Dr. DCIT, Cir.5, Pune, Pune V. M.S.Hiremath, Pune

ITA 292/PUN/2007

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56521 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-08-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 19-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 292/PN/2007 (ASSTT. YEAR: 2002-03) DY. COMMISSIONER OF INCOME - TAX ... APPELLANT CIRCLE-5, P.M.T. BLDG., SWARGATE PUNE V. DR. M.S. HIREMATH RESPONDENT 1126/B, MODEL COLONY SHIVAJINAGAR PUNE 411 016 PAN : NOT AVAILABLE APPELLANT BY : MS. ANN KAPTHUAMA RESPONDENT BY : SHRI M.R. BHAGWAT DATE OF HEARING : 11.8.11 DATE OF PRONOUNCEMENT: .10.11 ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER O N SEVERAL GROUNDS INVOLVING THE ISSUE AS TO WHETHER LD CIT(A) HAS ERR ED IN CANCELLING THE PENALTY OF RS. 3,90,500/- LEVIED BY THE A.O U/S. 271(1)(C) OF THE ACT. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW. 3. THE A.O LEVIED PENALTY OF RSW. 3,90,500/- U/S. 2 71(1)(C ) ON THE ADDITION OF RS. 12,75,900/- MADE ON ACCOUNT OF DISALLOWANCE OUT OF CONSULTATION FEE DEBITED BY THE ASSESSEE IN THE NAME OF VARIOUS DOCTORS BY HOLD ING THE SAME AS REFERRAL CHARGES. THE A.O WAS OF THE VIEW THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME REGARDING REFERRAL CHARGES AS THE LD CIT(A) HAD ALSO DISALLOWED THE CLAIMED REFERRAL CHARGES ON THE BASIS THAT IT WAS AMOUNTED TO CONSULTATION OF ITA . NO 292/PN/2007 DR. M.S. HIREMATH A.Y. 2002-03 PAGE OF 4 2 PATIENTS WHICH WAS NOT PERMITTED BY THE MEDICAL COU NCIL OF INDIA TREATING THE SAME AS UNFAIR PRACTICE OF REWARDING DOCTORS WHO REFERR ED PATIENTS TO ASSESSEE FOR CARDIAC PROCEDURE. THE A.O WAS OF THE VIEW THAT AS SESSEE BY CLAIMING THE EXPENDITURE OF RS. 12,75,900/- HAD REDUCED HIS TAX INCIDENCE FURNISHING THEREBY INACCURATE PARTICULARS OF ITS INCOME AND THEREFORE , PENALTY U/SW. 271(1)(C ) WAS LEVIABLE. THE LD CIT(A) HAS DELETED THE PENALTY WH ICH HAS BEEN QUESTIONED BY REVENUE ON DIFFERENT GROUNDS. 4. IN SUPPORT OF THE GROUNDS, THE LD. D.R. HAS BAS ICALLY PLACED RELIANCE ON THE PENALTY ORDER WITH THIS SUBMISSION THAT THE LD CIT( A) HAS FAILED TO APPRECIATE THAT BY MAKING IMPUGNED CLAIM, THE ASSESSEE HAS NOT ONL Y FURNISHED INACCURATE PARTICULARS OF HIS INCOME BUT THE IMPUGNED PAYMENTS WERE PATENTLY CONTRARY TO PUBLIC POLICY. THE LD. A.R., ON THE OTHER HAND, TR IED TO JUSTIFY THE FIRST APPELLATE ORDER. HE POINTED OUT THAT UNDER ALMOST SIMILAR F ACTS, THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. DR. DEEPAK RANADE, ITA NO. 543/PN/2008 ( A.Y. 2002-03) VIDE ORDER DATED 30 TH JUNE 2011 HAS DELETED THE PENALTY LEVIED U/S. 271(1)(C ) ON THE ADDITION OF RS.5,5,428/- MADE ON ACCOUNT OF DENIAL OF REFERRAL FEE PAYMENT. 5. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AS WELL AS THE ABOVE CITED DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DR. DEEPAK RANADE (SUPRA), WE FIND THAT THE LD CIT(A) HAS DELETED THE PENALTY ON THE BASIS THAT THE ASSESSEE HAD NOT FURNISHED ANY INACCURATE PARTICULA RS OF INCOME, BUT IT WAS A MATTER OF DIFFERENCE OF OPINION BETWEEN THE DEPARTMENT A ND ASSESSEE. THE A.O HAS NOT DISCUSSED AS TO HOW THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME EXCE PT THAT THE CLAIM OF THE ASSESSEE REGARDING REFERRAL FEE HAD BEEN CORRECTLY REJECTED. LD CIT(A) IN OUR VIEW HAS RIGHTLY HELD THAT THE EXPLANATION-1 TO SECTION 271(1)(C ) G IVES RISE TO A REBUTTABLE PRESUMPTION OF LAW. PENALTY IS EXIGIBLE IF THE AS SESSEE OFFERS AN EXPLANATION WHICH ITA . NO 292/PN/2007 DR. M.S. HIREMATH A.Y. 2002-03 PAGE OF 4 3 HE FAILS TO SUBSTANTIATE, THE EXPLANATION OFFERED I S NOT BONAFIDE AND ALL THE FACTS MATERIAL TO THE COMPUTATION OF INCOME HAVE NOT BEE N DISCLOSED. THE EXPLANATION OF THE ASSESSEE REMAINS THAT THE AMOUNT WAS PAID AS CO NSULTANCY FEE FOR OPINION AND CONSULTATION FOR VARIOUS PATIENTS BEFORE THE PATIEN TS WERE ACTUALLY OPERATED. IT IS ALSO NOT IN DISPUTE THAT THE AMOUNT WAS PAID BY ACC OUNT PAYEE CHEQUES. THE EXPLANATION OF THE ASSESSEE THAT THE AMOUNT RECEIVE D BY THOSE DOCTORS (WHO REFERRED THE PATIENTS TO THE ASSESSEE) AS CONSULTAT ION FEE WAS SHOWN BY THEM AS THEIR INCOME, HAS ALSO NOT BEEN PROVED TO BE FALSE . THE AMOUNT OF REFERRAL FEE/CONSULTATION FEE WAS DEBITED TO THE PROFIT & LO SS ACCOUNT. THE A.O APPEARED TO HAVE REJECTED THE EXPLANATION OF THE ASSESSEE ONLY FOR THE REASON THAT SUCH PAYMENT WAS AGAINST PUBLIC POLICY. EXPLANATION OF THE ASS ESSEE REGARDING PAYMENT OF REFERRAL FEES WAS NEITHER FANCIFUL NOR TOTALLY UNBE LIEVABLE. ALL MATERIAL FACTS HAD BEEN DISCLOSED, THE A.O HAS NOT STATED AS TO HOW TH E EXPLANATION OFFERED BY THE ASSESSEE WAS NOT SUBSTANTIATED. THERE IS NO WHISPE R AS TO HOW IT WAS NOT BONAFIDE OR THERE WAS FILING OF INACCURATE PARTICULARS AS TH E MATERIAL FACTS HAVE NOT BEEN DISCLOSED BY THE ASSESSEE. CONSIDERING THESE MATER IAL FACTS, WHICH REMAINED UN- REBUTTED BEFORE THE TRIBUNAL, WE ARE OF THE VIEW T HAT LD CIT(A) HAS RIGHTLY DELETED THE PENALTY. UNDER SIMILAR CIRCUMSTANCES, IN THE C ASE OF DCIT VS. DR. DEEPAK RANADE (SUPRA), THE TRIBUNAL HAS UPHELD THE FIRST A PPELLATE ORDER WHEREBY LD CIT(A) HAD UPHELD THE PENALTY U/S. 271(1)(C ) OF THE ACT. THE FIRST APPELLATE ORDER IN QUESTION ON THE ISSUE IS THUS UPHELD. THE RELATED GROUNDS ARE ACCORDINGLY REJECTED. 6. IN RESULT, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 5TH O CTOBER, 2011 SD/- SD/- (D.KARUNAKARA RAO) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 5TH OCTOBER, 2011 US ITA . NO 292/PN/2007 DR. M.S. HIREMATH A.Y. 2002-03 PAGE OF 4 4 COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -III, PUNE 4. THE CIT(A)-II, PUNE 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE