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2016 (11) TMI 384 - ITAT MUMBAI

2016 (11) TMI 384 - ITAT MUMBAI - TMI - Undisclosed income - Held that:- Nothing incriminating which is conclusively confirmed by Revenue is on record but there is no doubt possibility of leakage which can only be confirmed once patients confirmation/ verification are on record. We have observed that the matter is very old and it is now almost an impossible task to get confirmations/ verification from patients at this stage after 15 years and also that this is the second round of litigation befo .....

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ssessee and in exercise of our power u/s 254(1) of the Act with a view to render substantial justice to both the parties , we confirm/sustain the addition to the tune of ₹ 7 lacs as undisclosed income in the hands of the assessee as against the addition of ₹ 12,19,055/- sustained by the ld. CIT(A). Thus, the assessee will get relief of addition of ₹ 5,19,055/- as undisclosed income as confirmed/sustained by the learned CIT(A) with the conditions that the assessee will deposit a .....

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13 & ITA No. 7618/Mum/2013, are directed against the two separate appellate orders both dated 24th October, 2013 passed by the learned Commissioner of Income Tax (Appeals)- 3, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2002-03, the appellate proceedings before the learned CIT(A) arising from the assessment orders both dated 31st January, 2005 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income Tax Act,1961 (Hereinafter called th .....

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8,15,800/- amounting to ₹ 15,72,755/- only. 2. The appellant submits that the CIT(A) ought to have allowed relief in respect of the entire addition amounting to ₹ 27,91,810/- looking to the fact that the Assessing Officer has in the remand proceedings accepted the claim of double addition of the entire amount confirming that the "the total amount received by each has been shown in their return of income in the relevant year." 3. The appellant submits that having produced so .....

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ddition of ₹ 27,91,810/-. 3. The Brief facts of the case are that the assessee, Dr. Anjali A. Malpani, is in medical profession and is a gynecologist specialized in the treatment of infertility. She is also a partner in Malpani Infertility Clinic. A survey action u/s 133A of the Act was conducted by the Revenue on 17th January, 2002 at the premises of the assessee. During the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the assessee was asked to produce .....

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rved that there is a difference in amount of ₹ 76,81,210/- which has not been recorded in the books of account. With regard to this, the assessee explained that the inscription written in the reverse side of the receipt indicates that total fees received from the patient on a particular day in all the three entities i.e. Dr. Aniruddha Malpani , Malpani Infertility Clinic and the assessee. It was observed by the AO from the receipt book of Dr. Aniruddha Malpani, that similar amounts have be .....

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ls of treatment given to the patients in many of the receipts. The A.O. accepted the explanation of the assessee wherever these amounts have been found to have come within the range of fees referred by the assessee in the book How to have a Baby - Overcoming infertility which book was authored by the assessee and her husband Dr. Aniruddha Malpani. It is mentioned in the book that the range of fees referred to in the chart are approximate costs for procedure , tests and treatments . Comparative r .....

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l lead to absurd situation according to rate card. The AO gave benefit of doubt in these cases. However, where they are coming within range of fees as given in the book, the argument of the assessee that she has received a lesser amount of fees was not accepted by the AO. For example, vide receipt no. 1402 dated 30-06-2001 , the assessee had shown to have received a sum of ₹ 39,200 from Ms. Shweta S. Singh , whereas in the back of the receipt it is written as received 100 . The assessee co .....

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back of receipt no 1402 of the assessee and receipt no. 2984 of Dr. Anirudha Malpani of ₹ 1,00,000/- each only shows that the assessee has actually received the differential amount which has not been recorded in the regular books of accounts. Further, no supplementary evidences has been submitted by the assessee in support of her contention that the actual fees received is a lesser amount than as compared to the rate card. The A.O. observed that the fact that the professional charges being .....

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A.O. observed that in certain cases , the assessee has not furnished the nature of the treatment or the range of fees being collected for the treatment. In such cases and also in the cases where there is considerable difference between the amount reflected in the books of accounts and the range of fees as summarized in the book How to have a Baby - Overcoming infertility which book was authored by the assessee and her husband Dr. Aniruddha Malpani. , the benefit of doubt cannot be given to the a .....

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143(3) of the Act. The assessment order dated 31-01-2005 was confirmed by learned CIT(A) wherein he upheld the action of AO in first round of litigation vide appellate orders dated 17-10-2005 passed by ld. CIT(A) . On appeal to the Tribunal in first round of litigation, the Tribunal set aside the matter in ITA No. 7546/Mum/2005 for the assessment year 2002-03 in the case of the assessee vide orders dated 30th July, 2008 by holding as under:- 11. We have considered the submissions made by both th .....

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de of such receipts has been claimed to have been collected on behalf of the Anesthetics, hence, amounts mentioned on reverse side of receipts are net of such charges. It is also claimed that total fee is received as package and the total amount mentioned on the back of the receipts denotes total amount received from the patients which is bifurcated in the 3 entities and receipt of such bifurcated amount is issued in the hands of 3 entities. It has also been claimed that the amounts mentioned in .....

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he basis of rates published in one Book particularly when the amount written on the back of the receipt was accepted by the AO himself where these amounts were found to be within the range of fees received by all the 3 entities. It has also been contended that cross-verification of the patients could have been supplementary evidence which inspite of specific request, was not carried out, hence, the addition was merely based on conjectures and surmises. In this background, we find that the additi .....

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s reconciled the differences in an accurate manner. It is also noted that, in this case, the survey action was taken on 17th January, 2002, and the bills, vouchers / receipts have been impounded u/s.131 of the Act on 21st December, 2004, after more than 2 and a half years, hence, we find no substance / merit in the contention of the assessee that details in respect of 127 cases could not be furnished to the AO for the reason that the receipts / vouchers were not with the assessee. Because the as .....

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e remand proceedings. It is also noted that in the 2nd remand proceedings, the Ld.CIT(A) has specifically asked the AO to make necessary verification in respect of 55 patients whose particulars had been given to the AO and give report on the results thereof. However, the AO in the remand report has merely reported that it was an after-thought, hence, there is certainly non-compliance of the directions issued by the Ld.CIT(A), and, therefore, in respect of these 55 patients addition is apparently .....

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rders are common. Thus, detailed exercise is required to avoid the situation of double addition. Further, in our view, both the sides have failed to discharge their duties /onus and as per the material on record, we are not in a position to find out the quantum of addition which could be sustained, hence, we are of the view that the matter should be restored to the file of the Ld.CIT(A) for fresh adjudication of both the cases as per law. Accordingly, we restore the same to the file of the Ld.CI .....

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nation Accordingly, the AO filed his remand report before the learned CIT(A) on 17.10,2012, as follows: "Assessee submitted confirmation from 22 parties vide letter dated 15.3.2012. It was noticed that out of 22 parties 11 were out of Mumbai. Initially 133(6} was issued to 2 parties Out of those 1I parties in Mumbai, both were returned unserved. Further, an attempt was made by issuing letter u/s 133(6) to 13 more parties out of list of 88 parties submitted by the assessee vide letter dated .....

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paid towards treatment ₹ 1,25,000/-. (copy of receipts disposed off) 2 Suruchi A Choksi served Undergone treatment in F/Ys 2001-02. Confirmation of amount paid to .. Dr. Aniruddha Malpani- ₹ 8,000/- Dr. Anjali Malpani- ₹ 8,000/- 3 Lata Radhakrishnan Served Undergone treatment in F/Ys 2001-02. Confirmation of amount paid to .. Dr. Aniruddha Malpani- ₹ 7,200/-. Dr. Anjali Malpani- ₹ 7,200/- Amount in Malpani Infertility clinic - ₹ 19,360/-. 4 Jayshree M/ Shah u .....

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ion 14 Naffesa Begum Unserved Not known 15 Reshma Tagore served No reply It is therefore, submitted that most of the patients could not be traced. Hence, the authenticity of the transactions could not be verified. Thus, the issue may be decided on merits." The above report was confronted by the learned CIT(A) to the assessee for rebuttal. The assessee, vide letter dated 17.12.2012, submitted as follows: 1. " The appellant has in accordance with the direction of the Hon. Tribunal given .....

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mits that in such a situation the assessing officer ought to have enforced attendance or penalized the person for not complying with the summons. 4. In respect of certain patients where the assessing officer state that the summons were not served, the assessee's representative has tried to find out the reason and the following facts appear:- a) Jayshree M Shah- in this case it is found that the address of the patient has changed from Flat no. 25 to that and flat No. 26 on the same floor. A p .....

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clear that the patient does not live there anymore the remark being "Addessee left" which shows that she did in fact stay but has left. This confirmed address and the fact that a person by that name lived there. d) Pallavi Jain - inquiries revealed that this person has shifted to Delhi and the flat now stands in the name of her relative Rajat Gupta. e) Pramila Jain - as per the inspectors report he had visited the location Nivesia Road, and could not find the building "Prathiba&q .....

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e in the building revealed the name of Mr. Sunil Jingrani her husband and therefore the claim of the appellant stands fortified that she did in fact live there. h) Sangeeta Lohate - the summons could not be served. Inquiries revealed that she had shifted residence and after contacting her at the new residence, the appellant had been able to obtain a confirmation from her. The same is attached herewith. The new address of the patient is as follows:- 204, second floor, Rashmi Avenue Cooperative Ho .....

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d CIT(A) directed the A.O. to verify the remaining parties ; out of the 55 names provided by the assessee. The A.O. was also asked to examine the claim of the assessee with regard to the double addition in the hands of the assessee and his wife. The A.O. accordingly submitted his second remand report dated 05-06-2013 which is as under:- It is submitted that, initially notices u/s 133(6) were sent to 15 parties out of 88 parties, status of the same was discussed in detail vide remand report dated .....

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ver, amount paid and mode of transaction could not be remembered as receipts are not available. Later on on 26.12.12 Mr. Mehul Shah, CA of the patient confirmed the payment of ₹ 10,000/- to Malpani 2 Mrs. Moolchand Seinmal served Mr. Moolchand Seinmal confirmed that his wife had undergone treatment and held that expenditure incurred in 2001 was around ₹ 20,000/-. 3 Mrs. Jayashree Shah unserved Mr. Manoj Shah husband of Mrs. Jayshree Shah claimed that they had changed residence in Dec .....

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atter more than 10 years, she is not in a position to trace any records. Vide noting dated 25.4.2013 and 2.5.2013 assessee was granted opportunity to provide further submission or produce parties in order to prove the claim. Since no further submission or parties have been produced, it is submitted that the issue may be decided on merits. As far as double addition is concerned, assessee produced the chart showing how receipts have been distributed among Aniruddha N. Malpani, Anjali A. Malpani an .....

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ing reflected in receipts in their name. Hence the some may be decided on merits." Against the above remand report of the A.O. the assessee submitted the reply before learned CIT(A) which is as under:- a) As directed by the tribunal, the AO has not given instances of comparative cases. (b) The tribunal has held that addition in the case of 55 patients is unjustified. Therefore, the directions to examine these patients is not justified. (c) In the case of 77 patients, there has been a double .....

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ange of fees shown in the published book. The assessee has attached a list of such cases. (f) I would like to also mention that the detailed addresses of the 55 patients was given along with the letter dated 21 Jan 2005 enclosed herewith, requesting the assessing officer to call the patients by issuing summons u/s 133(6) and to verify the amount of fees given, but the assessing officer never called them. Even the CIT Appeals vide its letter dated 30 August 2005 , enclosed herewith, asked the ass .....

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y were not available at the said address. Copies of the returned envelopes are attached herewith on your record. In this regard I have to state that the assessment relates to the assessment year 2002 - 03 and almost 7 years there after the assessee was required to produce patients which is not only unfair but also asking for a near impossibility. The assessee has maintained a record of all the addresses given to him by the patient and it was not a duty of the assessee to verify the actual reside .....

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ssee. In fact there is no reason for the assessee to maintain addresses of the patient because the assessee does not need to contact them any time and on the contrary they have to contact the doctors in case they have any further consultation to do. (g) The appellant has relied upon the following decisions: 1. 87 ITD 69 (Mum) (TM) Kumar Agencies 2. C1T v . Calcutta Discount Co. Ltd. [1973]91 ITR 8 (SC) 3. Marghabai Kishabai Patel & Co. v. CIT [1977] 108 ITR 54 (Guj) (h) The appellant has obj .....

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January, 2002. It was not mentioned in the assessment order of any statement which was recorded during the survey operations wherein these receipt books, having apparently incriminating notings were confronted to the assessee. It appears that the A.O. kept silent for two years, these receipt books were summoned u/s.131 of the Act and were impounded under the provisions of the Act after two years of conducting survey u/s 133 A of the Act. The assessee explained before the A.O that the amounts me .....

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first appellate proceedings the A.O was asked to verify the facts by producing the address of the patients for cross verification. The assessee had supplied a list of 55 such cases to the A.O, but he could not produce the patients for examination. The ld. CIT(A) had confirmed the addition in first round of litigation. The Tribunal in first round of litigation observed that both the A.O and the assessee had defaulted in their investigations. The Tribunal held that the A.O should have complied wit .....

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n in the hands of the assessee and also her husband. The learned CIT(A) gave relief of ₹ 7,56,955/- to the assessee being 50% of the double addition w.r.t. 77 patients. It was further observed by learned CIT(A) that the Tribunal has given direction to afford opportunity to the assessee to reconcile the differences between the rate list and the amounts charged in the receipts. The learned CIT(A) observed that the assessee had filed a complete reconciliation chart with addresses and reasons .....

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ecided on merits. The assessee filed three charts to reconcile the differences. The first chart comprises double additions. Second chart comprises the cases where the amount credited to the books is more than the rate list. The third list shows list of the cases where additions have been made even though the amounts credited to the books is as per the range of the rate list. The ld. CIT(A) observed that the only issue now is with respect to verification from the patients. The ld. CIT(A) observed .....

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hat after a span of 10 years, most of the patients did not respond or could not be traced. The AO had observed that the assessee did not account for the entire receipts. While the assessee explained that the entire receipts mentioned behind the voucher are accounted for in the hands of four different entities ie. the assessee, secondly her husband, thirdly Malpani Fertility Clinic and fourthly the anesthetist. The ld CIT(A) observed that the A.O. has agreed with the assessee s contention that wh .....

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led. The ld. CIT(A) observed that some benefit of doubt has to be given to the assessee. The ld. CIT(A) gave relief to the assessee of ₹ 7,56,955/- with respect to double addition and a further relief of ₹ 8,15,800/- was also given on account of charts of reconciliation submitted by the assessee as detailed above, aggregating to ₹ 15,72,755/- and balance addition of ₹ 12,19,065/- was confirmed by the ld. CIT (A) vide appellate order dated 24.10.2013 passed in second round .....

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ee s husband Dr Aniruddha Malpani, Malpani Fertility Clinic and anesthetist . The ld. Counsel for the assessee submitted that the assessee and her husband are Doctors being infertility specialists. There was a survey u/s 133 A of the Act conducted by the Revenue on 17.01.2002 in the premises of the assessee. No incriminating material was found and seized. No statement was recorded by the Revenue. The ld. Counsel submitted that the books of account were produced before the Revenue during the cour .....

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band fee (Dr. Aniruddha Malpani), Malpani Infertility Clinic charges and anesthetist fee. The total fees is accounted for in the hands of all the four persons which has been offered for taxation and there is no shortfall in the recording of fee as inscribed at the back of receipt book viz.-z-viz. books of accounts of all four persons. It is also the say of the revenue that the fees charged is less than the range of fee specified in the book namely How to have a baby-Overcoming Infertility . writ .....

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sessee in her books of accounts along with three other persons on account of whom the total consolidated fees was charged namely assessee s husband fee (Dr. Aniruddha Malpani), Malpani Infertility Clinic charges and anesthetist fee. The only issue now left is verification with the remaining patients to confirm that the amounts are correctly recorded in the receipt books and books of accounts and there is no discrepancies as to the amount received from patients and the amounts recorded in the boo .....

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t possible for the assessee to trace patients so that verifications can be made as it is virtually impossible to trace the patients after a long lapse of time of 14-15 years. It is submitted that the patients come to the assessee from different parts of India as well outside India. The assessee did not know them and keep their details in normal course of business without verifying their details.The treatment of curing infertility is also confidential and sensitive and some time patients does not .....

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them to get their confirmation / verification of fees paid. It was submitted that an honest attempt was made by the assesssee to seek confirmations from the patients which is borne out from the records. The Tribunal directed to get confirmations from the patients and also to reconcile the fee as stated at the back of receipt book and books of accounts of all the four entities for which the consolidated fees was received by the assessee. It is submitted by the learned counsel of the assessee tha .....

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e want to settle this matter and accept the addition as may be decided and sustained by the Bench and does not want to pursue any further litigation on this matter . It was prayed that this litigation should be decided in a manner so that the litigation ends and the assessee showed her willingness to pay all due taxes and accrued interest thereon as per provisions of the Act and concession was accorded by learned counsel for the assesssee to be binding on the assessee as decided by the Bench. 6. .....

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assessment proceedings u/s 143(3) read with Section 143(2) of the Act, receipt book as were inventorised during survey operations were impounded by the AO u/s 131(3)(a) of the Act. There was a difference between the amount mentioned in the back side of the receipt book and the books of accounts maintained by the assessee. The assessee explained that the inscription written on the back of the receipts indicates the total consolidated fees received from the patient for all the four entities, i.e. .....

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from patients as compared to the rate list in the book How to have a Baby - Overcoming infertility which book was authored by the assessee and her husband Dr. Aniruddha Malpani and hence to that extent income has not been recorded in the books of accounts and hence the undisclosed income which is brought to tax as confirmed by learned CIT(A). Now this is the second round of litigation before the Tribunal. The Tribunal in first round of litigation has , inter-alia, directed to get these amounts c .....

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them and the amounts recorded in the books of accounts of these four entities. Rest of the patients are now not available/traceable despite efforts made by the assessee and the Revenue and virtually it has gone into realm of impossibility as the patients have either moved/changed addresses or were out of Mumbai/India and hence their present location is not traceable as around 14-15 years have elapsed. We could see the difficulty of both the revenue as well the assessee to get confirmation/verifi .....

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firmed by Revenue is on record but there is no doubt possibility of leakage which can only be confirmed once patients confirmation/ verification are on record. We have observed that the matter is very old and it is now almost an impossible task to get confirmations/ verification from patients at this stage after 15 years and also that this is the second round of litigation before the Tribunal, We have also observed that the remaining addition sustained is of ₹ 12,19,055/- on this account i .....

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, we confirm/sustain the addition to the tune of ₹ 7 lacs as undisclosed income in the hands of the assessee as against the addition of ₹ 12,19,055/- sustained by the ld. CIT(A). Thus, the assessee will get relief of addition of ₹ 5,19,055/- as undisclosed income as confirmed/sustained by the learned CIT(A) with the conditions that the assessee will deposit all due taxes and interest accrued thereon as per provisions of the Act on the additions sustained by us within 60 days o .....

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56,955/- and ₹ 76,400/- amounting to ₹ 8,33,355/- only. 2. The appellant submits that the CIT(A) ought to have allowed relief in respect of the entire addition amounting to ₹ 17,56,110/- looking to the fact that the Assessing Officer has in the remand proceedings accepted the claim of double addition of the entire amount confirming that the "the total amount received by each has been shown in their return of income in the relevant year." 3. The appellant submits that .....

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