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TMI Blog2023 (12) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in question are relating to the business operations of the assessee's hospital. Therefore, such income should be brought to tax as the business income u/s 28 of the Act. Therefore, we note that additional income earned in the course of business ought to be taxed as regular income and not u/s 68. CIT(A) has rightly noted that the assessee is in the business of running of the hospital. During the course of survey u/s 133A of the Act, some loose papers were found showing unaccounted hospital receipts. Since the hospital receipts are part of the business receipts, therefore CIT(A) held that the provisions of section 68 cannot be made applicable, in view of the decision of Shilpa Dying Printing Mills Pvt. Ltd [ 2015 (7) TMI 691 - GUJARAT HIGH COURT] . Section 68 of the Act can be invoked only if no explanation is offered by the assessee about the nature and source of income / receipts and such explanation is not found to be satisfactory in the opinion of the AO. However, in the instant case, the loose papers found during the course of Survey and the statements of the directors recorded during the course of Survey showed that the undisclosed receipts were pertaining to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement, Mr. Kirit Panchal has stated that he has supplied 64 semifaller beds and 36 ICU beds and 3 hydraulic emergency trolley beds. Thus, the supplier has also confirmed that he has supplied more than 100 beds to the assessee hospital which fulfills the eligibility that the assessee has more than 100 beds to claim deduction u/s 35AD of the Act. All these beds and other capital goods to the tune of Rs. 3,16,29,353/- were purchased by the assessee before the date of commencement of the hospital and hence, was found to be eligible for deduction u/s 35AD of the Act. Whether the claim of deduction u/s 35AD of the Act, which is not made in the original return can be made in the revised return filed ? - In the assessee's case, as the assessee has filed the original return in time as per the provisions of section 139(1) of the Act, the revised return filed as per the provisions of section 139(5) of the Act, claiming the deduction u/s 35AD of the Act for the first time needs to be allowed to the assessee. Therefore, the deduction u/s 35AD being 150% of the capital expenditure incurred before the commencement of business has to be allowed to the assessee. Therefore, ld CIT(A) has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revision of return sec. 139(5) of the Act will apply only to cases of 'omission or wrong statements' and not to the cases of intentional mis-statement and false claims. 5. In addition to ground No. 3 4, on the facts and in the circumstances of the case and in law, the CIT(A) has ignored the finding and observation of the assessing officer in remand report whereby the statement of supplier of hospital beds was taken on oath u/s 131 during remand proceedings and in response to Question no 9, the supplier stated that during FY 2012- 13, he had raised bills of only 79 beds and supplied 24 beds as complementary which is clearly a make believe story as complementary supplies cannot be around 30 % of billed supplies. 6. In addition to ground No. 3, 4 5, on the facts and in the circumstances of the case and in law, the CIT(A) has ignored the findings of assessing officer in the remand report where in it is clearly pointed out that the number of beds in hospital at the time of survey was stated to be 73 by Dr Viradia which is closer to figure of beds (79) whose bills have been raised by the supplier i.e. M/s Yogesh Surgicals and hence the benefit of section 35AD is pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing. 4. The assessing officer noted that a survey action u/s 133A of the Income Tax Act was carried out at the business premises of the assessee on 04.03.2014. During the course of the survey, loose papers reflecting receipts were found which were not reflected in the books of account of the assessee. The same are inventorised as per Annexure A-1 and Page no. 71 72 of the said loose papers reflected unaccounted receipts in the name of various doctors amounting to Rs. 1,95,00,000/-. Dr. Samir Gami, one of the Directors of the assessee, accepted that the alleged receipts reflected in the loose papers are unaccounted. Thus, on the basis of the incriminating materials and the admission to the effect that receipts were unaccounted, the assessee made a voluntary disclosure of Rs. 1.95 crore for the F.Y. 2012-13 relevant to assessment year 2013-14. 5. The assessing officer noted that these loose papers contained details about unaccounted payments amounting to Rs. 2,12,99,550/- also. Out of this, part is cash payment and part is cheque payment. The cheque payments made for investment are duly accounted in the books of account of the assessee. Dr. Samir Gami admitted that these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hospital. In view of the same a letter requesting the assessee to show- cause, as to why its claim u/s 35AD should not be disallowed for want of supporting documents and the unaccounted income disclosed during survey proceedings u/s 133A of the Act on 04.03.2014 of Rs. 1,95,00,000/- and should be taxed u/s 115BBE of the Act. It was also reminded to the assessee that the benefit of section 139(5) of the Act cannot be claimed by a person who has filed fraudulent returns. The Revision is allowed only if the omission was unintentional. Section 139(5) will apply only to cases of 'omission or wrong statements' and not to cases of concealment or false statements. 7. In response to the show cause notice, the assessee submitted that it has revised the return to claim deduction u/s 35AD of the Act. However, no documentary evidences' have been submitted by the assessee to substantiate its claim. This section has been introduced w.e.f A.Y.2010-11 to provide incentive to those assessee who set up new business units in certain specified areas/ fields. Thus, usually before making huge investments in such specified business the assessee may be well aware of the incentive /benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the normal provisions of the Act. The said income was already offered in the revised return, hence has to be taxed as income from business, and provisions of section 115BBE of the Act are not applicable, therefore, ld CIT(A) deleted the addition made by the assessing officer of Rs. 1,95,00,000/-. Regarding the other issue, whether the claim of deduction u/s 35AD of the Act which is not made in the original return can be made in the revised return filed.The ld CIT(A) held that in the assessee's case, as the assessee has filed the original return in time as per the provisions of Section 139(1) of the Act, the revised return filed as per the provisions of Section 139(5) of the Act, claiming the deduction u/s 35AD of the Act for the first time needs to be allowed to the assessee. Therefore, the deduction u/s 35AD of the Act of Rs. 4,74,44,030/- being 150% of the capital expenditure incurred before the commencement of business was allowed to the assessee. 10. Aggrieved by the order of ld. CIT(A), the Revenue is in appeal before us. 11. The Learned Senior Departmental Representative (ld. Sr. DR) for the Revenue, argued that in the original return filed u/s 139(1) of the Act, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the assessing officer during remand proceedings has recorded the statement of Mr. Kirit N. Panchal, from Yogesh Surgicals, the firm which has supplied the beds and other equipments to the assessee's hospital. In the said statement, Mr. Kirit Panchal has stated that he has supplied 64 semifaller beds and 36 ICU beds and 3 hydraulic emergency trolley beds. Thus, the supplier has also confirmed that he has supplied more than 100 (64+36+3) beds to the assessee hospital which fulfills the eligibility that the assessee has more than 100 beds to claim deduction u/s 35AD of the Act. The assessing officer vide letter dated 05.09.2018 has submitted the remand report wherein he has stated that the assessee has only 92 beds as against 100 beds as required for eligibility u/s 35AD of the Act. In this regard, Ld Counsel submitted that the Inspector from the assessing officer's office who visited the hospital has not counted the second beds in the twin sharing rooms under the presumption that the second bed is for the patient's attendant. This way, ld Counsel defended the order passed by ld CIT(A) and stated that ld CIT(A) has passed the speaking order considering all facts, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain of business of hospital. Therefore, the provisions of section 115BBE of the Act ought not to be invoked by the assessing officer. We note that ld Counsel relied upon the decision of Hon'ble Gujarat High Court in the case of Shilpa Dyeing Printing Mills (P) Ltd (Supra), wherein the Hon'ble Court had considered income disclosed in the survey proceedings as business income and not income from unexplained sources. Hence, it was submitted that there is no evidence with the assessing officer as to earning of income from any other source rather there was evidence as to earning from hospital business as found during the survey proceedings. 17. Therefore, ld CIT(A) has rightly noted that the assessee is in the business of running of the hospital. During the course of survey under section 133A of the Act, some loose papers were found showing unaccounted hospital receipts. Since the hospital receipts are part of the business receipts, therefore ld CIT(A) held that the provisions of section 68 cannot be made applicable, in view of the decision of the jurisdictional High Court in the case of Shilpa Dying Printing Mills Pvt. Ltd. (Supra). Section 68 of the Act can be invoked o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has only 92 beds as against 100 beds as required for eligibility u/s 35AD of the Act. The assessee submitted a rejoinder dated 10.10.2022 before ld CIT(A). In the said rejoinder, the assessee has stated that the Inspector from the assessing officer's office who visited the hospital has not counted the second beds in the twin sharing rooms under the presumption that the second bed is for the patient's attendant. The assessee has also submitted before ld CIT(A), the photographs of the twin sharing rooms with bed numbers in support of his claim. It was further submitted sharing rooms the attendants are provided small sofas and not the beds. The assessing officer during remand proceedings has recorded the statement of Mr. Kirit N Panchal, from Yogesh Surgicals, the firm which has supplied the beds and other equipments to the assessee's hospital. In the said statement, Mr. Kirit Panchal has stated that he has supplied 64 semifaller beds and 36 ICU beds and 3 hydraulic emergency trolley beds. Thus, the supplier has also confirmed that he has supplied more than 100 beds to the assessee hospital which fulfills the eligibility that the assessee has more than 100 beds to clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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