Dr. M.S. Hiremath, Pune V. Commissioner of Income-tax - III,

ITA 1114/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0748 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Keywords: Revised return
• Section: 143(3); 263

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.1114/PN/2014 ASSESSMENT YEAR : 2009-10 DR. M. S. HIREMATH, 1126/B, MODEL COLONY ROAD, SHIVAJINAGAR, PUNE 411 016. PAN : AADPH0605H . APPELLANT VS. THE JT. COMMISSIONER INCOME TAX, RANGE 5, PUNE. . RESPONDENT / APPELLANT BY : SHRI M. R. BHAGWAT / RESPONDENT BY : SMT. DIVYA BAJPAI / DATE OF HEARING : 15.12.2015 / DATE OF PRONOUNCEMENT: 31.12.2015 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX-III, PUNE (IN SHORT THE COMMISSIONER) DATED 24.03.2014 WHEREBY THE ASSESSMENT ORDER PASSED BY T HE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT) DATED 09.12.2011 HAS BEEN HELD TO BE ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECT ION 263 OF THE ACT. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1] THE LEARNED COMMISSIONER ERRED IN INITIATING AC TION U/S 263 WHEN THE ASSESSMENT ORDER U/S 143(3) WAS NEITHER ERRONEOUS N OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 2 ITA NO.1114/PN/2014 2] THE LEARNED COMMISSIONER ERRED IN INVOKING SECTI ON 263 EVEN THOUGH THE ASSESSING OFFICER HAD APPLIED HIS MIND AND CONDUCTE D PROPER ENQUIRY IN RESPECT OF ASSESSEES PROFESSIONAL RECEIPTS. 3] THE LEARNED COMMISSIONERS ORDER U/S 263 BE SET -ASIDE. 4] SUCH OTHER ORDERS BE PASSED AS DEEMED FIT AND P ROPER. 5] THE APPELLANT PRAYS FOR LEAVE TO ADD/ALTER OR M ODIFY HIS GROUNDS OF APPEAL AND LEAD EVIDENCE. 3. THE FACTS CONCERNING THE CASE ARE THAT THE ASSES SEE IS DOCTOR. THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 ON 26.09.2009 DECLARING A TOTAL INCOME OF R S.2,61,88,364/-. THEREAFTER, A REVISED RETURN WAS FILED BY THE ASSES SEE ON 12.02.2009 DECLARING TOTAL INCOME OF RS.2,40,20,801/-. THE CASE WAS SEL ECTED FOR SCRUTINY UNDER CASS. THE ASSESSING OFFICER OBSERVED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT THE AUTHORIZED REPRESENTATIVE APPE ARED FROM TIME TO TIME AND FURNISHED THE DETAILS CALLED FOR. THE ASSESSEE FURNISHED A COPY OF THE RETURN OF INCOME ALONG WITH THE COMPUTATION OF INCO ME, AUDIT REPORT IN FORM NO.3CB & 3CD, PROFIT & LOSS ACCOUNT AND THE BALANCE SHEET AS ON 31.03.2009. THE ASSESSMENT WAS COMPLETED AFTER MAK ING CERTAIN ADDITIONS AND DISALLOWANCES. THEREAFTER, THE COMMISSIONER HAS IN VOKED HIS REVISIONARY JURISDICTION UNDER SECTION 263 OF THE ACT AND HELD THAT THE IMPUGNED ASSESSMENT DATED 09.12.2011 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND SET-ASIDE THE SAME WIT H THE DIRECTION TO THE ASSESSING OFFICER TO REDO THE ASSESSMENT IN TERMS O F THE ORDER UNDER SECTION 263 OF THE ACT AFTER GIVING AN APPROPRIATE OPPORTUN ITY TO THE ASSESSEE OF BEING HEARD ON ISSUES RAISED BY HIM. 4. ON PERUSAL OF THE ORDER UNDER SECTION 263 OF THE ACT, IT IS OBSERVED THAT THE COMMISSIONER ALLEGED THAT THE ASSESSMENT ORDER IS VITIATED BY ERRORS. THE ASSESSEE HAS SHOWN A PROFESSIONAL RECEIPT OF RS.3,7 5,47,060/- IN ITS PROFIT & LOSS ACCOUNT WHICH INCLUDED AN AMOUNT OF RS.1,95,37 ,721/- (AS PER THE STATEMENT OF BREAK-UP OF THE PROFESSIONAL FEES) REC EIVED FROM GRANT MEDICAL FOUNDATION. THE COMMISSIONER, HOWEVER, OBSERVED TH AT AS PER THE TDS 3 ITA NO.1114/PN/2014 CERTIFICATE ATTACHED WITH THE RETURN OF INCOME, THE PROFESSIONAL RECEIPTS FROM GRANT MEDICAL FOUNDATION CREDITED TO THE ASSESSEE I S RS.2,77,26,917/-. THEREFORE, HAVING REGARD TO THE FACT THAT THE ASSES SEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING, THE CURRENT YEAR RECEIPT AFTER TAKIN G INTO ACCOUNT LAST YEARS RECEIPTS RECEIVED DURING THE YEAR AND DEDUCTING THE REFROM CURRENT YEARS RECEIPT RECEIVED DURING THE NEXT YEAR STANDS AT RS. 2,67,56,232/-. THUS, THERE IS A SHORT CREDIT OF RS.72,18,511/- IN THE PROFESSIONA L RECEIPTS DECLARED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS CONFRON TED WITH THE ALLEGED DISCREPANCY VIDE SHOW-CAUSE LETTER DATED 11.03.2014 . THE ASSESSEE DENIED ANY DISCREPANCY AND SUBMITTED THAT THE TDS CERTIFICATE ISSUED ORIGINALLY BY GRANT MEDICAL FOUNDATION APPEARS TO BE SOMEHOW INCORRECT. THE INCOME IS CORRECTLY REFLECTED IN FORM NO.26AS AS WELL AS ITS DATA OF TH E INCOME TAX DEPARTMENT WHICH WAS DULY EXAMINED DURING THE COURSE OF THE AS SESSMENT PROCEEDINGS. THE REPLY OF THE ASSESSEE IS REPRODUCED BELOW FOR R EADY REFERENCE :- THE ASSESSEE OBJECTS TO THE PROPOSED ACTION U/S.26 3 AS THE ASSESSMENT ORDER PASSED IN HIS CASE IS NEITHER ERRONEOUS NOR P REJUDICIAL TO THE INTEREST OF REVENUE. YOUR HONOUR HAS APPARENTLY INITIATED THE A CTION DUE TO AN AUDIT QUERY. THE AUDIT PARTY RAISED THE ISSUE BY BLINDLY RELYING UPON THE TDS CERTIFICATE ISSUED BY GRANT MEDICAL FOUNDATION THAT WAS SOMEHOW INCORRECT. THE ASSESSEE IS ENCLOSING THE COPY OF HIS FORM 26AS THAT SHOW THE GROSS RECEIPT FROM GRANT MED. FOUNDATION AT RS. 1,95,40,6 98 AS AGAINST RS. 1,95,37,721/- DISCLOSED BY THE ASSESSEE IN HIS RETURN. THE ID. ASSESSING OFFICER HAD CONFRONTED THE ASSESSEE WITH ITS DATA O F THE INCOME TAX DEPARTMENT DURING THE ASSESSMENT PROCEEDINGS. THE I TS DATA ALSO SHOWED THE SAME FIGURE AND THAT IS WHY THE ID. ASSESSING O FFICER RIGHTLY DID NOT MAKE ANY ADDITION TO THE ASSESSEE'S INCOME DURING THE AS SESSMENT. YOUR HONOUR MAY CALL FOR THE FILE FROM THE ASSESSING OFFICER AN D VERIFY THIS FACT ITS DATA ONCE AGAIN. GRANT MEDICAL FOUNDATION MAY HAVE PROBA BLY MIXED UP DATA ABOUT SOME OTHER DOCTOR WITH THE ASSESSEE AND LATER ON RECTIFIED THE SAME. YOUR HONOUR MAY NOTE THAT SUCH OVERLAP OF RECEIPTS OCCURS EVERY YEAR BECAUSE OF DIFFERENT SYSTEM OF ACCOUNTING ADOPTED B Y THE ASSESSEE AND THE HOSPITAL. THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT AND GOT THEM AUDITED U/S.44AB OF THE INCOME-TAX ACT, 1961. THE ASSESSEE IS OFFERING 70% OF HIS GROSS RECEIPT FOR TAX. THE INCOME TAX AU THORITIES HAVE NOT DOUBTED THE ACCURACY OF HIS PROF. RECEIPTS IN ANY OF HIS AS SESSMENTS. THERE HAVE BEEN NO ADDITIONS IN THE PAST BECAUSE OF PROF. RECEIPTS EXCEPT IN ASSESSMENT YEAR 2004-05. IN THAT YEAR THE LD. COMMISSIONER OF INCOM E-TAX (APPEALS) DELETED AN ADDITION FOR THE SAME REASON VIZ TDS MISMATCH AND T HE DEPARTMENT HAS NOT PREFERRED A SECOND APPEAL AGAINST THE ORDER. ALL TH E HOSPITALS PAY THEIR BILLS BY A LAG OF ABOUT TWO MONTHS AND SO AT ANY TIME SOM E OUTSTANDING REMAINS DUE TO THE DOCTOR FROM EVERY HOSPITAL. IN THE CASE OF THE ASSESSEE, HIS INCOME BEING QUITE HIGH THE OUTSTANDING DUES ARE ALSO HIGH WHICH HAS POSSIBLY MADE THE AUDIT PARTY SUSPECT THAT THE ASSESSEE IS HIDING HIS RECEIPTS. THE 4 ITA NO.1114/PN/2014 ASSESSEE'S INCOME IS TAXABLE AT THE HIGHEST SLABS O F TAX FOR THE LAST 20 YEARS OR SO AND HENCE HE HAS NO INCENTIVE TO ARTIFICIALLY SHIFT HIS INCOME FROM ONE YEAR TO ANOTHER. THE ID. COMMISSIONER OF INCOME-TAX (APPEALS) ALSO APPRECIATED THIS CONCEPT IN THE APPELLATE ORDER FOR A. Y. 2004-05. THE OVERLAPPING OF RECEIPTS IS NOT ONEWAY EITHER. T HE ASSESSEE IS ENCLOSED COPY OF HIS FORM NO.26AS FOR THE NEXT ASST. YEAR I. E. A. Y. 2010-11 AND COPY OF PROFIT AND LOSS ACCOUNT FOR THE SAME ASST. YEAR. THE ASSESSEE HAS DISCLOSED PROFESSIONAL RECEIPTS FROM HOSPITALS OF R S.3,15,36,143/- FOR THAT YEAR IN HIS PROFIT AND LOSS ACCOUNT ALTHOUGH THE FIGURE AS PER 26AS IS JUST RS.2,89,91,254/-. 5. THE COMMISSIONER, HOWEVER, DID NOT AGREE WITH TH E CONTENTIONS OF THE ASSESSEE. ACCORDING TO HIM, AS PER THE ASSESSEES OWN RECORD I.E. TDS CERTIFICATE, THE RECEIPT OF THE PROFESSION FEES OUG HT TO HAVE BEEN RS.2,67,56,232/- AS AGAINST DECLARATION OF RS.1,95, 37,721/-. ACCORDINGLY, HE SET-ASIDE THE COMPLETED ASSESSMENT FOR DE NOVO CONSIDERATION. 6. AGGRIEVED BY THE IMPUGNED ORDER OF THE COMMISSIO NER DATED 24.03.2014, THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE, AT THE OUTSET, SUBMITTED THAT THE PROFESSIONAL FEES ACCOUNTED FOR DURING THE YEAR WERE DULY EXAMINED BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS AS CAN BE SEEN FROM PARA 4 AND 5 OF THE ASSESSMENT ORD ER. IN-FACT, AFTER RECONCILIATION OF THE PROFESSIONAL RECEIPTS DECLARE D QUA TDS CLAIMED BY THE ASSESSEE, CERTAIN ADDITIONS TO THE TUNE OF RS.1,82, 696/- WERE ALSO MADE. THUS, IT IS APPARENT THAT THERE WAS SPECIFIC ENQUIRY ON T HE ISSUE INVOLVED. HE, THEREAFTER, SUBMITTED THAT THE ASSESSEE IS FOLLOWIN G CASH BASIS OF ACCOUNTING AND THE INCOME DECLARED IS FULLY RECONCILED WITH FO RM NO.26AS GIVING DETAILS OF PROFESSIONAL RECEIPTS CREDITED AND TDS DEDUCTED THEREON AND ALSO RECONCILED WITH ITS DATA OF INCOME TAX DEPARTMENT ITSELF. HE ALSO RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. ANIL KUMAR SHARMA, 335 ITR 83 (DEL) AND CONTENDED THAT THERE I S A DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUATE ENQUIRY. IF, TH ERE IS AN INADEQUATE ENQUIRY THAT ITSELF WOULD NOT GIVE DISCRETION TO T HE COMMISSIONER TO INVOKE 5 ITA NO.1114/PN/2014 THE PROVISIONS OF SECTION 263 OF THE ACT MERELY BEC AUSE HE HAS A DIFFERENT OPINION IN THE MATTER. HE ALSO RELIED UPON THE ANO THER DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF G.K. DEVELOPER S VS. DCIT IN ITA NO.1145/PN/2013, ORDER DATED 30.05.2014 AND CONTEND ED THAT MERE APPREHENSION OF ERROR WITHOUT ANY CLINCHING EVIDENC E WILL NOT ENABLE THE COMMISSIONER TO INVOKE THE PROVISIONS OF SECTION 26 3 OF THE ACT. 8. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE, ON THE OTHER HAND, CONTENDED THAT THE ISSUE INVOLVED IS PURELY F ACTUAL ISSUE WHERE TDS CERTIFICATES WERE NOT EXAMINED BY THE ASSESSING OFF ICER. THE ACTION OF SETTING- ASIDE THE ORDER BY THE COMMISSIONER HAS NOT CAUSED ANY PREJUDICE TO THE ASSESSEE PER SE SINCE A REASONABLE OPPORTUNITY IS BEING GRANTED TO THE ASSESSEE. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. ON PERUSAL OF THE ASSESSMENT ORDER, WE OBSERVE THAT THE ASSESSING OFF ICER HAS DULY EXAMINED THE PROFESSIONAL RECEIPTS QUA THE CLAIM OF TDS AND MADE CERTAIN ADJUSTMENTS AFTE R APPLICATION OF HIS MIND. THEREFORE, THE ASSERTIONS MADE BY THE ASSESSEE THAT THIS ASPECT HAS BEEN EXAMINED VIS--VIS FORM NO.26A S AS WELL AS ITS DATA OF THE INCOME TAX DEPARTMENT APPEARS TO BE TRUE AND IN CONSONANCE WITH THE FACTS ON RECORD. THE SUBMISSIONS ON BEHALF OF THE ASSESSEE BEFORE THE COMMISSIONER THAT THE ASSESSEE IS NOT HIDING HIS RE CEIPTS IN ANY MANNER AND BY SHIFTING THE INCOME ARTIFICIALLY FROM ONE YEAR TO A NOTHER WILL NOT BRING ANY ADVANTAGE PER SE HAS REMAINED UNCONTROVERTED. THE ASSESSEE HAD ALS O PRESENTED COPY OF FORM NO.26AS FOR THE SUBSEQUENT A SSESSMENT YEAR AND PROVIDED RECONCILIATION OF PROFESSIONAL RECEIPTS BE FORE THE COMMISSIONER. NO SPECIFIC DISCREPANCY IN SYSTEM GENERATED FORM NO.26 AS OR QUA THE ITS DATA OF THE INCOME TAX DEPARTMENT HAS BEEN POINTED OUT. THEREFORE, WE ARE UNABLE TO FIND ANY SUBSTANTIVE GROUND IN THE ACTION OF THE COMMISSIONER. NEEDLESS TO SAY, THE ERROR ENVISAGED BY SECTION 263 OF THE ACT IS NOT THE ONE THAT DEPENDS ON POSSIBILITY OR GUESSWORK, BUT IT SHOULD ACTUALLY BE AN ERROR EITHER OF FACTS OR OF LAW. MERE DISAGREEMENT WITH THE CONCLUSION DRAW N BY THE ASSESSING 6 ITA NO.1114/PN/2014 OFFICER WILL NOT RENDER THE ASSESSMENT ORDER IS ERR ONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY, THE ORDER O F THE COMMISSIONER PASSED UNDER SECTION 263 OF THE ACT STANDS CANCELLED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF DECEMBER, 2015. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 31 ST DECEMBER, 2015. & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-III, PUNE; 4) THE DR B BENCH, I.T.A.T., PUNE; 5) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE