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Facts
The assessee, a doctor, filed his return for AY 2014-15. Subsequently, a search at Apollo Hospitals led to a statement from a manager, Ms. Subhadra G., indicating doctors' consultation fees were not fully booked in Apollo's accounts. Based on this, the assessee's assessment was reopened under Section 147, and an addition of Rs. 7,56,700/- was made to his income, which was confirmed ex-parte by the CIT(A).
Held
The Tribunal, noting the assessee's advanced age, decided the appeal directly. Following a co-ordinate bench decision in a similar case, it ruled that the addition based solely on Ms. Subhadra G.'s uncorroborated statement, which lacked concrete data, was not sustainable in law, especially when the assessee was a regular income tax payer. The impugned addition was therefore deleted.
Key Issues
Whether an addition to income based on an uncorroborated third-party statement, made during a search operation, is legally sustainable when no other evidence supports the claim.
Sections Cited
132, 132(4), 148, 147, 143(3), 153A, 153C
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Income Tax Appellate Tribunal, ‘B’ (SMC
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL & HON’BLE SHRI MANU KUMAR GIRI
(िनधा�रणवष� / Assessment Year: 2014-2015) G. Ananthasubramaniam, Vs. The Income Tax Officer, No.21/7, 2nd Main Road, Non Corporate Ward 15(1) Kasturba Nagar, Adyar, Chennai. Chennai 600 020. [PAN: AAAPA 8460E] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Mr. P. James Victor Rajkumar, ��यथ� क� ओर से /Respondent by : Ms. D. Komali Krishna, CIT. सुनवाई क� तार�ख/Date of Hearing : 17.12.2024 घोषणा क� तार�ख /Date of Pronouncement : 15.01.2025 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member)
This appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax(Appeals) ADDL/JCIT (A)-2, Ahemdabad [CIT(A)] dated 29.07.2024 for Assessment Year 2014-15.
Brief facts of the case are that the assessee is a doctor (General Medicine) and during the concerned previous year he practices from clinics including the ones under M/s. Apollo Hospital Enterprises Limited. The assessee filed his return of AY 2014-15 on 30.10.2014 admitting total income of Rs. 20,34,140/- (after claiming deduction u/s chapter VIA). A search operation u/s 132 of the Act was conducted in the case of Apollo Hospitals, Chennai in January 2016. A statement u/s 132(4) of the Act was recorded from Ms. Subhadra G., Manager (Operations), Apollo Hospital on 5th January 2016 by the DDIT(Inv) Unit-2(3), Chennai during the search conducted at the premises of Apollo Hospitals Enterprises Limited, Greams Lane, Off Greams Road, Chennai. It was found that Ms. Subhadra has been working as Manager Operations heading the Outpatient services. She coordinates between the doctors, management and the patients. She has provided important information regarding all doctors operating out of Apollo Hospital premises who fix their own consultation fees which are not booked in the accounts of Apollo Hospital. In response to answer to Q.3 she furnished two charts showing the rates of consultation fees charged by various doctors in the years 2012 and 2015 which reflect the changes in fees collected between October 2012 and June 2015. The rate charts detail the differential fees charged by the doctors for the First visit/ New patients as also for Follow Up Visits/ Old patients. As per this, the assessee doctor during the period had charged Rs. 700/- for new patients and Rs. 700/- for old patients. Further, Ms. Subhadra with reference to her answer to Q4 of the statement u/s.132(4) of the Act, furnished vide letter dated 07-01-2016 a Compact Disc (CD) containing Out Patient (OP) Doctors appointment data from January 2009 to 4th January 2016 for Apollo Main Hospital, Chennai only. As per this, the assessee during the year has 819 new patients and 262 old patients. The assessment has been reopened after obtaining approval of the Pr.CIT-6, Chennai by 148 of the Act based on the reason to believe that income chargeable to tax has escaped assessment which was after receipt of information gathered in the course of a search u/s 132 in a sworn statement admissible in evidence. Since there are no other books of accounts/documents/assets relating to the assessee was seized which is a prerequisite for initiating proceedings u/s 153A read with 153C, it was deemed fit to invoke the provisions of section 147, which is in accordance with law.The appellant has originally filed a return of income on 30.10.2014 admitting an income of Rs.20,34,140/-. The assessment was completed u/s 143(3)r.w.s. 147 of the Income Tax Act, 1961 on 30.11.2019 assessed total income of Rs.27,90,840/- after making addition of rs.7,56,700/-. Assessee further challenged the order of assessment u/s 143(3) r.w.s. 147 of the Act before the ld.CIT(A) who proceeded ex-parte and confirmed the order of the AO on merits. Aggrieved, assessee is in appeal before us.
Before us, the ld. Counsel for assessee submitted that the ld. CIT(A) has not properly served notices or given sufficient time to file evidence and documents to substantiate his explanation, although proper explanation was given before the AO. The ld. Counsel also pointed out that additions based on the statement of Ms. G. Subhadra, Manager (Operations) has been knocked down by the order of the Tribunal vide order dated 20.09.2022 in the case of Dr.Sreenivasalu Reddy Ponnaluru [ITA Nos.673-678/Chny/2022]. The ld. DR vehemently relied upon the orders of the lower authorities and prayed for dismissal of appeal.
4. We have heard the rival submissions and perused the orders of the lower authorities. We have benefit of going through the order of the co-ordinate bench referred supra. We find that when impugned order dated 29.07.2024 was passed, the order of the co-ordinate benchdated 20.09.2022 in the case of Dr.Sreenivasalu Reddy Ponnaluru[ITA Nos.673-678/Chny/2022]was very much available with the department/revenue. We are also surprised of the fact that why the ld. CIT(A) did not enquire about status and fate of other searched persons. In this case, while reopening the assessment, revenue relied upon the information and statement made during the search by the Ms. Subhadra but while disposing of the appeal the ld. CIT(A) did bother to get the information or status of the cases of the searched persons.This was the minimum step required from the Ld. CIT(A). We find that the appellant is a 92 years old senior citizen and his auditor Mr. V. Narayanan has died on 20.12.2020 during Covid-19 pandemic therefore,instead of remanding back to the ld. CIT(A) for adjudication afresh, we are inclined to decide the appeal seeing the age (92Yrs) and peculiar circumstances of this case.
The order of the co-ordinate bench dated 20.09.2022 in the case of Dr.Sreenivasalu Reddy Ponnaluru [ITA Nos.673-678/Chny/2022] in similar circumstances held 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 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. 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 Ld. AO and therefore, the estimation as made by Ld. AO could not be upheld.
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:
AY Gross Fees as per Gross Total Income Net Taxable Income Profit & Loss Declared (Lacs) Declared (Lacs) Account (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 88.76 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.
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’’.
6. In the co-ordinate bench order referred supra, the third party statement of the Ms. G. Subhadra has been diluted and given no credence. Hence, respectfully, following the order of the co-ordinate bench dated 20.09.2022 in the case of Dr.Sreenivasalu Reddy Ponnaluru [ITA Nos.673-678/Chny/2022], we also delete the impugned addition of Rs.7,56,700/-.