Case Law Details
CIT Vs M/s Lakshmi Hospital (High Court Of Kerala At Ernakulum)– In this case also assessee conceded that the unaccounted receipts were collected for payment to doctors attending to patients in the hospital. What we notice is that the department has not made any effort to confront the doctors with the unaccounted payments stated to have been made to them by the hospital which engaged them. In our view, the question of addition in the hands of the respondent/assessee arises only when the doctors deny having received the amount. We do not know, why department did not venture to confront the doctors with the explanation offered by the respondent/ assessee with regard to the payments made to them. In fact, we notice that the Tribunal while allowing the assessee’s claim left freedom to the department to proceed against the doctors for assessment.
We are in complete agreement with the finding of the Tribunal because addition under Section 69C in this case can be sustained only in respect of the income not proved to have been received by the doctors. The respondent/ assessee, prima facie, discharged their burden or atleast shifted the same to the Revenue when they gave particulars of payments made to the doctors. In our view the department should have issued notice to the doctors for confirmation of the payments and if they confirm receipts, to make assessments on doctors and if they deny, to proceed against the respondent/ assessee and direct them to prove the payment as having been made and in the absence of proof of payment, to make assessment of the amount under Section 69C. Since this exercise has not been done, we do not think the assessment is tenable in the hands of the respondent/ assessee which obviously cannot be expected to give receipt or voucher from the doctors to whom unaccounted payments were made. The information received in search enables the department to assess assessees other than the searched assessee both under Section 147 of the Act as well as under Section 153D (previously 158BD) i.e., block assessment followed by search. So much so, we feel escapement of income from assessment is essentially on account of the lapses on the part of the department.
CIT Vs LAKSHMI HOSPITAL
High Court Of Kerala At Ernakulam
Dated :04/07/2011
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THE REPORTED DECISION IS, UNDOUBTEDLY, WELL-REASONED, AND QUITE APPEALING TO COMMON SENSE BY REASON OF THE PRAGMATICAL APPROACH ADOPTED. THIS REMINDS ONE OF THOSE OLD CASES WHEREIN A SIMILAR (THOUGH NOT IDENTICAL) ISSUE,-THAT WAS ON THE ADMISSIBILITY OF ‘SECRET COMMISSION’ UNDER SECTION 37(1)- WAS DECIDED IN ASSESSEES’ FAVOUR. Rightly so; for, after all, if ‘common sense’ were admitted as the touch tone of ‘logic’, logic has to be necessarily conceded to be the ‘corner stone’ of any enactment, – including the law on income-tax, despite its inherent complicity.
Refer: Dr. G.G. Joshi vs CIT – 209 ITR 324 (Guj), and CIT vs Goodlass Nerolac – 188 ITR 1 (Bom).
After insertion of the Explanation under section 37 (1), however, a new type of controversy arose. A detailed coverage thereof is to be found in the published article, – ‘Law of Income-tax – Fetters on Powers’- (2005) 147 TAXMAN 175. It may be interesting to look up and know of the later developments (since 2000,2001), and the final outcome, in those cases.
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