Dr.sajan Hegde v. The Assistant Commissioner Of Income Tax,Non-Corporate Circle-3(1),Chennai 600 034

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 02.07.2021 CORAM THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM Dr.Sajan Hegde ..Petitioner in both W.Ps. Vs. The Assistant Commissioner of Income Tax,Non-Corporate Circle-3(1),Chennai 600 034...Respondent in both W.Ps. Common Prayer: Writ Petitions filed under Article 226 of theConstitution of India, to issue a Writ of CertiorarifiedMandamus, calling for the records of the respondent contained inits notice issued under Section 148 of the Income Tax Act, 1961,for PAN: , dated 15.03.2019, for Assessment Years2015-16 & 2016-17 respectively, and all proceedings infurtherance thereof, including the impugned proceedings underSection 147 of the Income Tax Act, 1961, dated 07.11.2019,bearing ITBA/AST/F.17/2019-20/1019892075(1) in PAN: ,dismissing the petitioner's objections dated 12.06.2019 to thereopening of income tax assessment for the Assessment Years2015-16 & 2016-17 respectively, and to quash the same asarbitrary, unjust and illegal. The Writ Petitions on hand are filed challenging the noticeissues under Section 148 of the Income Tax Act, 1961(hereinafter referred to as, 'the Act') and the order dated07.11.2019, disposing of the objections filed by the writpetitioner, regarding the reopening of assessment under Section147 of the Act. The petitioner is an individual Assessee. The https://hcservices.ecourts.gov.in/hcservices/ petitioner is an Ortho-Pediatricians and Top Spine Surgeon ofsubstantial reputation attached to Apollo Hospital, Greams Road,Chennai. He is regularly filing Income Tax Returns in accordancewith law. The petitioner filed his Return of Income for theAssessment Years 2015-16 and 2016-17. The Return of Income wasprocessed under Section 143 (1) of the Act and a final order ofassessment was passed. Surprisingly, the petitioner received anotice dated 15.03.2019, issued under Section 148 of the Act,for reopening of the assessment for the Assessment Years 2015-16and 2016-17 respectively, on the ground that income chargeableto tax has escaped assessment within the meaning of Section 147of the Act. The petitioner submitted his reply to the notices,confirming the filed Return of Income. The petitioner requestedfor reasons for reopening of assessment. The reasons werefurnished to the petitioner by respondent in proceeding dated10.06.2019. On receipt of the reasons, the petitioner filed hisobjections in detail on 12.06.2019 and the said objections werenot considered and rejected in the impugned proceedings dated07.11.2019. Thus, the petitioner is constrained to file theseWrit Petitions. 2.The learned counsel appearing for the petitioner, even athis opening arguments, contended that it is suffice if thematter is remanded back by setting aside the order disposing ofthe objections passed by the respondent. The learned counsel forthe petitioner, to substantiate his confinement of relief toremand the matter back to the Assessing Officer, relied upon thereasons furnished for reopening of assessment as well as theshow cause notice issued on 28.11.2017 in respect of theAssessment Years 2011-12, 2012-13 and 2013-14. In the said showcause notice issued for the Assessment Year 2011-12, theAssessing officer has stated as follows: 2.The learned counsel appearing for the petitioner, even athis opening arguments, contended that it is suffice if thematter is remanded back by setting aside the order disposing ofthe objections passed by the respondent. The learned counsel forthe petitioner, to substantiate his confinement of relief toremand the matter back to the Assessing Officer, relied upon thereasons furnished for reopening of assessment as well as theshow cause notice issued on 28.11.2017 in respect of theAssessment Years 2011-12, 2012-13 and 2013-14. In the said showcause notice issued for the Assessment Year 2011-12, theAssessing officer has stated as follows: ““You were a consulting Doctor practicing atApollo Hospital, Chennai during the previous yearrelevant to A.Y.2011-12. Your chambers at ApolloHospital were leased out from the same hospital.The said hospital also maintained on itscomputerized systems the details of the patientsyou have seen during the relevant previous year.The said details have been obtained from the saidHospital in pursuance of the statement ofMs.Subhadra G., Manager (Operations), ApolloHospital, recorded on 5[th] January 2016 (copyenclosed). The details of your fee structure toohave been obtained similarly. These are as follows,Fee per First Visit/New Patient-Rs.700/-Fee per old patient/Follow up-Rs.700/-From the above details it would become clear thatyour income from consultation fees from yourApollo Hospital Practice would be Rs.20,20,900/-. However, after going through your return of incomefor the relevant assessment year, it is observedthat the income returned on this count issubstantially less. You are required to show causeas to why your income from consultation fees fromyour Apollo Hospital Practice as quantified aboveshould not be brought to tax in your hands. Yourreply should reach the undersigned within fifteendays from the date of receipt of this show causenotice.” 3.The learned counsel for the petitioner has stated that thesaid show cause notice indicates the statement of Ms.SubhadraG., Manager (Operations), Apollo Hospital, recorded on 5[th]January 2016 (copy enclosed). However, there was no enclosurecommunicated along with the show cause notice to the writpetitioner. Thereafter, the petitioner submitted several lettersseeking the copy of the statement of the said Ms.Subhadra G.,Manager (Operations), Apollo Hospital, and the said statementwas furnished belatedly, after disposing of the objections filedby the petitioner. Therefore, the petitioner had no opportunityto submit detailed objections with reference to the statement ofthe said Ms.Subhadra G., Manager (Operations), Apollo Hospital. 4.Secondly, the learned counsel for the petitioner relied onthe order passed by the Commissioner of Income Tax (Appeals), inthe case of Dr.Pichai Suryanarayan. It is contended that thecase of said Dr.Pichai Suryanarayan is also similar, wherein theCommissioner of Income Tax (Appeals) allowed the appeal filed bythe assessee, with an observation that the Assessing Officer hasnot applied her mind independently on the facts andcircumstances of the case and without forming legitimate reasonsto believe, which is the pre-requisite for issue of notice underSection 148 of the Act and has only relied on the statement ofMs.Subhadra G., Manager (Operations), Apollo Hospital, to reopenall the impugned assessments by issue of impugned notices underSection 148 for all three Assessment Years. The learned counselfor the writ petitioner further relied on the findings made inthe order passed by the Commissioner, Income Tax (Appeals) andcontended that he may be given an opportunity to submitobjections in detail with reference to the statement ofMs.Subhadra G., Manager (Operations), Apollo Hospital, as wellas the findings of the Commissioner, Income Tax (Appeals), madein the order dated 20.08.2019, in the case of Dr.PichaiSuryanarayan. 5.The learned counsel for the petitioner reiterated thatbeyond the merits of the case on hand, the petitioner has to begiven an opportunity to submit a detailed objections and suchobjections to be considered and a fresh order to be passed, disposing of the objections. In this regard, the order impugnedis to be quashed. 6.The learned Senior Standing Counsel appearing on behalf ofthe respondent objected the said contention by stating thatremand would result in multiplicity of proceedings and it willgive further scope for developing litigation in the presentcase. The respondent-Assessing Officer has scrupulously followedthe directives of the Hon'ble Supreme Court in the case of GKNDrive shafts India Ltd., Vs. ITO reported in 259 ITR 19 (SC) aswell as the provisions of the Income Tax Act for reopening ofassessment. Thus, if at all any objections are to be filed,still it is left open to the petitioner to submit the same andwhat is under challenge in these Writ Petitions is onlyreopening of assessment and the assessment order is yet to bepassed. Thus, the petitioner, even at this stage, has got ampleopportunity to submit his objections with reference to thefindings of the order passed by the Commissioner, Income Tax(Appeals) as well as with reference to the statement of saidMs.Subhadra G., Manager (Operations), Apollo Hospital.Contrarily, if the order impugned is quashed, it will pave wayfor the litigants to create further litigations unnecessarilyand the opportunity for submitting further objections are stillopen and further, no prejudice would be caused, in the event offiling any such objection at this stage. 7.The learned Senior Standing Counsel reiterated that theAssessing Officer has reason to believe that the incomechargeable to tax escaped assessment. Consequent to the searchoperations in Apollo Hospitals, various informations and detailswere collected and based on the informations and details,reopening proceedings are initiated. Thus, there is no infirmityas such in respect of initiation of proceedings under Section147/148 of the Act. 8.Regarding the non-furnishing of the copy of the statementof Ms.Subhadra G., Manager (Operations), Apollo Hospital, thelearned Senior Standing Counsel solicited the attention of thisCourt with reference to the show cause notice which was reliedupon by the petitioner, wherein admittedly, the statement ofMs.Subhadra G., Manager (Operations), Apollo Hospital, recordedon 05[th] January, 2016 (copy enclosed) has been stated. If at allthe copy was not enclosed along with the show cause notice dated28.11.2018, any prudent assessee would immediately respond tothe show cause notice by stating that they have not received thecopy of the statement, as stated in the show cause notice. Onreceipt of the show cause notice, the assessee, through theirChartered Accountants, sent a letter to the Assessing Officer on1[st] December, 2018. Interestingly, in the said letter, thepetitioner has not made any such complaint or request to furnish the copy of statement of said Ms.Subhadra G., Manager(Operations), Apollo Hospital, which was not enclosed in theshow cause notice dated 28.11.2018. However, subsequently, thepetitioner made a request on 06[th] December, 2018, through hisChartered Accountants. It is not in dispute that after disposingof the objection, the copy of the said statement was furnishedto the assessee through his authorized representative and thecopy of the said statement is enclosed along with the typed setof papers filed in the present Writ Petitions. the copy of statement of said Ms.Subhadra G., Manager(Operations), Apollo Hospital, which was not enclosed in theshow cause notice dated 28.11.2018. However, subsequently, thepetitioner made a request on 06[th] December, 2018, through hisChartered Accountants. It is not in dispute that after disposingof the objection, the copy of the said statement was furnishedto the assessee through his authorized representative and thecopy of the said statement is enclosed along with the typed setof papers filed in the present Writ Petitions. 9.Considering the arguments as advanced by the respectiveparties to the lis on hand, this Court is of the consideredopinion that the scope of reopening of assessment under Section147 of the Act are well enumerated and the requirements, pre-conditions as well as the procedures to be followed are alsounambiguous. The point to be considered is that whether thereopening of assessment is done in accordance with theprocedures contemplated and by complying with the mandatoryrequirements. 10.In the present case, admittedly, the assessee filed hisReturn of Income. Notice under Section 148 of the Act wasissued. The assessee requested for reasons. Reasons furnished.Thereafter, he filed his objections for the reasons and the saidobjections were also disposed of. Thus, the directives of theHon'ble Apex Court in the case of GKN Drive shafts India Ltd.,Vs. ITO (cited supra) was also followed by the respondent-Assessing Officer. 11.The petitioner had requested for further details and hehas submitted his objections to the reasons. With reference tothe said reply, show cause notice was also issued to thepetitioner in respect of the Assessment Years 2011-12, 2012-13and 2013-14. However, the statement of Ms.Subhadra G., wassubsequently handed over to the representative of the petitionerand the same was acknowledged. 12.The objections submitted were disposed of by thecompetent authority on 07.11.2019 and the concluding findings ofthe Assessing Officer regarding the objections in the saidorders read as under: Assessment Year 2015-16: “8.The assessee objected that merely relyingon hospital records which indicate number ofpatients 'who visited' is incorrect.The Assessing officer has not arrived at theincome escaping assessment relating to theA.Y.2015-16, merely based on the number ofpatients mentioned against the Col. 'who visited', in the Apollo Hospital records. It is clearlydeliberated in the para.6, supra as well as in thereasons for reopening, that as to how the numberof patients from whom consultation fee wascollected by the doctor was arrived at, afterexcluding the number of patients who are notliable to pay fees. In the instant case, for theA.Y.2015-16, though the total number of patientsconsulted by the assessee doctor during thefinancial year under consideration was 3799 (Newpatient 1888 no., follow-up patient 1515 No.MHC341 No. and Credit patients 55 No.), total incomefrom consultation fee from consultation in ApolloHospitals, was arrived at, after excluding theconsultation fee relating to 341 no. of the MasterHealth Check patient and 55 no. of credit patientsviz., patients who are not liable to payconsultation fees. The above action of theAssessing Officer shows the rationale of theproceedings initiated u/s.147. Hence, assessee'sobjection to this effect is baseless.” Assessment Year 2016-17: Assessment Year 2016-17: “8.The assessee objected that merely relyingon hospital records which indicate number ofpatients 'who visited' is incorrect.The Assessing officer has not arrived at theincome escaping assessment relating to theA.Y.2016-17, merely based on the number ofpatients mentioned against the Col. 'who visited',in the Apollo Hospital records. It is clearlydeliberated in the para.6, supra as well as in thereasons for reopening, that as to how the numberof patients from whom consultation fee wascollected by the doctor was arrived at, afterexcluding the number of patients who are notliable to pay fees. In the instant case, for theA.Y.2016-17, though the total number of patientsconsulted by the assessee doctor during thefinancial year under consideration was 3033 (Newpatient 1503 no., follow-up patient 1039 No.MHC 50Nos. and Credit patients 441 No.), totalconsultation fees from consultation in ApolloHospitals, was arrived at after excluding theconsultation fee relating to 50 no. of the MasterHealth Check patient and 441 no. of creditpatients viz., patients who are not liable to payconsultation fees. The above action of theAssessing Officer shows the rationale of theproceedings initiated u/s.147. Hence, assessee's objection to this effect is baseless.” 13.The reasons for reopening of assessment is made clear tothe assessee by the respondent. The objections submitted by theassessee was also considered by the respondent and a speakingorder was passed. While disposing of the objections, theAssessing Officer has categorically stated that he has reason tobelieve that the income chargeable to tax escaped assessment.The findings extracted in the aforementioned paragraphs wouldreveal that the reasons for reopening is candid and convincing.Thus, there is no reason, what so ever, for interfering with theinitiation of reopening proceedings under Section 147 of theAct. 14.Let us now consider the request made by the petitioner toremand the matter back to the Assessing Officer for freshdisposal of the objections by providing an opportunity to thepetitioner to submit additional objections, based on thestatement of Ms.Subhadra G., Manager (Operations), ApolloHospital and the order passed by the Commissioner of Income Tax(Appeals). 15.What is under challenge in the present Writ Petitions isthe initiation of reopening proceedings under Section 147 of theAct. Chapter XIV of the Income Tax Act provides procedures to befollowed. If the Assessing Officer has reason to believe thatany income chargeable to taxes has escaped assessment and if itis within 4 years, he is empowered to reopen the assessment. Ifit is beyond 4 years and within 6 years, certain conditions arestipulated for reopening under 1[st] proviso to Section 147 of theAct. Explanation I and II to Section 147 of the Act contemplatesvarious circumstances under which reopening of proceedings shallbe under taken by the competent authority. 16.On initiation of reopening proceedings, notice is to beissued, where income has escaped assessment under Section 148 ofthe Act. Section 149 contemplates time limit for notice. Timelimit for completion of assessment, re-assessment and re-computation are also contemplated under Section 153 of the Act.Section 151 of the Act stipulates sanction for issue of notice.Thus, various procedures are contemplated and mere initiation isone aspect of the matter and the assessment/re-assessment is tobe made by the Assessing Officer, is the further proceedings tobe followed. 17.The Writ Petitions are filed questioning the initiationof proceedings under Section 147/148 of the Act, for reopeningof assessment. Undoubtedly, the assessee must be provided withan opportunity to defend his case, in accordance with law, andat the first stage, on issuance of notice, the procedures to befollowed are settled by the judgment of the Hon'ble Supreme 17.The Writ Petitions are filed questioning the initiationof proceedings under Section 147/148 of the Act, for reopeningof assessment. Undoubtedly, the assessee must be provided withan opportunity to defend his case, in accordance with law, andat the first stage, on issuance of notice, the procedures to befollowed are settled by the judgment of the Hon'ble Supreme Court of India in the case of GKN Drive shafts India Ltd., Vs.ITO (cited supra). However, in the present case, the petitionerstates that the copy of the statement of Ms.Subhadra G., Manager(Operations), Apollo Hospital was not enclosed along with theshow cause notice issued. The learned Senior Standing Counselpointed out that even presuming it was not enclosed, thepetitioner has not sought for the copy immediately and even, inthe letter sent subsequently by the petitioner, there is nomentioning regarding furnishing of the said statement. Thus, thevery statement that the enclosure was not available along withthe show cause notice cannot be trusted upon. However, the saidstatement of Ms.Subhadra G., Manager (Operations), ApolloHospital was subsequently handed over to the authorizedrepresentative of the petitioner. The petitioner seeks furtheropportunity to submit elaborate objections. This Court is of theconsidered opinion that in the event of quashing the initiationproceedings and providing an opportunity to submit furtherobjections, it would cause prejudice to the revenue. Contrarily,the petitioner may be permitted to submit all his furtherobjections based on the statement of Ms.Subhadra G., Manager(Operations), Apollo Hospital, enabling the Assessment Officerto consider the same and accordingly, proceed with theassessment/re-assessment, based on the reopening of assessmentproceedings. Thus, instead of quashing the entire proceedings,as prayed for in the present Writ Petitions, it is suffice if anopportunity is provided to the writ petitioner to submitadditional objections, if any, based on the materials relied onby the assessee to the Assessing Officer, withing a stipulatedperiod and on receipt of the same, the Assessing Officer shallbe permitted to proceed with the assessment/re-assessment. Thisbeing the factum established, the petitioner is directed tosubmit his further objections along with the materials,documents, etc., to the respondent within a period of two weeksfrom the date of receipt of a copy of this order. On receipt ofany such objections from the writ petitioner, the respondentshall consider the same along with the process of assessment/re-assessment by providing an opportunity to the writ petitioner.In the event of not receiving any such objection within a periodof three weeks, the respondent is at liberty to proceed furtherfor assessment/re-assessment and complete the exercise asexpeditiously as possible. 18.With these directions, the Writ Petitions stand disposedof. No costs. Consequently, connected Miscellaneous Petitionsare closed. Sd/- Assistant Registrar(CS III) //True Copy// Sub Assistant Registrar gsa ToThe Assistant Commissioner of Income Tax,Non-Corporate Circle-3(1), Chennai 600 034. +2ccs to Mr.Arun Karathik Mohan, Advocate SR.No. 30994 +1cc to Mrs.Hema Murali Krishnan, Advocate SR.No. 31057 W.P.Nos.33438 & 33439 of 2019 AK II(CO) B.VC(26.07.2021)