2023 (11) TMI 436 - AT - Income Tax

Doctor's professional receipts addition deleted as AO's average fee calculation based on presumption lacks evidence

Me & Mummy Hospital Versus Dy. Commissioner of Income Tax, Central Circle-3, Surat

The ITAT SURAT-AT ruled in favor of the assessee regarding suppression of professional receipts from OPD patients. The AO had calculated average ... Suppression of professional receipts from the patients under OPD category - assessee has shown some “Zero Receipt Patients” in IPD” indoor patient department - AO worked out average consultancy fees of OPD category @ Rs. 150/- per patient and added sum as unaccounted income of assessee - CIT(A) while passing order u/s 154 restricted such addition to the extent of 30% being profit element of unrecorded receipt and deleted remaining addition. HELD THAT:- We find that Assessing Officer has adopted a figure of Rs. 100/- as minimum charge and Rs. 3,00/- as maximum charge of consultancy fees in OPD and worked out average consultancy fees of Rs. 150/- per patient adopting average consultancy fees, is nothing but on presumption. We further find that assessing officer made similar addition in respect of indoor patient (IPD patient), and on appeal before ld CIT(A) it was also restricted to 30% by ld CIT(A) in order dated And on further appeal before Tribunal such additions were deleted [2022 (12) TMI 1472 - ITAT SURAT] - Decided in favour of assessee. Issues Involved:- Addition of Rs. 2,28,015/- on the ground of suppression of professional receipts from patients under OPD category.- Rectification of order under Section 154 of the Income Tax Act for assessment years 2013-14 and 2014-15.Summary of the judgment for each issue:1. Addition of Rs. 2,28,015/- on the ground of suppression of professional receipts from patients under OPD category:The case involved a partnership firm providing medical services through hospitals in Surat. The assessing officer made an addition of Rs. 7,60,050/- on account of 'Zero Receipt Patients-OPD' during assessment for the year 2013-14. The CIT(A) initially quashed the addition based on a jurisdictional High Court decision but later rectified the order under Section 154, limiting the addition to 30% of the suppressed receipts. The Tribunal found that the assessing officer's methodology for the addition was based on presumption and not concrete evidence. Considering previous decisions where similar additions for IPD patients were deleted, the Tribunal ruled in favor of the assessee and deleted the addition for OPD patients as well.2. Rectification of order under Section 154 of the Income Tax Act:The CIT(A) rectified the order for assessment years 2013-14 and 2014-15, limiting the addition on account of 'Zero Patient-OPD' to 30% of the suppressed receipts. The assessing officer had relied on electronic records without the required certification under Section 65B(4) of the Evidence Act. The Tribunal found that the assessing officer's addition was not justified as it was based on presumptions rather than concrete evidence. The Tribunal also noted discrepancies in the assessing officer's approach and ruled in favor of the assessee, deleting the addition based on similar reasoning applied to IPD patients in previous cases.In conclusion, the Tribunal allowed the appeal of the assessee for both assessment years, considering the lack of concrete evidence supporting the additions and inconsistencies in the assessing officer's approach.