2020 (12) TMI 342 - AT - Income Tax

Tribunal directs re-examination of income from Apollo Hospital, orders deletion of consultation charges

The Tribunal set aside the appeals to the file of the Assessing Officer for re-examination of the issue regarding the amount received from Apollo ... Unaccounted income - Consultation charges received from Apollo Hospital group, Chennai - As included in the return of income filed for relevant assessment years or which is outside the books of account as claimed by the Assessing Officer on the basis of information received from PCIT., Central Circle, Chennai - HELD THAT:- As gone through the paper book filed by the assessee and find that the assessee has entered into agreement with Apollo Hospital group, Chennai and as per which Apollo Hospital group directly collects consultancy charges from outpatients and after deducting 15% of the fees collected from patients, the balance amount has been paid to the assessee. The said payment has been made through banking channel after deducting applicable TDS under section 194J of the Act - assessee has included the amount received from Apollo Hospital group, Chennai in his return of income for the impugned assessment year and also claimed TDS deducted by the Principal in his return of income. All these records are part of the paper book filed by the assessee - it appears that the assessee has included the amount received from Apollo Hospital group in his return of income filed for the relevant assessment year including the impugned assessment year. Making ad-hoc addition on the basis of information received from third party source on the pretext that assessee has received consultation charges in cash amounts to double taxation, which is incorrect. But, the fact remains that relevant documents including bank statement and form 26AS were not produced before the AO or even before learned CIT(A), because the assessee neither appeared before the authorities below nor filed any details. There was no occasion for the lower authorities to examine the case of the assessee in light of various evidences including form 26AS filed for relevant assessment years. Therefore, the issue needs to go back to the file of the Assessing Officer for limited purpose of examining the issue with regard to amount received from Apollo Hospital group, Chennai, to ascertain the facts whether the said amount is part of income declared by the assessee for the relevant assessment year - Decided in favour of assessee for statistical purposes. Issues Involved:1. Double taxation of consultation charges.2. Non-maintenance of separate books of account by the assessee.3. Addition of undisclosed income based on third-party information.4. Lack of evidence sharing by the Assessing Officer.5. Validity of reopening the assessment without proper information.6. Reliability of statements recorded during the search.Issue-wise Detailed Analysis:1. Double Taxation of Consultation Charges:The assessee contended that the consultation charges received from Apollo Hospital were already included in the gross receipts for the year. The payments were made through the bank after deducting TDS under Section 194J of the Income Tax Act. The addition made by the Assessing Officer on an ad-hoc basis based on information from the Principal CIT, Central Circle, Chennai, resulted in double taxation of the same income. The Tribunal agreed that making an ad-hoc addition based on third-party information without verifying the actual inclusion of the income in the assessee's returns amounts to double taxation, which is incorrect.2. Non-maintenance of Separate Books of Account by the Assessee:The assessee argued that the books of account required under Rule 6F of the Income Tax Rules were maintained by Apollo Hospital, which collected the fees and paid the balance to the assessee after retaining 15%. The Tribunal noted that the assessee did not maintain separate records as Apollo Hospital maintained the necessary records. The Tribunal directed the Assessing Officer to verify if the amounts received from Apollo Hospital were included in the assessee's income and to delete the additions if they were.3. Addition of Undisclosed Income Based on Third-Party Information:The Assessing Officer made additions based on information from the Principal CIT, Central Circle, Chennai, alleging that the assessee received consultation charges in cash from outpatients, which were not disclosed in the return of income. The Tribunal found that the assessee provided evidence, including the agreement with Apollo Hospital, bank statements, and Form 26AS, showing that the income was received through banking channels and subjected to TDS. The Tribunal directed the Assessing Officer to re-examine the case with the provided evidence.4. Lack of Evidence Sharing by the Assessing Officer:The assessee claimed that the Assessing Officer did not share the evidence or details based on which the conclusion of unaccounted income was reached. The Tribunal did not specifically address this issue but implied that the Assessing Officer should consider all relevant evidence provided by the assessee during the re-examination of the case.5. Validity of Reopening the Assessment Without Proper Information:The assessee argued that the reopening of the assessment was void due to the lack of information provided by the Assessing Officer. The Tribunal did not directly address the validity of the reopening but focused on the need for the Assessing Officer to verify the inclusion of the income in the assessee's returns during the re-examination.6. Reliability of Statements Recorded During the Search:The assessee questioned the reliability of statements recorded during the search, arguing that the person from whom the statement was recorded was not from the outpatient department. The Tribunal did not specifically address this issue but emphasized the need for the Assessing Officer to verify the actual inclusion of the income in the assessee's returns.Conclusion:The Tribunal set aside the appeals to the file of the Assessing Officer for re-examination of the issue with regard to the amount received from Apollo Hospital. The Assessing Officer was directed to ascertain whether the said amount was part of the income declared by the assessee for the relevant assessment years. If found to be included, the Assessing Officer was instructed to delete the additions made towards consultation charges received from Apollo Hospital. The appeals were allowed for statistical purposes, and the stay petitions were dismissed as infructuous.