Ita/239/2013 Of Dr.nassar Yusuf v. The Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE SHAJI P.CHALY WEDNESDAY, THE 15TH DAY OF JULY 2015/24TH ASHADHA, 1937 ITA NO.239 OF 2013 ----------------------- AGAINST THE ORDER IN ITA NO.516/COCH/2007 of INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH, COCHIN DATED 29-05-2013 APPELLANT(S)/RESPONDENT: ---------------------------------------------- DR.NASSAR YUSUF "SHAMROCK", BALAN K.NAIR ROAD, CALICUT(PAN ) BY ADVS.SRI.K.SRIKUMAR (SR.) SRI.K.MANOJ CHANDRAN SRI.P.R.AJITHKUMAR RESPONDENT/APPELLANT: ------------------------------------------------ THE COMMISSIONER OF INCOME TAX CALICUT. BY ADV. SRI.P.K.R.MENON, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON15-07-2015, ALONG WITH ITA. 240/2013 & ITA 245 OF 2013, THE COURTON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX APPELALLANT'S ANNEXURES: ANNEXURE 1: TRUE COPY OF THE ASSESSMENT ORDER DATED 30.03.2006. 30.03.2006. ANNEXURE 1A: TRUE COPY OF THE 1ST APPELLATE ORDER DATED 30.03.2007. 30.03.2007.ANNEXURE 2: TRUE COPY OF THE APPELLATE ORDER DATED 24.10.2008. 24.10.2008. ANNEXURE 3: TRUE COPY OF THE JUDGMENT IN ITA NO.1416/2009 DATED 04.01.2010. DATED 04.01.2010. ANNEXURE 4: TRUE COPY OF THE ORDER OF DATED 28.06.2013 IN IA NO.1375/2013 IN ITA NO.1416/2009. IA NO.1375/2013 IN ITA NO.1416/2009. ANNEXURE 5: CERTIFIED COPY OF THE APPELLATE ORDER IN ITA 516/COCH/2007 DATED 29.05.2013. 516/COCH/2007 DATED 29.05.2013. ANNEXURE 6: TRUE COPY OF THE COVERING LETTER DATED 22.03.2007 WITH COPIES OF PATIENT BILL. 22.03.2007 WITH COPIES OF PATIENT BILL. ANNEXURE 6A: TRUE COPY OF THE COVERING LETTER DATED 24.03.2007 WITH COPIES OF PATIENT BILL. 24.03.2007 WITH COPIES OF PATIENT BILL. ANNEXURE 7: TRUE COPY OF THE ASSESSMENT ORDER 21.10.2005. 21.10.2005. RESPONDENT'S ANNEXURES: NIL //TRUE COPY// P.A. TO JUDGE smv ANTONY DOMINIC & SHAJI P. CHALY, JJ.----------------------------------------------- I.T.A. No.239, 240 & 245 of 2013-----------------------------------------------Dated this the 15[th] day of July, 2015 JUDGMENT Antony Dominic,J. In view of the common issues that were raised, the appealswere disposed of by a common order of the Income Tax AppellateTribunal. For that reason itself, these appeals were heardtogether ad are being disposed of by this judgment, treating ITANo.240 of 2013 as the leading case. 2. The appellant is a doctor, who at the relevant time was employed in Fathima Hospital, Calicut. For the assessment year2000-2001, the appellant filed return of income which wasprocessed under Section 143(1) of the I.T.Act. A survey underSection 133A of the Act was conducted at the hospital. Duringthe survey, documents were unearthed disclosing payments oflarge amounts to doctors working in the hospital as professionalcharges for operations performed by them. In so far as theappellant is concerned, the impounded documents showed thatin the assessment year 2000-2001, he was paid Rs.40,40,014/-, which was not shown in the return of income filed by theappellant. Accordingly, notice under section 148 was issued andthe appellant filed his reply. Summons under Section 131 wasissued and his statement on oath was also recorded. Swornstatements of Mrs.Anju, the Accounting Assistant, Sri.A.K.Ahamed Kutty, the Computer Operator, Miss.Sindhu working inthe accounts and cash department of the hospital and Sri.AbdullaMohammed, the Managing Director of the company which ownsthe hospital were recorded. Based on the statements and thedocuments, including a Crystal College Book, unearthed duringthe survey, assessment under Section 143(1) r/w. Section 147was completed as per Annexure-1 order. which was not shown in the return of income filed by theappellant. Accordingly, notice under section 148 was issued andthe appellant filed his reply. Summons under Section 131 wasissued and his statement on oath was also recorded. Swornstatements of Mrs.Anju, the Accounting Assistant, Sri.A.K.Ahamed Kutty, the Computer Operator, Miss.Sindhu working inthe accounts and cash department of the hospital and Sri.AbdullaMohammed, the Managing Director of the company which ownsthe hospital were recorded. Based on the statements and thedocuments, including a Crystal College Book, unearthed duringthe survey, assessment under Section 143(1) r/w. Section 147was completed as per Annexure-1 order. 3. Appeal was filed before the Commissioner of Income Tax(Appeals) who disposed of the appeal by Annexure-1A order,partly modifying the assessment order. In the further appealfiled before the Tribunal, Annexure-2 order was passed. In itsorder, relying on the order of assessment passed in the case ofFathima Hospital, the Tribunal set aside Annexures 1 and 1Aorders mentioned above. Thereupon, the Revenue filed appealbefore this Court as ITA No.1144 of 2009. That appeal was heard along with the connected appeals and the appeals weredisposed of by Annexure - 3, judgment. By this judgment, orderspassed by the Tribunal were set aside and the Tribunal wasdirected to re-consider the appeals after verifying the records,particularly the seized accounts and the statements recordedfrom the employees and the Managing Director and after goingthrough the assessment and records of the hospital/company.Assessees and the department were also directed to be given anopportunity to be heard. 4. The matter was accordingly considered by the Tribunalafresh and by the impugned order, the Tribunal disposed of theappeals upholding Annexure- 1 and Annexure -1A orders. It is inthis background, these appeals are filed by the assessee, framingthe following questions of law: A. On the facts and circumstances of the case,whether the Hon'ble Income Tax AppellateTribunal was right in disposing the appeal filed bythe appellant without verifying records of thehospital company and order of assessment of thehospital company in spite of a specific directionsby this Hon'ble Court?whether the Hon'ble Income Tax AppellateTribunal was right in disposing the appeal filed bythe appellant without verifying records of thehospital company and order of assessment of thehospital company in spite of a specific directionsby this Hon'ble Court? B. Whether the Hon'ble Income Tax AppellateTribunal erred in not calling for the records andTribunal erred in not calling for the records and order of assessment of the Hospital company inspite of specific application filed by the appellant ?spite of specific application filed by the appellant ?C. On the facts and circumstances of the case,whether the Income Tax Appellate Tribunal wasright in relying on the passing comments made bythis Hon'ble Court instead of following thedirections given by this Hon'ble Court?whether the Income Tax Appellate Tribunal wasright in relying on the passing comments made bythis Hon'ble Court instead of following thedirections given by this Hon'ble Court? D. Whether passing comments in a judgment ishaving a binding effect on the lower authoritiesespecially when the law is well settled that thestatement which are in the nature of obiter dictaare not authoritative and binding?having a binding effect on the lower authoritiesespecially when the law is well settled that thestatement which are in the nature of obiter dictaare not authoritative and binding? D. Whether passing comments in a judgment ishaving a binding effect on the lower authoritiesespecially when the law is well settled that thestatement which are in the nature of obiter dictaare not authoritative and binding?having a binding effect on the lower authoritiesespecially when the law is well settled that thestatement which are in the nature of obiter dictaare not authoritative and binding? E. Whether principles of natural justice violated bythe Income Tax Appellate Tribunal in not providingan opportunity as directed by this Hon'ble Courtespecially when reasonable opportunity wouldtake in verification of the records and order ofassessment of the hospital company?the Income Tax Appellate Tribunal in not providingan opportunity as directed by this Hon'ble Courtespecially when reasonable opportunity wouldtake in verification of the records and order ofassessment of the hospital company? F. The addition of income made to the declaredincome of the appellant whether amounts todouble taxation when the very same income isseparately included in the income of the hospitalcompany in their assessment order ?income of the appellant whether amounts todouble taxation when the very same income isseparately included in the income of the hospitalcompany in their assessment order ? 5. We heard the learned Senior Counsel for the appellantsand the learned Senior Standing Counsel appearing for theRevenue. 6. The first contention raised by the learned Senior Counsel appearing for the appellants was that the Tribunal was un-necessarily influenced by the observations contained inAnnexure -3 judgment of this Court. According to him, theseobservations, being in the nature of obiter dicta, were notbinding on the Tribunal and as the Tribunal has relied uponthese observations, the order passed by the Tribunal isuntenable. In support of this contention, the learned Seniorcounsel placed reliance on judgment of the Apex Court in ArunKumar Aggarwal v. State of Madhya Pradesh and Others . 7. In the judgment mentioned above, the principle of obiterdicta was explained as opinions of a judge which do not embodythe resolution or determination of the Court, and made withoutargument or full consideration of the point, are not the professeddeliberate determinations of the judge himself. It was alsoexplained that obiter dicta are opinions uttered by the way, notupon the point or question pending, as if turning aside for thetime from the main topic of the case to collateral subjects.According to the court, it is mere observation by a judge on alegal question suggested by the case before him, but not arisingin such a manner as to require decision by him. In the light of this principle, it has to be seen whether the observations madeby the Division Bench in Annexure - 3 judgment in ITA No,820 of2009 and connected cases are mere obiter dicta which shouldhave been eschewed by the Tribunal when the appeals werere-considered. 8. This contention was raised in the context of thereferences made by the Tribunal to the findings of this Courtregarding the assessment order passed against the companywhich owns Fathima Hospital. As we have already stated, theappeals were filed by the Revenue challenging the orders of theTribunal setting aside Annexures - 1 and 1A orders of theAssessing Officer and the First Appellate Authority respectively.In the order impugned in this Court, the Tribunal had relied onthe order of assessment passed against Fathima Hospital, Calicutand according to the Tribunal the income assessed in the handsof the appellant herein was already assessed at the hands of thehospital. While considering the legality of this conclusion of theTribunal, this court necessarily had to make reference to theassessment order passed against the hospital. It was accordinglythat in the judgment this Court referred to the assessment order and made the observations which are extracted by the Tribunalin paragraph 8 of its order. These observations and findings,were essential for the disposal of the appeals and thereforeembody resolution or determination of the dispute which arosein those appeals and were made on full consideration of theissues that arose in the appeals. Therefore, these findings wereon the main issue raised before this Court and not on collateralsubjects to be eschewed as obiter dicta. If that be so, when theappeals were re-considered, the Tribunal necessarily had to takenote of the findings in Annexure - 3 judgment and its scope ofenquiry was circumscribed by the findings therein. Therefore,this contention raised by the counsel deserves only to be rejectedand we do so. 9. Counsel then complained that before the Tribunal,Annexure-6 and 7, affidavit of the Managing Director of thehospital, accounts of the hospital and the assessment order ofthe hospital for the assessment year 2000-2001 were producedand that the Tribunal did not even refer to these documents.Reading of the affidavit of the Managing Director shows that inthe affidavit, he has explained about the accounts of the hospital and about the assessment proceedings leading to Annexure-7assessment order. Annexure - 6 is the corresponding accounts ofthe hospital and it shows certain receipts which are recorded inthe ledger maintained by the hospital during the period from01.04.1999 to 29.02.2000. Annexure - A7 assessment order, aswe have already stated, is the one passed against the hospitalduring the assessment year 2000-2001. Since the complaint ofthe appellant is that despite the direction of this Court, in theoperative portion of Annexure- 3 judgment, requiring theTribunal to re-consider the appeals after verifying the recordsand with opportunity to the appellant, the Tribunal did not do so,we have to necessarily examine whether there was any failure onthe part of the Tribunal. 10. Reading of Annexure - 3 judgment of this Court showsthat referring to the accounts of the hospital and the assessmentorder passed against it for the year 2000-2001, this Court heldthus: “However, the case of surgical consumablesaccounted in the name of Dr.P.K.Asokan isRs.37,93,329/- and Dr.Nasser Yousuf isRs.21,06,918/-. So far as Dr.Anita Ashokan is concerned, even though she is a Gynaecologistcounsel submits that she was fairly Junior Doctorand it is not known whether she was involved inSurgery. In any case, we do no know how ahospital accounted purchase of surgicalconsumables in the name of Doctors, who arenot even Surgeons. Strangely, the assessingofficer at Mumbai accepted all the contentions ofthehospitaltreatingtheauthorisedrepresentative's statement as gospel truth. Inany case, we do not find any justification for theTribunal to interfere with the assessment ordersconfirmed in appeal merely based on the findingof the assessing officer at Mumbai in the case ofhospital. In fact, the amounts assessed in thehands of the respondents/assessees are notfound to be genuine expenditure by theassessing officer in the assessment of thehospital. Further, since income is not accountedand expenditure proved by the hospital, thesame does not bar the assessment of the incomeat the hands of the respondents/assessees if it isproved to be their income. We are constrainedto hold that the assessing officer, who completedthe assessment of the hospital at Mumbai, didnot do a responsible job because, withoutverifying the correctness of the statement fromauthorised representative, accepted it on it'sface value in a controversial case where theDepartment had unearthed unaccountedcollection and distribution of money among Doctors by the hospital.” Doctors by the hospital.” 11. The above findings in Annexure - 3 judgment, whichhave become final and binding on the appellant, shows that thisCourt has in categorical terms disapproved the accountsmaintained by the hospital and also Annexure - 7 assessmentorder passed against the hospital. It was on that basis that thematter was remitted to the Tribunal, directing it to re-considerthe appeals. Once the accounts and the assessment order weredisapproved by this Court and held it to be un-reliable, even ifthese documents were pressed into service by the appellant, theTribunal could not have taken cognizance of these documents.Therefore, if the Tribunal has eschewed these documents fromits consideration, the Tribunal was perfectly justified in doing so. 12. Counsel then referred us to the statements recordedduring the course of survey and contended that there was noevidence of un-accounted payments made to the doctors.Reading of the assessment order and the Tribunal's order showsthat there was sufficient indications in the statements recordedduring the survey. These findings, being purely factual, wedecline to undertake its appreciation afresh. 13. In so far as ITA No.239 of 2013 is concerned, oneadditional fact which was pointed out by the learned SeniorCounsel for the appellant therein was Annexure - 6, certain bills,certain letters of third parties and bills issued by the hospital tothose persons. It was contended that no cash payments weremade to the doctor who is the appellant in this case, who is alsopermanently employed in the hospital. In our view, when theRevenue had sufficient other materials to sustain a finding ofcash payments made by the hospital, these documents nowproduced are inadequate to upset those factual findings. In the result, we do not find any illegality in the orders ofthe Tribunal. Therefore, answering the questions raised againstthe appellant, these appeals are dismissed. Sd/- ANTONY DOMINIC JUDGE smv Sd/-JUDGE SHAJI P. CHALY