DR. THIRUVENGADAM PRITHVIRAJ,,CHENNAI vs. ACIT, NCC - 1,, CHENNAI

PER G.MANJUNATHA, AM:

These two appeals filed by the assessee are directed

against separate, but identical orders passed by the learned

CIT(A)-2, Chennai, both dated 27.08.2020 and pertain to

assessment years 2012-13 & 2013-14. Since, the facts are

identical and issues are common, for the sake of convenience,

these appeals are heard together and are being disposed off,

by this consolidated order.

appeal for both assessment years, therefore, for the sake of

brevity, grounds of appeal filed for the assessment year 2012-

13 are reproduced as under:-

2 ITA Nos.852 & 853/Chny/2020

“1. Appellant is a General Surgeon, who receives charges for surgeries done by him and the pre-post operation consultancy. The Appellant serves only at Apollo Hospitals and does not serve at any other hospital or clinic. The consultancy fees charged on patients is included in the Apollo Hospital billing system which also includes consultation charges on patients in master health check, surgery consultations, patients under insurance cover and post-operative care. Apollo Hospitals collects all fees directly from the patients and makes payment of fees to the Appellant vide RTGS after deducting 10% TDS, which is reflected in the bank transactions of the Appellant. No consultation fees has ever been collected directly by the Appellant from the outpatients or inpatients. Apollo Hospitals maintains the particulars of all patients and the income of the Appellant is supported by the statement of Apollo Hospitals, as may be required under Rule 6F of the Income Tax rules. The Assessing Officer called for details as per Rule 6F alleging concealed income. In the absence of any such income, the Appellant could not produce the alleged presumptive details. 2. The Respondent has relied upon the oral evidence given by one of the employees of Apollo, without notice to the Appellant and without affording an opportunity to cross- examine the employee, which is against the principles of natural justice enshrined in Article 14 of the Constitution of India. The Hon’ble Supreme Court has repeatedly held that the statement of witnesses recorded in the absence of Assessee, without giving opportunity for cross-examination is a breach of the principles of natural justice and thus renders the order passed a nullity. In ITA No.127/CIT(A)- 2/2018-19 order dt. 22.08.2019 w.r.t. Appellant’s assessment for AY 2011-1 2, the CIT (Appeals) held the recording of sworn statement without notice to Appellant and opportunity to cross-examine is a serious flaw, wherein the Assessing Officer herein had relied upon the very same sworn statement of witness dated 05.01.2015 / 05.01.2016. These shortcomings constitutes serious flaw and the unilateral examination of witness does not hold good in law and is against the settled principles of law.

Surgeon by profession practicing at M/s. Apollo Hospital,

Chennai as consultant and receives consultancy fees . The

3 ITA Nos.852 & 853/Chny/2020

consultancy fees charged on patients is included in Apollo

Hospital billing system which also includes consultation

charges on patients in master health checkup, surgery

consultations, patients under insurance cover and post-

operative care. The Apollo Hospital collects all fees directly

from patients and after deducting applicable TDS on

professional charges remits balance amount payable to the

assessee vide cheque / RTGS . All registers required to be

maintained under Rule 6F of I.T Rules, 1962, are maintained by

Apollo Hospitals. The assessee has declared consultation

charges received from Apollo Hospitals and filed return of

income for relevant assessment years.

been subsequently reopened u/s. 147 of the Act, on the basis of

reasons recorded as per which income chargeable to tax had

been escaped assessment on account of undisclosed income

towards consultation charges received from Apollo Hospitals in

cash. The case has been selected for scrutiny and during the

course of assessment proceedings, the Assessing Officer

called upon the assessee to file necessary evidences including

4 ITA Nos.852 & 853/Chny/2020

books of account supposed to be maintained as per Rule 6F of

Income Tax Rules,1962, to justify income declared in his return

of income filed for relevant assessment years. Since the

assessee has not filed relevant details, the Assessing Officer

has completed assessment u/s.144 r.w.s. 147 of the Act, for

both assessment years and made additions of Rs.5,31,000/- for

assessment year 2012-13 and a sum of Rs.12,50,000/- for

assessment year 2013-14 towards unaccounted professional

charges received from Apollo Hospitals in cash.

preferred an appeal before learned CIT(A). Before the learned

CIT(A), the assessee submitted that all books of account

required to be maintained under Rule 6F of I.T. Rules, 1962 is

maintained by Apollo Hospitals and the assessee does not

maintain those books separately in his individual capacity. The

assessee further submitted that he is working exclusively for

Apollo Hospitals and receive consultation charges by cheque /

RTGS, thus question of receipt of consultation charges in cash

and not declaring same in return of income does not arise.

5 ITA Nos.852 & 853/Chny/2020

submissions and also taken note of various facts brought out

by the Assessing Officer opined that since the assessee did not

furnish books of account or any other evidences in support of

professional charges received from Apollo Hospitals, claim of

the assessee that he had given treatment to certain patients

without charging fees is unsubstantiated. Therefore, he opined

that there is no error in the reasons given by the Assessing

Officer to make additions towards unaccounted professional charges and hence, sustained addition made by the Assessing

Officer for both assessment years. Aggrieved by learned

CIT(A) order, the assessee is in appeal before us.

learned CIT(A) has erred in sustaining additions made by the

Assessing Officer towards unaccounted professional charges

received from Apollo Hospitals, without appreciating fact that

the Assessing Officer has relied upon oral evidence given by

one of the employees of Apollo Hospitals, without confronting

those evidences and also an opportunity of cross examination to the assessee contrary to the principles of natural justice.

The learned A.R further submitted that the Assessing Officer

6 ITA Nos.852 & 853/Chny/2020

has made additions solely on the basis of statement of an

employee recorded during the course of search in the case of

Apollo Hospitals, but could not gather any other evidences to

disprove claim of the assessee that he has not received

professional charges in cash, other than what was received by

cheque/ RTGS. The AR further referring to decision of learned

CIT(A) for assessment year 2011-12 in ITA No.127/CIT(A)-

2/2018-19 dated 22.08.2019 submitted that when the CIT(A)

has accepted fact that additions made by the Assessing

Officer solely on the basis of statement a third party, without

providing opportunity of cross-examination to the assessee is

violative of principles of natural justice and thus, additions

cannot be sustained. However, for the impugned assessment

year, the CIT(A) has taken a different view ignoring specific

arguments made by the assessee in light of order of the CIT(A)

for assessment year 2011-12, without there being any change

in facts and circumstances of the case for year under

consideration. Therefore, she submits that additions made for

both assessment years needs to be deleted.

7 ITA Nos.852 & 853/Chny/2020

order of the Assessing Officer as well as learned CIT(A)

submitted that it is a matter of record that the assessee has not

maintained books of account required to be maintained by

medical practitioner, as per Rule 6F of Income Tax Rules, 1962

and thus, in absence of relevant books of account, the

Assessing Officer was right in making additions towards

unaccounted professional charges received from Apollo

Hospitals on the basis of evidences collected during the course of search and hence, there is no merit in the arguments taken

by the learned A.R for the assessee.

available on record and gone through orders of the authorities

below. Admittedly, the Assessing Officer has passed best

judgement assessment u/s. 144 r.w.s.147 of the Income Tax

Act, 1961, and made additions towards unaccounted

professional charges received from Apollo Hospitals in cash.

The sole basis for additions towards unaccounted professional

charges is statement recorded from an employee during the course of search in the case of Apollo group, where

Department has gathered certain materials which shows

8 ITA Nos.852 & 853/Chny/2020

payment of professional charges in cash to some consultant

Doctors including the assessee. The assessee has denied

having received professional charges in cash from Apollo

Hospitals other than what was received in cheque/RTGS.

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 that he had treated certain

9 ITA Nos.852 & 853/Chny/2020

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. We further noted that the

CIT(A) for the assessment year 2011-12 in ITA No.127/2018-

10 ITA Nos.852 & 853/Chny/2020

19 vide order dated 22.08.2019 has deleted additions made by

the Assessing Officer towards unaccounted professional

charges received from Apollo Hospitals in cash on the basis of

very same statement recorded from an employee during the

course of search by following decision of the Hon'ble Supreme

Court in the case of Andaman Timber Industries Vs.

Commissioner of Central Excise, Kolkatta-II (supra), and the

decision of Hon’ble Bombay High Court in the case of

H.R.Mehta Vs. ACIT. Therefore, we are of the considered view

that when learned CIT(A) having accepted legal position for

earlier assessment year, then erred in not accepting similar

legal position for subsequent assessment years, even though

there is no change in facts & circumstances of the case for

impugned assessment years.

circumstances of the case and also by following the ratio laid

down by the Hon'ble Supreme Court in the case of Andaman

Timber Industries Vs. Commissioner of Central Excise,

Kolkatta-II (supra), we are of the considered view that the

Assessing Officer has erred in making additions towards

11 ITA Nos.852 & 853/Chny/2020

unaccounted professional charges received in cash from Apollo

Hospitals on the basis of statement of a third party, without

providing opportunity of cross-examination to the assessee. The

learned CIT(A), without appreciating facts has simply

sustained additions made by the Assessing Officer. Hence, we

set aside orders passed by the learned CIT(A) for both

assessment years and direct the Assessing Officer to delete

additions made towards unaccounted professional charges

received in cash from Apollo Hospitals for both assessment

years.

assessment years are allowed. Order pronounced in the open court on 8th September, 2021

Sd/- Sd/- (धु�वु� आर.एल रे�डी) (जी. मंजुनाथ) (Duvvuru RL Reddy) (G.Manjunatha) $या�यक सद&य /Judicial Member लेखा सद&य / Accountant Member चे$नई/Chennai, )दनांक/Dated 8th September, 2021 DS आदेश क� ��त+ल,प अ-े,षत/Copy to: 1. Appellant 2. Respondent 3. आयकर आयु.त (अपील)/CIT(A) 4. आयकर आयु.त/CIT 5. ,वभागीय ��त�न2ध/DR 6. गाड� फाईल/GF.