DCIT Vs Kanva Diagnostic Services Pvt. Ltd (ITAT Bangalore)
A search was conducted u/s 132 at the premises of the assessee, a diagnostic services company. During the search Revenue found that the assessee was using a billing software (Power Lab) that had a special billing series called “V” series. This series was used to record certain cash transactions which were not entered into regular books of account. Only a few employees had access to this “V” series & the records were regularly deleted. Cash collected under this series was handed over directly to the MD & was not routed through formal accounting. Seized documents showed that billing under “V” series amounted to around ₹1 crore for the months of Sept–Nov 2017. The MD (Dr. H.M. Venkatappa) initially admitted to unaccounted sales of ₹19.97 crore over May 2013 to Nov 2017, but later retracted his statement, citing pressure & ill health.
AO made additions across AYs 2014–15 to 2018–19, estimating unaccounted sales by applying a 17% suppression ratio (based on Sept–Nov 2017 data).In AY 2018–19, in addition to the estimated income, the AO also added ₹2.28 crore as unexplained cash u/s 69A, although the assessee had already disclosed it as business income.
