Kerala High Court
The Commissioner Of Income Tax vs Dr.Sadique Ummer on 8 December, 2009
Bench: C.N.Ramachandran Nair, V.K.Mohanan
IN THE HIGH COURT OF KERALA AT ERNAKULAM
ITA.No. 1213 of 2009()
1. THE COMMISSIONER OF INCOME TAX,
... Petitioner
Vs
1. DR.SADIQUE UMMER,
... Respondent
For Petitioner :SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES)
For Respondent :SRI.T.M.SREEDHARAN
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice V.K.MOHANAN
Dated :08/12/2009
O R D E R
C.N.RAMACHANDRAN NAIR &
V.K.MOHANAN, JJ
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I.T.A.Nos. 1213 & 484 OF 2009
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Dated this the 8th day of December, 2009
J U D G M E N T
Ramachandran Nair,J:
The appeals are filed by the revenue against the orders of the Tribunal holding that re-assessments completed in assessee's case under Section 147 of the Income Tax Act were invalid for the assessment years 1998-99 and 1999-2000 as time barred. It is the finding of the Tribunal that the assessing officer had no material to reopen the assessment and in fact, he conducted enquiries and collected information only after reopening the assessment under Section 147 of the Act.
2. After hearing counsel appearing for the appellant as well as counsel appearing for the assessee, we notice that the Tribunal has decided the appeals without reference to records which include the reason recorded by the officer for reopening the assessment. Admittedly, the assessee is a freelance Anaesthetist ITA Nos.1213 & 484 of 2009 :-2-:
practising in four hospitals in Kanhangad. The assessing officer has stated that he collected information from hospitals about charges being collected from patients and paid to the respondents, ranging from Rs.750/- to Rs.1500/- per operation and he has attended 1600 operations in the first year and in the next year, he has attended 1147. As against so much of the charges so collected, the assessee has returned only a meagre income of Rs.1,13,830/- for the assessment year 1998-99 and Rs.1,30,800/- for the assessment year 1999-2000. Based on the information collected from the hospitals, the assessing officer estimated the income by applying the minimum rate charged for each surgery and made assessment under Section 147.
3. It is these assessments that were challenged by the assessee before the Commissioner of Income Tax(A) on the ground of limitation contending that the assessing officer had no materials. The First Appellate Authority as well as the Tribunal upheld the claim of the assessee and ITA Nos.1213 & 484 of 2009 :-3-:
cancelled the assessment as time barred. It is seen that the Tribunal has relied on some decisions of the Supreme Court in respect of the unamended provisions of Section 147(a) of the I.T.Act. The Standing Counsel relied on later decision of the Supreme Court on the amended provision reported in Assistant Commissioner of Income-Tax v. Rajesh Jhaveri Stock Brokers P.Ltd. [291 ITR 500 (SC)] wherein the Supreme Court has held as follows:-
"The expression "reason to believe" in section 147 would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. What is required is "reason to believe"
but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief. Whether material would conclusively prove escapement of income is not the concern at that stage. This is so because the formation of the belief is within the realm of the subjective satisfaction of the Assessing Officer."
ITA Nos.1213 & 484 of 2009 :-4-:
4. It is seen from the reasons recorded in the assessment order that the assessing officer, prior to the issuance of notice under Section 147, conducted enquiry in the hospitals about the payments made to the assessee and he got full information about the number of surgeries attended by the respondent as Anaesthetist and the amounts paid to him. On comparing the income received and the income returned by the assessee, the assessing officer noticed that the assessee has disclosed less income. He therefore reopened the assessment under Section 147 and issued revised assessment. It is also to be noted that after reopening the assessment, the assessing officer collected further information to complete reassessment which is also permissible under the Act. In our view, the finding of the first appellate authority as well as the Tribunal that the assessing officer had no material to believe that the income assessable has escaped is wrong and contrary to facts. The Tribunal has not cared to verify ITA Nos.1213 & 484 of 2009 :-5-:
the records which contained the reasons recorded by the assessing officer for reopening the assessment. Admittedly, the assessee had not maintained any books of accounts, but was returning the income on estimation basis which was found to be incorrect based on the information collected from hospitals where he was practising. Therefore, we find that the reopening of assessment was perfectly valid and was within time. We, therefore, set aside the orders of the Tribunal and that of the first appellate authority and remand the matter to the Tribunal for a decision on merit after hearing both sides. The appeals are allowed as above.
C.N.RAMACHANDRAN NAIR, Judge.
V.K.MOHANAN,
MBS/ Judge.
ITA Nos.1213 & 484 of 2009
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