DR. THIRUVENGADAM PRITHVIRAJ, CHENNAI V. ACIT, NCC-1, CHENNAI

ITA 852/CHNY/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6571 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-09-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 22-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Assessee Lawyers: MRS R MAHESWARI
• Keywords: Principle of natural justice; Opportunity of cross examination; TDS; Set aside
• Section: 13; 147; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ! . , ! ' BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.852 & 853/CHNY/2020 ( / ASSESSMENT YEAR: 2012-13 & 2013-14) DR.THIRUVENGADAM PRITHVIRAJ, 3, 3 RD STREET, DR.RADHAKRISHNAN SALAI, MYLAPORE CHENNAI-600 004. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-1 CHENNAI-34. PAN: AGUPP 5656M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MRS. R.MAHESWARI, ADVOCATE /RESPONDENT BY : MR. G.JOHNSON, ADDL.CIT /DATE OF HEARING : 02.09.2021 /DATE OF PRONOUNCEMENT : 08.09.2021 / O R D E R PER G.MANJUNATHA, AM: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST SEPARATE, BUT IDENTICAL ORDERS PASSED BY TH E LEARNED CIT(A)-2, CHENNAI, BOTH DATED 27.08.2020 AND PERTAI N TO ASSESSMENT YEARS 2012-13 & 2013-14. SINCE, THE FAC TS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF C ONVENIENCE, THESE APPEALS ARE HEARD TOGETHER AND ARE BEING DI SPOSED OFF, BY THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS MORE OR LESS FILED COMMON GRO UNDS OF APPEAL FOR BOTH ASSESSMENT YEARS, THEREFORE, FOR T HE SAKE OF BREVITY, GROUNDS OF APPEAL FILED FOR THE ASSESSMENT YEAR 2012- 13 ARE REPRODUCED AS UNDER:- 2 ITA NOS.852 & 853/CHNY/2020 1. APPELLANT IS A GENERAL SURGEON, WHO RECEIVES CH ARGES FOR SURGERIES DONE BY HIM AND THE PRE-POST OPERATIO N CONSULTANCY. THE APPELLANT SERVES ONLY AT APOLLO HO SPITALS AND DOES NOT SERVE AT ANY OTHER HOSPITAL OR CLINIC. THE CONSULTANCY FEES CHARGED ON PATIENTS IS INCLUDED IN THE APOLLO HOSPITAL BILLING SYSTEM WHICH ALSO INCLUDES CONSULTATION CHARGES ON PATIENTS IN MASTER HEALTH C HECK, SURGERY CONSULTATIONS, PATIENTS UNDER INSURANCE COV ER AND POST-OPERATIVE CARE. APOLLO HOSPITALS COLLECTS ALL FEES DIRECTLY FROM THE PATIENTS AND MAKES PAYMENT OF FEE S TO THE APPELLANT VIDE RTGS AFTER DEDUCTING 10% TDS, WHICH IS REFLECTED IN THE BANK TRANSACTIONS OF THE APPELLANT . NO CONSULTATION FEES HAS EVER BEEN COLLECTED DIRECTLY BY THE APPELLANT FROM THE OUTPATIENTS OR INPATIENTS. APOLL O HOSPITALS MAINTAINS THE PARTICULARS OF ALL PATIENTS AND THE INCOME OF THE APPELLANT IS SUPPORTED BY THE STATEME NT OF APOLLO HOSPITALS, AS MAY BE REQUIRED UNDER RULE 6F OF THE INCOME TAX RULES. THE ASSESSING OFFICER CALLED FOR DETAILS AS PER RULE 6F ALLEGING CONCEALED INCOME. IN THE AB SENCE OF ANY SUCH INCOME, THE APPELLANT COULD NOT PRODUCE THE ALLEGED PRESUMPTIVE DETAILS. 2. THE RESPONDENT HAS RELIED UPON THE ORAL EVIDENCE GIVEN BY ONE OF THE EMPLOYEES OF APOLLO, WITHOUT NOTICE T O THE APPELLANT AND WITHOUT AFFORDING AN OPPORTUNITY TO C ROSS- EXAMINE THE EMPLOYEE, WHICH IS AGAINST THE PRINCIPL ES OF NATURAL JUSTICE ENSHRINED IN ARTICLE 14 OF THE CONS TITUTION OF INDIA. THE HONBLE SUPREME COURT HAS REPEATEDLY HEL D THAT THE STATEMENT OF WITNESSES RECORDED IN THE ABSENCE OF ASSESSEE, WITHOUT GIVING OPPORTUNITY FOR CROSS-EXAM INATION IS A BREACH OF THE PRINCIPLES OF NATURAL JUSTICE AN D THUS RENDERS THE ORDER PASSED A NULLITY. IN ITA NO.127/C IT(A)- 2/2018-19 ORDER DT. 22.08.2019 W.R.T. APPELLANTS ASSESSMENT FOR AY 2011-1 2, THE CIT (APPEALS) HELD THE RECORDING OF SWORN STATEMENT WITHOUT NOTICE TO APPE LLANT AND OPPORTUNITY TO CROSS-EXAMINE IS A SERIOUS FLAW, WHEREIN THE ASSESSING OFFICER HEREIN HAD RELIED UPON THE VE RY SAME SWORN STATEMENT OF WITNESS DATED 05.01.2015 / 05.01 .2016. THESE SHORTCOMINGS CONSTITUTES SERIOUS FLAW AND THE UNILATERAL EXAMINATION OF WITNESS DOES NOT HOLD GOO D IN LAW AND IS AGAINST THE SETTLED PRINCIPLES OF LAW. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A GENERAL SURGEON BY PROFESSION PRACTICING AT M/S. APOLLO HOSPITAL, CHENNAI AS CONSULTANT AND RECEIVES CONSULTANCY F EES . THE 3 ITA NOS.852 & 853/CHNY/2020 CONSULTANCY FEES CHARGED ON PATIENTS IS INCLUDED IN APOLLO HOSPITAL BILLING SYSTEM WHICH ALSO INCLUDES CONS ULTATION CHARGES ON PATIENTS IN MASTER HEALTH CHECKUP, SURG ERY CONSULTATIONS, PATIENTS UNDER INSURANCE COVER AND POST- OPERATIVE CARE. THE APOLLO HOSPITAL COLLECTS ALL FEES DIRECTLY FROM PATIENTS AND AFTER DEDUCTING APPLICABLE TDS ON PROFESSIONAL CHARGES REMITS BALANCE AMOUNT PAYAB LE TO THE ASSESSEE VIDE CHEQUE / RTGS . ALL REGISTERS REQUI RED TO BE MAINTAINED UNDER RULE 6F OF I.T RULES, 1962, ARE MA INTAINED BY APOLLO HOSPITALS. THE ASSESSEE HAS DECLARED CONSUL TATION CHARGES RECEIVED FROM APOLLO HOSPITALS AND FILED R ETURN OF INCOME FOR RELEVANT ASSESSMENT YEARS. 4. THE ASSESSMENT FOR IMPUGNED ASSESSMENT YEARS HA VE BEEN SUBSEQUENTLY REOPENED U/S. 147 OF THE ACT, ON THE BASIS OF REASONS RECORDED AS PER WHICH INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT ON ACCOUNT OF UNDISCLOSED INCOME TOWARDS CONSULTATION CHARGES RECEIVED FROM APOLLO HOSPITALS IN CASH. THE CASE HAS BEEN SELECTED FOR SCRUTINY AN D DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER CALLED UPON THE ASSESSEE TO FILE NECESSARY EVIDENCE S INCLUDING 4 ITA NOS.852 & 853/CHNY/2020 BOOKS OF ACCOUNT SUPPOSED TO BE MAINTAINED AS PER RULE 6F OF INCOME TAX RULES,1962, TO JUSTIFY INCOME DECLARED IN HIS RETURN OF INCOME FILED FOR RELEVANT ASSESSMENT YEARS. SINC E THE ASSESSEE HAS NOT FILED RELEVANT DETAILS, THE ASSESS ING OFFICER HAS COMPLETED ASSESSMENT U/S.144 R.W.S. 147 OF THE ACT, FOR BOTH ASSESSMENT YEARS AND MADE ADDITIONS OF RS.5,31 ,000/- FOR ASSESSMENT YEAR 2012-13 AND A SUM OF RS.12,50,000/- FOR ASSESSMENT YEAR 2013-14 TOWARDS UNACCOUNTED PROFESS IONAL CHARGES RECEIVED FROM APOLLO HOSPITALS IN CASH. 5. BEING AGGRIEVED BY ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE LEARNED CIT(A). BEFORE T HE LEARNED CIT(A), THE ASSESSEE SUBMITTED THAT ALL BOOKS OF A CCOUNT REQUIRED TO BE MAINTAINED UNDER RULE 6F OF I.T. RUL ES, 1962 IS MAINTAINED BY APOLLO HOSPITALS AND THE ASSESSEE DO ES NOT MAINTAIN THOSE BOOKS SEPARATELY IN HIS INDIVIDUAL C APACITY. THE ASSESSEE FURTHER SUBMITTED THAT HE IS WORKING EXCLU SIVELY FOR APOLLO HOSPITALS AND RECEIVE CONSULTATION CHARGES BY CHEQUE / RTGS, THUS QUESTION OF RECEIPT OF CONSULTATION CHA RGES IN CASH AND NOT DECLARING SAME IN RETURN OF INCOME DOES NO T ARISE. 5 ITA NOS.852 & 853/CHNY/2020 6. THE LEARNED CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS AND ALSO TAKEN NOTE OF VARIOUS FACTS B ROUGHT OUT BY THE ASSESSING OFFICER OPINED THAT SINCE THE ASS ESSEE DID NOT FURNISH BOOKS OF ACCOUNT OR ANY OTHER EVIDENCES IN SUPPORT OF PROFESSIONAL CHARGES RECEIVED FROM APOLLO HOSPITALS , CLAIM OF THE ASSESSEE THAT HE HAD GIVEN TREATMENT TO CERTAIN PATIENTS WITHOUT CHARGING FEES IS UNSUBSTANTIATED. THEREFOR E, HE OPINED THAT THERE IS NO ERROR IN THE REASONS GIVEN BY THE ASSESSING OFFICER TO MAKE ADDITIONS TOWARDS UNACCOUNTED PROFE SSIONAL CHARGES AND HENCE, SUSTAINED ADDITION MADE BY THE ASSESSING OFFICER FOR BOTH ASSESSMENT YEARS. AGGRIEVED BY LE ARNED CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED A.R FOR THE ASSESSEE SUBMITTED THA T THE LEARNED CIT(A) HAS ERRED IN SUSTAINING ADDITIONS MA DE BY THE ASSESSING OFFICER TOWARDS UNACCOUNTED PROFESSIONA L CHARGES RECEIVED FROM APOLLO HOSPITALS, WITHOUT APPRECIATIN G FACT THAT THE ASSESSING OFFICER HAS RELIED UPON ORAL EVIDE NCE GIVEN BY ONE OF THE EMPLOYEES OF APOLLO HOSPITALS, WITHOUT CONFRONTING THOSE EVIDENCES AND ALSO AN OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE CONTRARY TO THE PRINCIPLES OF NATU RAL JUSTICE. THE LEARNED A.R FURTHER SUBMITTED THAT THE ASSESSI NG OFFICER 6 ITA NOS.852 & 853/CHNY/2020 HAS MADE ADDITIONS SOLELY ON THE BASIS OF STATEMEN T OF AN EMPLOYEE RECORDED DURING THE COURSE OF SEARCH IN THE CASE OF APOLLO HOSPITALS, BUT COULD NOT GATHER ANY OTHER E VIDENCES TO DISPROVE CLAIM OF THE ASSESSEE THAT HE HAS NOT RE CEIVED PROFESSIONAL CHARGES IN CASH, OTHER THAN WHAT WAS RECEIVED BY CHEQUE/ RTGS. THE AR FURTHER REFERRING TO DECISION OF LEARNED CIT(A) FOR ASSESSMENT YEAR 2011-12 IN ITA NO.127/ CIT(A)- 2/2018-19 DATED 22.08.2019 SUBMITTED THAT WHEN T HE CIT(A) HAS ACCEPTED FACT THAT ADDITIONS MADE BY THE ASSES SING OFFICER SOLELY ON THE BASIS OF STATEMENT A THIRD PARTY, WITHOUT PROVIDING OPPORTUNITY OF CROSS-EXAMINATION TO THE ASSESSEE IS VIOLATIVE OF PRINCIPLES OF NATURAL JUSTICE AND THU S, ADDITIONS CANNOT BE SUSTAINED. HOWEVER, FOR THE IMPUGNED ASSE SSMENT YEAR, THE CIT(A) HAS TAKEN A DIFFERENT VIEW IGNORIN G SPECIFIC ARGUMENTS MADE BY THE ASSESSEE IN LIGHT OF ORDER O F THE CIT(A) FOR ASSESSMENT YEAR 2011-12, WITHOUT THERE BEING A NY CHANGE IN FACTS AND CIRCUMSTANCES OF THE CASE FOR YEAR UND ER CONSIDERATION. THEREFORE, SHE SUBMITS THAT ADDITION S MADE FOR BOTH ASSESSMENT YEARS NEEDS TO BE DELETED. 7 ITA NOS.852 & 853/CHNY/2020 8. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUPP ORTING ORDER OF THE ASSESSING OFFICER AS WELL AS LEARNED CIT(A) SUBMITTED THAT IT IS A MATTER OF RECORD THAT THE A SSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT REQUIRED TO BE MAINTAI NED BY MEDICAL PRACTITIONER, AS PER RULE 6F OF INCOME TAX RULES, 1962 AND THUS, IN ABSENCE OF RELEVANT BOOKS OF ACCOU NT, THE ASSESSING OFFICER WAS RIGHT IN MAKING ADDITIONS TO WARDS UNACCOUNTED PROFESSIONAL CHARGES RECEIVED FROM APOL LO HOSPITALS ON THE BASIS OF EVIDENCES COLLECTED DURIN G THE COURSE OF SEARCH AND HENCE, THERE IS NO MERIT IN THE AR GUMENTS TAKEN BY THE LEARNED A.R FOR THE ASSESSEE. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY, THE ASSESSING OFFICER HAS PAS SED BEST JUDGEMENT ASSESSMENT U/S. 144 R.W.S.147 OF THE INC OME TAX ACT, 1961, AND MADE ADDITIONS TOWARDS UNACCOUNTED PROFESSIONAL CHARGES RECEIVED FROM APOLLO HOSPITALS IN CASH. THE SOLE BASIS FOR ADDITIONS TOWARDS UNACCOUNTED PR OFESSIONAL CHARGES IS STATEMENT RECORDED FROM AN EMPLOYEE DU RING THE COURSE OF SEARCH IN THE CASE OF APOLLO GROUP, WHER E DEPARTMENT HAS GATHERED CERTAIN MATERIALS WHICH SHO WS 8 ITA NOS.852 & 853/CHNY/2020 PAYMENT OF PROFESSIONAL CHARGES IN CASH TO SOME CON SULTANT DOCTORS INCLUDING THE ASSESSEE. THE ASSESSEE HAS D ENIED HAVING RECEIVED PROFESSIONAL CHARGES IN CASH FROM APOLLO HOSPITALS OTHER THAN WHAT WAS RECEIVED IN CHEQUE/RT GS. 10. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE REASONS GIVEN BY THE ASSESSING OFFICER IN LIGHT OF ARGUMENTS OF THE ASSESSEE AND WE DO NOT OURSELVES SUBSCRIBE TO THE REASONS GIVEN BY THE ASSESSING OFFICER TO MAKE AD DITIONS TOWARDS UNACCOUNTED PROFESSIONAL CHARGES RECEIVED I N CASH FOR SIMPLE REASON THAT EXCEPT STATEMENT OF AN EMPLOYEE RECORDED DURING THE COURSE OF SEARCH, THE ASSESSING OFFICE R HAS NEVER BROUGHT ON RECORD ANY OTHER EVIDENCE TO SUPPORT HIS FINDING THAT THE ASSESSEE HAS RECEIVED PROFESSIONAL CHARGES IN CASH FROM APOLLO HOSPITALS. WE FURTHER NOTED THAT ALTHO UGH, THERE IS A DIFFERENCE IN PROFESSIONAL CHARGES ADMITTED BY T HE ASSESSEE IN RETURN OF INCOME FOR IMPUGNED ASSESSMENT YEARS, WHEN COMPARED TO PROFESSIONAL CHARGES QUANTIFIED BY TH E ASSESSING OFFICER ON THE BASIS OF NUMBER OF PATIENTS REGISTER ED WITH THE NAME OF ASSESSEE IN APOLLO HOSPITALS, BUT THE ASSES SEE HAS EXPLAINED DIFFERENCE AND SUBMITTED THAT HE HAD TREA TED CERTAIN 9 ITA NOS.852 & 853/CHNY/2020 PATIENTS WITHOUT COLLECTING CHARGES AND FURTHER, S OME OF THE PATIENTS THOUGH REGISTERED WITH APOLLO HOSPITALS, BUT DID NOT TURN UP FOR TREATMENT. IN OUR CONSIDERED VIEW, EXPL ANATION GIVEN BY THE ASSESSEE THAT ADDITIONS CANNOT BE MADE ON TH E BASIS OF NUMBER OF PATIENTS REGISTERED WITH APOLLO HOSPITAL S APPEARS TO BE REASONABLE AND BONAFIDE. THE ASSESSING OFFICER NEVER DISPROVED CLAIM OF THE ASSESSEE WITH ANY EVIDENCES, BUT WENT ON TO MAKE ADDITIONS ONLY ON THE BASIS OF STATEMENT OF A THIRD PARTY, THAT TOO WITHOUT PROVIDING EVIDENCES AND OPP ORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE IN VIOLATION OF P RINCIPLES OF NATURAL JUSTICE. IT IS WELL SETTLED PRINCIPLES OF L AW BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S.A NDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCIS E, KOLKATTA-II (15 SCC 785), WHERE IT WAS CATEGORICALL Y HELD THAT NOT ALLOWING ASSESSEE TO CROSS EXAMINE WITNESSES B Y THE ADJUDICATING AUTHORITY, THOUGH STATEMENTS OF THOSE WITNESSES WERE MADE ON THE BASIS OF IMPUGNED ORDER IS A SERI OUS FLAW, WHICH MAKES THE ORDER NULLITY, INASMUCH AS IT AMOUN TED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. WE FURTHER NOTED THAT THE CIT(A) FOR THE ASSESSMENT YEAR 2011-12 IN ITA NO.1 27/2018- 10 ITA NOS.852 & 853/CHNY/2020 19 VIDE ORDER DATED 22.08.2019 HAS DELETED ADDITION S MADE BY THE ASSESSING OFFICER TOWARDS UNACCOUNTED PROFESSI ONAL CHARGES RECEIVED FROM APOLLO HOSPITALS IN CASH ON THE BASIS OF VERY SAME STATEMENT RECORDED FROM AN EMPLOYEE DURIN G THE COURSE OF SEARCH BY FOLLOWING DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE, KOLKATTA-II (SUPRA) , AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F H.R.MEHTA VS. ACIT. THEREFORE, WE ARE OF THE CONSID ERED VIEW THAT WHEN LEARNED CIT(A) HAVING ACCEPTED LEGAL PO SITION FOR EARLIER ASSESSMENT YEAR, THEN ERRED IN NOT ACCEPTI NG SIMILAR LEGAL POSITION FOR SUBSEQUENT ASSESSMENT YEARS, EV EN THOUGH THERE IS NO CHANGE IN FACTS & CIRCUMSTANCES OF THE CASE FOR IMPUGNED ASSESSMENT YEARS. 11. IN THIS VIEW OF THE MATTER AND CONSIDERING FACT S & CIRCUMSTANCES OF THE CASE AND ALSO BY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF A NDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCIS E, KOLKATTA-II (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HAS ERRED IN MAKING ADDITIONS TO WARDS 11 ITA NOS.852 & 853/CHNY/2020 UNACCOUNTED PROFESSIONAL CHARGES RECEIVED IN CASH F ROM APOLLO HOSPITALS ON THE BASIS OF STATEMENT OF A THIRD PAR TY, WITHOUT PROVIDING OPPORTUNITY OF CROSS-EXAMINATION TO THE A SSESSEE. THE LEARNED CIT(A), WITHOUT APPRECIATING FACTS HAS SI MPLY SUSTAINED ADDITIONS MADE BY THE ASSESSING OFFICER . HENCE, WE SET ASIDE ORDERS PASSED BY THE LEARNED CIT(A) FOR BOTH ASSESSMENT YEARS AND DIRECT THE ASSESSING OFFICER TO DELETE ADDITIONS MADE TOWARDS UNACCOUNTED PROFESSIONAL CHA RGES RECEIVED IN CASH FROM APOLLO HOSPITALS FOR BOTH ASS ESSMENT YEARS. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR BOTH ASSESSMENT YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER, 2021 SD/- SD/- ( . ) ( . ) (DUVVURU RL REDDY) (G.MANJUNATHA) $ & / JUDICIAL MEMBER & / ACCOUNTANT MEMBER $ /CHENNAI, ) /DATED 8 TH SEPTEMBER, 2021 DS +, -, /COPY TO: 1. APPELLANT 2. RESPONDENT 3. . () /CIT(A) 4. . /CIT 5. , 2 /DR 6. /GF .