Sadique Ummer, Kanhandad V. ITO, Kasargode

CO 52/COCH/2006

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6402 (ITAT-COCHIN)
• Duration Of Justice: 5 year(s) 5 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 1999-2000
• Appeal Filed On: 29-03-2006
• Court: TRIBUNAL
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A. NO. 879/COCH/2005 ASSESSMENT YEAR:1998-99 DR. SADIQUE UMMER, IRIS, OPP. MAHAKAVI P. SMARAKAM, KANHANGAD, KASARAGOD. [PAN: AAGPV 2428L] VS. THE I.T.O., WARD-2, KASARAGOD. (ASSESSEE-APPELLANT) (REVENUE - RESPONDENT) I.T.A NO. 134 /COCH/2006 & C.O. NO. 52/COCH/2006 (BY THE ASSESSEE) ASSESSMENT YEAR:1999-2000 THE I.T.O., WARD-2, KASARAGOD. VS. DR. SADIQUE UMMER, IRIS, OPP. MAHAKAVI P. SMARAKAM, KANHANGAD, KASARAGOD. [PAN: AAGPV 2428L] (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) REVENUE BY MS. S. VIJAYAPRABHA, JR. DR ASSESSEE BY SHRI T.M.SREEDHARAN, SR. ADV.-AR DATE OF HEARING 13/09/2011 DATE OF PRONOUNCEMENT 26/09/2011 O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF TWO APPEALS, I.E., FOR TWO CONS ECUTIVE YEARS, BEING A.Y.1998-99 AND A.Y. 1999-2000, BY THE ASSESSEE AND THE REVENUE RESPECTIVELY, WITH THE ASSESSEE PREFERRING A CROSS OBJECTION (C.O.) IN RESPECT OF T HE LATTER YEAR. I.T.A. NOS. 134/COCH/2006 & 879/COCH/2005 & C.O. NO. 52/COCH/ 2006 (F OR A.Y. 1998-99 & 1999- 2000) 2 2. THIS IS THE SECOND ROUND BEFORE THE TRIBUNAL. I N THE FIRST ROUND, THE TRIBUNAL, ACCEPTED THE ASSESSEES CLAIM THAT THE RE-ASSESSMEN T PROCEEDINGS WERE NOT LEGALLY VALID, SETTING ASIDE THE ASSESSMENTS AND, ACCORDINGLY, DID NOT EXAMINE THE ISSUE ON MERITS. THE MATTER WAS CARRIED BY THE REVENUE FOR BOTH THE YEAR S BEFORE THE HONBLE HIGH COURT, WHICH REVERSED THE SAID FINDING BY THE TRIBUNAL, AND HELD THE IMPUGNED ASSESSMENTS AS VALID, REMANDING THE MATTER BACK TO THE TRIBUNAL FOR A DEC ISION ON MERITS (IN I.T.A. NOS. 1213 & 484/09 DATED 8.12.2009/COPY ON RECORD). THE REVENUE S APPEAL FOR A.Y. 1998-99 (IN I.T.A. NO. 935/COCH/2005) WAS DISMISSED IN LIMINE AS NOT MAINTAINABLE BY THE TRIBUNAL VIDE ITS ORDER DATED 27.6.2006 IN VIEW OF THE MONE TARY LIMIT AS APPLICABLE TO THE REVENUES APPEALS BEFORE THE TRIBUNAL. 3.1 THE FACTS OF THE CASE AS GATHERED FROM THE R ECORDS ARE THAT THE ASSESSEE IS FREELANCING AS AN ANAESTHESIOLOGIST, PRACTISING IN VARIOUS HOSPITALS AT KANHANGAD. HE FILED HIS RETURNS FOR A.Y. 1998-99 (ON 17.6.1998) A ND A.Y. 1999-2000 (ON 30.8.1999), DECLARING INCOME AT ` 99130/- AND ` 102150/- RESPECTIVELY, WHICH STOOD PROCESSED AT THE RETURNED INCOME/S U/S. 143(1). SUBSEQUENTLY, IT CAM E TO THE NOTICE OF THE REVENUE THAT THE ASSESSEE WAS MAKING HUGE INVESTMENTS IN IMMOVEABLE AND MOVEABLE ASSETS, LIKE AGRICULTURAL LAND, RESIDENTIAL HOUSE, BANK DEPOSITS , ETC. WHICH WERE DISPROPORTIONATE TO HIS PROFESSIONAL RECEIPTS, AS SHOWN FROM YEAR TO YEAR. ACCORDINGLY, TO VERIFY THE FACTS, A SURVEY U/S. 133A OF THE INCOME-TAX ACT, 1961 ('THE ACT' HEREINAFTER) WAS CONDUCTED AT HIS PREMISES ON 14.10.2003. IT WAS FOUND THAT HE WAS W ORKING AS A R.M.O. WITH SURGI CARE HOSPITAL, KANHANGAD FOR THE PREVIOUS YEARS RELEVANT TO AYS 1996-97 AND 1997-98, AND STARTED HIS CAREER AS A PRACTISING ANAESTHESIOLOGIS T ONLY DURING THE LATTER PART OF THE PREVIOUS YEAR 1996-97 (RELEVANT TO AY 1997-98). AC CORDINGLY, THE PREVIOUS YEARS RELEVANT TO A.Y. 1998-99 AND 1999-2000 REPRESENTED HIS FIRST TWO YEARS OF FULL-FLEDGED PRACTICE, WHEREAT HE WAS ATTACHED WITH FOUR HOSPITA LS. FURTHER, HE WAS NOT MAINTAINING ANY RECORDS OR BOOKS OF ACCOUNTS, AS REQUIRED UNDER SEC. 44AA OF THE ACT. THE DETAILS OF THE SURGICAL OPERATIONS ATTENDED TO BY HIM FOR THE TWO YEARS, I.E., AT 1303 AND 1202 RESPECTIVELY, WHICH WERE ON THE BASIS OF THE CERTIF IED COPIES OF THE OPERATION THEATRE I.T.A. NOS. 134/COCH/2006 & 879/COCH/2005 & C.O. NO. 52/COCH/ 2006 (F OR A.Y. 1998-99 & 1999- 2000) 3 (O.T.) REGISTERS STATUTORILY MAINTAINED BY THE HOSP ITALS, WORKED TO A PROFESSIONAL RECEIPT TO THE TUNE OF ` 8 LAKHS. THE ASSESSEE RESPONDED TO THE NOTICES U/S. 148, ISSUED FOR BOTH THE YEARS ON 6.01.2004, BY FILING HIS ORIGINAL RETURNS OF INCOME. AS PER THE DETAILS FILED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR A.Y. 1998- 99, THE NUMBER OF OPERATIONS WERE LISTED AT 898, WITH THE GROSS FEES OF ` 113825/. THE SAME WORKED TO AN AVERAGE OF ` 126/- PER OPERATION. THIS WAS RIDICULOUSLY LOW AS THE ASS ESSEE WAS AN EMINENT POST-GRADUATE ANAESTHESIOLOGIST, ATTENDING TO EVEN HOSPITALS WHIC H HAD PERMANENT ANAESTHESIOLOGISTS ON THEIR ROLLS. IN FACT, HE WAS REQUIRED TO ATTEND MAJOR AND EMERGENT OPERATIONS ONLY, AND IN CERTAIN CASES CHARGED PROFESSIONAL FEES OF EVEN OVER ` 1000/- PER OPERATION. BESIDES, THE TOTAL NUMBER OF OPERATIONS FOR A.Y. 1998-99, AS CERTIFIED BY THE VARIOUS HOSPITALS, WAS 1303. THE FIGURES IN RESPECT OF THE CHARGES RECEIV ED BY THE ASSESSEE FROM THE VARIOUS HOSPITALS, AS CONVEYED BY THEM, DISCLOSED A RANGE O F ` 600/- TO ` 1000/- FOR MAJOR OPERATIONS AND ` 200/- TO ` 500/- FOR THE MINOR OPERATIONS. APPLYING, THEREFORE , THE MEAN RATE OF ` 750/- AND ` 350/-, I.E., FOR THE MAJOR AND MINOR OPERATIONS RES PECTIVELY, HIS GROSS RECEIPT FOR THE TWO CONSECUTIVE YEARS WAS COMPUTED AT ` 755250/- AND ` 716000/-, ASSESSING THE INCOME AT ` 740550/- AND ` 687340/- RESPECTIVELY. 3.2 IN APPEAL, THE ISSUE WAS EXAMINED IN DETAIL BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOCHI (CIT(A) FOR SHORT), WITH REFE RENCE TO EACH OF THE MATERIALS AVAILABLE WITH THE REVENUE AS WELL AS THE ASSESSEES OBJECTIO N/S IN ITS RESPECT. THE SUPPRESSION OF INCOME WAS CONFIRMED IN PRINCIPLE, EVEN AS, CONSIDE RING THE WIDE RANGE IN THE FEES OBTAINING AS WELL AS OF THE TIME SPAN TO WHICH IT R ELATED, I.E., AS STATED BY THE DIFFERENT HOSPITAL AUTHORITIES, AS ALSO THE FACT THAT CONSIDE RABLE TIME HAD ELAPSED BETWEEN THE EVENT AND THE STATEMENT OF SOME OF THE PATIENTS FROM WHOM FIGURES STOOD ELICITED, HE RESTRICTED THE FEES IN RESPECT OF MAJOR AND MINOR OPERATIONS T O ` 500/- AND ` 350/- RESPECTIVELY. FOR A.Y. 1999-2000 THE PRIMARY FACTS ARE THE SAME, EVEN AS THE AO INCREASED THE ESTIMATE QUA MINOR OPERATIONS MARGINALLY TO ` 400/- PER OPERATION. THE LD. CIT(A), HOWEVER, RESTRICTED THE ESTIMATE FOR BOTH THE CATEGORIES TO ` 350/-AND ` 100/- RESPECTIVELY. I.T.A. NOS. 134/COCH/2006 & 879/COCH/2005 & C.O. NO. 52/COCH/ 2006 (F OR A.Y. 1998-99 & 1999- 2000) 4 4. BEFORE US, LIKE CONTENTIONS STOOD RAISED BY EITH ER SIDE. WHILE THE LD. DR RELIED ON THE DECISION IN THE CASE OF VAZHAKALA ESTATE VS. STATE OF KERALA , 210 ITR 451 (KER.); CST V. H.M. ESUFALI, H.M. ABDULALI (1979) 90 ITR 271 (SC), AND CIT V. V.MR.P.FIRM (1965) 56 ITR 67 (SC), THE LD. AR RELIED ON THE DECISION I N THE CASE OF BRIJ BHUSHAN LAL PARDUMAN KUMAR VS. CIT (1978) 115 ITR 524 (SC). 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, AS ALSO THE CASE LAW CITED. 5.1 WE MAY FIRST TAKE NOTE OF THE MATERIALS AVAI LABLE WITH THE REVENUE IN IMPUGNING THE ASSESSEES RETURN OF INCOME FOR THE YEARS UNDER REFERENCE, AND ESTIMATING THE SUPPRESSION OF INCOME THEREIN. THE FIRST IS THE DA TA ON THE SURGICAL PROCEDURES ATTENDED TO BY THE ASSESSEE, WHICH STAND DETAILED, HOSPITAL-WIS E, AT PGS. 4 & 3 OF THE ASSESSMENT ORDERS FOR THE TWO CONSECUTIVE ASSESSMENT YEARS RES PECTIVELY. EVEN THOUGH THE ASSESSEE INITIALLY FURNISHED A FIGURE OF 898 SURGERIES IN SU PPORT OF ITS RETURN FOR THE FIRST YEAR, WE OBSERVE THAT THERE IS NO DISPUTE WITH REGARD TO THE SE FINDINGS OF THE REVENUE, NOR POSSIBLY COULD BE, BEING BASED ON THE AUTHENTICATED RECORDS MAINTAINED BY THE HOSPITALS STATUTORILY UNDER A STATUTORY PRESCRIPTION, WHILE THE BASIS FOR THE ASSESSEES, WHO HAS NOT SERIOUSLY CHALLENGED THE SAME, FIGURE BEING UNDISCLOSED. THE CONTROVERSY, THUS, CENTRES AROUND THE FEES CHARGED BY THE ASSESSEE FOR THE SAME. TOWARD THIS, WE OBSERVE THAT THE REVENUE HAS COLLECTED DATA FROM THE VARIOUS HOSPITALS WITH WHIC H THE ASSESSEE IS ASSOCIATED WITH AND WORKED FOR DURING THE RELEVANT YEARS. THE FEES RAT E/S FURNISHED IS IN THE FORM OF A RANGE, AND SEPARATELY FOR THE MAJOR AND MINOR OPERATIONS, I.E., AT ` 600/- TO ` 1000/-, AND FROM ` 250/- TO ` 550/-, FOR THE FORMER AND THE LATTER RESPECTIVELY. THE PERIOD STATED IS FROM 1997 TO 2004. NO DOUBT, ONE OF THE HOSPITALS, I.E., SUR GI CARE HOSPITAL, HAS STATED THAT THE ASSESSEE COLLECTED HIS FEES DIRECTLY FROM THE PATIE NTS, BUT THE SURGERIES REPORTED BY THE SAID HOSPITAL, AT 7 AND 51 FOR THE TWO CONSECUTIVE YEARS RESPECTIVELY, IS TOO MEAGRE TO HAVE ANY IMPACT (PB-II DATED 13.11.2006/PG.5). FUR THER, EVEN SO, THE DATA ON THE OBTAINING RATES AS FURNISHED BY THE SAID HOSPITAL, I.E., FROM ` 600/- TO ` 750/- (WHICH WOULD BE PRESUMABLY FOR MAJOR SURGERIES) ALSO MATCHES WIT H THAT REPORTED BY THE OTHER THREE I.T.A. NOS. 134/COCH/2006 & 879/COCH/2005 & C.O. NO. 52/COCH/ 2006 (F OR A.Y. 1998-99 & 1999- 2000) 5 HOSPITALS. THE THIRD SOURCE OF INFORMATION IS THE S TATEMENT BY THE THREE PATIENTS, AS TAKEN BY THE INSPECTOR, WHICH ALSO MATCHES WITH THAT DISC LOSED BY THE HOSPITALS. 5.2 NOW LET US CONSIDER THE MATERIAL BEING RELIED U PON BY THE ASSESSEE. ADMITTEDLY, HE IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS; CLARIF YING THAT HE STARTED MAINTAINING A REGISTER ONLY FROM 1.9.2002 ONWARDS (REFER PG. 14 O F PB DATED 9.8.2006., IN ANSWER TO QUESTION NO. 8). HE HAS ALSO NOT ISSUED ANY RECEIP TS, EITHER TO THE PATIENTS OR TO THE HOSPITALS AND, THUS, HAS NO RECORD OF THE SAME. AS SUCH, WE WONDER AS TO ON WHAT BASIS DID HE FURNISH THE DETAILS OF THE SURGERIES FOR ONE OF THE YEARS, OR EVEN ARRIVED AT THE RETURNED FIGURE OF GROSS RECEIPTS FOR THE RELEVANT YEARS. AGAIN, THE REPORTED FIGURE WORKS TO A RIDICULOUS LOW RATE OF ` 126/- PER OPERATION, PARTICULARLY CONSIDERING THAT THE MAJORITY OF THE OPERATIONS (55+ %) FALL IN THE CATEGORY OF M AJOR SURGERIES, ENTAILING A HIGHER FEES. IN FACT, IT WOULD AMOUNT TO EVEN LESS (I.E., AT ` 87/- PER SURGERY), IF THE CONFIRMED AND CERTIFIED FIGURE OF 1303 SURGERIES (FOR A.Y. 1998-9 9) IS ADOPTED. THAT IS, NOT ONLY IS THE DATA UNSUBSTANTIATED, BUT IS ONLY CONTRARY TO THE N ORMAL OBSERVATION, EVEN AS OBSERVED BY THE AUTHORITIES BELOW IN REJECTING THE SAME. BESIDE S, THE SAME IS CONTRARY TO THE DATA SUPPLIED BY THE HOSPITALS. 5.3 COMING, NEXT, TO THE ESTIMATE PART. THE LAW IN THE MATTER IS TRITE, I.E., THE SAME (ESTIMATE) MUST BE A FAIR AND HONEST EXERCISE, BEAR ING A REASONABLE NEXUS WITH THE MATERIALS AVAILABLE, AND CANNOT BE ARBITRARY OR UNR EASONABLE [ALSO REFER, I.E., BESIDES THE DECISIONS CITED BY THE PARTIES, THAT IN THE CASE OF I.T.O. VS. VIJAYA AUTOMOBILES , 243 ITR 874 (KER.)]. TOWARD THIS, WE FIND THAT THE LD. CIT (A) HAS, FOR A.Y. 1998-99, CAREFULLY NOTED THE DEFICIENCIES IN THE REVENUES CASE, AS BR OUGHT TO HIS NOTICE BY THE ASSESSEE, BEING PRINCIPALLY, THAT THE FIGURES FURNISHED BY TH E HOSPITALS WERE IN RESPECT OF THE TIME SPAN, AND THAT ATTRIBUTED TO THE PATIENTS TOO WERE RECORDED AFTER A LAPSE OF CONSIDERABLE TIME, FOR IT TO BE CONSIDERED AS COMPLETELY RELIABL E. HE, ACCORDINGLY, DISCOUNTED THE SAME TO ` 500/- AND ` 350/-, I.E., FOR THE MAJOR AND MINOR SURGICAL PROCE DURES RESPECTIVELY. IT IS THE REASONABILITY OF THIS ESTIMATE/S THAT WE ARE CA LLED UPON TO OPINE ON. I.T.A. NOS. 134/COCH/2006 & 879/COCH/2005 & C.O. NO. 52/COCH/ 2006 (F OR A.Y. 1998-99 & 1999- 2000) 6 THE LD. CIT(A) OBSERVED THE BASE RATE FOR MAJOR SURGERIES TO BE AT ` 600/-. HOWEVER, IN VIEW OF THE TIME PERIOD TO WHICH THE DATA RELATE S, HE ESTIMATED THE SAME AT ` 500/-. WITHOUT DOUBT, THE SAME IS A VERY FAIR ESTIMATE; TH ERE BEING NO REBUTTAL OF THE FIGURES FURNISHED BY THE HOSPITALS. THE FIGURES BY THE PATI ENTS, WHICH THE ASSESSEE SERIOUSLY OBJECTS TO AS BEING PURELY OUT OF MEMORY AND TAKEN AT HIS BACK, IT MUST BE APPRECIATED, BESIDES BEING FROM ONLY THREE PATIENTS, ARE ONLY CO RROBORATIVE OF THE FIGURES CONFIRMED BY THE HOSPITALS. AS REGARDS THE MINOR SURGERIES, HE H AS CONFIRMED THE RATE AT ` 350/-. THE MEAN RATE FOR THE MINOR SURGERIES, WE OBSERVE, WORK S TO ABOUT 50% OF THE RATE FOR THE MAJOR SURGERIES. ACCORDINGLY, IN OUR OPINION, THERE IS SCOPE FOR SOME REDUCTION, AND WE CONFIRM THE RATE THEREFOR AT ` 250/- . THE ASSESSEE GETS PART RELIEF. FOR A.Y. 1999-2000 , THE LD. CIT(A), WHILE APPRECIATING THE DETAILED ANALYSI S OF THE MATERIAL ON RECORD BY HIS PREDECESSOR, YET, LOWERED THE ESTIMATE TO ` 350/- AND ` 100/- FOR THE MAJOR AND MINOR SURGERIES RESPECTIVELY. WE FIND THE SAME AS WHOLLY WITHOUT BASIS AND DE HORS THE MATERIAL ON RECORD. THE PRIMARY FACTS AND THE SURROUNDING C IRCUMSTANCES, AS WELL AS THE RESPECTIVE CASES OF BOTH THE PARTIES BEFORE US, WE FIND TO BE THE SAME FOR THIS YEAR AS WELL. ACCORDINGLY, WE CONFIRM THE ESTIMATE FOR THIS YEAR (AY 1999-00) IN RESPECT OF MAJOR AND MINOR SURGERIES AT ` 600/- AND ` 300/- RESPECTIVELY, I.E., CONFORMING TO THE BASE RA TE (FOR THE MAJOR SURGERIES FOR THE PERIOD 1997 TO 2004), A ND 50% THEREOF FOR THE MINOR SURGERIES. THIS, IN OUR OPINION, WOULD BE A FAIR ESTIMATE, ALS O ACCOUNTING FOR THE TIME PROGRESSION. HERE, IT WOULD BE RELEVANT TO MENTION THAT THIS IS THE SECOND FULL-FLEDGED YEAR OF THE ASSESSEES PRIVATE PRACTICE, WITH THE NUMBER OF OPE RATIONS ITSELF SUGGESTING THE EXTENT TO WHICH HE IS IN DEMAND. WE DECIDE ACCORDINGLY. 6. THE ASSESSEES CO, WHICH IS FOR THE SECOND Y EAR, I.E., AY 1999-00, ALSO GETS DECIDED AS REGARDS HIS PRINCIPAL GROUND QUA ESTIMATION OF INCOME. THE SECOND ISSUE RAISED THEREBY, I.E., THE EXPENDITURE ALLOWED IN RESPECT O F THE ADDITIONAL INCOME, WHICH HAS BEEN ALLOWED @ 10%, STANDS IMPUGNED VIDE GROUND # 3. NO ARGUMENTS STOOD ADVANCED BY THE LD. AR DURING HEARING IN ITS RESPECT, NOR, CONSEQUE NTLY, RESPONDED TO BY THE REVENUE. IN FACT, WE FIND THE LD. CIT(A) HAS NOT GIVEN ANY REAS ON FOR THE SAME, EVEN AS THE SAME I.T.A. NOS. 134/COCH/2006 & 879/COCH/2005 & C.O. NO. 52/COCH/ 2006 (F OR A.Y. 1998-99 & 1999- 2000) 7 STOOD ALLOWED, STATING REASONS, AT 5% BY HIS PREDEC ESSOR, I.E., FOR AY 19998-99. UNDER THE CIRCUMSTANCES, WE FIND NO REASON WHATSOEVER, TO INTERFERE WITH THE IMPUGNED ORDER ON THIS GROUND. WE DECIDE ACCORDINGLY. 7. IN THE RESULT, THE ASSESSEES APPEAL FOR A .Y. 1998-99 (IN I.T.A. NO. 879/COCH/2005) IS PARTLY ALLOWED; THE REVENUES APPEAL FOR A.Y. 19 99-2000 (IN I.T.A. NO. 134/COCH/2006) IS PARTLY ALLOWED, AND THE ASSESSEE S CROSS OBJECTION (IN C.O. NO. 52/COCH/2006) FOR THAT YEAR IS DISMISSED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 26TH SEPTEMBER, 2011 GJ COPY TO: 1. DR. SADIQUE UMMER, IRIS, OPP. MAHAKAVI P. SMARAK AM, KANHANGAD, KASARAGOD. 2. THE INCOME TAX OFFICER, WARD-2, KASARAGOD. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KANNUR. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .