Tribunal rejects tax additions based on unverified info, rules in favor of taxpayer

The Tribunal concluded that the additions made by the Assessing Officer under Section 147 of the Income Tax Act were not sustainable in law. The Tribunal found that the estimation of income based on unverified third-party statements and the failure to consider non-charged patients were not supported by concrete evidence. The Tribunal held that the additions were deleted for all the years in question, citing a Supreme Court decision prohibiting additions based solely on third-party information. The appeals were partly allowed, with the order pronounced on 20th September 2022.

---

---

Issues Involved:
1. Validity of jurisdiction assumed under Section 147 of the Income Tax Act.
2. Addition based on unverified third-party statements.
3. Consideration of non-charged follow-up patients and other categories.
4. Estimation of consultation fees and income.

Detailed Analysis:

1. Validity of Jurisdiction Assumed Under Section 147 of the Income Tax Act:
The assessee challenged the jurisdiction assumed by the Assessing Officer (AO) under Section 147, arguing that it was based on an oral statement from Ms. Subhadra, who lacked locus standi and access to authentic data. The assessee contended that there was no valid material to form a belief that income had escaped assessment, making the notice under Section 148 void.

2. Addition Based on Unverified Third-Party Statements:
The assessee argued that the additions were based on mere estimations, suspicion, conjectures, and surmises. The AO had relied on data obtained during a search action on M/s Apollo Hospital Group and a statement from Ms. Subhadra, Manager (Operations). The assessee contended that the statement was not verified and that the data included several types of non-billed or non-charged patients. The Tribunal noted that the Manager (Operations) merely acted as a data collector and had no concrete data about the exact fee charged by the doctor. The Tribunal found that there was no corroborative evidence to support the AO's working, and the estimate was made on abstract figures.

3. Consideration of Non-Charged Follow-Up Patients and Other Categories:
The assessee submitted that follow-up patients and certain categories of patients were not charged. The Tribunal acknowledged that the data from Apollo Hospital included non-billed or non-charged patients, supporting the assessee's claim. The Tribunal found that the AO's estimation did not account for these exclusions and was not supported by documentary evidence.

4. Estimation of Consultation Fees and Income:
The AO estimated the concealed fee based on the number of patients and the fees charged, adding Rs.8,08,400/- to the assessee's income. The Tribunal found that the estimation was based on abstract figures and unsupported by concrete evidence. The Tribunal noted that the assessee was a regular income tax payer with substantial declared income, making it unlikely that the assessee would conceal income as estimated by the AO. The Tribunal cited the Supreme Court's decision in CIT vs Odeon Builders (P) Ltd, which held that no addition could be made based on third-party information gathered by the Investigation Wing.

Conclusion:
The Tribunal concluded that the impugned additions were not sustainable in law and deleted the additions for all the years. The Tribunal did not render findings on the validity of the assessment proceedings as the grounds were not urged during the hearing. All the appeals were partly allowed, and the order was pronounced on 20th September 2022.

---