IN THE ITAT, JODHPUR BENCH
Dr. Ashok Uppal
v.
Income-tax Officer
R. S. Syal, Accountant Member
AND HARI OM MARATHA, JUDICIAL MEMBER
IT Appeal No. 763 (Jd.) of 2005
[Assessment year 2001-02]
November 17, 2006
Section 143 of the Income-tax Act, 1961 - Assessment - Additions to
income - Assessment year 2001-02 - Assessee was a registered medical
practitioner, who examined patients and gave medicines to them - He was also a
member of Rajasthan Ayurvedic Chikitsak Sangh (P.) Regd. - For relevant year,
assessee filed his return of income showing gross receipts from patients, and
in addition, pursuant to a survey conducted at his business premises, assessee
surrendered a sum of Rs. 1,35,000 as his additional income - On account of
certain discrepancies, Assessing Officer rejected books of assessee and under
section 145(1), estimated consultancy charges received by assessee as also
profit on sale of medicine to patients and, thus, made certain addition to
income of assessee - Assessee explained that being a member of Rajasthan
Ayurvedic Chikitsak Sangh (P.) Regd., he did not charge consultation fees from
patients and earned profits only on sale of medicines - In support of his
claim, assessee produced a certificate issued by said society - Said
certificate was not considered by Assessing Officer, meaning, thus said claim
of assessee had remained unaddressed - Whether on facts, it could be said that
there was no cogent evidence in possession of Assessing Officer except wild
guesswork to come to a conclusion that assessee charged consultation fees -
Held, yes - Whether further, in view of additional income being surrendered by
assessee to plug any leakage, on either of counts, there was no need to make
any further addition in either receipts from consultancy or for giving
medicines - Held, yes - Whether,
therefore, impugned addition made to income of assessee was not justified and
was liable to be deleted - Held, yes
The assessee was a registered medical practitioner, who examined the patients and also gave medicine to them. He was also a member of the Ayurvedic Chikitsak Sangh. For the assessment year 2001-02, the assessee filed the return of income showing the total receipts from patients at Rs. 3,54,158 by showing average 45 patients from whom Rs. 10 to Rs. 43 were charged per patient. Pursuant to a survey conducted under section 133A at his business premises, the assessee surrendered a sum of Rs. 1,35,000 as his additional income. On examination of patient’s register, the Assessing Officer found that the assessee had not mentioned complete addresses of the patients. No receipts were given to the patients for the fee received from them. No stock register was maintained for medicines and that the closing stock was prepared on approximate basis. Thus, the Assessing Officer rejected the books of the assessee and applied the provisions of section 145(1) for estimating his income. The Assessing Officer estimated the consultation fee charged by the assessee and also the profit on the sale of medicines and thus, made certain addition to the income of the assessee. The assessee explained that he being a member of the Rajasthan Ayurvedic Chikitsak Sangh (P.) Regd., he did not charge consultancy fees and the only profit he received was on the sale of medicines and further, that even otherwise, the surrendered amounts of Rs. 1,35,000 would cover all the minor defects. But the Assessing Officer did not accept the said explanation.
On appeal, the Commissioner (Appeals) reduced the addition made by the Assessing Officer to same extent.
On second appeal:
Rejection of the books of account of assessee and the application of the provisions of section 145(1) was to be upheld. The statements of the assessee himself, recorded during survey coupled with the fact of surrender by the assessee, justified this action of the Assessing Officer, particularly, when no proper registers of accounts were maintained. The Commissioner (Appeals) had meticulously examined each detail, be it the estimation of patients receipts or the profit element from the sale of medicines. The assessee argued that he being an ayurvedic practitioner, did not charge consultancy fees but whatever profit, at the rate of 40 per cent he charged on the sale of medicines was his only gross receipt. The certificate issued by the Rajasthan Ayurvedic Chikitsak Sangh (P.) Regd., Sriganganagar was relevant for this claim. The Assessing Officer had not considered this certificate although it was produced before him. Since this claim of the assessee had remained unaddressed and both the Assessing Officer and the Commissioner (Appeals) had taken different parameters for making their estimations, it was to be held that if the surrender of Rs. 1,35,000 made by the assessee to plug any leakage, on either of the counts, was considered, there was no need to make any further addition in either the receipts from consultancy or for giving medicines. The statement of the assessee dated 26-2-2001, recorded during survey, clearly stated that no separate consultation charges were received by him. The consultation fee was included in the cost of the medicine only. There was no other cogent evidence in the possession of the Assessing Officer except wild guesswork to come to a conclusion that the assessee also charged consultation fees in addition to earning profit on the medicines at the rate of 40 per cent, as declared by the assessee himself. Thus, no further addition could be made to the income of the assessee. Therefore, the impugned addition of Rs. 95,967 made to the income of the assessee was not justified and same was liable to be deleted.
As regards the amount surrendered by the assessee at the time of survey, in view of the decision of the Jodhpur Bench of Tribunal in the case of Sushil Kumar & Bros. v. ITO [IT Appeal No. 663 (Jd.) of 2004 order dated 1-5-2005], and in view of assessee’s submission that he was making a surrender as he could not prove additional income, it was held that the surrendered amount had to be adjusted and a credit of the same had to be given.
CASE REFERRED TO:
Sushil kumar & Bros. v. ITO [IT Appeal No. 663 (Jd.) of 2004 dated 1-5-2005]. [Para 19]