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Dr. Tridip Kumar Sarma And Dr. Bani … vs Commissioner Of Income-Tax And … on 9 August, 2006

Gauhati High Court
Dr. Tridip Kumar Sarma And Dr. Bani … vs Commissioner Of Income-Tax And … on 9 August, 2006
Equivalent citations: (2006) 206 CTR Gau 645, 2006 286 ITR 482 Gauhati
Author: D Biswas
Bench: D Biswas, T N Singh


JUDGMENT

D. Biswas, J.

1. By this common judgment and order we propose to dispose of W. A. No. 585 of 2002 and W. A. No. 586 of 2002 arising out of the judgment and orders dated October 10, 2002, passed by the learned single judge in W. P(C) No. 6733 of 2002 and W. P(C) No. 6726 of 2002.

2. In both the writ petitions, the writ petitioners/appellants who are the consultants attached to M/s. Down Town Hospitals Ltd. challenged the notice issued by the respondent authority under Section 158BD of the Income-tax Act, 1961 read with Section 158BC for submission of true and correct returns for the block period from April 1, 1988, to February 4, 1999. The notice had been issued to the writ petitioners/appellants for the purpose of preparation of true and correct return of total income including undisclosed incomes for the aforesaid block period. The background leading to the issuance of the notice is that a search was conducted under Section 132 of the Income-tax Act, 1961, in the business premises of M/s. Down Town Hospitals Ltd., Guwahati, in the month of February, 1999, and during the course of search, certain documents, i.e., books of account and other documents of assets were seized and on the basis of those seized documents the impugned notices were issued calling upon the writ petitioners/appellants to submit returns in Form No. 2B duly verified and signed in accordance with the provisions of Section 140 of the Income-tax Act within a period of 15 days from the date of service of notice.

3. In response to those notices, the writ petitioners/appellants through their advocates requested the authorities to issue the certified copy of the order sheet/satisfaction note recorded by the authority during the course of proceeding for the block assessment in the case of M/s. Down Town Hospital Ltd. based upon which the proceedings under Section 158BD have been initiated in the case of the writ petitioners/appellants. Consequently, the appellants submitted applications before respondent No. 2, i.e., the Assistant Commissioner of Income-tax, Circle-1, Guwahati, challenging the jurisdiction of the authority in invoking the powers under Section 158BD of the Income-tax Act, 1961, on the ground that the “undisclosed income” purportedly received by the writ petitioners/appellants from M/s. Down Town Hospital Ltd. had already been assessed as “undisclosed income” of M/s. Down Town Hospital Ltd. under Section 158BC(c)/143(3) on February 28, 2001. A request was also made for dropping the proceedings initiated under Section 158BD.

4. Eventually, the Assistant Commissioner of Income-tax, Circle-1, Guwahati, by the letter dated September 23, 2002, has informed the appellants that their prayer for dropping of the proceedings is rejected for the following reasons:

… during the course of search and seizure operation conducted under Section 132 of the Income-tax Act, 1961, in the business premises of Down Town Hospital Ltd., in February, 1999, various registers were found and seized.

The abovementioned registers indicate a large amount of professional fees paid to various doctors. Your name has also figured in the said registers and the fees shown as paid to you in these registers do not tally with the figures shown by you in the return of income filed by you. Therefore, your contention that the conditions precedent for the issue of such a notice were not satisfied cannot be accepted in view of such discrepancies.

Therefore, for verification of the transactions recorded in the seized registers and in order to ascertain whether all these receipts have been fully and truly disclosed by you in your return of income, you are required to prepare a true and correct return of your total income including undisclosed income in respect of which you are assessable as an individual for the block period April 1, 1988, to February 4, 1999, The return should be in the prescribed Form No. 2B duly verified and signed by you in accordance with the provision of Section 140 of the Income-tax Act, 1961. So, you are hereby requested to furnish the return of income within 15 days from the date of receipt of this letter by you.

In view of the above, your petition for dropping of proceedings initiated under Section 158BD of the Income-tax Act, 1961, stands rejected.

5. The learned single judge after hearing learned Counsel for the parties by the impugned judgment and order dismissed the writ petitions with the observations that the writ petitioners/appellants could not make out a case of double taxation and this cannot be a case of double taxation if it is disclosed that the writ petitioners/appellants had received more amount from M/s. Down Town Hospital Ltd. as shown by them because in that case the writ petitioners/appellants would be liable. In that case, additional income-tax would be charged on that amount. It is, further, observed by the learned single judge that the writ petitioners/appellants had already informed the authorities concerned that they have not received any amount as disclosed in the books of account seized from the premises of M/s. Down Town Hospital Ltd. and it is for the Assessment Officer to decide whether the stand taken by the writ petitioners/appellants is acceptable or not.

6. We have heard Mr. D. K. Mishra, learned senior counsel assisted by Mr. R. Goenka, learned Counsel appearing for the appellants, as well as Mr. U. Bhuyan, learned standing counsel for the Income-tax Department, perused the impugned judgment and orders dated October 10, 2002, passed in connected W. P(C) No. 6733 of 2002 and W. P(C) No. 6726 of 2002 and other connected materials available on record and also the cases relied upon by the parties.

7. Mr. D.K. Misra, learned Counsel has argued that the element of satisfaction before issuance of any notice under Section 158BD is missing in this case. Mr. Misra, further pointed out that the “undisclosed income” discernible from the books of account of M/s. Down Town Hospital Ltd. had already been taxed in the hands of the hospital and, therefore, further taxation on the same money would amount to double taxation. The further contention of learned Counsel is that the writ petitioners/appellants have not received any amount beyond what they have indicated in their income-tax return and, therefore, they are not liable for payment of any tax beyond the amount they have received.

8. The judgment and order under appeal clearly shows that the learned single judge has not decided the question of satisfaction, but left the entire matter at the discretion of the respondent authority to decide whether the explanations given by the writ petitioners/appellants are acceptable or not.

9. The notices impugned in the writ petitions were issued for the reasons given in para. 3 of the letter dated September 23, 2002, which impliedly suggest that the jurisdiction under Section 158BD was invoked on being satisfied that “undisclosed income” escaped assessment. The plea of double taxation, in our opinion, is also of no consequence. It is because after due verification, if it is found that the writ petitioners/appellants have received any amount beyond what they have reflected in their tax returns, they would, certainly be liable for payment of tax on that amount. The writ petitioners/appellants will have ample opportunity to show that they did not receive any amount beyond what has been indicated in their returns, and in that eventuality they would not be liable to pay any tax on the amount which they have not received. The authority appears to have issued the notices only to verify as to whether any amount was received by them has escaped assessment. The decision of the learned single judge, in our opinion, is not prejudicial to the interest of the writ petitioners/appellants. The appellants failed to make out any case for interference with the impugned judgment and order dated October 10, 2002. Hence, we dismiss both the writ appeals subject to the observations made hereinabove.

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