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Facts
The assessee, Patanjali Hospitals Pvt. Ltd., deposited Rs.7,28,000 in specified bank notes (SBNs) during the demonetization period, which the Assessing Officer added to its income under Section 68 and taxed under Section 115BBE. The AO accepted Rs.69 lakhs as opening cash balance but made an addition for the remaining Rs.7,28,000, despite the assessee claiming it was part of its regular turnover which the AO had already accepted. The assessee argued that hospitals were permitted to accept SBNs during demonetization and the addition constituted double taxation.
Held
The Tribunal held that since the Assessing Officer had already accepted the assessee's turnover, which included the disputed Rs.7,28,000 from SBNs, making a separate addition for this amount would result in impermissible double taxation. It noted that the profit element was already accounted for within the accepted turnover and that diagnostic centers were allowed to accept SBNs during demonetization. Consequently, the Tribunal deleted the addition of Rs.7,28,000.
Key Issues
Whether an addition made under Section 68 and taxed under Section 115BBE for cash received in demonetized currency (SBNs) by a hospital constitutes double taxation when the amount is already included in the assessee's declared and accepted turnover.
Sections Cited
68, 115BBE
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Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This is an appeal filed by theassesseeagainst CIT(A)’s order videDIN& Order No: ITBA/APL/S/250/2024-25/1071693255(1) dated 30.12.2024.
Briefly stated the facts of the case are that the assessee is running a hospital in the name and style of Patanjali Hospitals Pvt. Ltd., at Chitradurga – 577 501, Karnataka. Assessee filed its return of income on 25.09.2017 declaring income of Rs.32,31,802/-. The case was selected for scrutiny and notice was served to the assessee and subsequently other statutory notices were issued to the assessee. The assessee furnished reply. The opening cash balance was shown by the assessee at Rs.69lakhs on 09.11.2016 which was deposited in demonetized currency were accepted by the AO. The AO did not accept only the difference amount of Rs.7,28,000/- which was received from 09.11.2016 to 30.12.2016 and applied section 68 of the Act. For tax computation purpose, the AO also applied section 115BBE of the Act. Submissions of the assessee were not accepted.
Aggrieved from the above Order, assessee filed appeal before the CIT(A). The assessee also furnished detailed submissions stating the reasons for accepting in SBNs and he dismissed the appeal of the assessee.
Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel reiterated the submissions made before the lower authorities and submitted that during the period of demonetization, the State Government of Karnataka had instructed to all diagnostic centres to accept in SBNs and provide treatment to the patients and in the meantime a letter was also written to the Joint Commissioner, Davangere, regarding impact of accepting in SBNs but till date no reply was received. The learned Counsel further submitted that the Central Government had also issued notifications in which it was clarified that the Hospitals were allowed to accept inSBNs from patients. He further submitted that the books of accounts have been properly maintained by the assessee and got it audited by Chartered Accountant and there is no any qualifications in the Tax Audit Report by the tax auditor in this regard. The AO has not rejected the books of accounts of the assessee and accepted the turnover declared by the assessee and the amount of Rs.7,80,000/- is part of the turnover in which the profit has been calculated which is subject to tax. The AO has accepted turnover and he has separately added the cash received from patients in SBNs which would amount to double taxation which is not permitted in the Income Tax Act. The learned Counsel requested that the matter may be remitted to the jurisdictional AO for further verification. The assessee has proper record to substantiate its case.
On the other hand, the learned DR relied on the Order of the lower authorities and submitted that during the course of proceedings before the authorities below, assessee could not justify the cash amount received from patients and the learned DR further submitted that the assessee has not produced Form 3Cr.w.r. 6F(3) which is required to be maintained by the hospital to prove the receipt from the patients. Therefore, providing more opportunities to the assessee is not correct.
Considering the rival submissions, we noted that during the course of demonetization, assessee deposited Rs.76,28,000/- in SBNs out of which Rs.69 lakhs has been accepted by the AO as opening balance as on 09.11.2016 which is major amount out of the total cash deposits in SBNs. The AO has not accepted only Rs.7,28,000/- and this amount is also included in the turnover of the assessee and assessee has calculated profit on such receipts. However, the AO has accepted the returned income and turnover of the assessee in which includes the amount of Rs. 7,28,000/-, the profit element is also involved on such receipts disclosed by the assessee as part of the turnover. The AO has not reduced these amounts (demonetized SBNs of Rs.7.28 lakhs) from the total turnover as shown by the assessee ii its financial statements and not recalculated the revised profits on the turnover achieved which amounts to double taxation is not permitted in the Income Tax Act. Further looking into the quantum of addition of Rs.7,28,000/-, the AO has accepted major portion of the SBNs which was treated as opening balance on 09.11.2016. In this regard there is no any observation by the AO regarding verification of the opening balance and diagnostic centres were allowed to accept in SBNs during the demonetization period. Considering the facts of the case and as request made by assessee’s Counsel regarding providing further chance to the assessee, we are of the view that it is not required since we have held that the addition made by the AO is double taxation on the same amount, we are rejecting the ld. AR’s request and delete the addition of RS. 7,28,000/- in above terms..
In the result, appeal filed by the assessee is allowed.