Misc. Appeal No.59 of 2002 With Misc. Appeal No.420 of 2004 ---- Against order dated 10.10.2001, passed by the Income Tax Tribunal, Patna Bench, Patna, passed by Sri K.K.Gupta and Dr. R.K.Yadav in I.A.T No.273 (Pat) 2000. ---- Misc. Appeal No.59 of 2002 Dr.(Mrs.)Shanti Ray, W/o Sri Brajdeo Roy, resident of V-19, Vidyapuri, Kankerbagh, P.S.Kankerbagh, District, Patna. ….Appellant. Versus 1. Chief Commissioner of Income Tax, Bihar, Patna 2. The Deputy Commissioner of Income Tax, Investigation Circle 2(1), Patna ….Respondents. With Misc. Appeal No. 420 of 2004 1. Dr.(Mrs.)Santi Roy, W/o Sri Brajdeo Roy, resident of V-19, Vidyapuri, Kankerbagh, P.S.Kankerbagh, District, Patna …Appellant. Versus 1. Chief Commissioner of Income Tax, Bihar, Patna. 2. The Deputy Commissioner of Income Tax, Investigation Circle 2(1), Patna. …Respondents. For the Appellant :Mr.Sandeep Kumar & :Mr. Alok Kumar Shahi, Advocates For the Income Tax :Mr.Harshwardhan Prasad, Sr.Standing Counsel & :Mr.Rishi Raj Sinha, Jr.Standing Counsel ---- P R E S E N T THE HON'BLE MR. JUSTICE S. K. KATRIAR & THE HON'BLE MR. JUSTICE KISHORE K. MANDAL *** S. K. Katriar & K.K.Mandal,JJ. The appellant in the two appeals is a doctor a Gynaecologist & Obstetrician and an assessee under the provisions of the Income Tax - 2 - Act,1961 (hereinafter to be referred to as „the Act‟). The appeals are with respect to the assessment year 1994-1995. Misc. Appeal No.59 of 2002 is with respect to the order of assessment whereby the figures returned by the assessee have been disbelieved leading to enhancement of gross income. Misc. Appeal No.420 of 2004 is consequential in nature, whereby penalty has been imposed on the assessee and the dues have been directed to be recovered with interest. 2. The basic facts necessary for the disposal of the appeal shall be drawn from Misc. Appeal No.59 of 2002, except by specific reference to Misc. Appeal No.420 of 2004. The assessee at the relevant point of time was in the services of the Bihar Government as a doctor, and was also a private practitioner. She filed returns showing gross income of Rs.2,85,140/-, for the period in question. Search and seizure of her residence-cum-clinic took place on 10.8.1994. - 3 - Cash amount of Rs. 26,05,915/- was recovered from her premises, apart from documents and cash found in lockers etc. This was followed by notice dated 26.11.1996, that the returns shall be subjected to scrutiny in terms of section 143 (a) and 142 (b) of the Act. On a consideration of the materials on record, by his order dated 19.3.1997 (Annexure-1), the learned Assessing Officer rejected the returned figures, and added a sum of Rs. 2,00,000/- spent towards the marriage reception of her daughter. A further sum of Rs. 1,00,000/- was added towards referral income which is the amount of commission received from clinic and laboratories of doctors for having referred patients to them for consultation and/or investigation. Aggrieved by the order, the assessee preferred appeal which was allowed in full by the learned appellate authority by his order dated 12.6.2000 (Annexure-4), and that of the learned Assessing officer was modified. Aggrieved by the appellate order, the Department - 4 - preferred second appeal before the Income Tax Appellate Tribunal, Patna Bench, Patna, which has been allowed by the impugned order dated 10.10.2001, whereby the order of the learned appellate authority has been set aside, and that of the learned Assessing Officer has substantially been restored with some relief to the assessee with respect to referral income. The Tribunal has held that addition of Rs. 2,00,000/- towards marriage expenses was fully justified, and the amount of referral income received by the assessee has been reduced to Rs.50,000/-. 3. By order dated 13.9.2006, passed in the present appeal, the following substantial question of law was formulated for the decision by this Court: “Whether in absence of any material on record the Tribunal has erred in law in confirming addition of Rs.2 lacs for alleged unexplained investment in the marriage of daughter Shipra Roy who in spite of opposition in the family had married her class- mate?” - 5 - 4. While assailing the validity of the impugned order, learned counsel for the assessee submits that there was no material before the learned Assessing Officer to enhance the figures of income. The same is without any factual basis and is arbitrary. He relies on the judgment of the Privy Council in the case of Commissioner of Income Tax Vs. Laxminarain Badridas, V Income Tax Reports, page 170. While pressing the analogous Miscellaneous Appeal No.420 of 2004, whereby penalty and interest have been imposed on the assessee, learned counsel for the assessee submits that penalty can be imposed only if dishonest intention is attributable to the assessee. Mere difference of opinion on the returned figures cannot justify imposition of penalty. He relies on the following reported judgments: (i) 142 ITR, page 836 (Commissioner of Income Tax Vs. Sardar Bhagat Singh). - 6 - (ii) 145 ITR, page 128 (Commissioner of Income Tax Vs. Nipani Tobacco Stores. 5. Learned Sr. Standing Counsel supports the impugned order and submits that the learned Assessing Officer has derived the facts from the materials on record and is not based on conjecture. He submits that the case set up by the assessee that her father-in-law had an agricultural income of Rs.44,000/- has been found to be completely unsupportable by documentary evidence. 6. We have perused the materials on record and considered the submissions of the learned counsel for the parties. It appears that the assessee‟s daughter was a medical student, and had married her class-mate of her own choice and free will on a date which fell during the financial year 1993-94. The assessee has taken the stand that, in view of the position that her marriage had shocked the conservative conscience of the - 7 - family and, therefore, they had not participated in the marriage ceremony except the reception party held to celebrate the marriage out of the funds provided by Shri Jagat Bali Roy, her father-in-law, a lawyer at Gopalganj. He was in a position to make expenses because he was a lawyer, and had agricultural income of Rs.44,000/- during the period in question. The question whether or not the family had disowned the marriage and had refused to participate in the wedding and the celebrations is not a matter of guess in the present proceeding. The factual position which has emerged because of the raids conducted in the premises of the assessee on 10.8.1994, had come close on the heels of the daughter‟s marriage, is that the authorities had been able to seize cash amount of Rs. 26,05,915/- , apart from the amount found in the assessee‟s locker which had not been operated since January 1989. A large number of incriminating documents had also been seized. - 8 - 7. In pursuance of the aforesaid notice dated 26.11.1996, the items of search and seizure were the subject matter of intense scrutiny by the learned Assessing Officer. The learned Tribunal has relied on the facts found by the learned Assessing Officer on the basis of the search and seizure and the statements made in various documents. It has also been found that, at the time of search and seizure, the daughter was as before living in the premises with her parents which disclosed continuance of cordial relationship. Therefore, the Tribunal has observed as follows in the impugned order: “The facts that she permitted the daughter to live with her, even after her marriage demonstrates that her stand that she remained indifferent in the marriage of her daughter is false. Contradictory stand of the assessee makes us to comment that she wants to play on both sides of the fence. These facts lead us to conclude that the assessee performed the marriage of her daughter whole heartedly. She tried to take the benefit out of the fact that her daughter performed a love marriage, to hoodwink the taxing authorities. After her marriage she allowed Dr. Shipra Roy to live with her, which fact is conclusive of their normal and cordial relations.” - 9 - In other words, the learned Tribunal concluded on the basis of the materials that there was no inhibiting factor to prevent the parents from celebrating the marriage of their daughter. 8. The next question which arises for consideration is quantification of the amount spent over the wedding reception. It appears to us that the learned Tribunal has made an abnormally conservative estimate of expenses with respect to the daughter‟s marriage of successful and affluent Gynaecologist. Her father was also a Patna-based Professor of Indian History, and the family was in a position to spend much more than the amount of Rs. 2,00,000/-. Another important aspect of the matter is that the assessee claimed that the amount has been spent by the father-in-law has been discarded, inter alia, on the ground that her claim that the father-in-law had disclosed the agricultural income of Rs.44,000/-, has been - 10 - found to be false by the authorities, not having been disclosed in his returns. This is once again a question of fact with which this Court would not like to interfere. To conclude this part of the matter, we are convinced that the learned Tribunal had adequate materials on record to reach the conclusion that a sum of Rs.2,00,000/- was spent over the wedding reception of the daughter. 9. The next question which arises for consideration is whether or not the assessee is liable for payment of tax on referral income. In our estimation, income from such a source, which in substance is illegally sharing the income of somebody else, particularly by a person of the standing of the appellant, is abhorrent to us. The same also was not a matter of guess work for the learned Assessing Officer or the learned Tribunal. As stated hereinabove, a large number of documents were seized in the course of search and seizure which disclosed that the assessee was receiving illegal - 11 - money by sharing the fee of doctors and X-ray clinic to whom she was referring her patients for consultation and/or investigation, X-ray, etc. Indeed, the learned Assessing Officer had added a sum of Rs 1,00,000/-, which has been reduced to Rs.50,000/- by the impugned order. In view of the materials on record, we are indeed of the view that the assessee has been let off very lightly. The findings in the impugned order, and that of the learned Assessing Officer, is based on the documentary evidence seized in the course of search and seizure. We are strongly of the view that the quantification of income made by the learned Assessing Officer was better than that of the Tribunal. The latter needlessly strained itself, without any justification, to reduce the income and grant relief to the assessee. She has been let off on account of unjustifiably liberal approach on the part of the learned Tribunal. In the result, we do not find any merit in Misc. Appeal No.59 of 2002, and is accordingly dismissed. - 12 - M.A.No.420 of 2004. 10. Learned counsel for the assessee has assailed the validity of the impugned order on the ground that the amount of penalty can be inflicted only if the authorities are of the view that dishonest intention is attributable to the assessee. The learned Tribunal has found as follows: “When facts were appreciated by us, it becomes clear that the assessee is telling a white lie. No grain of truth exists in her submissions. She concocts a story to get a favourable order. Reasons for these conclusions were traced by us out of the facts placed by the assessee in our hands…” “…search and seizure operations were conducted at the residential premises of the assessee and cash amounting to Rs.26,05,915/- was seized from there…” “…She was continuously residing there in the said house along with the assessee, even after her marriage...” “…This could happen only on account of normal and cordial relations between the assessee and Dr. Shipra - 13 - Roy…” “… Hefty sum of Rs.20.00 lacs were claimed by a student as her earning through the Institute...” “…Contradictory stand of the assessee makes us to comment that she wants to play on both sides of the fence. These facts lead us to conclude that the assessee performed the marriage of her daughter whole heartedly. She tried to take the benefit out of the fact that her daughter performed a love marriage, to hoodwink the taxing authorities. After her marriage, she allowed Dr. Shipra Roy to live with her, which fact is conclusive of their normal and cordial relations.” Commenting on the order of the learned Commissioner of Income Tax, the learned Tribunal has held: “He had not grasped the facts in toto and reached a perverse conclusion.” 11. It is thus evident on the findings recorded in the impugned order that the assessee is a mendacious person capable of taking contradictory stand with the dishonest intention to avoid lawful taxation. The learned Tribunal - 14 - was, therefore, fully justified in imposing penalty. Indeed, the Tribunal has observed as follows: “Heard both the parties and perused the record. We are of the view that since he Hon‟ble ITAT has confirmed the addition in the quantum appeal, by holding that the assessee has tried to mislead the Department by creating fictitious story in regard to the marriage expenses of her daughter, which is palpably false, the penalty u/s 271(1) © is imposable. However, agreeing with the alternate plea of the Ld. Counsel for the Assessee that a minimum penalty be imposed, we hold accordingly. In the result, the appeal is partly allowed.” It is thus manifest that the learned counsel for the assessee had himself conceded before the learned Tribunal that minimum penalty be imposed. In that view of the matter, the learned Tribunal was perfectly justified in imposing the penalty. 12. In view of the foregoing discussion, we answer the substantial question of law as follows: (i) The Tribunal has not erred in law - 15 - in confirming addition of Rs. 2,00,000/- as expenses over the marriage of her daughter. The same is indeed based on the documentary evidence collected from the premises of the assessee during the course of search and seizure. (ii) Indeed the appeals do not raise any such issue of law at all, and the proceedings are concluded by findings of facts recorded by the learned Tribunal. 3. In the result, the appeals are dismissed with costs quantified at Rs.10,000/-(ten thousand), which shall be realized along with the recovery of tax due. ( S. K. Katriar ) ( Kishore K. Mandal ) Patna High Court, Dated the 27th April,2009 HR/AFR