DR. SMT. RANJANA S.NARGOLKAR,PUNE vs. INCOME-TAX OFFICER, WARD - 11(2), PUNE

This appeal filed by the assessee is against the order of the CIT(A)-1, Pune dated 30.06.2017 for the assessment year 2003-04.

The effective ground raised

Briefly stated the relevant facts include that the assessee is a medical practitioner (Gynecologist and Anesthetist) and running a maternity home under the name and style of “Indira Maternity Home”. The assessee filed the return of income declaring total income of Rs.9,19,804/-. At the end of the assessment order u/s 147 r.w.s. 143(3) of the Act, the Assessing Officer assessed the total income of the assessee at Rs.62,62,196/- after making addition on account of long term capital gain on transfer of development rights of the property. Further, the Assessing Officer noted that the assessee’s accounts are not audited despite the eligible turnover of professional receipts. No audit report is submitted. Therefore, the Assessing Officer initiated the penalty proceedings and issued the notice u/s 271B of the Act. In the penalty proceedings u/s 271B of the Act, the Assessing Officer invoked the provisions of section 44AB of the Act and imposed the penalty of Rs.16,376/- which is equal to one half percent of the gross total receipts of the assessee. Against the said penalty order of the Assessing Officer, the assessee carried the matter before the CIT(A). The CIT(A) without appreciating the facts of the case and rejecting the written submission of the assessee, confirmed the penalty as levied by the Assessing Officer u/s 271B of the Act. The contents of para 5 to 7 of the order of the CIT(A) are relevant in this regard.

Aggrieved with the said decision of the CIT(A), the assessee is in appeal before us with the ground extracted above.

Before us, ld. AR submitted that the turnover of Rs.32,75,261/- constitutes a gross turnover of the assessee. Assessee has not maintained the books of account segregating the professional receipts from the said gross receipts. It is also informed that the assessee conducts “business” and not the “profession”. The turnover of the assessee for the year is below the threshold limits prescribed for business. Therefore, the audit requirement does not apply to the assessee. Otherwise, the sub-rule (3) of Rule 6F of the I.T. Rules, 1962 provides for the details of the registers to be maintained by a professional.

On the other hand, ld. DR for the Revenue submitted that how a “professional” can conduct a business. Ld. DR argued that the assessee being medical professional failed to maintain books of account which should be maintained by the professional. As per the ld. DR, the assessee is a professional and the provisions of section 44AA/44AB of the Act apply to the assessee. It is an admitted fact that the books of accounts of the assessee were audited u/s 44AA of the Act. Ld. DR submitted that assessee’s turnover, being Rs.32,75,261/-, attracts the provisions of section 44AB r.w.s. 271B of the Act. 7. We heard both the sides on this limited issue i.e. if the assessee is a medical professional or a business woman. We also examined the facts surrounding the assessee. It is an undisputed fact that the assessee is a qualified doctor, a Gynecologist and Anesthetist. She runs a nursing home. It is also admitted fact that the assessee attends to the patients and treats them in OPD and others. Therefore, mere running a nursing home/hospital does not convert a medical doctor into a business woman. Running a nursing home by her alone is a part of the medical profession. It is a different way of conducting her medical profession. Further, we find it is not the case of the assessee that she received salary from a hospital and there is no service agreement to support such an arrangement. Therefore, on this limited issue, we are of the considered opinion that the assessee is covered by provisions of section 44AA of the Act.

Further, we perused the order of the Tribunal of the Jaipur Bench in the case of Nirmal Kumar Joshi & Anr. vs. ITO vide order dated 27.03.2018, which is relied upon by the ld. AR. We find the same is distinguishable on facts. It is not a case of the medical professional. Further, we examined the contents of para 7 of the order of the CIT(A) and we find it relevant to extract the same here asunder :- “7. I have carefully considered the facts of the case as well as reply of the appellant. In this case, it is seen that the appellant is a Gynecologist and also runs proprietary concern named as Indira Maternity Home. There is no difference between the professional receipt of an individual and professional receipt of her proprietary concern as basically she is a professional. Therefore, it cannot be said that receipt of the appellant was in the nature of business receipt. The appellant has relied upon the decision of Gujarat High Court in the case of Natwarlal Ambalal Dave vs. CIT (1997) 225 ITR 0936. In this case, it is seen that the facts of the case are different as in that case, the issue was regarding clubbing of income in case of professional couple carrying out profession in their capacity as professionals. Therefore, the appellant cannot rely on the decision of Hon’ble Gujarat High court in her support. The appellant has also relied upon the decision of Hon'ble Hyderabad ITAT in the case of Shalini Hospitals vs ACIT. In this case, it is seen that facts are not identical in the sense that the nursing home was run by a personal firm and any of receipt was only of room rents, OT rents and Pre and Post Operation nursing care. While professionals fee was charged by Doctors and Surgeons directly from patients. Therefore, reliance of the appellant on the above decision is also misplaced. In this case, it is clear from the facts that the appellant is a professional who is running a proprietary concern and therefore receipt of the