Madras High Court
Dr.Sajan Hedge vs The Assistant Commissioner Of ... on 2 July, 2021
W.P. No.34042 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 02.07.2021
CORAM
THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM
W.P.No.34042 of 2018
and W.M.P.Nos.39540, 39541 & 39543 of 2018
and W.M.P.No.11036 of 2019
Dr.Sajan Hedge ..Petitioner
Vs.
The Assistant Commissioner of Income Tax,
Non-Corporate Circle-3,
VI Floor, Wanaparthy Block, Room No.623-A,
121, Mahatma Gandhi Road,
Chennai 600 034. ..Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India, to
issue a Writ of Certiorarified Mandamus, calling for the records of the
respondent contained in its notice issued under Section 148 of the Income
Tax Act, 1961, No.ITBA/AST/S/148/2017-18/1009404677(1), for PAN:
AAAPH6758C, dated 24.03.2018, for Assessment Year 2012-13, and all
proceedings in furtherance thereof, including the impugned proceedings
under Section 147 of the Income Tax Act, 1961, dated 03.12.2018, bearing
AAAPH6758C/NCC3/2018-19, in PAN: AAAPH6758C, dismissing the
petitioner's objections dated 10.10.2018 and 01.12.2018 to the reopening of
income tax assessment for the Assessment Year 2012-13, and to quash the
same as arbitrary, unjust and illegal and to consequently forbear the
respondent from in any manner reassessing the petitioner's income under
Section 147 of the Income Tax Act, 1961, for the Assessment Year 2012-13.
1/18
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W.P. No.34042 of 2018
For Petitioner : Mr.Suhrith Parthasarathy
For Respondent : Ms.Hema Murali Krishnan
(Senior Standing Counsel
for Income Tax)
ORDER
The lis on hand is filed to quash the notice issued under Section
148 of the Income Tax Act, 1961 (hereinafter referred to as, 'the Act') dated
24.03.2018 as well as the subsequent order passed, disposing of the
objections filed by the writ petitioner in proceedings dated 10.10.2018. The
petitioner is an individual Assessee. The petitioner is an Ortho-Pediatricians
and Top Spine Surgeon of substantial reputation attached to Apollo
Hospital, Greams Road, Chennai. He is regularly filing Income Tax Returns
in accordance with law. The petitioner filed his Return of Income for the
Assessment Year 2012-13. The Return of Income was processed under
Section 143 (1) of the Act and a final order of assessment was passed.
Surprisingly, the petitioner received a notice dated 24.03.2018, issued under
Section 148 of the Act, for reopening of the assessment for the Assessment
Year 2012-13, on the ground that income chargeable to tax has escaped
assessment within the meaning of Section 147 of the Act. The petitioner
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W.P. No.34042 of 2018
submitted his reply to the notice, confirming the filed Return of Income.
The petitioner requested for reasons for reopening of assessment. The
reasons were furnished to the petitioner by respondent in proceeding dated
10.08.2018. On receipt of the reasons, the petitioner filed his objections in
detail and the said objections were not considered and the same was
disposed of by the Assessing Officer in proceedings dated 03.12.2018. Thus,
the petitioner is constrained to file the Writ Petition.
2.The learned counsel appearing for the petitioner, even at his
opening arguments, contended that it is suffice if the matter is remanded
back by setting aside the order disposing of the objections passed by the
respondent. The learned counsel for the petitioner, to substantiate his
confinement of relief to remand the matter back to the Assessing Officer,
relied upon the reasons furnished for reopening of assessment as well as the
show cause notice issued on 28.11.2017. In the said show cause notice, the
Assessing officer has stated as follows:
“You were a consulting Doctor practicing at
Apollo Hospital, Chennai during the previous year
relevant to A.Y. 2012-13. Your chambers at Apollo
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W.P. No.34042 of 2018
Hospital were leased out from the same hospital. The said
hospital also maintained on its computerized systems the
details of the patients you have seen during the relevant
previous year. The said details have been obtained from
the said Hospital in pursuance of the statement of
Ms.Subhadra G., Manager (Operations), Apollo Hospital,
recorded on 5th January 2016 (copy enclosed). The details
of your fee structure too have been obtained similarly.
These are as follows,
Fee per First Visit/New Patient-Rs.700/-
Fee per old patient/Follow up-Rs.700/-
From the above details it would become clear that your
income from consultation fees from your Apollo Hospital
Practice would be Rs.17,22,000/-. However, after going
through your return of income for the relevant assessment
year, it is observed that the income returned on this count
is substantially less. You are required to show cause as to
why your income from consultation fees from your Apollo
Hospital Practice as quantified above should not be
brought to tax in your hands. Your reply should reach the
undersigned within fifteen days from the date of receipt of
this show cause notice.”
3.The learned counsel for the petitioner has stated that the show
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W.P. No.34042 of 2018
cause notice indicates the statement of Ms.Subhadra G., Manager
(Operations), Apollo Hospital, recorded on 5th January 2016 (copy
enclosed). However, there was no enclosure communicated along with the
show cause notice to the writ petitioner. Thereafter, the petitioner submitted
several letters seeking the copy of the statement of the said Ms.Subhadra G.,
Manager (Operations), Apollo Hospital, and the said statement was
furnished belatedly, after disposing of the objections filed by the petitioner.
Therefore, the petitioner had no opportunity to submit detailed objections
with reference to the statement of the said Ms.Subhadra G., Manager
(Operations), Apollo Hospital.
4.Secondly, the learned counsel for the petitioner relied on the
order passed by the Commissioner of Income Tax (Appeals), in the case of
Dr.Pichai Suryanarayan. It is contended that the case of said Dr.Pichai
Suryanarayan is also similar, wherein the Commissioner of Income Tax
(Appeals) allowed the appeal filed by the assessee, with an observation that
the Assessing Officer has not applied her mind independently on the facts
and circumstances of the case and without forming legitimate reasons to
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W.P. No.34042 of 2018
believe, which is the pre-requisite for issue of notice under Section 148 of
the Act and has only relied on the statement of Ms.Subhadra G., Manager
(Operations), Apollo Hospital, to reopen all the impugned assessments by
issue of impugned notices under Section 148 for all three Assessment Years.
The learned counsel for the writ petitioner further relied on the findings
made in the order passed by the Commissioner, Income Tax (Appeals) and
contended that he may be given an opportunity to submit objections in
detail with reference to the statement of Ms.Subhadra G., Manager
(Operations), Apollo Hospital, as well as the findings of the Commissioner,
Income Tax (Appeals), made in the order dated 20.08.2019, in the case of
Dr.Pichai Suryanarayan.
5.The learned counsel for the petitioner reiterated that beyond the
merits of the case on hand, the petitioner has to be given an opportunity to
submit a detailed objections and such objections to be considered and a
fresh order to be passed, disposing of the objections. In this regard, the
order impugned is to be quashed.
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W.P. No.34042 of 2018
6.The learned Senior Standing Counsel appearing on behalf of the
respondent objected the said contention by stating that remand would result
in multiplicity of proceedings and it will give further scope for developing
litigation in the present case. The respondent-Assessing Officer has
scrupulously followed the directives of the Hon'ble Supreme Court in the
case of GKN Drive shafts India Ltd., Vs. ITO reported in 259 ITR 19 (SC)
as well as the provisions of the Income Tax Act for reopening of assessment.
Thus, if at all any objections are to be filed, still it is left open to the
petitioner to submit the same and what is under challenge in this Writ
Petition is only reopening of assessment and the assessment order is yet to
be passed. Thus, the petitioner, even at this stage, has got ample opportunity
to submit his objections with reference to the findings of the order passed by
the Commissioner, Income Tax (Appeals) as well as with reference to the
statement of said Ms.Subhadra G., Manager (Operations), Apollo Hospital.
Contrarily, if the order impugned is quashed, it will pave way for the
litigants to create further litigations unnecessarily and the opportunity for
submitting further objections are still open and further, no prejudice would
be caused, in the event of filing any such objection at this stage.
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W.P. No.34042 of 2018
7.The learned Senior Standing Counsel reiterated that the
Assessing Officer has reason to believe that the income chargeable to tax
escaped assessment. Consequent to the search operations in Apollo
Hospitals, various informations and details were collected and based on the
informations and details, reopening proceedings are initiated. Thus, there is
no infirmity as such in respect of initiation of proceedings under Section
147/148 of the Act.
8.Regarding the non-furnishing of the copy of the statement of
Ms.Subhadra G., Manager (Operations), Apollo Hospital, the learned Senior
Standing Counsel solicited the attention of this Court with reference to the
show cause notice which was relied upon by the petitioner, wherein
admittedly, the statement of Ms.Subhadra G., Manager (Operations), Apollo
Hospital, recorded on 05th January, 2016 (copy enclosed) has been stated. If
at all the copy was not enclosed along with the show cause notice dated
28.11.2018, any prudent assessee would immediately respond to the show
cause notice by stating that they have not received the copy of the statement,
as stated in the show cause notice. On receipt of the show cause notice, the
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W.P. No.34042 of 2018
assessee, through their Chartered Accountants, sent a letter to the Assessing
Officer on 1st December, 2018. Interestingly, in the said letter, the petitioner
has not made any such complaint or request to furnish the copy of statement
of said Ms.Subhadra G., Manager (Operations), Apollo Hospital, which was
not enclosed in the show cause notice dated 28.11.2018. However,
subsequently, the petitioner made a request on 06th December, 2018, through
his Chartered Accountants. It is not in dispute that after disposing of the
objection, the copy of the said statement was furnished to the assessee
through his authorized representative and the copy of the said statement is
enclosed along with the typed set of papers filed in the present Writ Petition.
9.Considering the arguments as advanced by the respective parties
to the lis on hand, this Court is of the considered opinion that the scope of
reopening of assessment under Section 147 of the Act are well enumerated
and the requirements, pre-conditions as well as the procedures to be
followed are also unambiguous. The point to be considered is that whether
the reopening of assessment is done in accordance with the procedures
contemplated and by complying with the mandatory requirements.
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W.P. No.34042 of 2018
10.In the present case, admittedly, the assessee filed his Return of
Income. Notice under Section 148 of the Act was issued. The assessee
requested for reasons. Reasons furnished. Thereafter, he filed his objections
for the reasons and the said objections were also disposed of. Thus, the
directives of the Hon'ble Apex Court in the case of GKN Drive shafts India
Ltd., Vs. ITO (cited supra) was also followed by the respondent-Assessing
Officer.
11.With reference to the contentions raised by the petitioner to
remand the case back for re-consideration for the purpose of submitting
detailed objections to the reasons, this Court is of the considered opinion
that the reasons stated for reopening of assessment reads as follows:
“A search and seizure operation was conducted
in the case of M/s.Apollo Hospital Enterprises Limited on
05.01.2016. During the course of post-search
proceedings, details of the number of consultation done
by various doctors as per records of Apollo Hospital,
Chennai was extracted from the seized materials.
From the above information, it is ascertained
that the assessee Dr.Sajan K.Hege has received
consultation fee @ Rs.500/- per patient from 2596 no. of
patients during the period relevant to the Asst. Year 2012-
13 and total such fees received as consultation is
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W.P. No.34042 of 2018
Rs.12,98,000/- which is not offered for taxation. Thus, the
assessee has understated his income for the AY 2012-13.”
12.The petitioner had requested for further details and he has
submitted his objections to the reasons. With reference to the said reply, a
show cause notice was also issued to the petitioner in respect of the
Assessment Year 2012-13. However, the statement of Ms.Subhadra G., was
subsequently handed over to the representative of the petitioner and the
same was acknowledged.
13.The objections submitted were disposed of by the competent
authority on 03.12.2018.
14.The findings of the Assessing Officer regarding the objections
submitted are to be considered. Paragraph Nos.5 and 6 of the said order
dated 03.12.2018 reads as under:
“5.It may kindly be noted that in the said
certificate there is no specific details/remarks with regard
to the number of patients booked for appointment and
content of the certificate appears to be in a very general
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W.P. No.34042 of 2018
manner. Further, the content of the said certificate issued
by the Apollo Hospitals, is in a vague manner, which
needs further investigation. However, in the information
received in this office, there are details with regard to the
number of consultation done by the doctors during the
financial year 2010-11, 2011-12 & 2012-13. Merely based
on the said copy of certificate it could not be
concluded/contended that there is no reason to believe
that the income has escaped assessment.
6.You have contended the facts of the case-
being whether the consultation fee was charged or not
and whether receipt was offered to taxation or not. It may
kindly be noted that the onus to prove the fact that
consultation fee was not charged in cash and that the
entire professional fee receipt during the financial year
2010-11, 2011-12 and 2012-13 was offered to tax, is on
the assessee, which could be discharged only in the
course of the proceedings. Further, after completion of the
reopening proceedings only, facts of the case questioned
by you would be proved/would come to the light and
dropping of the proceedings initiated u/s 147 at this stage,
would obstruct establishing the facts of the case.”
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W.P. No.34042 of 2018
15.The reasons for reopening of assessment is made clear to the
assessee by the respondent. The objections submitted by the assessee was
also considered by the respondent and a speaking order was passed. While
disposing of the objections, the Assessing Officer has categorically stated
that he has reason to believe that the income chargeable to tax escaped
assessment. The findings extracted in the aforementioned paragraphs would
reveal that the reasons for reopening is candid and convincing. Thus, there
is no reason, what so ever, for interfering with the initiation of reopening
proceedings under Section 147 of the Act.
16.Let us now consider the request made by the petitioner to
remand the matter back to the Assessing Officer for fresh disposal of the
objections by providing an opportunity to the petitioner to submit additional
objections, based on the statement of Ms.Subhadra G., Manager
(Operations), Apollo Hospital and the order passed by the Commissioner of
Income Tax (Appeals).
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W.P. No.34042 of 2018
17.What is under challenge in the present Writ Petition is the
initiation of reopening proceedings under Section 147 of the Act. Chapter
XIV of the Income Tax Act provides procedures to be followed. If the
Assessing Officer has reason to believe that any income chargeable to taxes
has escaped assessment and if it is within 4 years, he is empowered to
reopen the assessment. If it is beyond 4 years and within 6 years, certain
conditions are stipulated for reopening under 1st proviso to Section 147 of
the Act. Explanation I and II to Section 147 of the Act contemplates various
circumstances under which reopening of proceedings shall be under taken
by the competent authority.
18.On initiation of reopening proceedings, notice is to be issued,
where income has escaped assessment under Section 148 of the Act. Section
149 contemplates time limit for notice. Time limit for completion of
assessment, re-assessment and re-computation are also contemplated under
Section 153 of the Act. Section 151 of the Act stipulates sanction for issue
of notice. Thus, various procedures are contemplated and mere initiation is
one aspect of the matter and the assessment/re-assessment is to be made by
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W.P. No.34042 of 2018
the Assessing Officer, is the further proceedings to be followed.
19.The Writ Petition is filed questioning the initiation of
proceedings under Section 147/148 of the Act, for reopening of assessment.
Undoubtedly, the assessee must be provided with an opportunity to defend
his case, in accordance with law, and at the first stage, on issuance of notice,
the procedures to be followed are settled by the judgment of the Hon'ble
Supreme Court of India in the case of GKN Drive shafts India Ltd., Vs.
ITO (cited supra). However, in the present case, the petitioner states that the
copy of the statement of Ms.Subhadra G., Manager (Operations), Apollo
Hospital was not enclosed along with the show cause notice issued. The
learned Senior Standing Counsel pointed out that even presuming it was not
enclosed, the petitioner has not sought for the copy immediately and even,
in the letter sent subsequently by the petitioner, there is no mentioning
regarding furnishing of the said statement. Thus, the very statement that the
enclosure was not available along with the show cause notice cannot be
trusted upon. However, the said statement of Ms.Subhadra G., Manager
(Operations), Apollo Hospital was subsequently handed over to the
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W.P. No.34042 of 2018
authorized representative of the petitioner. The petitioner seeks further
opportunity to submit elaborate objections. This Court is of the considered
opinion that in the event of quashing the initiation proceedings and
providing an opportunity to submit further objections, it would cause
prejudice to the revenue. Contrarily, the petitioner may be permitted to
submit all his further objections based on the statement of Ms.Subhadra G.,
Manager (Operations), Apollo Hospital, enabling the Assessment Officer to
consider the same and accordingly, proceed with the assessment/re-
assessment, based on the reopening of assessment proceedings. Thus,
instead of quashing the entire proceedings, as prayed for in the present Writ
Petition, it is suffice if an opportunity is provided to the writ petitioner to
submit additional objections, if any, based on the materials relied on by the
assessee to the Assessing Officer, withing a stipulated period and on receipt
of the same, the Assessing Officer shall be permitted to proceed with the
assessment/re-assessment. This being the factum established, the petitioner
is directed to submit his further objections along with the materials,
documents, etc., to the respondent within a period of two weeks from the
date of receipt of a copy of this order. On receipt of any such objections
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W.P. No.34042 of 2018
from the writ petitioner, the respondent shall consider the same along with
the process of assessment/re-assessment by providing an opportunity to the
writ petitioner. In the event of not receiving any such objection within a
period of three weeks, the respondent is at liberty to proceed further for
assessment/re-assessment and complete the exercise as expeditiously as
possible.
20.With these directions, the Writ Petition stands disposed of. No
costs. Consequently, connected Miscellaneous Petitions are closed.
02.07.2021
gsa (2/4)
Index : Yes
Speaking Order : Yes
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W.P. No.34042 of 2018
S.M.SUBRAMANIAM, J.
gsa
To
The Assistant Commissioner of Income Tax,
Non-Corporate Circle-3,
VI Floor, Wanaparthy Block, Room No.623-A,
121, Mahatma Gandhi Road,
Chennai 600 034.
W.P.No.34042 of 2018
02.07.2021
(2/4)
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