Judgment:
This is an appeal from the order of the Dy. CIT(A) dt. 31st December, 1991 confirming the following additions/disallowances.
The assessee is an Individual earning income from practising as a Medical Consultant. In the course of survey proceedings conducted on 25th October, 1988 under S. 133A of the IT Act, 1961 (The Act) at the business premises of the assessee it was known that the assessee had spent about Rs. 10,000 on the occasion of a birth ceremony of a son to his daughter but such expenditure was occasion of a birth ceremony of a son to his daughter but such expenditure was not reflected in the books. Addition of Rs. 10,000 on account of unexplained expenditure was accordingly made and confirmed.
3. Inviting my attention to assessees reply dt. 20th February, 1991 it was submitted on his behalf that the expenditure of Rs. 8 to 10 thousands, as stated by the assessee in his statement recorded on 25th October, 1988 during the course of survey proceedings, was met by all the members of assessees and his brothers, families and, therefore, the entire expenditure should not be charged to assessees account. The learned Departmental Representative on the other hand heavily relied upon assessees statement referred to above and thus supported the order under appeal. I, however, find some force in assessees submission.
4. It is no doubt true that in answer to question No. 22 of his statement recorded on 25th October, 1988 the assessee had stated that an expenditure of Rs. 8 to 10 thousand rupees was incurred on the birth ceremony of his grandson and such expenditure was met out by him. But at the same time it is also a matter of common knowledge that on such an occasion the other members of the family concerned also contribute to the expenditure, though the expenditure is declared to have been incurred by the father of the daughter. Looking to these hard fact and realities of life, I feel inclined to reduce the addition to Rs. 5,000 only. I direct accordingly.
On scrutiny of books the ITO noted a cash credit of Rs. 14,100 appearing in the name of one Shri Ajay Kumar. Though the assessee produced confirmation from the said depositor and the ITO examined him also yet he did not accept Shri Ajay Kumars capability of having saved an amount of Rs. 14,100 from his meagre income of Rs. 700 p.m. or so.
An addition of Rs. 14,100 was accordingly made and confirmed.
6. The learned counsel for the assessee urged that the identity of the depositor and his capacity to a deposit the amount in question was proved by the assessee and, therefore, there was no justification in making and sustaining this addition. The learned Departmental Representative supported the order under appeal.
7. On study of the material brought on the record of the Tribunal it is clearly gathered that the identity of the depositor and the sources of income to him are fully established. Shri Ajay Kumar was a RMP trainee with him and as stated by him he earned income from tuitions and part time jobs. Sources of income to him are, in fact, not in dispute. Under such circumstances, where the identity of the depositor and availability of sources of income to him are established on record, the addition in question, I feel, would not be justified. Addition of Rs. 11,100 only is accordingly deleted.
8. Deposit of Rs. 14,100 was noted in assessees books. He has explained deposit of Rs. 11,100 only. There is no explanation with regard to the balance of Rs. 3,000. Addition of Rs. 3,000 shall, therefore, stand.
In the personal capital account filed on 19th February, 1991 the ITO noticed opening balance of Rs. 8,500. Addition of that amount was made and confirmed on the ground that the opening balance was declared for the first time and that it was not believable that despite having two bank accounts the assessee would keep that much of amount with him.
11. It is not disputed that the assessee has been earnings income from medical profession for the last several years. He could have easily saved that much of money and kept the same with him to meet urgencies.
No addition in that behalf is, in my opinion, called for. The same is hereby deleted.
A cash credit of Rs. 9,600 appearing in the name of one Shri Srichand was noted by the ITO. Though the said Srichand confirmed the said credit in his statement on oath yet his such statement was not believed for the reason that with the burden of feeding 7 members of his family with an income of Rs. 1,000 p.m. to Rs. 1,200 p.m. he could not have saved that much of amount.
14. The identity of the depositor and availability or sources of income to him are established. Admittedly Sri Srichand has been running a juice shop for the last several years. With that source of income he could have been in a position to deposit that much of amount with the assessee. The cash credit thus stands explained. The addition of Rs. 9,600 is accordingly deleted.
Addition of Rs. 4,000 was made and confirmed on the ground that such expenditure was incurred by the assessee on the repairs of his house.
17. The assessee had explained that he had made withdrawals of Rs. 15,000 and out of that he was in a position to spend some amount on the repairs of his house. I think the expenditure stands explained and deserves to be allowed. The addition of Rs. 4,000 is, therefore, deleted.
The assessee extends medical advice and consultation to patients at his dispensary outside Pursharthi Dharmashala, Alwar and admits few patients too in his dispensary for treatment. On demand the assessee could not produce patient register from 1st April, 1987 to 31st December, 1987. The ITO noted that on sales (which included cost of medicines also) of Rs. 4,21,861, the assessee had declared gross profit of Rs. 75,305 (at 17.84%) and net profit at Rs. 22,224. He further noted that from indoor patients the assessee used to charge Rs. 300 to Rs. 400 per patient. He, therefore, estimated assessees receipts at Rs. 5,00,000 and applying g.p. rate at 20% thereto estimated his profit at Rs. 1,00,000 which resulted in g.p. addition of Rs. 25,000. In appeal the learned Dy. CIT(A) reduced the additions to Rs. 15,000.
19. Though the learned counsel for the assessee vehemently argued that the estimation of the gross profit of the assessee was highly excessive yet after considering the facts found by the IT authorities, I do not feel inclined to interfere with the estimation made by the learned Dy.
CIT(A) of assessees gross profit. The addition of Rs. 15,000 is hereby confirmed.