The Commissioner of Income-tax, Chennai v. Hakeem S.A.Syed Sathar
[Citation -2017-LL-0821-20]

Citation 2017-LL-0821-20
Appellant Name The Commissioner of Income-tax, Chennai
Respondent Name Hakeem S.A.Syed Sathar
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 21/08/2017
Assessment Year 1997-98, 1998-99, 1999-00, 2000-01, 2001-02, 2002-03
Judgment View Judgment
Keyword Tags regular books of account • unaccounted income • undisclosed income • cost of purchase • block assessment • question of law • total cost
Bot Summary: The Income Tax Appellate Tribunal held that the Assessee has been suppressing the professional receipts and held that by considering the fact that 42 gross receipts calculated by the Revenue are allowed as deduction on account under receipt and/ or cost of medicines estimated towards non-receipt of fee as well as cost of medicines. The above Tax Appeal was admitted on the following substantial question of law: Whether in the facts and circumstances of the case, the Tribunal was right in granting a relief of Rs.1,09,02,206/- while considering the issue relating to addition made on account of suppressed receipts of Rs.2,59,57,634/- when the said addition was made on the basis of the admission of the Assessee and seized materials at the time of the search Whether in the facts and circumstances of the case, the Tribunal was right in granting the said relief when the consultation registers and the account books were put to the Assessee for verification and the difference that arose was arrived at Rs.2,59,57,634/- 6. The tribunal has accepted the contention of the Assessee on the ground that Assessee is carrying on practice in Unani system of medicine and therefore, Assessee was charging lumsum fees including the cost of medicines. In the circumstances, 12 we set aside the impugned order of the Tribunal and remand the matter to the Tribunal for a fresh decision in accordance with law after hearing the parties concerned in which a clear finding should be given whether any deduction has been allowed in the assessment of the assessee in the earlier year so as to comply with section 41(1) of the Income-tax Act. We do possess power under 13 S.260A ibid to remand the case to Tribunal for deciding the appeal afresh on merits if we find that finding of fact recorded by the Tribunal for reversing the decision of CIT(A) was based on no evidence no non-consideration of evidence led. In our view, there are no materials or guidelines or discussion of evidence with regard to deduction of 42 granted by the tribunal towards non receipt of fees and cost of medicines, in the light of the decisions cited supra, this Court is inclined to set aside the order passed by the tribunal. The impugned order of the tribunal is set aside and the matter is remanded to the tribunal to consider the issues afresh and pass an appropriate order in accordance with the provisions of law.


IN HIGH COURT OF JUDICATURE AT MADRAS Dated: 21.08.2017 CORAM HONOURABLE MR. JUSTICE S.MANIKUMAR and HONOURABLE MR. JUSTICE D.KRISHNAKUMAR Tax Case Appeal No.536 of 2007 Commissioner of Income Tax, Chennai. .. Appellant Vs. Dr.Hakeem S.A.Syed Sathar .. Respondent PRAYER: Appeal filed under Section 260A of Income Tax Act 1961 against order of Income Tax Appellate Tribunal, Bench , Chennai, in I.T.(SS) No. 94/mds.2006 for assessment year 1997-98 to 2002-2003. For Appellant : Mr.M.Swaminathan Standing Counsel for Income Tax Department For Respondent : Mr.A.S.Sriraman for Mr.S.Sridhar JUDGMENT (Judgment of Court was delivered by D.KRISHNAKUMAR, J) This Appeal has been filed by Revenue under Section http://www.judis.nic.in260A of Income Tax Act 1961 against order of Income Tax 2 Appellate Tribunal, Bench, Chennai, in I.T.(SS) No.94/mds.2006 for assessment year 1997-98 to 2002-2003. 2. facts of case in nutshell are as follows:- respondent/Assessee is medical practitioner in Unani medicine. search was conducted in respondent Clinic on 23.1.2003. Consequent to search, following facts have come to light: (i) Suppression of Receipts (ii) Inflation of expenses in purchase of medicine (iii) Investing unaccounted income generated, by suppressing collection (iv) Bogus sundry debtors (v) Omission to account advertisement expenses (vi) No accounting of income received on lodging house. Cash Rs.18,25,450/- was found and seized, gold jewellery weighing 1522.6 grams were found, but not seized. Hence, for block period 1996-97 to 2002-2003 and for period 1.4.2002 to 23.1.2003 assessment was framed under Section 158 BC read with Section 143 of Act and notice under Section 158 BC of Act was issued on 3.11.2003 and assessment was completed u/s.158 BC read with Section 143(3) of Act on 31.3.2005 and determined total undisclosed income as Rs.2,59,57,634/- as against income returns submitted by respondent/Assessee of Rs.69,40,422/-. 3. Aggrieved by Block Assessment order, Assessee preferred appeal before Commissioner of Income Tax (Appeals) in I.T.A.No.27/2005-06. Commissioner of Income Tax (Appeals) vide order dated 31.3.2006, partly allowed appeal of Assessee. Commissioner of Income Tax (Appeals) confirmed all additions but http://www.judis.nic.in 3 deleted sum of Rs.24,48,242/- on inflation or cost of medicines. 4. Challenging order passed by Commissioner of Income Tax (Appeals), Assessee preferred appeal before Income Tax Appellate Tribunal in IT (SS) A.No.94/Mds/2006. Income Tax Appellate Tribunal held that Assessee has been suppressing professional receipts and held that by considering fact that 42% gross receipts calculated by Revenue are allowed as deduction on account under receipt and/ or cost of medicines estimated towards non-receipt of fee as well as cost of medicines. 5. Challenging said order, Revenue has preferred appeal before this Court. above Tax Appeal was admitted on following substantial question of law: Whether in facts and circumstances of case, Tribunal was right in granting relief of Rs.1,09,02,206/- while considering issue relating to addition made on account of suppressed receipts of Rs.2,59,57,634/- when said addition was made on basis of admission of Assessee and seized materials at time of search ? Whether in facts and circumstances of case, Tribunal was right in granting said relief when consultation registers and account books were put to Assessee for verification and difference that arose was arrived at Rs.2,59,57,634/- ? 6. Mr.M.Swaminathan, learned Standing Counsel for Revenue/appellant would submit that as result of search, block assessment was completed on 31.3.2005 under Section 158 BC read with http://www.judis.nic.in 4 Section 143(3) of Act by making following additions: Suppression of receipts Rs.2,59,57,634/- Suppression of sale of old medicines Rs. 25,05,120/- Inflation or cost of medicines Rs. 24,48,242/- Marriage Hall income Rs. 3,71,860/- Madurai Mansion income Rs. 2,00,000/- 7. learned Standing counsel for appellant contended that Commissioner of Income Tax (Appeals) confirmed all additions but deleted sum of Rs.24,48,242/- on purchase of medicines. Against said portion of order, appellant/Revenue has filed appeal before Income Tax Appellate Tribunal in IT (SS) A.No.156/ Mds/2006. Assessee has preferred appeal in IT (SS) A.No.94/ Mds/2006. 8. learned Standing counsel for appellant contended that Income Tax Appellate Tribunal has held that Assessee has been suppressing professional receipts on basis of consultation register. Further, tribunal has held that initially Assessee had submitted that 20% of money was not received and lateron submitted that upto 30% of money was not received. tribunal has accepted contention of Assessee by pointing out that Assessing Officer himself estimated cost of medicines about 42% in assessment year 2001-02. Thus, total cost for purchase of medicines admitted by Assessing Officer is Rs.73,57,878/- as against total collection including unaccounted collection of Rs.1,74,05,435/- which comes to 42.27%. But cost of purchase gone down to 26.46% and 18.82% for http://www.judis.nic.in 5 assessment year 2002-03 and 2003-04 respectively. tribunal has accepted contention of Assessee on ground that Assessee is carrying on practice in Unani system of medicine and therefore, Assessee was charging lumsum fees including cost of medicines. Without giving any reasons and when no material has been placed by Assessee to prove his contention, tribunal has partly allowed appeal filed by Assessee allowing deduction of 42% from gross receipts towards non receipt fees as well as cost of medicines. Therefore, order passed by Tribunal is perverse in granting deduction of 42% without any materials. Hence, order passed by Tribunal is liable to be set aside. 9. Per contra, learned counsel for respondent/ Assessee would submit that on basis of statement made by Assessee before department, respondent/Assessee had submitted before Appellate Tribunal that Consultation register and patient history register seized by department during course of search, contained payment schedule for entire course of treatment and in many cases, some patients have not continued treatment and in some cases, there were defaults in payment by patients and in some cases, consultation fee of Rs.50/- alone was collected and patients have not preferred to take any medicine as prescribed. Hence, respondent/ Assessee submitted that Consultation register cannot be relied on in its entirety to make said estimated additions. 10. learned counsel for respondent also placed http://www.judis.nic.inreliance on sworn statement taken during course of search from 6 respondent/Assessee and his Assistant. said statement of Assessee is extracted as under: ''It is submitted once again that ''Quotation'' noted in prescription slips is for entire course of treatment which is not collected in one lump in first sitting. They are collected in parts in various sittings during course of treatment. Some patients do not complete course, some discontinue in middle and some patients after knowing Quotation bolt away. In very few cases, course is repeated. totalling done by A.D.I. of such Quotations is abstract and does not represent correct collection and based upon such abstract totalling, present proposed assessment will be nowhere near realities. Atleast 30% of gross total thus arrived at is not collected or realised. Even totalling made by Department arriving at figure of Rs.5,50,82,680/- was done in haste and it needs rechecking. Even admitting such total as correct, 30% has to be deducted as not collected and realised. This will further reduce collection figures by Rs.96,35,673/-. Further, amount collected as per Books works out to Rs.2,71,58,856/- and figure adopted for this in your above letter is not correct.'' 11. learned counsel for respondent/Assessee would content that Net wealth of Assessee did not match income estimated by Assessing Officer and wealth of respondent/ Assessee stood as Rs.59 lakhs as against Rs.2.55 Crores and further submitted that there was no evidence in hands of department indicating receipt of above estimated income at Rs.2.55 Crores. http://www.judis.nic.in Further, it is case of respondent/Assessee that Assessing 7 Officer himself had allowed cost of purchase of medicine for Assessment year 2001-02 at 42.27% of total estimated collections. On basis of said deductions granted by Assessing Officer, respondent/Assessee pleaded for deductions with regard to expenses incurred on account of purchase of medicine, advertisement and further on account of non receipt of income mentioned in Consultation register seized by Department during course of search. 12. Accepting said contention, tribunal has partly allowed appeal of respondent/Assessee. According to learned counsel, there is no substantial question of law involved in second appeal. Therefore, there is no error or illegality or perversity in order passed by tribunal. Hence, Tax appeal is liable to be dismissed. 13. Heard learned Standing counsel appearing for Revenue/Appellant as well as learned counsel for respondent/ Assessee and perused materials available on record. 14. As result of search conducted by Assessing Officer, order has been passed under Section 158 BC read with Section 143(3) of Income Tax Act for block period 1996-97 to 2002-03 by determining total undisclosed amount of Rs.2,55,19,500/-. 15. Challenging said order, Assessee filed appeal in ITA No.27/05-06 before Commissioner, Income Tax (Appeals), Chennai on ground that 30% of quotation was not realised and it was wrong to assess gross total of quotations, as actual collection. Further, Assessing authority erred in making addition of http://www.judis.nic.inRs.14,04,120/- being amount quantified on sale of medicine to 8 outpatients. In field of practising Unani medicine, generating receipts would not be possible without purchase of medicine, in as much as it is case of dispensing in Unani medicine prescribed, at time of consultation of patients. Assessing Officer has not appreciated contentions of Assessee that regular books of account should not have been relied upon while rejecting claim of purchase of medicine, especially in search case. Further, it is contention of respondent/Assessee that Consultation charges mentioned in consultation register were not fully realised, only 20% to 30% of said charges were realised. Therefore, said aspect was not considered by Assessing Officer and further contention that Assessing Officer himself has given 42%, towards cost of medicine, against undisclosed receipts. 16. There is no dispute that undisclosed receipts and unaccounted purchase of medicines were found during assessment. Commissioner has come to conclusion that separate addition has been made towards inflation of purchase to tune of Rs.24,48,242/-. In so far as unaccounted purchase of medicine to tune of above said amount, has been disallowed as ordered by Assessing Officer and in so far as other addition is concerned, Commissioner has upheld order of Assessing Officer. In light of above, Commissioner has allowed deduction of Rs.24,48,242/- towards cost of medicines. In so far as other dispute is concerned, order of Assessing Officer has been sustained. http://www.judis.nic.in 17. Assailing said order, Assessee/respondent has 9 preferred appeal in IT (SS) No.94/Mds/2006 before Income Tax Appellate Tribunal, Chennai on ground that assessment should be framed on net asset method and estimation of professional receipts including discount on non-realisation of such purchases and deduction for purchase on medicines etc. and other grounds were also raised, in respect of other issues. 18. tribunal by taking into consideration of purchase of medicine for assessment year 2001-02 allowed 42.27% for above said period and set aside order passed by Commissioner of Income Tax (Appeals), Chennai and added 42% from gross receipts estimated for non-receipts bills, as well as cost of medicines. 19. In so far as other issues are concerned, Tribunal has partly allowed appeal. Challenging said order, tax appeal has been preferred raising substantial questions of law as stated above. 20. learned counsel for appellant would submit that only issue involved in this appeal is that ITAT has given relief of Rs.1,09,02,206/- by directing Assessing Officer to allow 42% as deductions from total gross receipts Rs.2,59,57,634/-. aforesaid relief granted by Appellate tribunal from total gross receipts is without any basis and thus erroneous. 21. tribunal has clearly stated that Assessee has been suppressing professional receipts. Therefore, Revenue has given option that there should not be professional receipts on basis of http://www.judis.nic.inConsultation register and accepted order passed by authority. It 10 is also stated that initially Assessee has submitted that 20% of money was not received and thereafter, submitted that upto 30% of money was not received. Tribunal has granted relief to respondent/ Assessee on ground that Commissioner of Income Tax (Appeals) has passed order by stating that there are unaccounted receipts and there would be unaccounted purchase of medicines, but no benefit was granted in absence of any proof for same. But tribunal, by taking into consideration of contention of respondent/Assessee, granted deduction 42% from gross receipts estimated for non receipts of fee, as well as cost of medicines. block assessment has been made only, with books seized and suppression of undisclosed income. Without any materials and guidelines, tribunal has granted relief of 42% deduction on cost of medicines and non receipt of fees. Simply by observing that Assessing Officer himself has estimated cost of medicine at about 42% for year 2001-02, Tribunal has granted deduction 42% towards cost of medicines and non receipt of fees, and same which is not explained. Therefore, respondent/ Assessee is not entitled for deduction of 42% from gross receipts towards non receipt of fees and cost of medicines. Commissioner of Income Tax (Appeals) has granted deduction only for purchase of medicines and not for non receipt of fees by respondent/ Assessee. There is no discussion or any evidence, to come to such conclusion by tribunal, for granting deduction of 42% towards cost of medicines and non receipt of fees. http://www.judis.nic.in 22 Full Bench of Kerala High Court in 11 N.K.Dharmadas vs. State Transport Appellate Tribunal (AIR 1963 Ker 73) has held that as under: "The power to remand was incidental to and implicit in appellate jurisidiction. This is what Full Bench observed in paras 16, 17, 18, and 19 of said judgment: ''16. appeal is complaint to superior body of injustice done or error committed by inferior one with view to its correction or reversal. It is creature of statute, not constitutional or inherent right. But, as pointed out by Maxwell, where Act confers jurisdiction, it impliedly also grants power of doing all such acts, or employing such means, as are essentially necessary to its execution. 17. remand by appellate court is usually made when record before it is in such shape that appellate court cannot in justice determine what final judgment shuld be rendered and power to do so cannot but be essential requisite of very jurisdiction to entertain appeal. It is old maxim of law that to whomsoever jurisdiction is given, those thing also are supposed to be granted, without which jurisdiction cannot be exercised.'' 23. In Narayanan Chettiar Industries vs. Income-Tax Officer reported in [2005] 277 ITR 426 (Mad) First Bench of this Court held as under: "A perusal of impugned order of Income-tax Appellate Tribunal shows that there was no finding of tribunal that any deduction or allowance was made in assessment of http://www.judis.nic.in assessee in earlier year. In circumstances, 12 we set aside impugned order of Tribunal and remand matter to Tribunal for fresh decision in accordance with law after hearing parties concerned in which clear finding should be given whether any deduction has been allowed in assessment of assessee in earlier year so as to comply with section 41(1) of Income-tax Act. This appeal is allowed, impugned order of Tribunal is set aside, and matter is remanded to Tribunal for fresh decision in accordance with law.'' 24 In Nitin Pahadiya vs. Union of India reported in (2006) 202 CTR (MP) 321 Madhya Pradesh High Court (Indore Bench) has held as under: "9. When Tribunal was reversing finding of fact recorded by CIT(A) on that it was obligatory upon tribunal to have discussed factual evidence led by assessee in its proper perspective. Referring to factual statement of witness without giving his name and actually quoting what he said and where he said, finding of Tribunal cannot be said to be legally sustainable finding. It is finding which is rendered de hors evidence led. It is not supportable by evidence on record. Such finding is not binding on this Court and is incapable of being sustained. 10. This Court in its appellate jurisdiction cannot appreciate evidence led by parties for deciding issue because our jurisdiction is confined to only substantial question of law http://www.judis.nic.in framed. Similarly, we do possess power under 13 S.260A ibid to remand case to Tribunal for deciding appeal afresh on merits if we find that finding of fact recorded by Tribunal for reversing decision of CIT(A) was based on no evidence no non-consideration of evidence led. It then becomes case of improper appreciation of oral evidence calling for interference. It is for this reason, we have formed opinion to remand case to Tribunal. In our view, remand if made would not cause any prejudice to either of parties as both will get opportunity to put forth their submission again before Tribunal in appeal.'' 25. In our view, there are no materials or guidelines or discussion of evidence with regard to deduction of 42% granted by tribunal towards non receipt of fees and cost of medicines, in light of decisions cited supra, this Court is inclined to set aside order passed by tribunal. substantial questions of law framed in this appeal are answered accordingly. 26. In facts and circumstances of case and decisions cited supra, appeal is allowed. impugned order of tribunal is set aside and matter is remanded to tribunal to consider issues afresh and pass appropriate order in accordance with provisions of law. No order as to costs. (S.M.K., J.) (D.K.K., J.) http://www.judis.nic.in 21.8.2017 14 Speaking/Non Speaking order Index : Yes / No Internet : Yes / No. vaan To Commissioner of Income Tax, Chennai. S.MANIKUMAR, J AND D.KRISHNAKUMAR, J vaan Pre-Delivery Judgment in T.C.A.No.536 of 2007 http://www.judis.nic.in 15 21.8.2017 http://www.judis.nic.in Commissioner of Income-tax, Chennai v. Hakeem S.A.Syed Sathar
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