IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE ITA No.277 of 2008 DR. RANBIR PAL -Versus- COMMISSIONER OF INCOME TAX KOLKATA XX ITA No.278 of 2008 DR. RANBIR PAL -Versus- COMMISSIONER OF INCOME TAX KOLKATA XX BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 19th February, 2015. Appearance: Mr. Soumitra Mukherjee, Adv. Mr. Debashis Sinha, Adv. Mr. Arya Das, Adv. Ms. Sharmistha Dhar, Adv. ...for appellant. Mr. P.K. Bhowmick, Adv. ...for respondent. Court : subject-matter of challenge in this appeal is judgment and order dated 11th January, 2008 by which learned Income Tax Appellate Tribunal held that 2 reassessment proceedings under Section 147 with respect to assessment years 1998-99 and 1999-00 were invalid. reassessment for assessment years 2000-01 and 2001-02 were, however, sustained. Aggrieved by this order, present appeal was preferred by assessee. Mr. Mukherjee, learned advocate appearing for assessee submitted that proceedings under Section 147 were initiated but recorded reasons for initiation of such proceedings were not supplied to assessee in spite of demand. As matter of fact, recorded reasons were given to assessee for first time during appeal against order passed under Section 147 read with Section 143(3). He contended that there has, therefore, been glaring violation of principles of nature justice. Mr. Bhowmick, learned Advocate for revenue did not dispute that recorded reasons were, for first time, given to assessee during appellate stage. second submission advanced by Mr. Mukherjee is that reopening of assessment is, in any event, based on surmise and conjecture. There was no material before authorities to come to any finding that income had escaped assessment. authorities in most atrocious manner, he contended, proceeded to reopen assessment and passed orders which were upheld by CIT(A) and learned tribunal. He drew our attention to 3 assessment order in order to show that entire exercise was based on surmise and conjecture. assessment order for year 2001-02 contains following basis for reassessment: a) Income from clinic at Jeevan Deep In course of survey on 20.8.2004 it was detected that doctor attended not less than 30 to 40 patients per day. During F.Y. 1999-2000 no of patients attended is presumed to be 25 per day for two sift with fees for Rs.50/- per patient. Thus total weekly collection comes to Rs.(50/- 25 6 days) i.e.Rs.7500/-. b) Income from Gouri Medical Hall It was disclosed by assessee in his deposition recorded on 20.08.2004 that he attended chamber at Gouri Medical Hall for 6 days week. Assuming that at least 10 patients turned up of treatment per day, total weekly collection with fees for Rs.40/- per patient comes to Rs.(40/- 10 6) i.e. Rs.2400/-. c) Income from Ghosh Medical Hall Assessee stated in course of survey that he attended chamber at Ghosh Medical hall on Saturday morning and Sunday evening. Assuming that he attended at least 10 patients with fees @ Rs.40/- total weekly collection from this chamber comes to Rs.(40 10 2) i.e. Rs.800/-. Thus total weekly fees collection from three chambers is calculated at Rs.7500/- + 2400/- + 800/-) i.e. Rs.10700/-. Considering fact that chambers were closed for 6 weeks during Puja holidays and for some private assignment of doctor, total yearly professional 4 earning comes to Rs.(10700/- 46 weeks) i.e. Rs.492200/- during F.Y. 2000-2001. Assessee declared Rs.212920/- as professional receipt during F.Y. 2000-2001. As such difference of Rs.(492200/- 212920/-) i. e. Rs.279280/- is added back to total income of assessee to compensate loss of revenue for probable suppression of professional income. It is not in dispute that identical methodology was applied for year 2000-01. It is in these facts of case that Mr. Mukherjee contended that reassessment proceedings were illegal in sense that recorded reasons were not supplied. reassessment is also vitiated by illegality because they are based on surmise and conjecture. Mr. Bhowmick, learned Advocate appearing for revenue drew our attention to statement of assessee recorded on 20th August, 2004 during survey conducted under Section 133A. He drew our attention to following part of statements of assessee recorded by officers of revenue: Q. 9. How much fee do you charge for attending patients ? Ans. 9 I charge Rs.70 (average) as my fee per patient. Q.10. How many chambers do you attend ? Give particulars of place. Ans.10 I am child specialist and attending following chambers. a) Jeevan Deep (Specialist Clinic) Station Road, Khardah b) Gouri Medical Hall 5 Rahara Bazar, Khardah c) Ghosh Medical Hall P.K. Biswas Road, Rahara. Q.11. Please state time schedule of each of chamber ? Ans.11 I attend a) Jeevan Deep from 8.00 a.m. to 10.00 a.m. except when out of station and to assignment at Krishanganj Medical hospital and (b) Gouri Medical Hall from 11.00 a.m. to 1.00 p.m. except weekly holiday i.e. on Monday. Except when out of station for H.C. about said assignment and (c) Ghosh Medical Hall, from 10.00 a.m. to 11.00 a.m. on Saturday morning and Sunday Evening from 7.00 to 8.00 p.m. Also I attend Jeevan Deep in Evening appointment only. Q.12. How many patients do you attend in above said chambers ? Ans. 12 a) Jeevan deep Morning : Average 10 Evening : Average 5 (for reporting mainly) b) Gouri Medical Hall Morning : Average 5 patients (mainly free patients) c) Ghosh Medical Hall Morning : Avg. one to two patients Sunday Evening: Avg. one to two patients. Q. 20. How many patients you have attended today. Ans.20 I have attended 20 patients today and received approximately Rs.1500/- received service charges @ Rs.15 per patient (at Jeevan Deep). Today I could not attend Gouri Medical Hall. Q.21. Please state your weekly average professional receipt in each chamber? Ans.21 a) Jeevan Deep: Approximately Rs.2,500/- b) Gouri Medial Hall: Approximately Rs.500/- c)Ghosh Medical Hall: Approximately Rs.500/- 6 Mr. Bhowmick added that assessee refused to produce professional diary maintained by him. Therefore, revenue had no other option but to complete reassessment on basis of fair estimate made by them. He also drew our attention to judgment of Kerala High Court in case of Commissioner of Income Tax vs. Sadique Ummer reported in (2010) 322 ITR 602 (Ker). Held, allowing appeal, that reasons recorded showed that Assessing Officer, prior to issuance of notice under section 147, conducted enquiry in hospitals about payments made to assessee and got full information about number of surgeries attended by assessee as anesthetist and amounts received by him. On comparing income received and income returned by assessee, Assessing Officer noticed that assessee had disclosed less income. He, therefore, reopened assessments under section 147 and issued revised assessments. Assessing Officer collected further information to complete reassessments which was also permissible under Act. finding of first appellate authority as well as Tribunal, that Assessing Officer had no material to believe that income had escaped assessment was wrong and contrary to facts. assessee had not maintained any books of account. Therefore, reopening of assessments was valid and within time. 7 We have considered rival submissions. In so far as violation of principles of natural justice is concerned, it is admitted fact that recorded reasons were not given to assessee. Therefore, submission that assessee was prevented from making adequate representation as regards illegality of proceedings under Section 147 cannot be lightly brushed aside. There has, in fact, been violation of principles of natural justice. authorities did in fact conduct themselves in most atrocious manner. Omission to supply recorded reasons was initial step. During assessment they resorted to surmise and conjecture, as is evident from order of assessment quoted above. When authorities were of opinion that income had escaped assessment, they were obliged to record reasons in support thereof and to prove same. burden of doing so was on revenue. It does not appear from reassessment that revenue had any material far less any tangible material to show that income had in fact escaped assessment. We are concerned in this case with assessment of assessment order 2000-01 and 2001-02, that is to say, financial year 1999-2000 and 2000-01. financial year 2000-01 ended on 31st March, 2001 whereas statement of assessee was recorded on 20th August, 2004. questions put to assessee have been 8 quoted above. Not one question was put to him as to what was his income during relevant period which is subject matter of consideration in this appeal. assessee was asked in August, 2004 as to what was his income, he gave answer to that. But present income cannot also be presumed to be past income. officers of revenue could have asked necessary questions but they omitted to do so. When they omitted to do so that may be pointer to show that they did not have any information as regards any understatement of income by assessee for that period. If such information was available with them, they would have asked that question. Without asking any question without having any material, they could not have proceeded on basis that assessee must have earned amount. Nothing was shown to us to establish that such course is permitted by law. It is well- settled that statutory authorities must act in accordance with law or not at all. judgment cited by Mr. Bhowmick does not really assist him because in that case definite information as regards payments received by assessee and definite information as regards surgeries attended by assessee were available. Therefore, facts and circumstances of that case are different than facts and circumstances of case before us. We, therefore, have no doubt in our mind that entire proceedings were without any basis. For aforesaid reasons, appeals are allowed. judgments and orders under challenge are 9 set aside. question formulated at time of admission of appeal is answered in affirmative and in favour of assessee. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) As./sm Ranbir Pal v. Commissioner of Income-tax, Kolkata XX