TMI Blog2018 (12) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 7.11.2016 passed for the Asstt.Year 2014-15. 2. Sole grievance of the Revenue is that the ld.CIT(A) has erred in deleting addition of ₹ 2,07,41,751/- which was added by the AO on account of unaccounted income earned by the assessee by way of suppression of professional receipts. 3. Brief facts of the case are that search action under section 132 of the Income Tax Act was carried out in the case of medical professional group of Surat on 4.3.2014. M/s.Yash Clinical Laboratory is proprietorship concern of Dr.Mehul T. Desai. It was covered under survey action under section 133A of the Act. The assessee has filed its return of income on 23.10.2014 declaring total income at ₹ 66,97,770/-. According to the AO, during the course of survey certain loose papers reflecting unaccounted receipts were found and impounded as Annexure A/1 to Annexure- A/6. These loose papers pertained to the period of 1.9.2013 to 3.3.2014 i.e. for six months. Sum total of these loose papers was worked out by the AO at ₹ 1,62,77,798/-. According to the AO, the assessee failed to explain as to how these unaccounted receipts have been recorded in the regular books of accounts. On the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his issue, therefore, it is pertinent to take note of this section. It reads as under : 145. (1) Income chargeable under the head Profits and gains of business or profession or Income from other sources shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time [accounting standards] to be followed by any class of assessees or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) [or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee], the Assessing Officer may make an assessment in the manner provided in section 144.] 7. A bare reading of Section 145 would reveal that it provide the mechanism how to compute the income of the Assessee. According to sub-section 1, the income chargeable under the head profit and gains of business or profession or income from othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause no entity could earn gross receipts. This fold of dispute has been ignored by the AO on the ground that evidence was not submitted by the assessee exhibiting incurrence of expenditure. To our mind, this was not correct approach at the end of the AO. The ld.CIT(A) has appreciated the controversy in right perspective and in placing reliance upon the judgment of Hon ble jurisdictional High Court. It is worth to take note of finding recorded by the ld.CIT(A). It reads as under: 7. Having gone through the nature of seized documents, the final accounts, the assessment orders, the submissions and the decided law; the following pertinent observations and decisions are culled out: a) The comparison of the transactions recorded on the registers etc. seized with the books of account and bills, clearly shows that the actual receipts are substantially more than that recorded in the regular books. - . b) The total receipts worked by the AO are also disputed, and the appellant did not agree with the figures worked out. I have carefully gone through the seized register and the regular books. The following facts and observations are very relevant to the issue: 1) The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rs. 3,25,55,596/- minus ₹ 46,91,8767- minus ₹ 65,72,014/-). c) The only issue which remains is the quantum of profits to be worked out on the basis of actual and suppressed receipts of the appellant's profession. d) The Courts have time and again held that what is to be added is the profit embedded in the suppressed receipts, by way of the suppression and not the entire receipts. I agree with the appellant on this count. The following decisions of superior Courts are relied upon and taken guidance from: 1) Commissioner of Income Tax Vs. President industries (2002) 124 Taxman 654 (Gujarat High Court) ; 2) Commissioner of Income Tax Vs. Samir Synthetics Mills (2001) 326 ITR 410 (Gujarat High Court) 3) Commissioner of Income Tax Vs. Gurubachhan Singh (2008) 171 Taxman 406 (Gujarat High Court) 4) Commissioner of income Tax Vs. Balchand Ajit Kumar 135 Taxman 180 (Madhya Pradesh) 5) Kishor Mohnalal Telwala Vs. AC/T (1999)^7 foxmann.com 86 (Ahd) The decision in the case of Sairam Multi Speciality Hospital Vs. ACIT, (2014) 40 CCH 0132 Hyd. Trib. which relates to similar, business also supports this view. The final accounts of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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