NITIN PRAKASH KOCHAR,PUNE vs. ITO WARD 11(1), PUNE

ORDER

PER DR. DIPAK P. RIPOTE, AM:

2. The learned CIT(A) failed to appreciate that upon filing the revised ITR u/s 139(5), the original ITR u/s 139(1) is replaced by the revised ITR and therefore, the additions of Rs.9,12,089 made by the A.O. merely by relying on the receipts and expenses declared in the original ITR u/s 139(1) were not justified in law and on facts of the case.

3. The learned CIT(A) erred in sustaining the addition of Rs. 1,89,909 made by the A.O towards professional receipts without appreciating that the said receipt represents refund of deposits kept with M/s. Six Sigma Medicare & Research Ltd. in earlier years which do not constitute income of the appellant and hence, the said addition was not justified on facts of the case and hence, the no addition is required in respect of the said amount.

3. The learned CIT(A) erred in sustaining the disallowance of Rs.5,68,000 made by the A.O towards Professional Charges paid to two doctors on vague grounds without appreciating that the said payments were made through banking channel after deduction of TDS and the said receipts were also offered to tax by the recipient doctors in their ITRs filed for A.Y.2020 - 21 and therefore, there was no reason to disallow the said expenses merely because the deduction in respect of the same remained to be claimed in the original ITR u/s 139(1).

4. The learned CIT(A) erred in sustaining the disallowance of Rs. 1,54,180 made by the A.O by disallowing the ‘Petrol & Diesel Expenses’ of Rs. 1,05,230 and ‘Salary & Wages Expenses’ of Rs.48,950claimed additionally in the revised ITR filed u/s 139(5) without appreciating that the said expenses were genuinely incurred for business purposes and there was no reason to disallow the same merely because the said expenses remained to be claimed in the original ITR filed u/s 139(1) for A.Y.2020-21.

5. The appellant craves, leave to add, alter, amend and delete any of the above grounds of appeal.” Brief facts of the case :

2. Assessee Dr.Nitin Prakash Kochar is a Cardiac Surgeon filed Original Return of Income electronically on 05.12.2020 showing 2 Nitin Prakash Kochar [A] total income of Rs.42,58,230/-. The assessee revised return of income on 15.12.2020 to Rs.33,46,140/-. Assessee’s case was selected for scrutiny, accordingly, the Assessing Officer(AO) issued various notices. Assessee filed submission before the Assessing Officer. The AO asked assessee to explain the reasons for reduction of income in the revised return of income. The assessee submitted that inadvertently Rs.1,89,909/- which was an amount of Refund of Deposit from Sigma Hospital was shown as Professional Receipt. Similarly, certain expenditure of Rs.5,68,000/- which was paid to Dr.Daniel Fernandes and Dr.Rashmi Kochar, but remained to be claimed in the Original Return of Income. The amounts of Rs.1,05,230/- and Rs.48,950/- remained to be claimed as expenditure. After considering the assessee’s submission, the AO assessed the total income at Rs.42,58,230/-. Aggrieved by the assessment order, assessee filed appeal before the ld.CIT(A). The ld.CIT(A) confirmed the order of the AO.

2.1 Being aggrieved by the order of the ld.CIT(A), Assessee filed appeal before this Tribunal.

3 Nitin Prakash Kochar [A] Submission of ld.Authorised Representative(ld.AR) : 3. The ld.Authorised Representative(ld.AR) for the Assessee submitted that Assessee is a Doctor who is mainly working as Consultant in Six Sigma Medicare & Research Ltd., Nashik and also runs OPD. Ld.AR’s submission on various issues is as under :

Professional Receipt of Rs.1,89,909/- : 3.1 In the Original Return of Income, Assessee had shown inadvertently Rs.1,89,909/- as Professional Receipt, however, the said amount was a partial refund of deposit kept by Doctor with Six Sigma Medicare & Research Ltd., Nashik. The assessee had made deposit three years back of an amount of Rs.28 lakhs by Cheque. The hospital i.e.Six Sigma Medicare & Research Ltd., Nashik refunded Rs.1,89,909/- during the year. The Revised Balance Sheet filed by the assessee clearly shows the same. The confirmation letter issued by Six Sigma Medicare & Research Ltd., Nashik was filed during the assessment proceedings. Thus, due to inadvertent error, Rs.1,89,909/- was shown as Professional Receipt in the Original Return of Income. Therefore, Assessee filed a Revised Return of Income to correct the same.

4 Nitin Prakash Kochar [A] 3.2 Ld.Authorised Representative for the assessee submitted that Assessee had made payment of Rs.1,57,500/- to Doctor Daniel Fernandes after deducting TDS of Rs.17,500/-. The assessee failed to claim the said expenditure in the Original Return of Income, hence, claimed it in the Revised Return of Income.

3.3 Further, as per TDS returns filed for 4th Quarter which were filed on the record of the AO, the impugned payment by cheques and tax deducted at source are reflected. Evidence of Payment of TDS are submitted in paper book. Further, impugned professional charges of Rs. 1,75,000/- after deducting TDS of Rs. 17,500/- i.e., Rs. 1,57,500/- were paid by cheques (Rs.90,000/- on 19.04.2020 & Rs.67,500/- on 24.07.2020) and bank statements showing the above payments were filed during assessment proceedings. The copy of ledger account of Dr. Daniel in the books of the assessee and bank statement showing the impugned payment submitted in the paper book. The assessment proceedings were conducted in the FY 2021-22 i.e., much after the actual payments made by account payee cheques in the year 2020. Therefore, by no stretch of imagination, it can be said that the claim of the appellant in Revised return is an afterthought and made for reducing Taxable 5 Nitin Prakash Kochar [A] income as alleged by the AO. Further the copy of acknowledgement of return, computation of income showing gross receipts from Dr. Nitin Kochar Rs.3,25,000 on which TDS was deducted at source Rs.32,500, Profit and Loss and Balance Sheet of Dr. Daniel Fernandes is submitted in the paper book. “It is undisputable fact that Dr. Rashmi Kochar is an anesthetist and had given service as anesthetist in respect of about 190 operations conducted by the appellant i.e., Dr. Nitin P. Kochar. The appellant being the husband of Dr. “Rashmi Kochar has" made payments by cheques directly in the Housing Loan and other accounts of Dr. Rashmi Kochar, whenever required by her by account payee cheques. The impugned payments were in fact in respect of services rendered by her as anesthetist. Therefore, merely because the payments were directly made in the Loan accounts of Dr. Rashmi Kochar instead of making payments by cheques to her then she deposits the same in her bank accounts and then she makes payments in her loan account, cannot be the reason for the impugned disallowance. The AO has pointed out that the TDS entry of Rs.39,300/- was reflecting on 28.12.2020 i.e., much after the date of filing revised return 15.12.2022. The AO had apparently erred in raising this absurd contention as the return of income was filed on 15.12.2020 and the payment of TDS was made on 28.12.2020 as mentioned by the AO. Therefore, the contention of the AO that the TDS was paid after about 2 years is apparently incorrect. As the payments were made through banking channels and TDS was also paid in December, 2020 and the assessment proceedings were conducted in FY 2021-22, by no stretch of imagination, it can be said that the claim of the appellant in Revised return is an afterthought and made for reducing Taxable income as alleged by the AO. The accountant had inadvertently not considered the professional charges paid to Dr. Rashmi Kochar by account payee cheques as payment towards professional charges in Original return filed. In support of the above fact, of expenditure towards professional charges Rs.3,93,000/- the assessee had filed during assessment proceedings (a) Copy of Ledger Account of Dr. Rashmi Kochar in his books of accounts showing the professional charges paid by account payee cheques and showing tax deducted at source (b) Copy of Form 26Q filed for 4th 6 Nitin Prakash Kochar [A] Quarter (c) Copy Bank Statements of the assessee wherein the payments made by cheques to Dr. Rashmi Kochar are reflected. In view of the above facts and evidence the addition of Rs.3,93,000/- on account of disallowance of professional fees paid to Dr. Rashmi Kochar is not justified. The assessee owns a Volkswagen Vento motor car bearing number ME1-15DC-8387 which was exclusively used by him for profession and total petrol & diesel expenses incurred during the year were Rs. 1,11,185/- which includes cheque payments of Rs.5,955/-. The accountant had considered only cheque payments and hence, cash payments were remained to be accounted for. The impugned expenses are about of Rs.9.250/- per month which is reasonable considering the Professional Services rendered by the assessee to various hospitals. Copy of ledger account of the assessee.” 3.4 Ld.AR for the assessee filed an elaborate paper book. Submission of ld.DR : 4. The ld.DR for the Revenue relied on the order of AO and ld.CIT(A). The ld.DR submitted that assessee was working as a Consultant in Six Sigma Medicare & Research Ltd., Nashik. As per the procedure, entire payment is collected from the Patient by the Hospital. Then, the hospital in turn pays to various doctors, be it Pathologist, Anesthetist etc., Therefore, the assessee’s claim that he paid Anesthetist Charges to Dr.Rashmi Kochar directly cannot be accepted. Similarly, the payment to Dr.Fernandes are not acceptable. The assessee failed to prove that it was wholly and exclusively for the purpose of business of the assessee. Regarding 7 Nitin Prakash Kochar [A] the refund of deposits, assessee failed to give any evidence. Therefore, the ld.DR requested to confirm the additions.

Findings &Analysis : 5. We have heard both the parties and perused the records. We will discuss each addition separately.

Addition of Rs.1,89,909/- : 5.1 Assessee has claimed that he has received Rs.1,89,909/- as partial refund of the deposit. It is a fact that assessee was mainly working as a Consultant in Six Sigma Medicare & Research Ltd., Nashik in addition to visit to other hospitals. Therefore, assessee has received Professional Charges from Six Sigma Medicare & Research Ltd., Nashik. The Hospital has deducted TDS also. It has been submitted by the assessee that assessee has given a deposit of Rs.28 lakhs to Six Sigma Medicare & Research Ltd., Nashik. There is no reason why Six Sigma Medicare & Research Limited should refund Rs.1,89,909/- out of the total deposit of Rs.28 lakhs, when assessee continues to be Consultant in the said hospital! Even otherwise, it is beyond comprehension that why a hospital shall refund an odd amount of Rs.1,89,909/-! It is an 8 Nitin Prakash Kochar [A] admitted fact that hospital has made total payment of Rs.47,26,546/- to the Assessee during the year, which were shown as professional receipts by the assessee in the Original Return of Income. Out of the total Professional Receipts received from Six Sigma Medicare & Research Ltd., there is no evidence to suggest that Rs.1,89,909/- pertains to partial refund of deposits. Therefore, the addition of Rs.1,89,909/- is confirmed.

Payment to Dr.Daniel Fernandes : 5.2 Dr.Daniel Fernandes is an Anesthetist. Assessee claimed that Dr.Daniel Fernandes used to work as an Anesthetist for the Assessee and accordingly raised bills every quarterly. Assessee submitted that he has made payment of Rs.3,25,000/- for F.Y.2019-20 and deducted the TDS. However, Rs.1,75,000/- which was part of Rs.3,25,000/- inadvertently could not be debited and hence remained to be reflected in the Original Return of Income. Assessee filed copy of Return of Income of Dr.Daniel Fernandes. On perusal of the Return of Income and its Annexures of Dr.Daniel Fernandes, it is observed that total professional receipts of Dr.Daniel Fernandes were Rs.17,28,776/-, out of that Rs.3,25,000/- has been received from Nitin Kochar i.e.Assessee.

9 Nitin Prakash Kochar [A] Remaining amounts are from Sahyadri Hospital, Six Sigma Medicare & Research Ltd., Nashik and Vinod. Thus, in the Return of Income of Dr.Daniel Fernandes, Rs.3,25,000/- is shown as receipt from Assessee. The Assessee has also filed copy of Ledger Account of Dr.Daniel Fernandes at page no.37 of the Paperbook which reflects Rs.1,75,000/-. Therefore, assessee has proved that assessee had made payment of Rs.3,25,000/- to Dr.Daniel Fernandes. Hence, we accept the assessee’s contention and direct the Assessing Officer to delete the addition of Rs.1,75,000/-.

Payment of to Dr.Rashmi Kochar : 5.3 Assessee has claimed that he had paid Rs.3,93,000/- to Dr.Rashmi Kochar(Anesthetist) as professional charges, however, it remained to be claimed as expenditure in the Original Return of Income. Assessee submitted that Dr.Rashmi Kochar is a Qualified Anesthetist, therefore, her services were availed by Assessee. The Assessee had filed copy of Form No.26AS of Dr.Rashmi Kochar, copy of return of income, copy of P & L Account of Dr.Rashmi Kochar. On perusal of the Form No.26AS, it is observed that Dr.Rashmi Kochar has received Rs.3,93,000/- from Dr.Nitin Prakash Kochar i.e.Assessee. The TDS of Rs.39,300/- has been 10 Nitin Prakash Kochar [A] deducted on the said amount and Dr.Rashmi Kochar has claimed the TDS Credit in her Return of Income. Dr.Rashmi Kochar had filed Return of Income for A.Y.2020-21 on 24.11.2020, i.e. before the filing of Return of Income by the assessee. We have perused the Ledger Account of Dr.Rashmi Kochar and observed that amount of Rs.3,93,000/- appears in the Ledger Account. The AO has mentioned in the assessment order that assessee had not submitted copy of 26AS, copy of Ledger Account during the assessment proceedings, hence, Assessing Officer made addition. However, on perusal of the assessee’s submission filed before the Assessing Officer dated 28.03.2022 which is at page no.83 to 94 of the paper book, the assessee had filed copy of TDS Return, copy of TDS Challan, copy of Bank Statement, copy of Ledger Account to demonstrate the payment of Rs.3,93,000/- to Dr.Rashmi Kochar. We have also perused the copy of the e-Proceedings Response Acknowledgement filed by the assessee in the paper book and observed that assessee had filed copy of Ledger Account of Dr.Rashmi Kochar along with her bank statement, copy of TDS Return and TDS Challan. Therefore, the facts recorded by the AO in the assessment order are factually incorrect. The only reason 11 Nitin Prakash Kochar [A] mentioned by the AO in the assessment order is that assessee failed to file details. We have already mentioned that assessee had filed elaborate submissions during the assessment proceedings. Ld.DR has not raised any objection regarding the contents of the paper book filed by the assessee. Ld.CIT(A) has confirmed the addition with only three lines. The findings of the ld.CIT(A) are reproduced as under:

12 Nitin Prakash Kochar [A] 6.1 In this case, during the appeal proceedings before this Tribunal, we specifically asked ld.AR of the assessee to prove that Dr.Rashmik Kochar has acted as an Anesthetist during surgeries performed by the assessee by filing copies of the Operation Notes maintained by the hospital. Ld.AR filed copy of Operation Notes for the Surgery performed on 23.08.2019 wherein Dr.Rashmi Kochar’s name appears as Anesthetist along with Dr.Tipre, Anesthetist. Similarly, on perusal of the Operation Notes of the Surgery performed on 27.08.2019, Dr.Rashmi Kochar’s name appears as Anesthetist along with Dr.Tipre, Anesthetist. Similarly, for the Operation performed on 24.07.2019, Dr.Rashmi Kochar’s name appears as Anesthetist along with Dr.Tipre, Anesthetist.

6.2 The ld.DR has also perused the impugned Operation Notes which contains name of the patient, registration number, date of admission, surgeon’s name and other medical details. For the sake of confidentiality, we are not reproducing name of the patient, registration number and other details, which are not relevant to decide the issue.

13 Nitin Prakash Kochar [A] 6.3 Ld.AR also submitted that these are sample copies and if Bench desires, ld.AR was willing to file all the Operation Notes.

6.4 We agree that these Operation Notes were not filed before the AO/CIT(A). However, these Operation Notes have been considered by us as an evidence only to substantiate the primary evidence filed by the assessee before Assessing Officer and ld.CIT(A). We have already discussed in earlier paragraphs the evidences filed by assessee before the AO and ld.CIT(A) in the form of copy of bank statement of Dr.Rashmi Kochar, copy of TDS Return etc.

6.5 In these facts and circumstances of the case, we are convinced that assessee had made payment of Rs.3,93,000/- to Dr.Rashmi Kochar as professional fees. The said amount was wholly and exclusively for the purpose of the business of the assessee. Hence, we direct AO to delete the addition of Rs.3,93,000/-.

Petrol and Diesel Expenditure : 7. Assessee had claimed Rs.1,05,230/- under the head “Petrol and Diesel Expenses” in the Revised Return of Income. It was 14 Nitin Prakash Kochar [A] observed that assessee had already claimed Rs.4,92,084/- as Travelling and Conveyance Expenses. Assessee claimed that assessee owns a Motor Car and it was exclusively used for his profession. The amount of Rs.1,11,185/- was the Diesel Expenditure for the said car. However, Accountant only considered Rs.5,955/- and failed to consider remaining amount of Rs.1,05,230/-. No specific evidence has been filed by the assessee before us to prove the Diesel Expenditure. Assessee merely filed a Ledger Account at page no.60 and 61 of the paper book. The Ledger Account shows certain cash payments at periodic intervals. However, that does not prove that the expenditure has been incurred wholly and exclusively for the purpose of the business of the assessee. Accordingly, addition of Rs.1,05,230/- is upheld.

Salary and Wages Rs.48,950/- : 8. The Assessing Officer in the assessment order has observed that amount of Rs.48,950/- was payable. AO merely mentioned that assessee has not filed relevant audited financial statement, copy of bank statement, cash book to prove the same. Hence, AO made the addition of Rs.48,950/-. However, it is observed that assessee had filed copy of Ledger Extract of salary and wages 15 Nitin Prakash Kochar [A] account before the Assessing Officer and ld.CIT(A). The amount of Rs.48,950/- was the salary of March, 2020; hence, remained payable. It is observed from the submission of assessee before the AO dated 28.03.2022 that assessee had filed copy of salary register, name, PAN and Address of all the employees. Before us also assessee filed copy of ledger extract, copy of salary register at page no.62 to 76 of the paper book. Ld.DR has not pointed out any discrepancy in these documents. On perusal of the Ledger Account, it is observed that Rs.48,950/- was shown as payable on 31.03.2020. In these facts and circumstances of the case, we are convinced that it is an allowable expenditure. Accordingly, AO is directed to delete the addition of Rs.48,950/-.