2015 (8) TMI 182 - HC - Income Tax

Addition to income - whether the Hon ble Income Tax Appellate Tribunal was right in disposing the appeal filed by the appellant without verifying records of the hospital company and order of assessment of the hospital company in spite of a specific directions by this Hon ble Court? - according to the Tribunal the income assessed in the hands of the appellant herein was already assessed at the hands of the hospital - Held that - This Court has in categorical terms disapproved the accounts maintained by the hospital and also Annexure - 7 assessment order passed against the hospital. It was on that basis that the matter was remitted to the Tribunal, directing it to re-consider the appeals. Once the accounts and the assessment order were disapproved by this Court and held it to be un-reliable, even if these documents were pressed into service by the appellant, the Tribunal could not have taken cognizance of these documents. Therefore, if the Tribunal has eschewed these documents from its consideration, the Tribunal was perfectly justified in doing so. Counsel then referred us to the statements recorded during the course of survey and contended that there was no evidence of un-accounted payments made to the doctors. Reading of the assessment order and the Tribunal s order shows that there was sufficient indications in the statements recorded during the survey. These findings, being purely factual, we decline to undertake its appreciation afresh. One additional fact which was pointed out by the learned Senior Counsel for the appellant therein was Annexure - 6, certain bills, certain letters of third parties and bills issued by the hospital to those persons. It was contended that no cash payments were made to the doctor who is the appellant in this case, who is also permanently employed in the hospital. In our view, when the Revenue had sufficient other materials to sustain a finding of cash payments made by the hospital, these documents now produced are inadequate to upset those factual findings.Appeal dismissed.

Issues involved:
1. Appeal against assessment under Section 143(1) r/w. Section 147.
2. Tribunal's consideration of Annexure-3 judgment observations.
3. Alleged failure to consider hospital records and assessment order.
4. Objection to reliance on passing comments in judgment.
5. Violation of principles of natural justice.
6. Double taxation concern regarding addition of income.
7. Allegation of unaccounted payments to doctors.

Issue 1: Appeal against assessment under Section 143(1) r/w. Section 147
The appellant, a doctor employed in a hospital, filed a return of income for the assessment year 2000-2001. A survey revealed unreported payments to doctors for operations. Subsequently, notice under section 148 was issued, and assessment under Section 143(1) r/w. Section 147 was completed. Appeals were filed, leading to various orders by different authorities.

Issue 2: Tribunal's consideration of Annexure-3 judgment observations
The Tribunal relied on observations in Annexure-3 judgment, leading to an appeal challenging the Tribunal's decision. The appellant contended that these observations were obiter dicta and not binding on the Tribunal. However, the Court held that the findings in the judgment were essential for dispute resolution and not collateral, thus justifying the Tribunal's reliance on them.

Issue 3: Alleged failure to consider hospital records and assessment order
The appellant complained that the Tribunal did not consider certain hospital records and the assessment order despite specific directions. However, the Court found that the Tribunal had to adhere to the findings in Annexure-3 judgment, which disapproved the accounts and assessment order of the hospital, justifying the Tribunal's decision not to consider those documents.

Issue 4: Objection to reliance on passing comments in judgment
The appellant objected to the Tribunal's reliance on passing comments made by the Court in a previous judgment. The Court clarified that these comments were crucial for resolving the dispute and were not mere obiter dicta, thus supporting the Tribunal's reliance on them.

Issue 5: Violation of principles of natural justice
The appellant alleged a violation of natural justice by the Tribunal for not providing a proper opportunity for verification of records. However, the Court found no illegality in the Tribunal's orders, dismissing the appeal against this issue.

Issue 6: Double taxation concern regarding addition of income
The appellant raised concerns about double taxation due to the addition of income. The Court found that the Tribunal had sufficient evidence to support the findings of cash payments made by the hospital, dismissing the appellant's argument against double taxation.

Issue 7: Allegation of unaccounted payments to doctors
The appellant contended that there was no evidence of unaccounted payments to doctors. However, the Court noted that there were indications in the statements recorded during the survey, declining to reassess these factual findings.

In conclusion, the Court dismissed the appeals, upholding the Tribunal's orders and addressing each issue raised by the appellant in detail.

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