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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
आदेश /O R D E R PER D.S. SUNDER SINGH, Accountant Member: This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-1, Visakhapatnam vide I.T.A No.290/2013-14/ITO/W-1(4)/VSP/2015-16 dated 25.03.2016 for the assessment year 2011-12.
2 ITA No.284/Viz/2016 Dr.C.H.S.Srinivas, Visakhapatnam
Dr.C.H.S.Srinivas, the assessee is a pediatrician by profession and also the Managing Director of M/s Sri Sai Dhanvantari Healthcare Pvt. Ltd. (SSDH) (RK Children Hospital & Perinatal Centre). Search and seizure operations were conducted in the group cases of Dr. Kandula Radha Krishna and M/s SSDH on 24.12.2010. During the course of search, incriminating material was found indicating suppression of receipts of Dr.Radhakrishna, Dr.K.Seshagiri and also the assessee. During the search, the assessee has admitted the additional income of Rs.10 lakhs as per the sworn statement recorded on 22.2.2011 u/s 132(4) of the I.T.Act. The Assessing Officer (AO) issued the notice u/s 148 of I.T.Act on 31.12.2012 and the assessee had filed the reply requesting the AO to treat the return filed on 27.9.2011 as the return in response to the notice issued u/s 148 on 31.12.2012. The AO took up the case for scrutiny and on verification, found that R.K. Childrens Hospital and Perinatal Centre (Sri Sai Dhanvantri Healthcare Pvt. Ltd (SSDH) ) has collected the amounts from the patients admitted in the hospital in the name of ‘Doctors fees’ but the same was not disclosed as receipts in the regular books of accounts maintained by the assessee company. The AO further observed that the Doctors fee was actually charged from the patients admitted in hospital and appropriated
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among three Doctors of the hospital. The assessee who happens to be the Managing Director of SSDH accepted in the statement recorded u/s 132(4) of the I.T.Act that the Doctors fee debited as expenditure in the accounts of the company was appropriated by three doctors i.e. Dr.K.Radhakrishna, Dr. Seshagiri and Dr.C.S.Srinivas at the ratio of 37:35:28. The assessee also admitted a sum of Rs.40 lakhs as additional income in the hands of the company and a sum of Rs.10 lakhs as additional income in his hands of the assessee for the financial year 2010-11. The AO verified the books of accounts and the return of income but did not find the sum of Rs.10 lakhs additional income admitted by the assessee in the return of income separately. Further the AO found that the share of Doctors fee related to the assessee under the head Doctors fee collected by the company was worked out Rs.16,51,815/-.The AO has called for the explanation of the assessee as to why the said sum of Rs.16,51,815/- should not be separately added to the income and the assessee replied that the entire sum of doctors fee amounting to Rs.16,82,445/- was admitted as income and brought into the books of accounts hence no separate addition is required to be made. The assessee also submitted a note and produced the books of accounts before the AO. The AO was not convinced with the explanation of the
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assessee, since the assessee has not separately shown the additional income in the return of income. Thus, the AO made the addition of Rs.16,51,815/- relating to undisclosed receipts of SSDH in his hands and computed the total income at Rs.48,94,065/-.
Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and submitted that the amounts collected from the in patients of hospital i.e. SSDH in the name of Doctors fee was admitted in the return of income filed by the assessee. The Ld.AR further submitted before the CIT(A) that at the time of conducting the search the assessee was not maintaining the books of accounts and later on the assessee reconstructed the books of accounts and accounted the receipts, hitherto which were unaccounted under the head ‘Doctors fee’. Therefore, no further addition is required to be made in the hands of the assessee separately. However, the Ld.CIT(A) observed that the assessee in his sworn statement recorded u/s 132(4) of the Act surrendered the additional income of Rs.10 lakhs towards the share of Doctors fee but in the return of income, no such amount was separately shown by the assessee, hence, the Ld.CIT(A) was of the view that the assessee should have admitted the sum of Rs.10 lakhs separately in
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the return of income as committed in his sworn statement on account of suppression of share of Doctors fees. Accordingly directed the AO to make the addition of Rs.10 lakhs instead of Rs.16,51,815/-.
Aggrieved by the order of the Ld.CIT(A), the assessee has taken up the matter before the Tribunal. During the appeal hearing, the Ld.AR argued that there was a search in the case of SSDH and during the course of search, the incriminating material was found showing that the Doctors fees charged from the patients was not admitted in the books of hospital and such amount was taken by three directors of the Hospital who are also doctors in the ratio of 37:35:28 between Dr.K.Radha Krishna, Dr.K.Seshagiri and Dr.C.H.S.Srinivas respectively. During the search proceedings, the assessee admitted additional income of Rs.10 lakhs, however, the actual share of assessee from SSDH was Rs.16,82,445/- for the period from April to December 2010. The same was not recorded in the regular books of accounts as the assessee was not maintaining the books of accounts at the time of search. Later on the assessee reconstructed the books of accounts and accounted the said receipts in the books accounts as well as in the return of income filed on 27.9.2011, thus there is no
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suppression of income and no requirement to make the addition separately either for Rs. 10.00 lacs or for Rs.16,51,815/-, since the assessee admitted more than the said amounts. The assessee has filed a paper book and furnished the copy of the note submitted before the AO in page No.15 and 16, wherein, he had stated to have admitted a sum of Rs.16,82,445/- as Consultancy Receipts received from SSDH. Apart from the receipts upto December 2010, the assessee also admitted the receipts for the subsequent period i.e. from January to March 2011 in the ledger account and furnished the copy of the ledger account in Page No.19 of the Paper Book. As per the ledger, the assessee has admitted the sum of Rs.16,82,445/- upto Dec 2010 and the aggregate receipts of Rs.20,93,569/- up to march 2011 from SSDH. Accordingly filed the return of income admitting the net profit of Rs.18,12,589/-. Since above information establishes that the assessee has admitted the entire receipts of his share from SSDH over and above the disclosure made by the assessee, the Ld.AR argued that the Ld.CIT(A) has erred in directing the AO to make the addition of Rs.10 lakhs as undisclosed income and requested to delete the same.
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On the other hand, the Ld.DR vehemently supported the orders of the lower authorities and argued that the Ld.CIT(A) has rightly confirmed the addition of Rs.10 lakhs and no interference is called for.
We have heard both the parties and perused the material placed on record. A search u/s 132 was carried out in the case of SSDH. on 24.12.2010. During the course of search, the incriminating material was found indicating the suppression of receipts which were appropriated by the Directors Dr.K.Radhakrishna, Dr.K.Seshagiri and Dr.C.H.S.Srinivas. The assessee admitted undisclosed income of Rs.10 lakhs in his hands u/s 132(4) of I.T.Act on account of undisclosed receipts relating to Doctors fees, which was collected from the patients who are admitted in the RK Childrens Hospital and Perinatal Centre (SSDH). The said sum was not accounted in the books of hospital, but appropriated by the assessee and two other Doctors, as admitted by the assessee in the statement recorded u/s 132(4) in response to Q.13 on 22.02.2011. The share of the assessee from the undisclosed doctors fee collected from patients was worked out to Rs.16,51,815/- according to AO. At the time of conducting the search the assessee was not maintaining the books of accounts, but by the time the
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assessee filed the return of income the assessee reconstructed the books of accounts and duly accounted the receipts which were unaccounted under the head ‘Doctors fees’. The assessee has produced the books of accounts and shown the ledger account of undisclosed receipts on account of doctors fee collected from the patients. The assessee’s case is that at the time of conducting the search, the assessee was not maintaining the books of accounts. Subsequent to the date of search, the assessee has reconstructed the books of accounts and accounted the entire receipts of his share in the books of accounts from the period from April to December 2010 and January to March 2011. As an evidence, the assessee has furnished account copy of ledger. The department’s case is that the assessee has admitted the additional income and has not shown the receipts separately the said sum of Rs.16,15,851/- thus the same required to be brought to tax in his hands. The CIT(A) though accepted the contention of the assessee, upheld the addition of Rs.10 lakhs which was admitted by the assessee u/s 132(4) of I.T.Act which was not shown separately in the return of income. Though the assessee has admitted additional income of Rs.10 lakhs, the share of the assessee towards the Doctors fee collected from the patients worked out to Rs.16,51,815/- which was not disputed by the AO. The AO also has not
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disputed the fact that the assessee had not maintained the books of accounts till the date of search, but subsequently reconstructed the books of accounts. As evident from the ledger account, profit and loss account and the note submitted by the assessee that the assessee had admitted the sum of Rs.16,82,445/- towards his share from the SSDH upto December 2010 which was more than the admission made by the assessee u/s 132(4) and also the share of his receipts worked out by the AO. The AO has not given a finding that the assessee has received more than Rs.16,82,445/- and not admitted by the assessee. Merely because the statement u/s 132(4) was given, the addition cannot be made in the hands of the assessee without any supporting evidence. Since the assessee has admitted the entire receipts upto December 2010 and for the subsequent period and filed the return of income, we hold that no separate addition is required to be made in the hands of the assessee on account of Doctors fees. Accordingly, we set aside the orders of the lower authorities and delete the addition made by the AO. The appeal of the assessee is allowed on this ground.
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In the result, appeal of the assessee is allowed.
The above order was pronounced in the open court on 4th July, 2018.
Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर ससह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER धिशाखापटणम /Visakhapatnam ददिांक /Dated : 04.07.2018 L.Rama, SPS आदेश की प्रधिधलधप अग्रेधर्ि/Copy of the order forwarded to:- 1. ननर्ााररती/ TheAssessee- Dr.C.H.S.Srinivas, D.No.17-1-17, Opp.KGH, Maharanipeta, Visakhapatnam 2. राजस्व/ The Revenue –The Income Tax Officer, Ward-1(4), Visakhapatnam 3. The Pr.Commissioner of Income Tax-1, Visakhapatnam 4. The Commissioner of Income Tax(Appeals)-1, Visakhapatnam 5. धिभागीयप्रधिधिधि, आयकरअपीलीयअधिकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam 6.गाडाफ़ाईल / Guard file आदेशािुसार / BY ORDER // True Copy //
Sr. Private Secretary ITAT, VISAKHAPATNAM