2013 (11) TMI 210 - AT - Income Tax

Undisclosed income - Income received from hospital - Record shown in crystal book which is not regular books of account - Held that - it is obvious that the entries found in crystal college book are not the regular books of account maintained by the hospital for receipt of the amount. This crystal college book was maintained for collection of amount over and above the regular hospital charges to be paid to the respective doctors directly - that the entries found in the crystal college book is with regard to payment made to respective doctors including the assessees herein over and above their monthly salary. Therefore, the same is to be treated as their income - Decided against Revenue.

Issues Involved:
1. Validity of additions made based on entries in the crystal college book.
2. Double taxation concerns regarding amounts already assessed in the hands of Fathima Hospital Pvt Ltd.
3. Legitimacy of penalty levied under Section 271(1)(c) of the Income Tax Act.

Detailed Analysis:

1. Validity of Additions Based on Entries in the Crystal College Book:
The Tribunal considered the evidence from a survey conducted at Fathima Hospital Pvt Ltd, which revealed a crystal college book detailing payments to doctors. The assessees argued that these amounts were hospital receipts and not personal income. However, the Tribunal noted that the High Court had remanded the matter, emphasizing that the hospital's accounts were unreliable and that the Tribunal must independently verify the seized materials. Statements from hospital staff, including Sindhu P and Anju, indicated that the amounts recorded in the crystal college book were indeed payments made directly to the doctors. Despite cross-examination denials, the Tribunal found these entries credible and indicative of additional income received by the doctors beyond their salaries.

2. Double Taxation Concerns:
The assessees contended that the amounts in question had already been assessed as income of Fathima Hospital Pvt Ltd, thus constituting double taxation if added to their personal income. However, the High Court found that the hospital's assessment was flawed and unreliable, and the Tribunal could not rely on it. The Tribunal, therefore, dismissed the argument of double taxation, stating that it must independently assess the evidence and entries in the crystal college book, which clearly indicated additional payments to the doctors.

3. Legitimacy of Penalty Under Section 271(1)(c):
The Tribunal addressed the penalty levied on Dr. P.K. Asokan under Section 271(1)(c) for concealment of income. The CIT(A) had previously deleted the penalty based on the Tribunal's earlier decision, which was overturned by the High Court. The Tribunal now found it necessary to reassess the penalty, noting that penalty proceedings are distinct from assessment proceedings and require a thorough examination of the assessee's explanations. The Tribunal remanded the penalty issue back to the assessing officer to reconsider afresh, ensuring the assessee is given a fair opportunity to explain the non-disclosure of income.

Conclusion:
- The Tribunal confirmed the additions made by the assessing officer based on the crystal college book entries, rejecting the contention of double taxation.
- The penalty issue under Section 271(1)(c) was remanded back to the assessing officer for reconsideration, ensuring due process and fair hearing for the assessee.

Orders:
- The appeal of the revenue in the case of Dr. Nasser Yousuf was allowed.
- The appeals of Dr. P.K. Asokan and Dr. Mrs. Anitha Asokan were dismissed.
- The penalty issue in the case of Dr. P.K. Asokan was remanded back to the assessing officer for fresh consideration.

Order pronounced in the open court on 29/05/2013.

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