COMMISSIONER OF INCOME TAX Vs. LAKSHMI HOSPITAL

JUDGEMENT

(1.) The appeals are filed by the revenue with a delay of 23 days. In the normal course, we should condone the delay only after issuing notice to the respondents and after hearing their objections. However, when the delay condonation petition came up for consideration before us, we heard merits of the case. For the reasons discussed below we do not find any ground to interfere with the orders of the appellate Tribunal allowing respondent's claim. So much so, we condone the delay of 23 days in filing the appeals and proceed to consider the case on merits.

(2.) The respondent/assessee is a major hospital located in the middle of the city. During search conducted by the department, they noticed unaccounted collection of fees in the name of doctors and distribution of the same to various doctors serving the hospital whether as regular employees or as consultants. In the course of enquiry, the respondent/assessee accepted the collections but contended before the department that they have distributed the entire amounts to the doctors in whose name the collections were made and no part of it is retained as their income. However, the department rejected the explanation offered by the respondent and assessed the entire amount as unexplained expenditure falling under section 69C of the IT Act. On appeal filed by the respondent/assessee the CIT (Appeals) though in principle confirmed the addition, granted a reduction of 25 per cent against which the assessee as well as the department filed second appeal. The Tribunal allowed the assessee's appeal completely cancelling the addition and dismissed the department's appeal. It is against the common orders of the Tribunal passed for the four years 2000-01 to 2003-04, the department has filed these 8 appeals raising the same question as to whether the entire amount collected in the name of doctors by the respondent could be assessed as unexplained expenditure under section 69C, on account of the failure of the respondent to prove the expenditure.

(3.) We have heard the standing counsel appearing for the appellant in detail who tried to justify the assessment under section 69C which is as follows: