Tribunal annuls reassessment, directs deletion of addition based on unverified third-party info.

The Tribunal allowed the appeals filed by the assessee for all assessment years, annulling the reassessment proceedings and directing the deletion of the addition of Rs. 5,52,155/- made by the AO. The Tribunal found that the AO's reliance on unverified third-party statements without corroborative evidence violated principles of natural justice, citing the Supreme Court decision in M/s. Andaman Timber Industries. The Tribunal emphasized that additions cannot be made solely based on third-party information, directing the AO to delete the addition for the relevant assessment years.

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Issues Involved:
1. Legality of reopening the assessment under section 147/148.
2. Addition of Rs. 5,52,155/- towards undisclosed professional charges under section 28.

Summary:

Issue 1: Legality of Reopening the Assessment
The assessee challenged the reopening of assessment on the ground that there was no tangible material and that the assessment was based on search and seizure operations of a third party. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the reopening, citing that the Assessing Officer (AO) had reasonable belief of income escapement based on data from the Investigation Wing. The CIT(A) relied on precedents such as Vasudev Fatandas Sawlani Vs Santosh Kumar and Raymond Woolen Mills Ltd. v. ITO, which held that the AO needs only a prima facie material to reopen the case.

Issue 2: Addition of Rs. 5,52,155/- Towards Undisclosed Professional Charges
The AO made an addition of Rs. 5,52,155/- based on the data obtained during the search and seizure operation at Apollo Hospitals. The AO concluded that the assessee, a consultant at Apollo Hospitals, did not account for all professional fees received. The CIT(A) partially upheld this addition, reducing the estimated consultancy fees to Rs. 500 per patient but maintaining the total number of patients consulted as 990.

The assessee argued that the AO's addition was based solely on unverified third-party statements and did not consider the actual accounting records. The Tribunal found that the AO's reliance on the statement of Ms. Subhadra.G, Manager (Operations) at Apollo Hospitals, without corroborative evidence, violated principles of natural justice. The Tribunal referenced the Supreme Court decision in M/s. Andaman Timber Industries, which held that statements without cross-examination and corroborative evidence are insufficient for making additions.

The Tribunal also considered similar cases, such as Dr. Srinivasulu Reddy Ponnaluru v. ACIT, where it was held that no addition can be made solely based on third-party information. The Tribunal concluded that the AO erred in making the addition without concrete evidence and directed the AO to delete the addition for the assessment years 2011-12 to 2015-16.

Conclusion:
The Tribunal allowed the appeals filed by the assessee for all assessment years, annulling the reassessment proceedings and directing the deletion of the addition of Rs. 5,52,155/- made by the AO.

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