Commissioner Of Income Tax v. Dr.ashish B.dwivedi....opponent(S

O/TAXAP/1104/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1104 of 2005 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI Sd/- andHONOURABLE MR.JUSTICE K.J.THAKERSd/- ====================================== 1 Whether Reporters of Local Papers may be allowed to see Yesthe judgment ?the judgment ? 2 To be referred to the Reporter or not ?Yes 3 Whether their Lordships wish to see the fair copy of the Nojudgment ?judgment ? 4 Whether this case involves a substantial question of law as Noto the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ?No ====================================== COMMISSIONER OF INCOME TAX....Appellant(s) Versus DR.ASHISH B.DWIVEDI....Opponent(s) ====================================== Appearance: MR VARUN K PATEL, ADVOCATE for the Appellant(s) No. 1MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 11/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of this appeal, the appellant-department has challenged the judgment and order of the Income Tax Appellate Tribunal dated 6.12.2004 in IT(SS)A No.103/Ahd/02, whereby the tribunal has allowed the appeal of the assessee and set aside the order of the Assessing Officer. 2.Counsel for the appellant, Mr.Patel, has taken us through the impugned order of the tribunal as well as the order passed by the Assessing Officer. He submitted that the tribunal has not considered the matter in its true perspective and the finding of the Assessing Officer on many issues have been totally ignored by the tribunal while passing the impugned order. In support of his submission, learned counsel has taken us through the findings of the Assessing Officer as well as the findings recorded in the Tribunal's order, which are reproduced hereunder: Assessing Officer's order “It is clear from the above that: 1.The assessee is not maintaining books of accounts. 2.The assessee is not maintaining the prescribed register 3-C. 3.The assessee systematically destroying the appointment diaries and chits himself. 4.The assessee is not showing the receipts of payments received from the patients regularly and only on demand he give them receipts. It is clear from the above that the assessee is systematically destroying all the evidences of earning and maintaining only those which he desires to be shown in his return of income. ESTIMATION BASED ON SEIZED RECORDS & OTHER MATERIAL/INFORMATION The ld. Counsel for the assessee had contended before the Tribunal that there is no material with the Assessing Officer to estimate such income and estimation are purely based on assessee's statement during the course of search proceedings. 2.The assessee is not maintaining the prescribed register 3-C. 3.The assessee systematically destroying the appointment diaries and chits himself. 4.The assessee is not showing the receipts of payments received from the patients regularly and only on demand he give them receipts. It is clear from the above that the assessee is systematically destroying all the evidences of earning and maintaining only those which he desires to be shown in his return of income. ESTIMATION BASED ON SEIZED RECORDS & OTHER MATERIAL/INFORMATION The ld. Counsel for the assessee had contended before the Tribunal that there is no material with the Assessing Officer to estimate such income and estimation are purely based on assessee's statement during the course of search proceedings. The ld. Counsel is factually incorrect. During the course of search proceedings a lose paper file A-1/8 was seized from the premises. This file gives details of unaccounted receipts and its bifurcation between Dr. Nagesh Bhandari and the assessee for the period 01-04-1994 to date of search. As per lose paper no.17, 18 and 19 relevant to financial year 01-04-1994 to 31-03-1995, Shri Nagesh Bhandari received Rs.3,91,616/- and the assessee received Rs.1,89,447/- from the indoor patients (these receipts are not accounted for, anywhere in books of accounts as the assessee himself had admitted that no books of accounts are maintained and requirement prescribed u/s.44AA are also not fulfilled). Similarly unaccounted receipt from 01-04-1995 to date of search are Rs.3,83,230/- for Dr. Nagesh Bhandari and Rs.1,69,040/- for assessee (these receipts are for eight and half months). These receipts matches with the estimate provided by the assessee in answer to question No.22 of the statement recorded u/s.132 (4) of the I.T.Act. File A-2 seized from the assessee's premises is admission book which gives details of the patients admitted for the period from 07-01-1994 to 31-03-1994. However, income received from these patients for the period from 07-01-1994 to 31-03-1994 is not available. Records of earlier period for the indoor patients were also not found during the course of search whereas the assessee is carrying on business with Shri Nagesh Bhandari from the year 1988. No records of OPD (outdoor patient) were available for any period and no books of accounts were found for OPD patients. Under the circumstances the Assessing Officer is left with no option except of estimating income in the case of assessee for the block period. It is clear from the above that (a) there is a suppression of income on day to day basis and (b) the assessee has admitted that he has systematically destroyed the records of receipts from patients for earlier period. Under the circumstances it has become necessary to estimate the income of the assessee on the basis of available seized materials and following relevant case law in this regard and as per Hon'ble Supreme Court decision in the case of CIT Vs. K.Y. Pilliah & Sons (1967) 68 ITR 411. Estimation of income for the period for which no seized material is available on record is being estimated and the same estimation found support in the recent judgment in the case of Rajnik & Company Vs. ACIT 251 ITR 561 decided by the Hon'ble Andhra Pradesh High Court.” Tribunal's order “9.As regards the estimation of undisclosed income, the assessee has given detailed explanation and submissions in respect of undisclosed income which has been rejected in summary manner. Detailed scrutiny of lose papers showing receipts from the patients shows that they are tallied with the regular books of accounts and no discrepancy has been found out between the lose papers seized and the books of accounts. It is the case of the Revenue that the patients diaries/records were not maintained. But we find that the relevant diaries/ records available on record and evidence have been filed by Tribunal's order “9.As regards the estimation of undisclosed income, the assessee has given detailed explanation and submissions in respect of undisclosed income which has been rejected in summary manner. Detailed scrutiny of lose papers showing receipts from the patients shows that they are tallied with the regular books of accounts and no discrepancy has been found out between the lose papers seized and the books of accounts. It is the case of the Revenue that the patients diaries/records were not maintained. But we find that the relevant diaries/ records available on record and evidence have been filed by the assessee according to which the figures shown by the assessee tallied with the figures mentioned in the regular books of accounts maintained by the assessee and submitted along with the matter. We are of the view that the assessment order has to be passed according to the directions given by the ITAT in their earlier original order and the basis of seized materials and undisclosed income has to be worked out on comparison of regular books of accounts with seized papers. The AO should not have relied upon mere statement recorded of the assessee which has been subsequently retracted by him on coming to know the correct position. 10.There is nothing on record on the basis of which the AO can estimate the undisclosed income and the AO has estimated the undisclosed income purely based on assessee's statement during the course of search proceedings. The retracting statement can be relied upon in the proceedings as the statement given earlier was recorded while the assessee was under depression and was not knowing the correct position. During the course of assessment proceedings it was also contended that the disclosure was made by the assessee under threat and coercion to the effect that if the amount so intimated is not surrendered, the assessee will have to suffer many serious consequences. Under these circumstances and under bonafide the assessee had to give statement which subsequently was retracted by him. The assessee being a professional doctor was not conversant with the technical accounting terms like gross receipts and net receipts and further the statement was made by the assessee before the Notary who is designated authority appointed by the Government for recording statement on oath and therefore the AO was not justified in rejecting the statement which was made before the Notary.” evidence on record against the case of the assessee, the tribunal allowed the appeal of the assessee without giving any cogent reasons. He accordingly prays for allowing this appeal. 4.Mr. Soparkar, learned advocate for the respondent has tried to justify the order of the tribunal by taking us through the additional paper book, which is produced today. He contended that the basis on which the Assessing Officer has made the order is not in consonance with the evidence on record. 5.We have gone through the impugned order of the tribunal. We find submission of Mr.Patel that the tribunal has not considered the findings of the Assessing Officer in its proper perspective though sufficient evidence was there on the record of the case and the tribunal has not given cogent reasons for reversing the finding of the Assessing Officer requires acceptance. We are of the opinion that there is considerable force in the contention raised by the learned counsel for the appellant. On the other hand, Mr.Soparkar was not in a position to show any reasoning adopted by the tribunal to reverse the finding of the Assessing Officer. 5.We have gone through the impugned order of the tribunal. We find submission of Mr.Patel that the tribunal has not considered the findings of the Assessing Officer in its proper perspective though sufficient evidence was there on the record of the case and the tribunal has not given cogent reasons for reversing the finding of the Assessing Officer requires acceptance. We are of the opinion that there is considerable force in the contention raised by the learned counsel for the appellant. On the other hand, Mr.Soparkar was not in a position to show any reasoning adopted by the tribunal to reverse the finding of the Assessing Officer. 6.In view of above, instead of examining the matter on merits, in our view, it is better to remit the matter back to the tribunal for considering the matter afresh. Accordingly, we remit this matter back to the Income Tax Appellate Tribunal for considering the appeal of the assessee afresh. It is needless to mention here that while considering the appeal of the assessee afresh, the tribunal will consider all the points that may be raised by the department. While deciding the matter afresh, the tribunal may also consider the findings of the Assessing Officer on merits and may pass appropriate order after considering the evidence on record. 7.In the premise aforesaid, this appeal is allowed. The matter is remitted back to the tribunal for considering the appeal of the assessee afresh. It is clarified that this Court has not expressed its opinion on the merits of the case. Sd/-(K.S.JHAVERI, J.) *malek Sd/-(K.J.THAKER, J)