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Facts
The appellant, a hospital, filed its return for AY 2017-18. During the assessment under Section 143(3), the AO made an addition of Rs. 45,74,000/- for cash deposits in Specified Bank Notes (SBN) during the demonetisation period, arguing the hospital was not authorized to accept SBN from 09.11.2016. The CIT(A) subsequently confirmed this addition.
Held
The ITAT observed that the appellant claimed to have collected SBN from patients for emergency medical services and had also submitted a Ministry of Finance notification authorizing hospitals to accept SBN in such situations. As the lower authorities failed to examine the names of patients, the ITAT restored the matter to the AO for a de novo disposal with a reasonable opportunity of hearing to the appellant.
Key Issues
Whether the AO was justified in making an addition of cash deposits in SBN as unexplained money, given the appellant's claim of accepting SBN from patients for medical services and a Ministry of Finance notification, which the lower authorities failed to verify.
Sections Cited
143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI GEORGE GEORGE K., VP & SHRI INTURI RAMA RAO, AM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)], dated 29.08.2024 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is a limited company engaged in the business of running a hospital. The return of income for AY 2017-18 was filed on 03.11.2017 declaring income of Rs. 1,69,95,566/-. Against the said return of income, the assessment was completed by the Assessing Officer (AO) vide order Trichur Heart Hospital Ltd. dated 22.12.2019 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 2,15,69,566/- before set off of the brought forward losses of AY 2016-17. While doing so, the AO made addition of cash deposits in specified bank notes (SBN) during the demonetisation period of Rs. 45,74,000/- on the ground that the appellant was not authorised to accept these SBN from 09.11l.2016.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before us in the present appeal.
The learned counsel for the assessee submitted before us that the appellant had accepted SBN from the customers on emergency situation during period from 09.11.2016 to 20.12.2016 against bills issued to them in respect of health care services and sale of medicine from the pharmacy in the hospital. The amounts so collected from the customers were already offered to tax, which is not disputed. Since the corresponding income was already offered to tax, there is no need to make special addition on account of deposit of money and in this connection he placed reliance on the decision of the coordinate bench in the case of Shree Sanand Textiles industries Ltd. v. CIT in ITA No. 116/Ahd/2014.
On the other hand, the learned Sr. DR vehemently opposed the submission made on behalf of the appellant and submitted that the Trichur Heart Hospital Ltd. appellant was not authorised to accept SBN from the patients after 18.11.2016 and, therefore, explanation offered in support of cash deposit cannot be accepted.
We have heard the rival contentions and perused the material available on record. The short issue that arises for our consideration is whether the AO was justified in making addition of cash deposits made in SBN during demonetisation period of Rs. 45,74,000/- as unexplained money. During the course of assessment proceedings as well as before the CIT(A), it is asserted that the appellant made the above cash deposit out of the money collected from the patients during demonetisation period. The appellant also filed a notification issued by the Ministry of Finance authorising the hospitals to accept cash in SBN during the demonetisation period on emergency medical situation. However, the lower authorities failed to examine the names of the patients who are admitted in hospital and paid the fees in SBN. Therefore, the matter is restored back to the file of the AO for de novo disposal in accordance with law after providing reasonable opportunity of hearing to the appellant.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 9th April, 2025.