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Facts
A search and seizure action was conducted at the assessee doctor's residential premises, leading to the discovery of cash receipts from OP consultations. The Assessing Officer (AO) made additions based on information from the hospital and levied penalty under Section 271(1)(c) for concealment of income.
Held
The Tribunal held that penalty proceedings are distinct from assessment proceedings and not automatic. Following the jurisdictional High Court's decision in a similar case, the Tribunal found the assessee's explanation for not disclosing the income to be bonafide and reasonable.
Key Issues
Whether the penalty levied under Section 271(1)(c) is sustainable when the assessee has a reasonable cause for non-disclosure, and penalty proceedings are separate from assessment.
Sections Cited
271(1)(c), 132, 273B
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Income Tax Appellate Tribunal, ‘C BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid four appeals filed by the assessee for Assessment Years (AYs) 2013-14 to 2016-17 arises out of the identical orders of Learned Commissioner of Income Tax, Appeal, Chennai-19 [hereinafter “CIT(A)”] dated 15.12.2023 confirming penalty order passed u/s 271(1)(c) for A.Y. 2013-14 to 2016-17.
The facts in all the appeals of the assessee are identical and issues are common hence, we proceed to pass a common order. For :- 2 -: brevity, we shall take up the appeal in for A.Y 2013-14 as lead case.
The assessee in the appeals filled for A.Y 2013-14 to A.Y. 2016- 17 has raised the grounds of appeal in confirming the penalty for concealment of income u/s. 271(1)(c) of the Act.
1. 4. The assessee is a Doctor employed in Apollo Hospital, Chennai and also doing practice as OP consultation in the hospital. A search and seizure action u/s. 132 of the Act was conducted at the residential premises at 39 & 40, Bakers Street, Choolai, Chennai of assessee on 08.06.2018. During the course of search at the residential premises of the assessee, a paper cover containing details of cash received from OP consultation on one day was found and seized vide Annexure ANN/AKG/JPC/LS-S. The A.O, on the basis of documents seized from the assessee premises called for details from Apollo Hospital and made addition of unaccounted OP consultation received in the assessment order. The A.O has also initiated penalty u/s 271(1)(c) of the Act for concealment of particulars of income during course of assessment proceeding. The A.O has levied penalty u/s 271(1)(c) of the Act for concealment of income after assessment order was confirmed by Ld CIT(A). Aggrieved, the assessee preferred appeal
:- 3 -: before Ld. CIT(A). On appeal, the Ld. CIT(A) has confirmed the penalty and now the assessee is in appeal before us.
The Ld. Authorized Representative (A.R) of the assessee has submitted that the A.O has made addition on the basis of information called from Apollo Hospital and not from the seized material, therefore in view of decision of Hon’ble Supreme Court in the case of Pr. CIT, Central-3 Vs. Abhisar Buildwell 454 ITR 212 (SC), even addition based on which penalty has been levied is not sustainable. The Ld. AR further submitted that penalty proceeding is different from assessment proceedings and merely because addition has been sustained, in itself does not attract penalty u/s 271(1)(c) of the Act. The Ld. AR submitted that in identical case where addition has been made in the case of another doctor on the basis of information from Apollo Hospital, the Hon’ble Madras High Court in the case of S. Duraisamy vs DCIT Business Circle-1, Chennai in Review Application Nos.92 to 94 of 2024 dated 16.07.2024 (Mad) has deleted penalty after considering the provisions of section 273B of the Act. The Ld. AR has submitted that the assessee is a reputed heart surgeon and busy in his profession and was under the impression that income has already
:- 4 -: been disclosed by the hospital regarding consultation fee from OPD.
Therefore there was a reasonable cause. 6. The Ld. Departmental Representative, on the other hand, has argued that the assessee has accepted undisclosed income during search and the addition made has been upheld. The Ld. DR has submitted that the non disclosure of OPD cash receipts were deliberate and hence, penalty levied u/s. 271(1)(c) of the Act is justified.
We have heard the rival submissions, and perused the materials available on record. A search was conducted in the case of the assessee on 08.06.2018 and a paper cover containing details of cash received from OP consultation in a day was found and seized. Subsequently, the A.O called for details from the Apollo Hospital and made addition of undisclosed income. The A.O. has levied penalty u/s.271(1)(c) of the Act for concealment of income after addition has been upheld by Ld CIT(A). The assessee is a Heart Surgeon and busy in his profession and has given reason for not including the OP consultation charge in return of income. The Hon’ble Supreme Court in the case of CIT vs. Anwar Ali [1970] 76 ITR 696 (SC) has held that penalty proceedings are separate and distinct from assessment
:- 5 -: proceedings. Penalty u/s. 271(1)(c) of the Act is not automatic and should not be levied mechanically only because an addition has been made to the income. As per Section 273B of the Act, penalty is not to be imposed in case assessee shows that there was reasonable cause for the failure referred to in Section 271(1)(c) of the Act. In this context, it is gainful to refer to the order passed by the Hon’ble Jurisdictional High Court, in the case of Duraisamy vs. DCIT, supra, wherein the penalty levied u/s 271(1)(c) of the Act was cancelled as under :
“10. In the case of similarly placed person viz., Dr.R.Gopalakrishnan, while dismissing the appeal filed by the Revenue, it was held by the Division Bench as follows: "5.It is seen from the records that the assessee was never put on notice and there is nothing to suggest that he was aware of the documents obtained from M/s.Apollo Hospitals. In order to fasten the penalty on the assessee, there should be a specific finding that there is deliberate and wilful suppression on the part of the assessee. In other words, the revised return will have be treated as voluntary one until the contrary is proved." Though the learned senior standing counsel appearing for the Revenue contended that the case of Dr.R.Gopalakrishnan (supra) is of no relevance as it is factually distinguishable, no materials, more particularly, the copies of the revised returns filed by Dr.R.Gopalakrishnan, despite several opportunities granted by us, were produced to substantiate the same. Therefore, we are of the opinion that the review applicant is on the same footing as that of Dr.R.Gopalakrishnan and he also is entitled to the same relief as Dr.R.Gopalakrishnan was entitled to.
Superadded, from the facts obtaining in this case, this Court has no incertitude in holding that the plea of the learned counsel for the Review applicant that the Review applicant is a professional doctor and he has rendered service to thousands of downtrodden people and hence, levying penalty on him would affect his mental status as :- 6 -:
well as professional career, appears to be bona fide and quite reasonable and hence, merits acceptance.
In view of the foregoing reasons, the judgment dated 17.11.2023 passed by this court in TCA Nos.365 to 367 of 2011 is recalled and the Tax Case Appeals are disposed of by setting aside the order dated 18.03.2011 passed by the Tribunal in to 944/CHNY/2010.”
In light of the above, and following the ratio of order of Hon’ble Jurisdictional High Court in the case of Duraisamy vs. DCIT, supra, we are inclined to accept the explanation of the present Doctor assessee (supra) as bonafide and quite reasonable, hence, the impugned penalty is cancelled.
We find that the identical issues are involved in assessee’s appeals for A.Ys 2014-15, 2015-16 & 2016-17 accordingly, our adjudication above in A.Y 2013-14 applies mutatis mutandis to these A.Ys. Therefore, for the similar reasons, we cancel the penalty in 64 & 66/Chny/2024 as well.
In the result, all the four appeals filed by the assessee are allowed. Order pronounced on 07th March, 2025.