Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO, HON’BLE & SHRI MANJUNATHA. G, HON’BLE
to 2016-17, order dated 20.09.2022 and also the decision in the case of Dr.Thiruvengadam Prithviraj v. ACIT in & 853/Chny/2020 for the AYs 2012-13 & 2013-14, order dated 08.09.2021.
6. The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), 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.
We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The sole basis for 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 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.
8. We have given our thoughtful consideration to the reasons given by 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 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.
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 to 678/Chny/2022 for the AYs 2011-12 to 2016-17, order dated 20.09.2022, where the Tribunal by considering
:: 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:
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 has been added to his professional income. The whole basis of the addition is statement of Smt. Subhadra G., the relevant portion of which read 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.
:: 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.
It could also be seen that as per the submission of the assessee all out patients were not charged. The certain category of patients and review patients would not be charged if they visit within 15 days of first consultation. The fee prescribed by Apollo Hospitals for Master Health Check-up patients is Rs.150/- only. This being the case, the assessee Doctor cannot be expected to charge substantially higher amount as considered by Ld. AO and therefore, the estimation as made by Ld. AO could not be upheld.
7. We find that the whole basis of addition is the statement of Ms. Subhadra G. who does not possess any concrete data except abstract figures of number of patients. There is no corroborative evidence to support that so much of fees has been collected by the assessee from the patients. The assessee has also placed on record the certificate issued by Senior Vice-President (Finance) which clearly states that "the out-patient list maintained by the Information Technology Department of Apollo Hospitals includes several types of non-billed or non-charged patients also". The same supports the submissions of the assessee.
Pertinently, the assessee is a regular Income Tax Payer and works only in Apollo Hospital. His income averages to more than Rs.50 Lacs per year which could be tabulated as under: - Gross Fees as per Gross Total Income Net Taxable Income AY Profit & Loss Account Declared (Lacs) Declared (Lacs) (Lacs) 2011-12 71.31 45.04 43.89 2012-13 80.90 52.01 51.82 2013-14 92.55 53.85 51.29 2014-15 97.60 60.81 59.51 2015-16 98.48 58.16 56.21 2016-17 88.73 47.55 45.35
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.
9. Considering the facts and circumstances of the case, the impugned additions are not sustainable in law and therefore, we delete the impugned additions for all the years. Though the assessee has taken grounds challenging the validity of assessment proceedings also, however, these grounds have not been urged during hearing before us. Accordingly, no findings have been rendered on these grounds.
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, 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 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.
In the result, appeals filed by the assessee for all the assessment years are allowed.
Order pronounced on the 15th day of March, 2023, in Chennai.