TMI Blog2011 (3) TMI 1835X X X X Extracts X X X X X X X X Extracts X X X X ..... rologist by profession, filed his return of income for the year on 27.11.2003 at a total income of ₹ 7,93,747/-, including professional income of ₹ 5,60,759/-, i.e., on gross receipt of ₹ 18,80,392/-, which was principally from M/s. Apollo Hospitals Ltd., Greams Road, Chennai, with which he was associated/attached, i.e., in professional capacity. The said return was processed u/s. 143(1) at the returned income, and no proceedings for subjecting the return to the verification procedure under the Act, i.e., by issue of notice u/s. 143(2), stood initiated. During the course of investigation by the Department with the said Apollo Hospitals in February, 2006, it was found that there was an arrangement in place whereby fees was being collected by it (hospital) from the patients on behalf of doctors, who were paid the same, i.e., without taking the same in its accounts, after deducting 10% towards its charges for provision of infrastructural facilities. The arrangement had been on for some years, as found from the records found maintained by the Hospital in its respect, and which had engaged the services of a cashier specifically for the purpose, i.e. to effectuate the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, being made only to cover the discovery by the Department of the said additional income as a result of its enquiries/investigation. He, relying on a host of case law, levied penalty for each of the years, being 2003-04 to 2005-06. In appeal, the assessee found favour with the ld. CIT(A) on the basis that revision by the assessee of its original return on 15.3.2006 was bona fide, i.e., it was a genuine case of omission/mistake (in the original return), which stood rectified, thus, and much prior to the notice u/s. 148. There was nothing on record to show that it was not so, but a case of concealment, which could not be a matter of presumption, based on conjecture or surmise, but one of fact. With reference to the decision in the case of Cement Marketing Co. Ltd. vs. Asst. CST (1980) 124 ITR 15 (SC), it was observed by him that in the absence of deliberateness, i.e., in-so-far as default in not returning the correct income or in not furnishing true and correct particulars in its respect, would not lead to the inference of the original return being false, i.e., as opposed to a genuine omission/mistake, justifying the levy of penalty. The `revised return being filed beyond the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 602 (Mad.); the assessee does on the decision in the case of CIT v. Sri Rajram Cloth Stores, 214 ITR 262 (Mad.); CIT vs. Dubey (Dr. Kumari M.), 171 ITR 144 (M.P.); and CIT (Addl.) vs. Manjeet Engineering Industries, 154 ITR 509 (Del.). 5.2 The point in issue is principally factual, i.e., whether the return by the assessee in the absence of any proceedings initiated on it, can be said to be voluntary, or it is not so, and his action in revising the return inflicted by want of bona fides. The law in the matter is abundantly clear, nay, trite, as a perusal of the respective cases of the parties would itself bear out; their differing stands being only qua facts. The hon ble jurisdictional high court explained the same in the case of JKA Subramania Chettiar (supra) as: It is implicit in the word concealed used in section 271(1)(c) that there has been a deliberate act on the part of the assessee. The word omission occurring in section 139(5) connotes an unintentional act. Equally, the words wrong statement will not take in a statement known to be false to the person who made the statement . However, the word discovers occurring in section 139(5) will make it clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exhibition of his bona fides by the assessee. That is, the assessee s second return is voluntary, so that the omission cannot be treated as a subsisting act of `concealment which the law deems where the asssessee does not substantiate his explanation and full particulars in relation to its income stand furnished. No doubt, the onus to establish its case, which is always on the assessee, becomes heavy in such a case, i.e., where the omission in the original return is not shown to be a result of a genuine mistake, which by definition connotes a bona fide act, devoid of any conscious decision. However, a bona fide, voluntary act mitigates the default and operates to save penalty, which it would be seen is the import of and pervades the law on penalty, act as it does as a reasonable cause. It is this reasoning that informs the decision in the case of CIT vs. Suresh Chandra Mittal (supra), which rests on the factual edifice of the non-disclosure in the original return (which being voluntary has to be taken as the starting point for the purpose of reckoning the default), being a case of an omission, i.e., in contradistinction to a positive act of concealment. It is on account of this va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... patient, doctor and the hospital are in the know of the same. So however, no official charge (regular bill) stands raised on the patient either by the hospital or by the doctor, who pays only to the hospital. Doing so would necessitate them to account for the same, as well as the amount received there-against. The hospital s explanation, that it was doing so as the money was being collected for and on behalf of the doctor concerned is, to our mind, only an alibi. Firstly, the arrangement is only a joint, internal arrangement, to which the patient is not privy. That a part of the receipt was to be subsequently paid to the doctor (who in any case would have to be paid for his services) is something between the hospital and the doctor; as far as the patient is concerned, it is paying to the hospital, through whose agency the medical services are being received by him. Even so, nothing prevented the hospital to raise the bill, issue receipt, paying the assessee his dues as per the arrangement, i.e., to account for the same, as indeed it would be, and is, doing for the other amounts being paid to him, i.e., by duly accounting the same, to a like-wise action at the end of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going facts, which are admitted and undisputed, a contradiction to suggest otherwise. In fact, the assessee has no basis whatsoever to contend so, which, thus, is only a bald assertion. He secures amounts in cash (without receipt) from the hospital in pursuance to an arrangement (or, from the patient through the hospital), against consulting/professional services rendered; does not issue any receipt either to the patient or to the hospital; does not enter it in his regular records, which he maintains (being obliged to under the Act), and on the basis of which only he files his return of income with the Department year after year. Could it, by any measure, be said to be not a conscious, deliberate action, but a result of a genuine, bona fide mistake? It is only his charges that are being collected by the hospital staff. Again, without dwelling into the mechanics of the arrangement, being of little consequence, the fact remains that he receives cash, on his own account, month after month (quite apart from his other, duly accounted - both by the hospital and by him - receipts), and which is assiduously kept off the accounts, including by the hospital, and also not returned. Why? The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income, prior to its detection by the Revenue, would save penalty. In fact, this forms the crux of the assessee s case (refer para 3.2, 5.1), and on which he stands allowed relief by the ld. CIT(A); his explanation before the authorities below begins only with the filing of the second return in March, 2006, ignoring his past conduct. The question, therefore, boils down to whether the second returns for A.Y. 2001- 02 to 2005-06 (though we are only concerned with the AYs 2003-04 to 2005-06), disclosing additional income received in cash from his patients for the said years (against professional services rendered), could be regarded as voluntary. The facts in the matter, which are admitted, speak for themselves. There was no change of heart at the assessee s end. There were investigations at the hospital conducted by the Department in February, 2006, resulting in information and evidences coming to its possession of the assessee being paid in cash (for the relevant years) which is not recorded in his regular accounts/returns. This is borne out by the reasons recorded for the issue of notice u/s. 148 for the relevant years. Immediately thereafter, in March, 2006, the assessee revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the obtaining facts. Furthermore, the assessee having paid the tax along with interest, the Revenue, but for the material and information with it, validating action u/s. 147, was not even required to issue notice u/s. 148 (refer: CIT v. Shelly Products, 261 ITR 367 (SC)). 5.5 We may next discuss specifically the case law cited by and on assessee s behalf in support of its case. The decision in the case of CIT v. Sri Rajram Cloth Stores (supra), stands considered and, in fact, drawn support from by us. The decision in the case of ACIT vs. Dubey (Dr.Kumari M.) (supra) is based on the finding that the omission in the original return was not a case of deliberate concealment and, further, that the subsequent revision was bona fide; the assessee, as a matter of fact, being unaware of the omission or the wrong statement at the time of filing of the original return. We are unable to see as to how this case would be of any assistance in the present case, which we have found as imbued with wilful and deliberate concealment. The facts in the case of CIT (Addl.) vs. Manjeet Engineering Industries (supra) are, at the minimum, cumbersome, involving a mixed question of fact and law, runn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and which, if so, without doubt, saves penalty and which we have in the present case found as not, endorsing the findings by the AO in the matter. The decision by the hon ble high court is based on the factual finding of the second return being a revised return u/s. 139(5), i.e., filed within the time allowed thereby and the non-disclosure of income per the original return being on account of a genuine and bona fide mistake. In the instant case, on the contrary, there is a specific finding by the AO of it not being a case of omission or wrong statement, but a case of concealment and false statement, with there being, in fact, no explanation by the assessee of his failure to disclose his entire professional income in the first instance (refer para 10 of the penalty order). It is this finding which has found our approval, noticing that the assessee s case as sans any explanation qua the stated omission/mistake, which begins only with the filing of the second return, while default for which the penalty stands levied having occurred earlier, i.e., at the time of furnishing the original return. The said factual finding, as noted by the hon ble court at pg. 6 of its judgement, affirms th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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