2004 PLP 145 (PTD)

Claimed Disallowed Claimed Disallowed 1 Salaries & Benefits 1,139,815 0 948,193 189,639 1,172,602 390,867 2 Communication 64,170 9,626 9,626 96,349 24,087 112,240 28,060 3 Laundry and Linen 21,662 5,416 53,424 13,356 36,948 9,237 4 Medicine and Laboratory 477,124 0 317,639 136,57 558,414 334,939 5 Repair & Maintenance 154,338 38,585 114,823 28,706 96,508 24,127 6 Printing and Stationary 42,726 0 48,602 12,151 63,188 15,797 7 Conveyance 3,437 0 2,978 745 4,320 1,080 8 Entertainment 12,155 4,052 1,216 6,096 1,524 6,700 1,675 9 Vehicle Running & Maintenance 46,433 11,608 9,267 49,055 12,264 17,175 4,294 10 Depreciation 70,469 2,302 14,093 76,501 68,114 11 Security Charges (SOS Pvt. Ltd.) 44,456 0 43,194 45,512 12 Misc. Expenses 11,274 0 5,685 5,685 1,004 1,004 Total addition in Income 3,260,414 322,909

12. Admittedly declared receipts include only 1/3rd receipts through banking channel from panel companies and 2/3rd cash receipts from casual patients. Further the Taxation Officer, has admitted that computerized details of receipts indicating bill No. and package offered to the patients have been filed. The only discrepancies recorded in the orders are that the bills do not carry complete addresses and NIC numbers of patients and that the books of account are not kept as per rules 28 and 29 of Income Tax Rules, 1982. According to Taxation Officer the declared receipts "appear to be quite low in view of the fact that hospital is situated in a congested area of the city and provides all the facilities to the patients including X-ray, I.C.U., N.I.C.U., Laboratory test, ultrasound, physiotherapy, E.C.G., operation theater, labour room apart from private rooms and V.I.P. rooms as well as medical store."

13. The counsel of the complainant submits that it is evident from the records of assessment proceedings that no effort was made by the Assessing Officer to verify the amount of any bill from any patient. The specimen of the entries in the bills reproduced on page-4 of the assessment order for 2001-2002 proves that mostly addresses were available on the bills and further details e.g. telephone numbers etc. were available in Patient/Case Register. Further, there was no truth in the allegation that books as prescribed under the Rules were not maintained. There was no requirement of recording NIC number of patients in the prescribed forms.

14. The fact that the complainant has faithfully recorded all transactions in the books of account is proved by the fact that recorded cash receipts are almost double the cash receipts. Moreover, the Taxation Officer has not placed a single instance of patient who was treated at the hospital and charged for the treatment but the amount collected from him was either not recorded in the books or was short recorded. This could have been found by spot enquires.

15. The counsel, submits that it is evident from the foregoing comparison that the decisions made by the Taxation Officer to estimate receipts for 2001-2002 at Rs.4,500,000 and for 2002-2003 at Rs.6,000,000 in total disregard to the history of the case settled by the Tribunal despite absence of any reason/evidence placed on record or recorded in the orders are mala fide, without valid reasons, perverse, arbitrary, unreasonable, unjust, biased and oppressive. The respondent has become biased and oppressive due to instant complaints lodged by the assessee. The disallowances made out of expenses claimed in each of the two years are equally arbitrary, excessive and oppressive. It a blatant departure from established practice. The respondent has raised highly excessive tax demands amounting to Rs.1,126,075 for assessment year 2001-2002 and Rs.1,323,680 for assessment year 2002-2003 to harass the complainant.

16. Maladministration alleged on account of causing undue delay in passing the assessment order for 2001-2002 is proved. Maladministration in the decisions to estimate receipts of the complainant and disallowing the claims of expenditure at baseless and arbitrarily oppressive and excessive figures in total disregard to the established practice an complainant's own case is also proved.

17. It is recommended that:-- (i) The Commissioner to proceed in accordance with the relevant Rules against the DCIT, who retained the books of account on 7th May, 2002 and did neither hand over the same to his successor while, making over the charge on May 10, 2002 nor to his successor's successor, who took over charge on 19th August, 2002. (ii) The Commissioner to proceed in accordance with the relevant Rules against the Assessing Officer who did not take due note of the written submissions on 29-8-2002 that assessee's books of account were in the custody of Assessing Officer since 7th May, 2002 and took almost four months to write to his predecessor on 21-12-2002 that he did not handover assessee's books or account while making over the charge. (iii) The Commissioner to note that it is his legal obligation to take suo motu cognizance of carelessness and negligence of the concerned officers and he needs to be more vigilant in monitoring the performance of officer's working under him. (iv) The Commissioner takes suo motu cognizance of the effect or maladministration found in the decisions leading to assessments of income for assessment years 2001-2002 and 2002-2003 on the respective assessment orders in order to provide relief due to the complainant in exercise of powers vested in him by the law. (v) Compliance be reported within 45 days. C.M.A./891/FTO Order accordingly.