TaxTMI 
TaxTMI 
2013 (4) TMI 765
X X X X Extracts X X X X
X X X X Extracts X X X X
....inivasan, orally pleaded for an adjournment. Since no proper reasons have been shown for seeking the adjournment, this is also rejected. 3. Cross objections of the assessee in the case of Dr.Deepak Lemech are delayed by 29 days for which condonation petitions have been filed. Delay is condoned and Cross Objections are admitted. 4. Short facts apropos of the fact are that search under section 132 of the Income Tax Act, 1961 (in short 'the Act') was conducted in the premises of one Dr. P. Ravichandran on 12.10.2007. Dr. P. Ravichandran is a renowned nephrologist. During the years 1996 to 1998, he worked as a Consultant at Tamil Nadu Hospital, Kancheepuram Dist. Thereafter, during 1999 to 2003, he established a proprietary professional consultation unit called Kidney Institute of Organ Transplantation (KIOT) and this consulting unit entered into a Memorandum of Understanding (MOU) with M/s. MIOT hospital, Manapakkam,Chennai. This arrangement, it seems continued upto 2003. In 2003-04, a similar tie up, was entered with one St. Thomas Hospital. KIOT specialized in treatment of the diseases connected to kidney as also renal transplants. During the period, when Dr.P.Ravichandran was hav....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... As per the Assessing Officer, Dr.P.Ravichandran in his statement dated 29.11.07 had admitted payment of ₹ 1 lakh as the maximum surgeon fee per operation. Pursuant to the search in the premises of Dr.P.Ravichandran and statement recorded from him on 29.11.07, proceedings under section 153C were initiated against the two assessees, here namely Dr. Deepak Leemach and Dr.L.Srinivasan. Both the assessees responded by stating that the returns originally filed by them could be deemed as filed in pursuance of such notices. During the course of assessment proceedings, Assessing Officer noted that these two assessees had made substantial deposits in their respective bank accounts. He recorded statements from them, invoking Sec.131 of the Act. Relevant queries posed to Dr. Deepak Leemach and his replies are reproduced hereunder:- "Q.No.13 Have you received any fee for surgery directly from the patients. If so, furnish details. Ans. No, never I have received fee directly from the patients. Q.No.6 Can you please tell whether Dr.Srinivasan is engaging you for the transplantation surgeries or Dr.P.Ravichandran? Ans. Dr.P.Ravichandran alone collects all the money from the patients. Dr.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing Officer, the number of renal transplants done came to 760 cases. Year-wise break up was also compiled by the Assessing Officer from the impounded records and this read as under:- Asst. Year No. of cases 2002-03 7 03-04 214 04-05 130 05-06 85 06-07 110 07-08 92 08-09 122 Total 760 10. Thereafter, considering the statement given by Dr.P.Ravichandran, as also statements given by the assessees, Assessing Officer came to a conclusion that total surgeon fee per operation could be estimated at ₹ 75,000 for A.Ys. 2006-07, 2007-08 & 2008-09 and ₹ 70,000/- for A.Ys. 2002-03, 2003- 04, 2004-05 & 2005-06. Out of the total surgical team's fees, as per the A.O., 25% went to the anesthetist team, 30% went to the donor surgical team, viz. Dr. Deepak Leemach, and 45% went to the recipient surgical team, viz. Dr.L.Srinivasan. Based on these data, professional receipts of the assessees were worked out and additions made for the impugned Assessment Years. 11. Both the assessees moved in appeal before the CIT(A), assailing both the number of operations estimated for each year and also the income estimated from each operation. Further, as per the assessees, substa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the statements of assessee and records available, came to a conclusion that the number of operations totally done by the two assessees had to be accepted as 407 for the period involved. According to him, the document impounded from the Bharathiraja Hospital clearly showed that name of surgeon was mentioned as one Dr.Muthu Jayaraman in 13 cases. For 33 cases, according to him, it was clear that only one patient's name was mentioned whereas for renal bilateral nephrectomies, two patients were a must for each procedure. CIT(A) also accepted the claim of assessee that 41 number of operations were done by doctors not related to KIOT. With regard to the operations done at MIOT hospital, CIT(A) noted that Assessing Officer himself had admitted the number of transplants as 120. He also accepted the claim of assessees that 104 of surgeries were done free of cost for Kidney Care Trust belonging to Dr.P.Ravichandran. Effectively, he upheld number of kidney transplants as 407. 15. Vis-a-vis the fees received, the CIT(A) accepted the estimation done by the Assessing Officer. However, according to him, assessees claim that expenses were incurred for junior doctors, staff nurses and medicines ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dure was not one involving a transplant. In any case, according to him, for 41 numbers claimed by the assessee as operations in which they had no part to play, there was no evidence. Similarly, according to the Ld.D.R, 104 operations were simply presumed by the CIT(A) to have been done by the assessees free of cost for M/s.Kidney Care Trust. 17. Vis-à-vis the claim of expenditure incurred by the assessees for their supporting staff, D.R pointed out that Dr. P. Ravichandran had paid a part of the fees to concerned hospitals being the part of the package charges, to meet the hospital expenses. Therefore, according to him, the presumption that assessees would have paid directly to various supporting staff could not be accepted. Ld. CIT(A), as per D.R, again went by the submissions of assessees which were not corroborated by any evidence. Therefore, according to him, CIT(A) fell in error in disturbing the findings of the Assessing Officer, except for the number of transplants done at MIOT hospital, which was confirmed as 120 by the Assessing Officer, in his remand report. Ld.D.R further pointed out that assessee had not produced any evidence with regard to the kidney transplant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecific ground before the CIT(A) questioning the validity of proceedings initiated under section 153C of the Act. Though this was not part of the original grounds of appeal, it was submitted during the course of hearing as an additional ground. According to him, recording of satisfaction by the Assessing Officer was a pre requisite for initiating proceedings under section 153C of the Act and this was not done here. Assessing Officer of the assessee and Assessing Officer of Dr. P. Ravichandran, who was searched, were different. Reliance was placed on the decision of Apex Court in the case of Manish Maheshwari Vs. ACIT in 289 ITR 341. According to Ld. A.R., CIT(A) fell in error in not adjudicating the aspect of jurisdiction. In any case, according to him, Tribunal was duty bound to examine the question of law even if it was taken as an additional ground of appeal as held by Hon'ble Apex Court in the case of National Thermal Corpn. Vs. CIT 229 ITR 383. Further, as per Sr. Advocate N.Devanathan, his assessee could not be treated on a different footing vis-à-vis Dr. P. Ravichandran. According to him, Ld. CIT(A) had on the appeals filed by Dr. P. Ravichandran, directed the Assessin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be, probable since a renal transplant require a donor as well. We are unable to accept the argument of the Ld. D.R. that non-mentioning of donors name could have been an omission, since surgery on donor is also a massive procedure. Vis-à-vis the claim of the assessees that certain operations in the list was exclusively done by the doctors of Bharathiraja Hospital, serial No. mentioned by the assessees are the following: "76,79,88,103,102,107,112,118,120,138,139,157, 158,161,167,175,176,182,228,244,264,273" A verification of the corresponding pages in the record of M/s. Bharathiraja Hospital show that the initials mentioned against each is PRC only. However, there is no conclusive evidence to show that assessees were always the surgeons, when initial 'PRC' was mentioned. Neither has any evidence been produced by the assessees to show that these were done by a team in which assessees were not part. Similarly assessees have also not produced any record to prove that 104 numbers of transplants were done by them free of cost for M/s.Kidney care Trust. Considering the various difficulties in exactly ascertaining the number of operations done by the assessees at Bharathiraja Hos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so appears in the assessment order of Dr. P. Ravichandran supra. Thus, what can clearly be discerned is that none of these persons had mentioned anything regarding the payments to the support staff in the surgical team of the assessees. Dr.L.Srinivasan, in his statement had mentioned that 30% went to the donor surgical team, and 45% went to the recipient surgical team. The payments effected were for the teams as such. Therefore, in our opinion contention of assessees that assistants had to be paid , which included junior doctors and staff nurses, has considerable strength. Ld. CIT(A) estimated such expenses at ₹ 9,000/- per case. Amount of ₹ 2,000/- estimated by the Ld. CIT(A) as payment to two staff nurses per operation is on the lower side. In the facts and circumstances, we are of the opinion that expense of ₹ 12,000/- per case can be considered reasonable. Orders of the authorities below are set aside on this aspect and the Assessing Officer is directed to recompute the income of respective assessees considering the expense for each transplant at ₹ 12,000/-. Cross objection of the assessees on this issue is partly allowed. 25. Coming to one of the groun....