2024 (9) TMI 207 - AT - Income Tax

Revision u/s 263 - AO had not assessed the assessee s alleged suppressed professional receipts declared as additional income, during the course of survey u/s 115BBE HELD THAT - We wish to make it clear that there is hardly any dispute between the parties about the fact that this assessee is an Orthopaedic hospital providing maternity and other similar facilities. That being the case, we are of the considered view that the Rule 6F(3)(i) stipulates that such a person carrying out specified profession(s) i.e. medical herein is supposed to maintain a daily case register in Form No.3C prescribing the relevant particulars including the patients names, nature of services rendered, fees received and data of receipt etc. We find that the assessee s instant case file nowhere indicates compliance thereof which could take us to the conclusion that its impugned additional income has been derived from regular business activities only. Once the AO had not carried out his detailed enquiry(ies) to this clinching fact for the purpose of assessing the assessee s additional/surrendered income during survey; the same renders his assessment dated 22.09.2021 as an erroneous one causing prejudicial to interest of the Revenue. PCIT has rightly assumed his section 263 revision s jurisdiction in light of Malabar Industrial Co. Ltd 2000 (2) TMI 10 - SUPREME COURT in these facts and circumstances. We thus uphold the learned PCIT s revision direction in very terms. Assessee appeal dismissed.

Summary

Issues:
Assessment year 2019-20, Revision directions by PCIT, Alleged suppressed professional receipts, Jurisdiction under section 263 of the Income Tax Act, 1961, Application of section 115BBE, Compliance with Rule 6F(3)(i) for medical professionals, Proper verification and application of relevant provisions by Assessing Officer.

Analysis:
The judgment involves an appeal for the assessment year 2019-20 against the PCIT-1, Nashik's order dated 19.03.2024, pertaining to proceedings under section 263 of the Income Tax Act, 1961. The primary issue revolves around the Assessing Officer's failure to assess the assessee's alleged suppressed professional receipts declared as additional income during a survey, under section 115BBE of the Act. The PCIT's revision directions were challenged by the assessee, arguing that the additional income was duly disclosed and assessed at a normal rate, not the higher rate under section 115BBE. The CIT-DR supported the PCIT's directions, emphasizing that the undisclosed income should have been taxed under section 115BBE due to non-compliance with section 69 and lack of proper verification by the Assessing Officer.

The PCIT invoked section 263, setting aside the assessment order as erroneous and prejudicial to the revenue's interests, directing the Assessing Officer to reframe the assessment after proper verification and application of relevant provisions. The tribunal upheld the PCIT's revision directions, emphasizing the importance of proper verification and compliance with applicable provisions. The tribunal noted the failure of the Assessing Officer to conduct a detailed inquiry into the nature of the additional income derived from the assessee's regular business activities, leading to the assessment being deemed erroneous and prejudicial to revenue. The tribunal supported the PCIT's jurisdiction under section 263 based on the Malabar Industrial Co. Ltd vs. CIT case (2000) 243 ITR 83 (SC).

Furthermore, the tribunal highlighted the requirement for medical professionals, like the assessee, to maintain a daily case register as per Rule 6F(3)(i) to track patient details, services rendered, fees received, and other relevant particulars. The non-compliance with this rule indicated a lack of proper documentation, reinforcing the conclusion that the additional income was not adequately verified by the Assessing Officer. Ultimately, the tribunal dismissed the assessee's appeal, affirming the PCIT's revision directions and emphasizing the importance of proper verification and compliance with statutory requirements in income tax assessments.

In conclusion, the judgment underscores the significance of thorough verification, proper application of relevant provisions, and compliance with statutory requirements in income tax assessments to ensure the accuracy and fairness of tax liabilities. The tribunal's decision to uphold the PCIT's revision directions highlights the need for meticulous scrutiny and adherence to legal standards in assessing undisclosed income to safeguard the revenue's interests.