AO Couldn’t Disallow Medical Camp Expenses Merely Relying Upon Statement of Office Bearer

Case Details: CIT (Exemption) v. Anandalok - [2023] 152 taxmann.com 13 (Calcutta)

Judiciary and Counsel Details

• • T.S. Sivagnanam, ACTG., CJ. & Hiranmay Bhattacharyya, J.
  • Prithu Dudhoria, Adv. for the Appellant.
  • Somnath Ganguli, Sr. Adv., Sukalpa Seal, Bhaskar Sengupta & Ms Priyamvada Singh, Advs. for the Respondent.

Facts of the Case

Assessee was a hospital, engaged in charitable activities of providing medicines and medical aid to needy and poor people. It had set up a medical camp in flood affected area for providing free medicines to needy and flood affected people. Assessing Officer (AO) had doubted genuineness of expenditure incurred by the assessee on free distribution of medicines to patients and other social organizations during the flood situation and disallowed application of income for charitable purpose.

On appeal, the Tribunal allowed application of income by the assessee on account of free distribution of medicine. The matter reached before the High Court.

High Court Held

The High Court held that it was not in dispute that the assessee, engaged in charitable activities of providing free medicines, medical aid and treatment to the needy and poor, operating hospital and conducting medical campaigns. These activities of the assessee were never doubted by the Income-tax department in the year under consideration or in the previous or succeeding years.

The documents in the nature of photographs produced before the Tribunal were also examined and it was found that the medical camp was conducted by the assessee to cater to the poor and affected people of the concerned area.

Tribunal had seen that requests were received by the assessee from various social organizations for giving free medicines so that the same could be distributed to the people affected by the floods. Purchase of medicines were verified by AO by issuing notice under section 133(6) to various suppliers who are confirmed to have supplied medicines to the assesse.

AO solely relied upon a statement recorded from an office bearer of the social organization, disallowed the expenses incurred by the assessee for supplying free medicines to social organizations.

Further, assessee was not provided the opportunity to cross-examine despite specific request made by the assessee, requesting that they may be permitted to cross-examine the office bearer of the social organization.

Thus, ITAT was justified in allowing application of income on account of free distribution of medicines in medical camp by assessee.

List of Cases Reviewed

• • Anandalok v. ACIT (Exemption) [IT Appeal No. 2128 (Kol.) of 2018, dated 21-10-2022] (para 6) affirmed.