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TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 625
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.... in the facts of the case in making an addition of Rs.5,52,155/- u/s 28 of the Act, based on unverified data obtained in search and seizure proceedings in which the Appellant was never a part of. 2. The AO erred in reopening the assessment without any tangible material and based on a search and seizure operations of a third party in which the Appellant was never a part of. 3. The AO presumed that the data received from the Investigation Wing is correct and complete - even though the person from whom the information was obtained did not authenticate it as correct and complete. 4. The AO erred in not appreciating the fact that mere receipt of information does not lead to reason to believe that income has escaped assessment, for the incomplete or unverified information cannot lead the AO to neither cause nor justification or formation of reason to independently believe that income has escaped assessment. 5. The AO erred to notice that the unverified data obtained by the investigation wing of the income tax department in a case not related to the Appellant cannot lead to a live link between the material coming to the notice of the AO and the formation of belief regarding es....
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....n 05.01.2016. During the course of search, it was noticed that the assessee was working for M/s.Apollo Hospitals, as Consultant and received professional charges. It was further noted that the assessee charges fee separately which was not accounted in the books of the hospitals. A statement of oath of the Manager (Operations) Ms.Subhadra.G, was also recorded u/s.132(4) of the Act, who has confirmed Out Patients consultation fees collected directly by the Doctors and the same was not accounted in the books of accounts of the Hospitals. Further, related data of Out Patients who were seen by the Consultants along with fees structure of each Consultant over the years was obtained and analyzed. Based on the information collected during the course of search, the AO opined that although, the assessee has received consultation fees from M/s.Apollo Hospitals in cash as well as cheque, but has not offered professional fees received in cash. Therefore, the AO called upon the assessee to explain 'as to why' additions should not be made towards professional fees received from M/s.Apollo Hospitals, Chennai. In response, the assessee submitted that he has received professional charges from M/s.Ap....
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....er: 6. Decision in appeal : 6.1 I have considered the facts and circumstances of the case submission of the appellant and perused the order u/s.143(3) r.w.s.147. Ground of appeal 1 is general in nature and does not require separate adjudication. 6.3 As per the second ground of appeal the appellant challenged the reopening of assessment proceedings u/s.147/148 of the Act on the ground that assessment was reopened "without any tangible material and based on a search and seizure operations of a third party in which the Appellant was never a part of." The assessment order has been perused and it is seen that the reason for reopening is on the ground that the appellant had not shown the consultation fees collected from patients seen through Apollo Hospital which information was collected through search proceedings on Apollo Hospital on 5.01.2016. In para 3.1 of the order the AO has stated that based on the data received from the Investigation Wing it was seen that the appellant had received consultation fees of Rs.10,42,300/- from Apollo Hospital which was prima facie not accounted for in his return for AY 2011-12. On the basis of this information the AO had reason to believe th....
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.... charged by the doctors who were doing private consultation in Apollo Hospitals from 2012 onwards. The data included the name of the patient, appointment date and time taken, visit time and concluding time which was separately maintained for each doctor. Further it was stated that the doctors are free to charge Outpatient fees based on their experience and credentials. They have provided the details of out-patients consulted by the doctor during the A.Y.2011-12 to A.Y.2016-17 as per the appointment module in CD format. She also confirmed such fees collected by the doctors directly are not accounted in the books of M/s. Apollo Hospitals. The data as obtained from the hospital was provided to the assessee for his information. The total consultation charges were worked out as under: FY 2010-11 Fee per patient 700 for new patients & 500 for review patients Total consultations 1489 Status -consulted 990 (436 new patients + 554 review patients) Status - not consulted 499 Total fees received as consultation Rs.10,42,300/- (being 700 x 1489) Restricted to Rs.5,82,200 (being 436 x 700 + 554 x 500) 3.5 It is seen from thesubmissions that professional fees towards co....
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....O estimating the consultancy fees for new patients at the rate of Rs.700/- and for old patients @ Rs.500/-; there is some truth in it. In the statement of Ms. Subhadra G., Manager (operations), Apollo Hospital the figure of Rs.700/- has not been mentioned anywhere. In fact in reply to question no. 6 she mentioned that the slab for OPD consultation fees was between Rs.450/- to Rs.500/- and there is no possibility for any doctor to charge above this rate. She also stated that she took over the job of managing outpatient services in the year 2012 and has no personal knowledge of the fees charged by the Doctors prior to October, 2012. In the assessment order, the AO has stated that the hospital provided the data which included the name of the patient, appointment date and time taken, visit time and concluding time which was separately maintained for each doctor. Further it was stated that the doctors are free to charge Outpatient fees based on their experience and credentials. But no detail has been given regarding the consultation fee of Rs.700/-. In view of the appellant's submissions and the statement of the Manager (Operations) it would be appropriate to calculate the consultan....
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....The Ld.Counsel for the assessee submitted that the Ld.CIT(A) erred in upholding the re-opening of assessment without appreciating the fact that the reasons recorded by the AO to form reasonable belief of escapement of income, is having no nexus with information received from M/s.Apollo Hospitals, during the course of search. The Counsel further submitted that mere receipt of information does not constitute a reasonable belief that the income was escaped assessment. Further, incomplete or unverified information cannot buy any justification lead to the AO in forming a reasonable belief independently that income has escaped assessment. He further submitted that the Ld.CIT(A) is also erred in sustaining additions made by the AO towards professional charges u/s.28 of the Act, without appreciating the fact that the assessee has already accounted professional charges received from M/s.Apollo Hospitals, which is subjected to TDS as per law. Further, the assessee had also reconciled Out Patients data collected from M/s.Apollo Hospitals to his books of accounts and explained that for each of the assessment year income accounted by the assessee is more than the amount of professional charges ....
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....Out Patients collected from M/s.Apollo Hospitals. According to the AO, the assessee has given treatment to 1489 patients and charged Rs.700/- per patient. Thus, total fees received during the Financial Year relevant to the AY 2011-12 is approximately Rs.10,42,300/-, whereas, the assessee has accounted a sum of Rs.5,49,756/- in his books of accounts as per payment made by the M/s.Apollo Hospitals which was subjected to TDS as per the provisions of the Act. The AO while arriving at the above conclusion has considered the details collected from M/s.Apollo Hospitals and statement of Manager (Operations) and come to the conclusion that there is an escapement of income on account of non-disclosure of professional charges received from M/s.Apollo Hospitals. Thus, made addition towards differential amount of professional charges u/s.28 of the Act. It was the arguments of the assessee before the AO that professional charges received from M/s.Apollo Hospitals, has been accounted in his books of accounts in toto. The assessee further claimed that although the list of Out Patients as per Hospital is more, but in many cases, the patients registered for consultation, but did not turn up. Further....
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.... of those witnesses were made on the basis of impugned order is a serious flaw, which makes the order nullity, inasmuch as it amounted to violation of principles of natural justice, because of which the assessee was adversely affected. Therefore, we are of the considered view that no addition can be made on the basis of statement of the third party alone, without any corroborative evidence. 9. We further noted that an identical issue has been considered by the co-ordinate bench of Chennai Tribunal in the case of Dr.Srinivasulu Reddy Ponnaluru v. ACIT, in ITA Nos.673 to 678/Chny/2022 for the AYs 2011-12 to 2016-17, order dated 20.09.2022, where the Tribunal by considering facts and also very same search operations conducted by the Department in the case of M/s.Apollo Hospitals, opined that no addition can be made on the basis of the third party information gathered by the Inspection Wing of the Department. The relevant findings of the Tribunal are as under: 5. From facts, it emerges that the Doctor is an ENT specialist working as a consultant Doctor in Apollo Hospital. Based on search findings on Hospital, the consultation fee of the Doctor has been estimated and differential fee....
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....? Ans: As per the statement of Mrs. Sashikala, my predecessor, the for OPD consultation fees was between Rs.450-500. There is no possibility for any doctor to charge above this rate but there is no physical evidence available with us as proof. We will be able to provide the list of patients who were offered consultation during the period 01-04-2009 to September 2012 as a soft copy. Upon perusal of above statement, it could be gathered that the Manager (Operations) merely act as data collector and has no idea about the exact fee charged by the Doctor from each of the patient. Further, she is not authorized to collect fees for non-employee Doctors. The fee is directly collected by the assessee's staff and such fee is not accounted for in the Hospital's books of account. Such category of doctors has discretion to fix their own fees and they merely pay monthly rent to the Hospital. The fees so collected by them are not booked in the books of Apollo Hospital. The range of fees being charged is only an estimated one and there is no physical evidence available before her. It could also be seen that apart from this statement, there is no corroborative evidence on record to support th....
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....ed during hearing before us. Accordingly, no findings have been rendered on these grounds. 10. In this case, on the basis of facts available on record, we find that the basis for re-opening of assessment u/s.147 of the Act, is the statement of Manager (Operations) Ms.Subhadra.G and Out Patients details collected from the said hospitals. If you go through the statement of Ms.Subhadra.G, we find that she does not possess any concrete data about number of patients treated and fees charged by the assessee except abstract figures of number of patients. There is no corroborative evidence to support that the assessee has charged fees from each and every patient as per list submitted by the Hospital. On the other hand, the assessee proved that Out Patients list maintained by the Hospitals, includes several types of nonbilled and non-charged patients also. Moreover, the gross-receipts and income declared by the assessee for all these assessment years is over and above the amount of income quantified by the AO from the list collected from M/s.Apollo Hospitals. Therefore, we are of the considered view that the AO is completely erred in making addition towards difference amount of profession....