records are maintained. The original primary reports, i.e., patients record register and lab slips were being destroyed. Sh. Harish Agarwal further stated that out of the suppressed receipts, commission payment is paid to various doctors. Few names of the patients appearing in the registers of M/s A.B. Diagnostic Centre were also appearing in the registers of the assessee. Sh. Harish Agarwal has further stated that approximately Rs. 2000-3000 are being paid to the assessee. 29. After appreciation of the fact in the case of M/s A.B. Diagnostic Centre, we are of the view that M/s A.B. Diagnostic Centre is maintaining books of account which are made ....