Trichur Heart Hospital Ltd. Vs DCIT Circle – 1(1) & TPS (ITAT Cochin)
Cochin: The Income Tax Appellate Tribunal (ITAT), Cochin Bench, has set aside an addition of Rs. 45.74 lakh made by the tax authorities against Trichur Heart Hospital Ltd. related to cash deposits in specified bank notes (SBN) during the demonetisation period. The Tribunal has remitted the matter back to the Assessing Officer (AO) for a fresh examination, citing the failure of lower authorities to adequately verify the source of the cash deposits.
The case, referenced as ITA No. 915/Coch/2024, involved an appeal filed by Trichur Heart Hospital Ltd. against the order of the National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year (AY) 2017-18. The hospital, engaged in providing healthcare services, had filed its return of income declaring Rs. 1,69,95,566/-. However, the AO completed the assessment by making an addition of Rs. 45,74,000/- on account of cash deposits made in SBNs during the demonetisation period.
The basis for the AO’s addition was the contention that the hospital was not authorised to accept SBNs from November 9, 2016, onwards. This addition was subsequently upheld by the CIT(A).
Before the ITAT, the counsel for the assessee hospital argued that the cash deposits represented collections from patients during the demonetisation period, specifically between November 9, 2016, and December 20, 2016. These collections, it was submitted, were received on account of emergency healthcare services and sale of medicines from the hospital’s pharmacy against valid bills. The hospital maintained that the income corresponding to these cash collections had already been offered to tax in their return of income, and therefore, a separate addition for the cash deposit was unwarranted.
