M/S ORTHONOVA HOSPITAL, JALANDHAR, PUNJAB V. UNION OF INDIA AND ORS.

CWP/2644/2011

AI Insights

The case involves M/s Orthonova Hospital, a firm run by a husband and wife who are doctors, challenging the order of the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961. The challenge was against the dismissal of their revision petition concerning an assessment order for the year 2007-08, which had resulted from a search and seizure operation. The Assessing Officer had made several additions to the declared income, citing unaccounted cash receipts, commission from suppliers, unrecorded operation theatre receipts, and inflated expense claims. The revisional authority upheld these additions, leading to the hospital's petition in the High Court, which was dismissed.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 724271 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 21-02-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: J S BHASIN
• Keywords: Assessment; Income Tax; Quasi Judicial Proceedings; Revision petition; Unaccounted income
• Section: 264

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No.2644 of 2011 Date of decision: 21.2.2011 M/s Orthonova Hospital. -----Petitioner. Vs. Union of India & others. -----Respondents. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. J.S. Bhasin, Advocate for the petitioner. --- ADARSH KUMAR GOEL, J. 1. This petition seeks quashing of order of the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961 (for short, “the Act”), dismissing the revision petition against the order of assessment for the assessment year 2007-08. 2. The assessee is a firm comprising husband and wife who are doctors running a hospital. A search and seizure operation was carried out in the premises of the assessee on 17.11.2006. The assessee filed return on 12.6.2008 declaring Rs.54,31,620/- income. The Assessing Officer, however, made C.W.P. No.2644 of 2011 certain additions and assessed the income to be Rs.91,47,210/-. Reasons for addition were mentioned to be as under:- (i) The assessee introduced unaccounted cash receipts account in the cash book which was beyond the amount offered by the assessee for taxation as miscellaneous income; (ii) The assessee had received commission from supplier of implants to the patients; (iii) There was suppression of receipts for the operations in the operation theatre which were not reflected in the regular books of account and (iv) False and inflated claim was made towards expenses. 3. The assessee did not file any appeal against the order of assessment but filed a revision under Section 264 of the Act. The Commissioner considered and rejected the contentions raised on behalf of the assessee. It was held:- “(i) As far as addition of Rs.29,29,000/- is concerned, in the body of the assessment order, it has been elaborately discussed on the basis of the seized material how the assessee had suppressed professional receipts. Talking specifically about the figure of Rs.29,29,000/-, addition made was kept restricted to this amount by giving benefit of doubt to the assessee through warding off every iota of estimation, conjecture or surmise, even though possible ground for making further addition under this 2 C.W.P. No.2644 of 2011 head was there. The assessee in his own submission has himself submitted that there was discrepancy in as much as professional receipts were not fully disclosed in the cash book for which he has sought to explain being purely a problem of an inefficient account. Whether right or wrong, fact remains that total professional receipts were not disclosed in his books of accounts. Further, it has been found that the assessee, in course of assessment proceedings, himself admitted of non-recording of professional receipts to the tune of Rs.44,10,620/- which were intended to get partly offset through matching entries in his books of accounts and for which the disclosed Rs.15,00,000/- as misc. income. Thus, the balance amount to be thus off-set by him, in his own admission comes to Rs.29,10,620/- which is pretty close to the addition made by the A.O. on this account. Thus, the addition on this ground is very much reasonable and does not call for any further intervention. Moreover, it is seen that the assessee has given detailed explanation at the time of assessment and the same has been closely examined by the A.O., hence at this stage, no further interference on this issue is called for. (ii) Coming to the addition of Rs.6,16,330/- on account of operation receipts, here also the A.O. has discussed in the body of the assessment order itself the basis of this addition. The AO made the addition on the grounds that the OT receipts summarized in the OP a/c seized (A-) 3 C.W.P. No.2644 of 2011 from the assessee’s premises were nowhere found mentioned in the books of the assessee and thus held these to be unaccounted income of the assessee. The assessee’s reply that medicines are purchased by the patients and not charged for is not convincing since OT expenses would include actual operating expenses, room charges, doctor’s fees etc. other than only medicines. In any case, it is not clear why the assessee is maintaining any such account, if it were never to be charged from the patients. The assessee in his own submission failed to bring about any fresh argument which may call for further consideration from this end. Thus, no intervention on this addition is also contemplated. (iii) As regards addition of Rs.5,00,000/- on account of implants, the assessee could not counter the arguments, advance by the A.O. in his assessment order except stating that this addition is made on estimate basis. If implants have been routed through a distribution channel then some benefit/incentives/remuneration in the form of commission to the distributor or as discount to the end-user is likely to flow as normal practice. Further the fact that the accounts were being maintained and cash was being handled on behalf of the implant supplier indicated a close relationship between the assessee and the supplier, hence the assessee’s argument have no ground. If the implant are sold directly to the patients and the assessee has nothing to do with the payments 4 C.W.P. No.2644 of 2011 etc. then there is no reason for the assessee to collect cash and maintain the account for the implants supplier. An affidavit given after the search and seizer in nature. Further, the addition made is very reasonable when compared with the quantum found in the account at the time of search. Furthermore, in this context it is stated by the assessee that addition on the basis of estimate, in this context it is stated by the assessee that addition on the basis of estimate, in itself, is nowhere a baseless one, if it is strongly corroborated by facts on records and the circumstantial evidences. The A.O. in the assessment order elaborately discussed the circumstances before arriving at this estimation. In this context, it may be stated that the assessee in his submission nowhere contradicted the circumstances brought about by the A.O. in the assessment order. Thus, no intervention in this account is also called for. (iv) As far as addition of Rs.1,00,000/- and Rs.61,260/- are concerned, although these were additions made on estimate basis but keeping in view the circumstances under which the A.O. was forced to make such estimation, these were only too conservative ones and do not call for any revision. (v) Lastly, addition of Rs.9000/- on account of charity and donation is on the basis of facts on records and does not call for any comments at all. The AO has disallowed 1/6th of the total expenses incurred on staff welfare, Misc. 5 C.W.P. No.2644 of 2011 Expenses, Repair & Maintenance, House Tax & Generator Expenses in view of the submission that the partners were residing in the same premises as the firm. In light of these facts, it is quite reasonable to disallow a reasonable amount from this expenditure being non- business in nature and hence calls for no interference.” 4. We have heard learned counsel for the petitioner. 5. Learned counsel for the petitioner submits that the discrepancies in the books of account were fully explained which has not been properly gone into by the revisional authority. 6. We are unable to accept the submission. 7. The finding recorded by the Assessing Officer, as affirmed by the revisional authority, is a pure finding of fact. Whether or not explanation of the assessee about the discrepancies in the books of account should have been accepted, is not a matter which can be gone into in a writ of certiorari. There is no error apparent on the face of record on a question of principle. 8. Only contention raised on behalf the petitioner is that revisioinal proceedings under Section 264 of the Act are quasi judicial proceedings and not administrative and the revisional authority must go into the issue raised by the assessee. The assessee has option either to file an appeal or to file a revision. 6 C.W.P. No.2644 of 2011 9. The contention raised cannot be accepted. As already observed, the revisional authority has gone into all the contentions raised and merely because by re-appreciation of facts, a different view is possible, is not a ground for holding the concurrent finding of fact to be perverse so as to call for interference under Article 226 of the Constitution. Dismissed. (ADARSH KUMAR GOEL) JUDGE February 21, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 7 "