TaxTMI 
TaxTMI 
1999 (2) TMI 672
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....re the appellant has been running the aforesaid sex and health and beauty clinics. Her family members have also been working with her as salaried employees. She has set up three branches of her sex and health clinic in Mumbai. The first one was set up at Borivili in 1991, the second one at Charni Road in May 1995 and the third one at Dadar in November 1995. A search was conducted at the residential and business premises of the appellant on 26-3-1996. During the search, the following cash was found : - (1) At the residential premises situated at Flat Nos. 201, 202 and 203-A, Lancelot Building, Borivili (West), as per Panchanama dated 27-3-1996. ₹ 49,36,500 (2) At Clinic, at 15, Ghamat Terrace, Senapati Bapat Marg, Dadar (West), as per Panchanama dated 26-3-1996 ₹ 32,400 A substantial portion of the above cash, excluding a small portion, was offered to tax as the unexplained income of the appellant. 2. During the search, it was also noticed that the appellant and her above mentioned family members received substantial gifts from certain non-residents out of their NRE Accounts in different years, in the names of the aforesaid family members of the appellant and also ....
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....ot No. 86, Sector 15, C.B.D., Belapur, New Mumbai. ₹ 8,02,700 -do- 1 2 3 4 (5) Flat No. 806, 8th flr., Punit Tower-2, Plot No. 53, Sector No. 11, CBD Belapur, New Mumbai. ₹ 4,25,750 Dr. Rajrani Gupta (6) Office 1001/1002, 10th flr., (Proposed bldg.), Bay-view Tower, Flat No. 7, Sector No. 11 CBD, Belapur, New Mumbai) ₹ 13,88,000 -do- (7) Flat (Number not given), 7th flr., Akashganga, Plot No. A-21, Oshiwara, Bombay. ₹ 6,00,000 -do- (8) Flat No. 201-A, Lancelot Bldg., Opp. Shastri Nagar, S.V. Road., Borivili (W), Mumbai-92. ₹ 4,03,877 Dr. Sohanlal (HUF) (9) Flat No. 202-A, Lancelot Bldg., Opp. Shastri Nagar, S.V. Road., Borivili (W), Mumbai-92. ₹ 5,58,780 -do- (10) Flat No. 203-A, Lancelot Bldg., S.V. Road., Borivili (W), Mumbai-92. ₹ 2,30,343 -do- (11) Tenament No. 15, 2nd flr., Ghamat Terrace, Senapati Bapat Marg, Dadar (W), Mumbai-28. ₹ 3,50,000 Dr. Arunkumar Gupta (12) Room No. H, 3rd flr., Laud Mansion, Queens Rd., Mumbai. ₹ 6,00,000 Dr. Arunkumar Gupta (13) Flat No. C-411 Lancelot S.V. Road., Borivili (W), Mumbai-92. ₹ 3,61,000 -do- (14) Shop No. 37, Chawla Plaza, Plot 14/15....
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....p Internationals 1,83,428 Kayakalp International (Export) 21,476 2,04,904 Excess Cash 46,75,640 It may be observed that the appellant worked out the above excess cash of ₹ 46,75,640 on the basis of the cash balances reflected in the cash books of the different family members, inclusive of the grand daughter of the appellant, Aakanksha. After working out the unexplained cash at the above figure of ₹ 46,75,640, an amount of ₹ 39,74,375 was offered as the income of the appellant and the balance of ₹ 7,01,265 was offered in the assessment of Dr. Sohanlal Gupta. The AO has not raised any dispute about the allocation of the excess cash between the appellant and her husband. He has, however, mentioned that the cash balance in the cash books seized during the raid at Kayakalp International stood only at ₹ 1,37,372 as against the amount of ₹ 1,83,428 taken credit-of-by the appellant in the above computation for working out the excess cash. He has also mentioned that the appellant surrendered, in the deposition taken from her under section 132(4) at the time of search, an amount of ₹ 48,00,000 as against the income offered in the block returns....
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....ere was no relationship at all between the donors and the appellant or the members of her family and it is inconceivable that they developed such close relationship with the donors, as alleged by the appellant, in a short span of three to four years after their coming to Mumbai from Bhatinda, Punjab. It is also mentioned that the gifts received from the NRIs have no relevance to any particular occasion like marriage or birthday and there was no reciprocation by the appellant. It is further mentioned that the gifts are supported by informal letters alleged to have been received from the respective donors confirming the gifts and these letters were seized during the raid, but "surprisingly, the contents of all such informal letters are identical except the particulars related to the gift such as date, amount and draft No. etc." The AO wondered how the persons situated in different countries like Hong Kong and Singapore could write the same letter to the appellant and her family members unless the draft of the letter itself had been supplied by the appellant just for their signatures. The AO also made the copies of such letters as Annexure B to the assessment order. As the l....
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....e gifts received by me and my wife and my daughter, I state that I have received from NRE cheques of totalling ₹ 12,50,000. (Twelve lacs fifty thousand) and my wife received NRE cheque of ₹ 2,11,000 (Two lacs eleven thousand) and my daughter received cheque of ₹ 50,000 (Fifty thousand) drawn from different NRE holders residing in different foreign countries from their accounts maintaining with Hongkong Bank, United Bank of India, Bombay Merchant Bank, Bank of America in Bombay. I will furnish the full name and addresses of the persons from whose NRE accounts I received cheques as follows: Ch. No. A/c. No. Amount Name of party 072831 dated 19-2-1996 11-239159-006 5,00,000.00 Trevor Gastellino 072830 dated 20-12-1995 " 1,50,000.00 " 009042 dated 13-2-1993 1129 20,000.00 Sheel Union Bank Cabral 001607 dated 24-8-1993 1400 1,00,000.00 Francis Bosco UBI Vaz 421784 dated 20-8-1994 112395906 3,00,000.00 Trevor Hongkong Renu Gupta 8283 dated 28-3-1995 53344 2,11,000.00 M.F. Hussain Aakanksha 40639 dated 25-2-1996 340451 50,000.00 Manisha Kapila Bank of America In total myself, my wife and daughter received total ₹ 1....
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....ved from their accounts. The persons from whom myself, my wife and my son, daughter-in-law and grand daughter received N.R.E. cheques from their accounts in different Banks in Bombay are not related to us. These persons are permanently employed different foreign countries. We received N.R.E. cheques from them when they visited India directly from the persons. All the amounts received from N.R.E. a/cs. are converted into F.D.Rs." The Assessing Officer has also mentioned that both Dr. Sohanlal Gupta and Dr. Arunkumar Gupta retracted their statements before the FERA authorities on the ground that the original depositions were extracted from them through coercion, but he mentioned that there was no evidence that the statements given before the FERA authorities were vitiated by coercion and so the so-called retraction was not of any significance but was only self-serving. The Assessing Officer also mentioned that the appellant was required to produce the donors before him for examination but not even a single donor was produced. He also observed that the only reply given to him was that the donors were not available in India and had gone abroad. He also mentioned that the Indian a....
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....tended the office today at 12.30. 2. The Officer started interrogating me at 2.00 p.m. and told me that he knew everything about the receipt of gift cheque in lieu of cash payments from certain Seamen and he has told me that he would dictate the said statement to me which I will have to write down as per his dictation. I told the officer that I knew the Seamen personally for a long time and this is a genuine gift transaction and there is no cash payments against this gift totalling ₹ 17,36,000 which includes gift received by my wife also + HUF. The Officer was not prepared to believe me and he insisted that I must write down that this is a gift against cash payment. He threatened that if I do not write down as dictated by him my whole family will face dire consequences and I will be arrested and prosecuted under Cofeposa. Being a thyroid patient aged over 62 I become desperately nervous. I had no other choice but to write down whatever was dictated to me by the officer. The recording of the statement went on till 5.30 p.m. and then I was asked to sign the said statement which I did unwillingly. When I was going, I was handed over summons by the Officer and asked me to sign t....
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....nt relied upon the decision of the Apex Court in the case of Parimisetti Seetharamma v. CIT (1965) 57 ITR 532for the proposition that the onus is on the Department and not on the assessee to prove that the apparent is not the real, or that in the present case the gifts are not genuine. He has also relied upon the decision of the jurisdictional High Court in the case of CIT v. Gokaldas Hukumchand (1993) 11 ITR 462 (Bom.) for the proposition that suspicion cannot take the place of evidence and so it is pleaded that in the present case, addition is made only on the basis of suspicion, which is unjustified. It is mentioned that in the present case, the gifts were received by account payee cheques or drafts and the addresses of the donors were available and so the onus lying on the appellant of proving the gifts is discharged and in this context, reliance is placed upon the decision of the Patna High Court in the case of Addl. CIT v. Bahri Bros. (P.) Ltd. (1985) 154 ITR 244/22 Taxman 3 and the decision of the jurisdictional High Court in the case of Orient Trading Co. Ltd. v. CIT (1963) 49 ITR 723 (Bom.). It is also pleaded that the Assessing Officer could have summoned the donors if he....
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....thin a period of about five to six years of their migration to Bombay from Punjab and the receipt of gifts to the tune of ₹ 40 lakhs by the various family members as well as the seizure of cash of about ₹ 50 lakhs are all tell-tale signs of accumulation of black money. The learned DR invited our attention to the letters received from the non-residents which were seized during the search and mentioned that even though they were written in different years and from different places, they are all in the same type, which indicates that they were written on the same typewriter. It is also mentioned that the deeds read alike even though they ostensibly have emanated from different places like America, Singapore and Hong Kong. It is stressed that the letters are mass produced. He also mentioned that there is no relationship between the donors of the NRI gifts and any of the members of the appellant's family and there can be no conceivable reason why the donors, who are mostly sailors, should have exhibited such love and affection towards the members of the family of the appellant. He also pleaded that the confessions given by Dr. Sohanlal Gupta and Dr. Arunkumar Gupta on th....
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....so pleaded that the donors were not produced for the examination of the Assessing Officer even though specifically required and as the onus of proving the gifts, which are on par with cash credits, lies on the appellant, it must be held that the version of the gifts is not proved at all. Ultimately, the learned DR pleaded that human probabilities cannot be ignored in assessing the genuineness of the NRE gifts in question and in this context he relied upon the decision of the Apex Court in the case of Sumati Dayal v. CIT (1995) 214 ITR 801/ 80 Taxman 89 and mentioned that the gifts in question are simply a money-laundering exercise by the appellant and her family members, as was actually admitted by her husband and son before the FERA authorities. 9. In his rejoinder, the learned counsel for the appellant pleaded that the enquiry by the FERA authorities was instigated by the Income-tax Department in order to strengthen their case and the FERA authorities are known for adopting coercive measures. It is also mentioned that the addition of premium on the gifts at 8% is totally unjustified, as there is no evidence at all in support of such payment of premium. It is also mentioned that ....
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...., the same has been accepted by you as per our oral talk. I have made this gift to the amount of ₹ 4,00,000 to you out of natural love and affection and the high esteem and regards that I have for you. Henceforward you are the sole owner of the proceeds of this gift and can enjoy the same as you may deem fit and proper. I have made this gift without any past, present or future consideration, of any kind whatsoever and declare that I have not got any type of right, title, control or interest on the amount gifted to you as mentioned hereinabove. Please convey my regards to Bhabhiji, Arun & Renu, Love to Baby Aakanksha. With best wishes. Yours lovingly, Sd/- (Darshan Singh Raina)". A subsequent letter dated 2-2-1996 from one A.T. Dianold appearing at page 17 of the APB filed along with the appeal memo reads as follows : "A.T. Dianold, U.S.M. (Pvt.) Ltd., 3F Abdoolally House, 20, Stanely Street, Hong Kong. Dated : 2-2-1996 "To, Shri Sohan Lal Gupta, 201/A, Lancelot, S.V. Road, Borivili (West), Bombay-400 092 My Dear Uncle, By the Grace of God, I trust this letter will find you and your family in the best of health and spirits. Likewise I am also keeping fi....
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.... they are admitted to be by Dr. Sohanlal Gupta and Dr. Arunkumar Gupta before the FERA authorities. We are aware that the gift received by the appellant of ₹ 3,51,000 in the year of account relevant for the assessment year 1995-96 is from one Keshav Govind Jadhav and is supported by a gift deed dated 27-7-1994 and the donor is a resident of Mogadishu, Somalia and is stated to be an official of the U.N.D.P. But this gift, even though being from an official of the U.N.D.P., should normally carry higher credibility, we are not inclined to make any exception even in respect of this gift because it is also substantially falling into the same pattern as the other NRI gifts and it is not the case of even the learned counsel for the appellant that this particular NRI gift stands on any different footing from the others inasmuch as his contention has been that all the NRI gifts received by the appellant and the family members are, without exception, genuine. The other NRI gift received by the appellant and included in the addition of ₹ 4,06,080 is the one received on 15-12-1993 from one Murtuza Hussain Jangad and is ostensibly supported by a deed dated 15-12-1993, which may be s....
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....the Assessing Officer himself the updated passbooks reflect- ing the debits of the alleged gifts. The matters as they stand, to our mind, indicate only a money-laundering device where the copies of the passports, personal letters, gift deeds, copies of the pass books, etc., were all obtained simultaneously with the exchange of the cheque money and cash money between the alleged donors on the one hand and the members of the family of the appellant on the other. In a transaction of this type, the payment of premium is also normal and cannot be ignored. For these reasons we are of the view that the addition of ₹ 4,06,080 made by the Assessing Officer by way of NRI gifts received by the appellant and premium thereon requires to be sustained. We may also mention that the letters and gift deeds in respect of the NRI gifts were seized during the search and so the Assessing Officer was quite justified in considering the genuineness of these gifts for determining the undisclosed income in the impugned block assessment and so far as these NRI gifts are concerned, the ratio of the decision of the Tribunal in the case of Sunder Agencies (supra) and relied upon by the learned counsel for ....
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.... facts alleged for sustaining or deleting an addition and this is exactly what we have sought to do in respect of the issue regarding the NRI gifts received by the appellant. The same view is reiterated by the Apex Court in the case of Sumati Dayal, cited supra, by the learned DR. We may also mention that in the case of Shama Raising Chandel v. ITO (1992) 41 ITD 212, the Ahmedabad Bench of the Tribunal observed that there was a racket of converting black money into white by issuing bogus bank drafts from NRE Accounts. In these circumstances, we sustain the addition of ₹ 4,06,080. 11. The next ground is that the AO erred in making the following additions in respect of gifts from friends and relatives in India : Assessment Year Amount 1993-94 72,251 1994-95 82,704 1995-96 2,501 Total 1,57,456 The AO mentioned that the appellant and the family members had received gifts from non-NRIs as follows: Sr. No. Name Amount Cash Cheque (1) Dr. Arunkumar Gupta 2,82,353 1,17,399 1,64,954 (2) Dr. Sohanlal Gupta 79,959 2,959 77,000 (3) Dr. Rajrani Gupta 1,57,516 83,014 74,502 (4) Dr. Sohanlal Gupta (HUF) 31,000 - 31,000 (5) Dr. Renu Gupta 1,47,613 55,....
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....ifts and brought to tax in the amount of ₹ 82,704 (1,07,704 25,000) as mentioned in the ground taken by the appellant. We have already taken the view that the NRI gifts are part of the money laundering design admitted by the appellant. We do not see any reason to make an exception in respect of the NRI gifts erroneously included by the AO among domestic gifts for the assessment years 1993-94 and 1994-95. In the circumstances, we sustain the addition of ₹ 11,000 being the gift from Shri Francis Bosco Vaz included in the assessment year 1993-94 among domestic gifts and the aggregate of the remaining for NRI gifts of ₹ 26,500 brought to tax by the AO as part of the domestic gifts in the assessment year 1994-95. So an addition of ₹ 37,500 (11,000 + 26,500) is sustained out of the addition of ₹ 1,57,456 made by the AO under the head "Non-NRI gifts". In respect of the other domestic gifts we have to delete the addition on the short ground that the regular assessments for the years in which the gifts were received had been completed and some of them were considered for addition in the regular assessments and there was no material located during the ....
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.... 9,25,333 1995-96 6,83,833 Total 16,09,166 The AO mentioned that the appellant and her family members acquired certain properties numbering 15, the details of which we have already given here in before in para 2 on page 4 of this order. The properties mentioned at Sr. Nos. 5, 6 and 7 of the list of 15 properties were acquired in the name of the appellant, whereas the balance 12 properties were in the names of the other members of the appellant's family. In the course of the search, a paper, enclosed as Annexure E to the assessment order, was located in which it was written that the white portion represented by the letter "W" was 60 and the black portion represented by the letter "B" was 40% and the shop area was 3,600 sq. ft. and the rate was ₹ 11,000 per sq. ft. and the name of the Builders is Desai Builders. On the basis of this material, the AO inferred that the appellant has paid money over and above the investment reflected in the books for acquiring these three properties in question. He also obtained a list of sale instances from the Appropriate Authority functioning under Chapter XXA of the Income-tax Act and found that the cost of acquis....
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.... on Plot No. A-21, Oshiwara, Bombay for an aggregate value of ₹ 6,00,000 (Rupees Six lakhs only), after a discount of ₹ 4,00,000 being the party agreed to pay the entire amount in lumpsum, in advance.We also hereby confirm that ₹ 1,000 (Approx.) per sq. ft., was the prevailing market rate, at the time of booking.We also give below some other bookings in the said Project, as a proof for the prevailing market rate at the time when Smt. Rajrani Gupta booked a Flat. Name Area in Sq. ft. Aggregate value Rs. Mr. Harshad D. Shroff 1,055 9,94,125 Mr. Sanjay P. Kadaria 1,000 10,00,000 Mr. Vishnu Agrawal 900 9,00,000." The learned counsel for the appellant also invited our attention to pages 179 to 184 of the APB wherein the distinguishing features of the various properties are given in a letter addressed to the AO. It is mentioned at page 184 that the appellant had invested in old dilapidated buildings and crumbling chawls with a gambler's instinct with a view to realise future gains. It is also pleaded that as no understatement of the consideration has been proved, no addition can be made on the basis of unexplained investment in view of the ratio of....
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....he assessment of Sohanlal Gupta (HUF), the AO made an addition of ₹ 3,72,520 in respect of the acquisition of this property on the ground of unexplained investment. The reasons given for making the addition of ₹ 3,72,520 are the same as those mentioned by us in the context of the acquisition of properties by the appellant. We have already discussed these reasons and held that the reasons given for holding that the appellant has made any unexplained investment in the acquisition of properties are not tenable and accordingly we have deleted the addition of ₹ 16,09,166. As the Assessing Officer held that Sohanlal Gupta (HUF) paid on-money of ₹ 3,72,520 to the appellant in respect of the acquisition of that flat at Lancelot Building and brought the said amount of ₹ 3,72,520 to tax as unexplained investment, he made a corresponding addition in the hands of the appellant of ₹ 3,72,520 as undisclosed sale consideration or income. 19. Before us, the learned counsel for the appellant pleaded that there is no evidence that the appellant has received any sale consideration over and above the amount of ₹ 5,58,780 disclosed in the books and it is actua....
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....ils of the expenditure incurred on renovation, she furnished the details which included an amount of ₹ 76,000 shown to have been paid to M/s. Ghanshyam & Co. The Proprietor of the said contractor M/s. Ghanshyam & Co., Shri N.R. Tawadia, stated that he had received from the appellant ₹ 91,300 as against ₹ 76,000 stated by the appellant to have been paid. Accordingly, he brought the difference of ₹ 15,300 (91,300 76,000) to tax as the unexplained investment of the appellant in the clinic. 25. The learned counsel for the appellant did not dispute the factual position mentioned by the Assessing Officer. He, however, pleaded that in case this addition is made on the ground that ₹ 15,300 is paid outside the books of account, a corresponding deduction should be given for the expenditure incurred in view of the ratio of the decision of the Tribunal in the case of M.K. Mathivathanan v. ITO (1989) 31 ITD 114(Mad). This argument would hold good only if the expenditure incurred is of a revenue nature. However, considering the smallness of the amount involved, we delete the addition in the light of the said decision of the Tribunal. 26. The next ground is that th....
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.... seized papers and the entries made in the books. The explanation offered by the learned counsel for the appellant does not explain the nature of the entries made or the context in which they were made. As their connection with the appellant is not denied and as it is not established that the commission payments reflected in the seized papers are also disclosed in the books, we have no material to dislodge the inferences made by the Assessing Officer in this context. We accordingly sustain the impugned addition of ₹ 2,42,870. 29. The next ground is that the Assessing Officer erred in making an addition of ₹ 63,591 being the alleged cash payment to Panther Advertising Co. The Assessing Officer found that there are two bills in the handwriting of Dr. Arunkumar Gupta aggregating to the impugned amount of ₹ 63,591 and as per the notings on these bills, the amounts were received by a man of Panther Advertising Co. As these payments were not reflected in the books of account of the appellant, the Assessing Officer inferred that the payments were made outside the books and he accordingly brought the impugned amount of ₹ 63,591 to tax. 30. Before us, the learned c....
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.... kind. As already mentioned, the basis for the conclusion that all the fees are not recorded in the patients' history forms is the statements recorded from the four patients mentioned above during the search action. As the seized forms are not serially numbered, the Assessing Officer inferred that the total number of patients treated by the appellant in all the three clinics mentioned hereinbefore must have been double the number of the seized forms and accordingly he estimated the number of patients at 4,682. He also estimated the number of visits of each patient at five and also estimated the fees collected for each visit at ₹ 1,000 and accordingly estimated the average gross receipts at ₹ 2,34,10,000 (4682 × 5 × 1000). He gave a deduction for the receipts shown in the books and expenditure reflected in the books of ₹ 69,50,798 and accordingly estimated the unaccounted income or income not recorded in the books at ₹ 1,64,59,202 (2,34,10,000 69,50,798) for the assessment years 1994-95, 1995-96 and 1996-97. He gave some concession and determined the undisclosed receipts for these three years at ₹ 1.5 crores and apportioned these receipt....
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....#39; history forms is corroborated by the estimate on the basis of the cash seized from Dr. Arunkumar Gupta of ₹ 32,400 on the date of search. 32. The thrust of the argument advanced by the learned counsel for the appellant is that any undisclosed income should emanate from the seized material and the estimation of the professional income made by the Assessing Officer has no basis in the seized material. In the figurative language of the learned counsel, it is a volcano of the seized material that must emit the lava from the disclosed income and when the volcano is missing, there cannot be any undisclosed income. For this proposition, the learned counsel for the appellant has relied upon, as already mentioned, the decision of the Tribunal in the case of Sunder Agencies (supra). It is pleaded that all the receipts reflected in the patients' history sheets are disclosed in the account books and the excess cash found during the search has been offered to tax. Even if there are any small omissions on the part of the appellant in disclosing the correct income, such omissions should be regarded as covered by the excess cash offered to tax of ₹ 40 lakhs. It is also pleade....
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....g that if the patient is not cured within the stipulated period, later visits will not be charged. The written submissions of the appellant in respect of the estimation of professional income of the appellant by the Assessing Officer placed in APB-II at pages marked `A' to `C', read as fallows : - "Estimation of Professional Income from Clinic A.Observations in respect of estimate of ₹ 2,50,40,000 made by the Assessing Officer as per page 30 of the assessment order : 1.First of all, the manner in which the Assessing Officer has estimated daily receipts of ₹ 40,000 is not clear. 2.As per the statement made by Dr. Arun Kumar under section 132(4) which has been extracted by the Assessing Officer on page 30 of the assessment order, the daily receipts of Borivili Clinic are ₹ 9,150 and of Dadar Clinic ₹ 8,250, aggregating to ₹ 17,400. The Assessing Officer has observed "Charni Road Clinic has almost equal number of patients". This observation is factually incorrect since the receipts at Charni Road Clinic are far less than the receipts of the other Clinics. For confirmation, please see pages 166 to 168 of the paper book showing ....
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....heets belonging to the period prior assessment year 1994-95. In view of this, his estimate determined on the basis of the clinic income declared in assessment year 1994-95 to assessment year 1996-97 is defective on this account sample forms showing the history sheets belonging to the period prior to assessment year 1994-95 are attached at pages 41 to 43. 3.The precise basis of assumption of 5 visits per patient and fees of ₹ 1,000 per visit has not been spelt out which is also exaggerated. 4.It is a common practice that any medical practitioner maintains records only of current patients. In effect, the learned counsel for the appellant has pleaded that in the ultimate analysis, addition to the income of the appellant cannot tran- scend the sum of ₹ 40 lakhs declared by the appellant without demur. We may also mention that we have put it to the learned counsel for the appellant that while he was questioning the assumptions made by the Assessing Officer, he did not offer any working of his estimate of undis-closed income. We wanted him to give a working on the basis of the cash seized of ₹ 32,400 from Dr. Arunkumar Gupta and his deposition during the search regar....
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....endered cash credits of ₹ 3,50,000 and so the amount surrendered of ₹ 43,50,000 would exceed the understatement of professional income worked out in the above worksheet at ₹ 32,88,105. We have of course to mention that the cash credits are reflected in the books and so the surrender of cash credits cannot come to the assistance of the appellant for explaining the abovementiond difference of ₹ 32,88,105. In this context, we may also mention that the same is the position with regard to the NRE gifts which have been treated as income. They are also recorded in the books and so they go to swell the cash balance in the books and to explain the expenditure and investments recorded in the books. So even if they are treated as the income of the appellant, they cannot be taken into account for explaining the abovementioned difference of ₹ 32,88,105. The learned counsel for the appellant also pleaded that the patients' forms seized during the search relate only to the assessment years 1994-95 to 1996-97 and there is absolutely no material seized during the raid which had any bearing on the estimation of the professional income for the assessment years 1992-9....
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.... of the appellant and this letter reads as follows : - "No. DCIT/SPL. RG. 2/S&S/98-99 Offices of the Deputy Commissioner of Income-tax, Special Range-2, Mumbai 400 020. Date : 10/09/1998 Shri D. J. Tralshawala Sr. Authorised Representative `A' Bench, ITAT Mumbai Sub : Smt Rajrani Gupta & Others IT (S&S)/96/M/97 Report regarding Professional Income Hearing fixed on 10-9-1998. Ref. : Sr. DR/A Bench/98-99, dated 31-7-1998. In my letter dated 4-9-1998. I have informed that entries found at the back of the Patient History Sheet inventorized in Annexure D-9, were not reflected in the Patient Register maintained at the Dadar Office. This conclusion was drawn on the basis of comparing patient history sheets found at the Dadar office and the ledger sheets from the Dadar premises. As directed by the Hon'ble Tribunal on 7-9-1998, the verification was made in the presence of the assessee and it is found that many of the entries have been made in the Patient Register maintained at Borivili and Charni Road offices. The assessee has narrated that the Patients History Sheets are transferred to the other clinics on the request of the patients as sometimes it is convenient to the....
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....ing the cash outside the books seized during the course of search action. Firstly, the estimation of undisclosed income for the assessment years 1992-93 at ₹ 5 lakhs and for 1993-94 at ₹ 10 lakhs has no legal validity because even the patients' forms seized during the raid relate only to the assessment years 1994-95 to 1996-97 and in view of the authorities cited by the learned counsel for the appellant to the effect that the material seized during the raid relating to a particular assessment year cannot be utilised for drawing adverse conclusions against the assessee for earlier years. So, we have to delete the additions totalling ₹ 15 lakhs, being the professional income estimated for the assessment years 1992-93 and 1993-94. 35. Even for the assessment years 1994-95 to 1996-97, the estimate has to be based only on the patients' forms. This is because the depositions taken from the four patients were never put to the appellant. Allowing the appellant to take photocopies of the seized materials is not the same thing as supplying the copies of the depositions and giving an opportunity of cross-examining those patients to the appellant. Simply because the ....
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....s not been reflected in the account books. As already mentioned, that is not the position, as admitted by the learned DR before us and as stated by the Assessing Officer in the assessment order. In the circumstances, the patient's forms cannot be a basis for the estimate of professional income at the exhorbitant figures adopted by the Assessing Officer. The only other material is the amount of cash of ₹ 32,400 seized from Dr. Arunkumar Gupta during the search and on the basis of this deposition, the undisclosed professional income comes to only the difference worked out by the learned counsel for the appellant of ₹ 32,88,105. This also falls short of the ₹ 40 lakhs which has been declared by the appellant during the raid. Any receipts in kind or other small omissions noticed by the Assessing Officer can also be regarded as covered by the excess cash of ₹ 40 lakhs over the difference worked out by the Assessing Officer. In this view of the matter, we delete the addition of ₹ 1,24,00,866 towards undisclosed professional income. We do not have to separately mention that the unexplained cash has been correctly included in the income of the appellant. W....
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.... is not justified in saddling the appellant with the capital gains in respect of this property. 38. The learned DR on the other hand relied upon the assessment order. 39. We are of the view that the appellant deserves to succeed on this issue. We find at pages 201 to 205 of the APB the explanation dated 6-4-1994 wherein the source of the funds invested in the purchase of the house property was explained. The explanation reads as follows : - "To, The Income-tax Officer, Ward 22 (9), Bombay Reg : Sohanlal Gupta HUF Sub : Antecedents of Sohanlal Gupta HUF Assessment Year 1992-93 and 1993-94 Dear Sir, In respect of the above we would like to inform you as follows : - A. Constitution of the HUF Sohanlal Gupta HUF has been in existence for a long time since the marriage of Dr. Sohanlal Gupta. It consists of three co-parceners as under : 1.Dr. Sohanlal Gupta Karta 2.Smt. Rajrani Gupta (Wife) Coparcener 3.Dr. A.K. Gupta (Unmarried Son) Coparcener B. Source of Income The source of income of the HUF has been rental income from house situated at Bhatinda and interest income from loans given for the past several years. C. Land and House at Bathinda The HUF purchased two....