DR DEEPAK ARJUNDAS ,CHENNAI vs. ACIT , CHENNAI

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 quantified by the AO on the

basis of Out Patients data collected from the Hospital. However, the AO

and the Ld.CIT(A) simply made addition towards difference amount of

ITA Nos.924 to 929/Chny/2022 :: 9 ::

professional charges on the ground that the assessee could not explain with

necessary evidences, amount received from M/s.Apollo Hospitals has been

accounted in the books of accounts. In this regard, he relied upon by the

decision of the ITAT Chennai Benches 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 and also the decision in the case of

Dr.Thiruvengadam Prithviraj v. ACIT in ITA Nos.852 & 853/Chny/2020 for

the AYs 2012-13 & 2013-14, order dated 08.09.2021.

submitted that it is a matter on record that the assessee has not accounted

professional charges received from M/s.Apollo Hospitals in total. Further,

the assessee has not maintained books of accounts as per Rule 6F of the

Income Tax Rules, 1962, and thus, in the absence of relevant books of

accounts, the AO was right in making addition towards unaccounted

professional charges received from M/s.Apollo Hospitals on the basis of

evidence collected during the course of search. Further, information

collected during the course of search, clearly indicate that there is a

difference between income received by the assessee from M/s.Apollo

Hospitals and income accounted in the books of accounts for relevant to

AY. Therefore, the AO has rightly made addition towards professional

charges u/s.28 of the Act, and their orders should be upheld.

record and gone through orders of the authorities below. The sole basis for

ITA Nos.924 to 929/Chny/2022 :: 10 ::

the AO to re-open assessment u/s.147 of the Act, is a search and seizure

operation conducted u/s.132 of the Act, in the case of Apollo Group of

Hospitals on 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 on his own, which was not considered as

receipts of M/s.Apollo Hospitals. This fact has been admitted by the

Manager (Operations) in her statement recorded u/s.132(4) of the Act. The

AO has formed reasonable belief of escapement of income on the basis of

statement of Ms.Subhadra.G and data of 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

ITA Nos.924 to 929/Chny/2022 :: 11 ::

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, in many cases they come up for

follow-up treatment, for which, no fees is charged. In many cases, there

are VIP patients and patients come under master health checkup, for which,

no separate fees is charged. If you exclude these cases and compute

amount received from the list of M/s.Apollo Hospitals, then amount offered

by the assessee in his books of accounts is matching with amount quantified

by the AO. Therefore, the question of escapement of income, does not

arise.

the Assessing Officer in light of arguments of the assessee and we do not

ourselves subscribe to the reasons given by the Assessing Officer to make

additions towards unaccounted professional charges received in cash for

simple reason that except statement of an employee recorded during the

course of search, the Assessing Officer has never brought on record any

other evidence to support his finding that the assessee has received

professional charges in cash from Apollo Hospitals. We further noted that

although, there is a difference in professional charges admitted by the

assessee in return of income for impugned assessment years, when

compared to professional charges quantified by the Assessing Officer on

the basis of number of patients registered with the name of assessee in

Apollo Hospitals, but the assessee has explained difference and submitted

ITA Nos.924 to 929/Chny/2022 :: 12 ::

that he had treated certain patients without collecting charges and further,

some of the patients though registered with Apollo Hospitals, but did not

turn up for treatment. In our considered view, explanation given by the

assessee that additions cannot be made on the basis of number of patients

registered with Apollo Hospitals appears to be reasonable and bonafide.

The Assessing Officer never disproved claim of the assessee with any

evidences, but went on to make additions only on the basis of statement of

a third party, that too without providing evidences and opportunity of cross

examination to the assessee in violation of principles of natural justice. It

is well settled principles of law by the decision of the Hon'ble Supreme Court

in the case of M/s.Andaman Timber Industries Vs. Commissioner of Central

Excise, Kolkatta-II (15 SCC 785), where it was categorically held that not

allowing assessee to cross examine witnesses by the adjudicating authority,

though statements 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.

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

ITA Nos.924 to 929/Chny/2022

:: 13 ::

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:

Q.3. please provide the consultation fees charged by the doctors using Apollo hospital premises from the period 01-04.2009 to till date?

Ans: Total number of doctors is 225 (approx..). The seven doctors of nephrology department are permanent employees of Apollo hospitals working on guaranteed income. Rest of the doctors fix their own consultation fees. I took over the job of managing outpatient services in the year 2012. Out of my own interest I collected the datas regarding consultation fees charged by the doctors. I have provided a hard copy of the fees charged by the doctors in the year 2012 (Annexure 1). I have signed the same and authenticated it. The data was collected in the month of October 2012. We collected the fees charged by the doctors again in June 2015 (Annexure 2). It reflects the changes in fees collected between October 2012 and June 2015. It may not reflect the present fees charged by the doctors. But in 98% of the doctors, the fees may not have changed.

Q4. Please provide me the details of number of outpatients treated in this hospital from the year 2009?

Ans: I have asked our IT team to collect the details and I will be submitting the same by today as softcopy.

Q5 Whether the cash collection is routed through the books of accounts of Apollo hospitals. If not why?

Ans: The fees collected by the employed doctors of Apollo hospitals (i.e.) 7 doctors in the nephrology department are booked in the accounts of Apollo hospitals. The fees collected by the remaining doctors are not booked in our accounts. The nonemployee doctors have their discretion to fix their fees. They pay monthly rent of Rs.13,800 p.m. presently. In case of part-time Doctors, the rent is charged on an hourly basis. The fees charged by the non-employee doctors are not booked in the accounts of Apollo hospitals even before I took over. I am continuing the same procedure. Dr. Satyabhama, Director of Medical Services only has the final say regarding the fees of non-employee doctors and whether or not to book the same in the accounts of Apollo hospitals.

Q6 Please provide the details of consultation fees received by the doctors for the consultations to patients in Apollo from 01-04-2009 to September 2012?

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.

ITA Nos.924 to 929/Chny/2022

:: 14 ::

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 the working of Ld. AO. The estimate has been made merely on abstract figures.

Based on above tabulation, it could not be accepted that the assessee would attempt to conceal income as estimated by Ld. AO. The Hon’ble Supreme Court in the case of CIT vs Odeon Builders (P) Ltd (2019) 110 Taxmann.com 64 (SC) has held that no addition can be made on the basis of third-party information gathered by the Investigation Wing of the Department.

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,

ITA Nos.924 to 929/Chny/2022 :: 15 ::

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 non-

billed 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 professional charges on the basis of Out Patients data collected from

M/s.Apollo Hospitals and statement of Manager (Operations)

Ms.Subhadra.G, without any corroborative evidence to suggest that the

assessee has received so much professional charges from the Hospitals and

further, the same has not been accounted in his books of accounts.

Further, the assessee has analyzed Out Patients list given by the Hospitals

with his books of accounts and also reconciled the amount of income

accounted in his books of accounts for all these assessment years and

claimed that income accounted by the assessee from M/s.Apollo Hospitals

is more than the amount of income quantified by the AO from the list of

Out Patients supplied by the Hospitals. Therefore, we are of the considered

view that the AO is completely erred in making addition towards differential

ITA Nos.924 to 929/Chny/2022 :: 16 ::

amount of professional charges u/s.28 of the Act. The Ld.CIT(A) without

appreciating the relevant facts, simply sustained the additions made by the

AO and thus, we set aside the order of the Ld.CIT(A) and direct the AO to

delete the addition towards professional charges u/s.28 of the Act, for the

AYs 2011-12 to 2015-16.

years are allowed.

Order pronounced on the 15th day of March, 2023, in Chennai.

Sd/- Sd/- (वी. दुगा� राव) (मंजूनाथा.जी) (MANJUNATHA.G) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 15th March, 2023. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�/CIT 2. ��यथ�/Respondent 5. िवभागीय �ितिनिध/DR 3. आयकर आयु� (अपील)/CIT(A) 6. गाड� फाईल/GF