TaxTMI 
TaxTMI 
2017 (11) TMI 912
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....to have been received by the assessee as confessed by the director of the company u/s. 132(4) and subsequently retracted without any corroborative evidences to the contrary? (*) Rs.98.15 lacs for assessment year 2011-12. 3. In the assessee's cross objection following grounds have been raised: A.Y. 2010-11 1. The assessment order passed u/s. 143(3) read with Sec 153C in appellant's case for A.Y. 2010-11 is bad-in-law because no document or valuable asset belonging to the appellant was seized u/s. 132 from any premises or person. The documents relied upon in the assessment order were impounded during action u/s. 133A from the business premises of the appellant. A.Y. 2011-12 1. The assessment order passed u/s. 143(3) read with Sec 153C in appellant's case for A.Y. 2011-12 is bad-in-law because no document or valuable asset belonging to the appellant was seized u/s. 132 from any premises or person. The documents relied upon in the assessment order were impounded during action u/s. 133A from the business premises of the appellant. 2. The assessment order passed u/s. 143(3) read with Sec 153C in appellant's case for A.Y. 2010-11 is....
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....id company. Administrative aspects are being looked after by Smt. Madhu Chopra and Dr. Ashok Chopra is the performing surgeon. During the course of search and survey based on the impounded/seized material, it was admitted by both the directors that the company accepts cheques as well as cash as per the convenience of the patients and most of the cash receipts are not accounted for and are being utilized for paying incentives and other cash expenses, which are not recorded in the books of accounts. 8. During the course of search, the statement of oath u/s. 132 of the Act of Smt. Madhu Chopra was recorded on 24.01.2011. The statement from her may be referred as under: Q.2 Please state your business or profession? Ans. I am basically doctor by profession however I have not been doing active practice since the last few years. I am now more of an administrator looking after the overall supervision of Studio Aesthetic including finance administration and day today affairs. I am also in the knowhow of the income and expenses of both Studio Aesthetic and of Dr. Ashok Chopra. I also oversee the financial matters of my daughter Ms Priyanka Chopra. I am aware of all the r....
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..... Kindly explain and reconcile the difference. Ans. We have been accepting the receipts in respect to these liposuction surgeries sometimes in cheque and sometime in cash, as per the convenience of the patient. I am from medical background and it is possible that certain number of entries of cash receipt has been inadvertently left out, since we do not have a full time accounting staff. Since I am unable to reconcile the exact amount which has been left unaccounted, I am offering the -sum of Rs. 1.74 crores, which is shortfall in the amount of receipts as the unaccounted income of my company for financial year 2009-10 and 2010-11. Q.12. Kindly give the details of how the unaccounted receipts, as admitted above by you in the above question, should be accounted for F.Y. 2009-10 and 2020-11? Ans. As stated earlier, I have not maintained the details of cash receipts and hence cannot exactly account the same as per financial year. I offer that the same may be divided of ratio of months in F.Y.2009-10 and 2010-11 till date (i.e. 8.5 months for F.Y. 2009-10 and n months for F.Y. 2010-11). The working is as under : 8.5 x 174 lakhs = 75.85 lakhs for F.Y. ....
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....ounted income will be declared as undisclosed income. it is to clarify that an amount of Rs. 1.74 crores based on estimates done on the date of search is unjustified. 11. Upon Assessing Officer's enquiry during the course of assessment, it was submitted that Smt. Madhu Chopra had already retracted her statement. It was further submitted that the addition was based upon the statement recorded without any cross reference to seized papers and documents found during search. The assessee also asked the Assessing Officer to provide the working of the figure of Rs. 1.74 crores. It was submitted that the search party had derived said alleged figure of Rs. 1.74 corres based on the Register (referred as Annexure A-2 having 61 pages) maintained at the operation theatre containing details of operations performed. It was submitted that the figures are identified on the basis of arbitrary calculation with various types of surgical performed and the rates are different. It was submitted that no addition is justified in this regard. 12. The Assessing Officer further noted during the assessment order that the assessee's ld. Counsel on 23.11.2012 was provided with the documents seized and was ....
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....opra who had accepted the discrepancy found during the course of survey/search action and consented to the statement given by Smt. Madhu Chopra. That the assessee had not produced any contemporaneous record or evidence, documentary to substantiate the retraction. That the declaration made and answers given by Smt. Madhu Chopra with regard to the cash payments and cash received and subsequently payment of cash to other doctors and other relevant matters were in their specific knowledge and, hence, they could not have been dictated by the survey/search party. The Assessing Officer further observed that Mr. Ashok Chopra along with Smt. Madhu Chopra made the declaration of cash component received and cash payments made subsequently as unaccounted income at the time of search and that too on oath which the departmental authorities accepted and upon which they did not proceed with further investigations. That if they have not made the said declaration or statement, the departmental authorities could have continued the search and could have investigated the entire matter on the basis of the various documents impounded/ seized during the course of survey /search. That by making the disclos....
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....further referred to CBDT Circular that the ld. Departmental Representative should not rely solely on the confession obtained without credible evidence. The ld. CIT(A) opined that the assessee's director had mistaken belief of facts. Hence, the ld. CIT(A) placed reliance and accepted the retraction statement. He also observed that the Assessing Officer's observation that the Revenue's authorities have stopped further enquiry after the acceptance to be wrong. He observed that nobody can stop ld. Departmental Representative from search operations unless it is to their satisfaction. He further observed that no undisclosed income was found by the search authorities that no incriminating materials were found showing the receipt of cash income. He held that the declaration made by Smt. Madhu Chopra was under pressure, mental stress. The ld. CIT(A) concluded as under: It is held that the assessing officer has erred and has merely relied on the admission made during the search proceedings ignoring the clarification statements filed by the director of the appellant Mrs. Madhu Chopra. It is seen that all the surgeries are being conducted at the premises of the appellant and that the ....
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....n any property or any corroborative evidence, addition cannot be sustained on the basis of mere rough noting on loose sheets. Uncorroborated loose sheets or registers found during the search addition is deleted. Therefore the addition is deleted. 4.7 It is seen that this addition is made on the basis of a single register which is also not further corroborated by evidence by the A.O. Uncorroborated registers or loose papers found during; search cannot be made basis for making addition by the A.O. The A.O. has not brought anything on record to substantiate the addition. Therefore, the appellant's explanation is acceptable in the light of the Honourable Supreme Court decision in CIT vs Kalyanasundaram ( 2007) 294 1TR 49 (SC) and Honourable Mumbai Tribunal decision in SP Goyal vs DCIT ( 2002) 82 ITD 85 ( Mum Tribunal). Therefore, this ground of appeal is allowed 17. Against the above order, the Revenue is in appeal before us, on merits. The assessee has filed cross objection on validity of jurisdiction for assessment. 18. We have heard the parties, and perused the material on record. The ld. Counsel for the assessee submitted that the addition has not been based upon....
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....a after 4 months and it cannot be a basis for deleting the addition. 20. We have carefully considered the submission and perused the records. Fist we deal with the cross objection of the assessee that the addition is not based upon incriminating material found during search and, hence, the same is bad in law. We note that during the course of search a statement on oath u/s. 132(4) of the Act was obtained from Smt. Madhu Chopra, who is a director in the company. Here Smt. Madhu Chopra has clearly admitted the modus operandi and the fact of cash receipt in Q. No. 3 to the search. The same may gainfully be repeated hereunder: Q.3 Please explain as to how the receipts and payments of Dr. Ashok Chopra recorded in the books ofA/c and also as to how do you control the same ? Ans. My husband Dr. Ashok Chopra is a surgeon and he has a team of doctors assisting him in the operation. Whatever receipts are received at the front office for the purpose of any surgery etc. are received in My Proprietorship A/c as the credit card swiping machine is linked to my Proprietor^ Account. Miscellaneous expenditure required for the *maintenance of the clinic is paid from this propriet....
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....made on the basis of un-corroborative material found during search. Thus, from the above, it is clear that incriminating materials were found during search. There was clear admission u/s. 132(4). Hence, it cannot be said that the addition in the present case is not based upon incriminating material found during search. Hence, the cross objection filed by the assessee challenging the validity of the jurisdiction, is dismissed. 24. Now we come to the merits of the case. In this regard, it is noted that in the statement of oath u/s. 132(4) of the Act recorded on 24.1.2011, i.e., the date of search, Smt. Madhu Chopra, the director of the company has clearly admitted to the estimate of such unaccounted income already made by Dr. Ashok Chopra said to be to the tune of Rs. 1.74 crores for two years. This admission during search corroborates the statement given by Dr. Ashok Chopra the performing surgeon which was duly based upon register found by the Revenue which disclosed surgeries performed and unaccounted cash payments. The statement of Dr. Ashok Chopra in this regard may be gainfully referred as under: "Q.11 As per Annex A-2, you have performed more than 230 surgeries sinc....
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...., which is short in our field. / admit that such cash payments are unaccounted and were made from the unaccounted cash receipt of Rs. 174 lakhs as I have already admitted above. Q.14. Do you want to state anything else? Ans. I once again reiterate that I am offering unaccounted receipt estimated at Rs. 75.85 lakhs for F.Y. 2009-10 and 98.15 lakhs for F.Y.10-11 as additional income for the said years in the hands of the company Studio Aesthetique Put. Ltd, of which I am a Director. I also state that certain unaccounted cash payments have been made from such receipts. The balance has been spent on various lifestyle and other personal expenses which I am unable to recollect. To sum up I am offering an additional income of Rs. 174 lakhs on account of unaccounted receipts in the hands of the company for the respective financial years. Considering my stand, I pray that no penalty proceedings should be initiated with respect to this additional income offered." 25. From the above, it is amply evident that the additions in this case are based upon cogent materials found during search. The director of the company Smt. Madhu Chopra subsequently vide letter dated 13.04.201....
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....seized materials, Smt. Madhu Chopra is clearly accepting that the disclosure of Rs. 1.74 crores by Dr. Ashok Chopra and which was subsequently confirmed by her also, is cogent and there is no infirmity in the same. Moreover, we also note that there is no retraction whatsoever by Dr. Ashok Chopra. He was a director of the assessee company and also the performing surgeon. As per admission by both the directors, it was Dr. Ashok Chopra who performed the unaccounted surgeries and received cash. It was Dr. Ashok Chopra who gave the detailed working of the undisclosed income. 27. From the above, it is apparent that the ld. Commissioner of Income Tax (Appeals)'s reliance upon the so called retraction of the admission during search is not cogent. Similarly, the ld. Commissioner of Income Tax (Appeals) reliance upon the CBDT Circular of not obtaining confession is also out of place. It is clear that the registers were found which clearly detailed about undocumented surgeries performed by Dr. Ashok Chopra and unaccounted cash receipts. Based upon this Dr. Ashok Chopra has admitted offer of Rs. 1.74 crores. Dr. Ashok Chopra had also accepted the working of this figure. As already noted the....