TMI Blog2023 (4) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... AO 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 M/s.Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkatta-II [ 2015 (10) TMI 442 - SUPREME COURT ] 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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 escapement of income, 6. The AO erred in not considering the fact that the Appellant was only a visiting doctor to M/s.Apollo Hospitals Enterprises Limited, Chennai ( Apollo ) and even according to Apollo they do not have a list of patients treated by them, 7. Even assuming the data provided by Apollo is to be considered as information, the data provided by Apollo was totally incomplete, for the Appellant the data does not contains details of patients coming for the second visits/ patients referred by the other doctors in Apollo, hospital staffs, colleagues and their family members, g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.Apollo Hospitals, in cheque after deduction of necessary TDS applicable as per law, and the same has been accounted in his books of accounts. Therefore, submitted that the question of making additions towards professional charges received from M/s.Apollo Hospitals, on the basis of Out Patients data, does not arise. The AO, however, was not convinced with the explanation furnished by the assessee and according to the AO, although, the assessee has received a sum of Rs.11,01,911/- as professional charges from M/s.Apollo Hospitals, but has offered a sum of Rs.5,49,756/- only in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 that income had escaped assessment and was therefore justified in reopening proceedings under section 147. In this regard reliance is placed on the case of Vasudev Fatandas Sawlani Vs Santosh Kumar, 2018-TIOL-2305-HC-AHM-IT, of Gujarat High Court where in the appellant s writ petition was dismissed by the Hon'ble court by holding that when issuing notice for reopening assessment, the AO is only required to show reasonable belief that income escaped assessment is not required to establish the same beyond reasonable doubt. Similarly, in the case of Raymond Woolen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 consultations from M/s.Apollo Hospitals for the AY 2011-12 offered by the assessee is Rs.5,49,756/- and all of such payments received were after deduction of TDS. The total receipts as arrived by this office is as under: Professional recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted from the hospital was a part of the search proceedings. 6.6 Coming to the appellant's contention that there is no basis for the AO 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is calculated at Rs.4,64,955/- and the addition made by the AO is confirmed to that extent. These grounds of appeal are partially allowed. 5. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement 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 assessee further claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tta-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. 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 work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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