TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 167
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....No. 2152/2014 (for exemption) in W.P. (C) No. 1045/2014 1. Exemptions allowed subject to all just exceptions. 2. The applications are disposed of. W.P.(C) No. 924/2014 & CM No. 1873/2014 (for stay) W.P.(C) No. 1045/2014 & CM No. 2151/2014 (for stay) W.P.(C) No. 3077/2015 & CM No. 5498/2015 (for stay) W.P.(C) No. 3078/2015 & CM No. 5500/2015 (for stay) 3. These four writ petitions by Dr. Ajit Gupta, a medical practitioner who is an Assessee, challenge the notices issued to the Assessee by the Deputy Commissioner of Income Tax ('DCIT'), Circle 37(1), New Delhi under Section 148 of the Income Tax Act, 1961 ('Act') seeking to reopen the assessment for Assessment Years ('AYs') 2006-07 to 2009-10. 4. The Assessee filed a return of in....
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....ssion and derived income from proprietary business from M/s. Park Hospital and M/s. Sunil Hospital & Nursing. The assessee filed its return of income on 31.10.2006 declaring the income of Rs. 12,35,268/-. On the basis of information gathered while scrutiny proceedings u/s. 143(3) for A. Y. 2010-11 and as per para 11(a) of Tax Audit Report u/s. 44AB dated 28.10.2006 of the assessee (M/s. Park Hospital and Sunil Hospital and Nursing Home), the assessee is regularly following mixed system of accounting. As per section 145 of the I.T.Act, 1961, income chargeable under the head 'profits and gains of business or profession' shall be computed in accordance with either cash or mercantile system of accounting regularly employed by the assess....
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....9. The same reasons, as extracted hereinbefore, were given to the Assessee for the reopening of the said assessment for AY 2008-09. 11. As far as AY 2007-08 is concerned, the notice under Section 148 of the Act was issued by the Assistant Commissioner of Income Tax ('ACIT'), Circle 37(1) on 5th March 2014. The reasons conveyed to the Assessee by the letter dated 9th October 2014 were more or less similar to the above reasons. It was stated further as under: "During the assessment proceedings for A.Y. 2010-11, the assessee submitted in his reply on 14.03.2013 that he has been following cash system of accounting until F.Y 2008-09 and shifted over to mercantile system of accounting for F. Y. 2009- 10. Assessee during the assessment procee....
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....proceedings pursuant to the impugned notices. Similar orders were passed at the time of issuance of notices in the other two petitions W.P. (C) Nos. 3077 and 3078 of 2015( for AYs 2007-08 and 2009-10). 15. The Court has heard the submissions of Mr. Salil Kapoor, learned counsel for the Petitioner and Mr. Rahul Chaudhary, learned Senior Standing counsel for the Revenue. 16. The main reason for the reopening of the assessment is admittedly the letter given by the Assessee while the assessment for AY 2010-11 was under scrutiny. It is stated that in the reply dated 14th March 2013 addressed to the DCIT in reply to the notice dated 8th March 2013, the Assessee volunteered that "we have followed the cash system of accounting until FY 2008-09 an....
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....lowing credit to any patient, there was no debtor appearing in the books. These factors were examined by the AO during the original assessment proceedings and the books of accounts were also produced. It was pointed out that the mercantile system of accounting was being followed by the Assessee not only during AY 2006-07 but the earlier and subsequent years as well. Counsel for the Assessee has produced before the Court the assessment order dated 17th November 2006 for AY 2004-05 which shows that the method of accounting in the said AY was 'mercantile'. It was explained that the word 'mixed' was inadvertently mentioned in the audit report under Section 44AB of the Act but actually it was only the mercantile system which was followed. The au....
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....ct would be 'nil' and there would be no escapement of income. The only controversy was whether income was to be taxed in the first year or the next year and overall it would be tax neutral. There was also no revenue loss as the maximum slab of tax rate in all the AYs was the same, i.e., 30%. It was further pointed out that for AY 2009-10 "by changing the method as cash basis, the assessed income would be reduced". 21. The Court finds that none of the above objections have been adequately dealt with by the AO while rejecting the objections. 22. During the course of today's hearing, apart from the mistake made in the audit report by mentioning the system of accounting of the Assessee as 'mixed' and the letter issued by the Assessee himself,....