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2016 (1) TMI 363 - ITAT CHENNAI

2016 (1) TMI 363 - ITAT CHENNAI - TMI - Levy of penalty u/s. 271(1)(c) - Held that:- In the present case, in fact, the contention of the assessee has been such that certainly calls for levy of penalty. First of all, the assessee found a way as to how, it can hide the information to the Department. Even after search action, the assessee has not come with the proof to show that the assessee has not concealed the particulars of income and at this point of time, the assessee has not come clean so as .....

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ide and there was a clear-cut strategy to not only evade taxes, but also to file inaccurate particulars of income even after search operation. As such, by placing reliance on the judgment of the Supreme Court in the case of B.A.Balasubramaniam & Bros. Co. v. CIT (1998 (1) TMI 7 - SUPREME Court) , we have no hesitation in confirming the penalty impugned u/s 271(1)(c) of IT Act, 1961. - Decided against assessee. - ITA Nos. 2797, 2798, 2799, 2800 & 2801/Mds/2014 - Dated:- 20-11-2015 - Chandra Pooja .....

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only common issue in these appeals is with regard to levy of penalty u/s. 271(1)(c) of the I.T. Act, 1961. 3. The facts of the case are that the assessee is a surgeon in profession. For these assessment years, the assessee filed the return of income offering following amount as professional income : A.Y. Professional Income 2003-04 ₹ 9,47,024/- 2004-05 ₹ 8,70,534/- 2005-06 ₹ 8,69,764/- 2006-07 ₹ 7,83,328/- 2007-08 ₹ 14,63,365/- 3.1 The assessee had carried out surg .....

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r.P.Ravichandran on how much he has given to Dr. L. Srinivasan for performing the surgery on the donors of the Kidney as well as the recipients of Kidney. 3.2 Dr L.Srinivasan in his statement had indicated the number of cases which he and the assessee herein have carried out in the course of Kidney transplant in which Dr.P.Ravichandran was involved. Dr.L.Srinivasan had also indicated the approximate amount he had paid to the assessee herein for performing operation of the donors of Kidney. All t .....

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mbers - surgeon and two assistants) and 45% went to the surgical team operating on recipient and 25% went to the two anaesthetics teams with donor and donee surgical teams. 3.4 Dr L.Srinivasan has categorically stated that he has not received any money from the patient directly. Thus, the Petitioner had received only the amounts given to him by Dr L.Srinivasan. The assessing officer had recorded a statement from the Appellant on 30.01.2008. In the statement the assessee had stated that he was re .....

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on of ₹ 8000 to ₹ 10000/- per operation. The assessee has included the income derived from these operations also in the regular return of income. 3.5 It was submitted before the lower authorities that for the assessment year 2002-03 and 2003-04 the assessee had received the payment from Dr L.Srinivasan by cheques. The average sum received per operations is ₹ 10000/- to ₹ 15000/- out of which he had spent 1/3rd to pay his assistants. However, the assessing officer has comp .....

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per operation for the assessee. Again, he has estimated the number of cases that would he have been performed by the assessee as well as Dr. L. Srinivasan as 760 for the assessment year 2002-03 to 2008-09. It is not clear on what basis he has arrived at this figure. The Assessing officer has not made available to the assessee the basis of which he has arrived at number of operation he has performed as well as the statement of Dr. P. Ravichandran based on which he has arrived at the amount paid t .....

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basis of these, he has estimated assessee's income from these operation purely on surmises and has arrived at the assessed income at ₹ 27,30,0001- for the assessment year 2004-05. 3.8 The assessee, before the CIT(Appeals) contended that the finding of the AO that the assessee is not in a position to explain the source for the deposits made in his Bank Account, is not correct. Books of accounts are maintained and sources for deposits could be explained. Deposits have been made out of p .....

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d allowed the expenditure of ₹ 9000/- per case. Against this quantum addition, the department filed appeal against the orders of the CIT(Appeals) and the assessee filed cross-objections before the Tribunal in ITA Nos. 2007 to 2011/Mds/12 and & CO Nos. 14 to 18/Mds/2012 for these assessment years. 3.9 After considering the submission of both the sides, the Tribunal vide order dated 18.4.2013 has fixed the number of cases done at MIOT hospital at 120 and 450 cases at Bharathiraja hospita .....

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authorities. Assessments of both the assessees here, have as its base, the search done in the residential premises of Dr. P. Ravichandran, who was admittedly heading a Nephrology unit, which was inter alia doing renal transplants. It is not denied by either of the assessees that they had assisted Dr. P. Ravichandran. Dr.Deepak Lemech was doing the donor nephrectomies whereas Dr.L.Srinivasan was doing the recipient nephrectomies. Vis-à-vis the number of such procedures done in Dr.L.Sriniva .....

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nitial PRC is the abbreviation of Dr. P. Ravichandran. Case of the assessees is that 13 of the total 476 cases mentioned in the list were operations done by one Dr.Muthu Jayaraman. An examination of this list show that against serial os.2,12,13,14,38,40,45,55,60,62,66,105 & 112, considered by CIT(A) as transplants done by Dr.Muthu Jayaraman except Sl. Nos. 2,38,40,13 which show the initial 'NJ' overwritten over the initial 'PRC', all others are doubtful. Similar column agains .....

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considered as a bilateral nephrectomy seems to be, probable since a renal transplant require a donor as well. We are unable to accept the argument of the Ld. D.R. that non-mentioning of donors name could have been an omission, since surgery on donor is also a massive procedure. Vis-à-vis the claim of the assessees that certain operations in the list was exclusively done by the doctors of Bharathiraja Hospital, serial No. mentioned by the assessees are the following: "76,79,88,103,102 .....

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s have also not produced any record to prove that 104 numbers of transplants were done by them free of cost for M/s.Kidney care Trust. Considering the various difficulties in exactly ascertaining the number of operations done by the assessees at Bharathiraja Hospital, we are of the opinion that an estimate of 450 will render justice. Thus, total number of operations done by the assessees considering both MIOT hospital as well as Bharathiraja Hospital can be taken as 570. Thus, vis-à-vis t .....

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y ₹ 45,000/- at the maximum against which Assessing Officer considered it at ₹ 75,000/- for Assessment Years 2006-07 to 2008-09 and ₹ 70,000/- for Assessment Years 2002-03 to 2005-06 per operation. It is not disputed that both the assessees had some unexplained deposits in their respective bank accounts. Therefore, in our opinion, CIT(A) was justified in confirming the quantum of fees estimated made by the Assessing Officer in this regard. 24. However, vis-à-vis the reli .....

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the assessment order of Dr. P. Ravichandran for Assessment Year 2007-08 dated 24.12.09, copy of which has been produced before us. She has also given a break-up of the expenditure in four heads namely, hospital expenses, medicines, diet expenses and blood charges. Similarly, Dr.Natesan, of Bharathiraja Hospital in a statement recorded on 04.02.08 had also mentioned that Dr. P. Ravichandran used to deposit ₹ 75,000/- in cash directly at the cash counter and this sum was against theatre char .....

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o the recipient surgical team. The payments effected were for the teams as such. Therefore, in our opinion contention of assessees that assistants had to be paid, which included junior doctors and staff nurses, has considerable strength. Ld. CIT(A) estimated such expenses at ₹ 9,000/- per case. Amount of ₹ 2,000/- estimated by the Ld. CIT(A) as payment to two staff nurses per operation is on the lower side. In the facts and circumstances, we are of the opinion that expense of ₹ .....

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as under : A.Y. Penalty 2003-04 ₹ 4,72,500/- 2004-05 ₹ 2,88,090/- 2005-06 ₹ 1,90,850/- 2006-07 ₹ 3,21,000/- 2007-08 ₹ 2,40,330/- Against this, the assessee went in appeal before the CIT (Appeals). 6. On appeal, the CIT(Appeals) confirmed the penalty on the reason the assessee has not maintained any reliable record for the number of surgeries conducted and the fee received thereon. Further, the CIT(Appeals) observed that due to the efforts of the AO, on verification .....

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e number of surgeries conducted during the same period of 7 years i.e. from 2002-03 to 2008-09 at 570 and fee for surgery at ₹ 22,500/-. Based on the order of the Tribunal, the AO quantified the unaccounted income for the impugned assessment years and levied penalty u/s.271(1)(c) of the Act. According to the CIT(Appeals), the assessee has not proved that there is no concealed income with any cogent evidence so as to establish that no penalty could be levied and he confirmed the levy of pen .....

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search action, Dr. P. Ravichandran stated that he has paid surgical fees to the donor's surgeon, Dr. Deepal Lamech along with another surgeon, Dr. L. Srinivasan. The assessee has not maintained proper books of account for receipt of fees received from Dr. P. Ravichandran and also for the expenditure incurred by the assessee. Therefore, the AO estimated the receipt of surgeon fees at ₹ 22,500/- per person and the income of the assessee for all these assessment years. According to the l .....

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it is estimated at 570 operations. Accordingly, for all these assessment years, it is directed to estimate the number of operations under the prescribed ratio as mentioned by the Tribunal in para 9 of its order and in respect of fees, it was directed to estimate the same at ₹ 22,500/- per person. The ld. AR contended that the conclusion of the Assessing Officer is based on estimation of income and it is not appropriate levy of penalty in these cases. He relied on the decision of the Suprem .....

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e due to difference of opinion about estimated rate of fees for surgery, it cannot be said that there is concealment of income and penalty cannot be levied. But in the present case, the assessee has not maintained any books of account so as to show the correct state of affairs of the assessee. The details of the income whatever within the knowledge of the assessee was not at all brought to the notice of the Department and it is a well planned and executed tax evasion so as to defraud the revenue .....

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the assessee and the addition made by the authorities cannot be considered unsustainable. Further, the addition made in the assessment is based on the seized material found during the course of search and these are not controverted by the ld. AR and it is not unproved that the income is not based on any positive material. The case law relied upon by the assessee only pertains to those instances where no evidence is available with the assessing officer and certain additions are made based on revi .....

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