Reassessment initiated on statement of hospital manager that doctor didn’t disclose full consultancy fees held valid

Case details: Dr. Sajan Hedge v. ACIT - [2021] 129 taxmann.com 215 (Madras)

Judiciary and Counsel Details

• • S.M. Subramaniam, J. 
  • Suhrith Parthasarathyfor the Petitioner.
  • Ms. Hema Murali Krishnan, Sr. Standing Counsel, for the Respondent.

Facts of the Case

Assessee was an ortho-pediatrician and surgeon. A reopening notice was issued on the ground of statement of person who was manager in the Hospital in which assessee was practicing. In the recorded statement, the manager stated that based on number of patients visited, income from consultation fees received by assessee from hospital practice was much more than what was shown by him.

Assessee submitted that the copy of the manager’s statement was not enclosed along with the show cause notice issued. The revenue pointed out that even presuming it was not enclosed, assessee had not sought the copy immediately. Even in the letter sent subsequently, there was no mention regarding furnishing of the said statement. However, the said statement was subsequently handed over to the authorized representative of assessee. Assessee filed a writ to seek further opportunity to submit elaborate objections.

High Court Held

On writ, Madras High Court held that quashing the reassessment proceedings and providing an opportunity to submit further objections would cause prejudice to the revenue. Contrarily, assessee may be permitted to submit all his further objections based on the statement, enabling AO to proceed with the assessment or reassessment. Thus, instead of quashing the entire proceedings, it was sufficient if an opportunity was provided to assessee to submit additional objections.

List of Cases Referred to

• • GKN Driveshafts India Ltd. v. ITO [2002] 125 Taxman 936/[2003] 259 ITR 19 (SC) (para 6).