Dr. Sreenivasulu Reddy Ponnaluru Vs ACIT (ITAT Bangalore)
ITAT Bangalore held that addition merely on the basis of third-party information, without any corroborative evidence, gathered by the Investigation Wing of the Department is unsustainable in law.
Facts-
The assessee is an ENT specialist having consultancy at Apollo Hospital, Chennai. The case was reopened pursuant to receipt of certain information from investigation wing which was based on data obtained by the department during search action on M/s Apollo Hospital Group coupled with statement of G. Subhadra, Manager.
A sworn statement was recorded from Smt. G. Subhadra- Manager. In the sworn statement Smt. G. Subhadra, provided hard copy of fees charged by the doctors who were doing private consultation in Apollo Hospitals from 2012 onwards. She also confirmed such fees collected by the doctors directly are not accounted in the books of Apollo Hospitals. As per the list provided by her, as part of sworn statement, no fee is charged for review undertaken within a period of 15 days from new patients.
The assessee submitted that he has declared professional cash receipt of Rs.4.19 lakhs which is computed for 1678 patients at Rs.250 per patient. The 5872 number of patients were review patients who were not charged. However, AO held that the submissions were not supported by any documentary evidences. AO also rejected the plea of the assessee that fee of Rs.400 per patient was not charged particularly in view of the fact that the assessee was a specialized doctor who was sought after consultant.
Conclusion-
Held 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.
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.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeals by assessee for Assessment Years (AYs) 201112 to 2016-17 arises out of separate orders passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 29.06.2022 in the matter of separate assessments framed by ld. Assessing Officer u/s 143(3) r.w.s. 147 of the Act. The facts as well as issues are same in all the years and it is admitted position that adjudication in any one appeal shall equally apply to the other appeals also. For the purpose of adjudication, facts from AY 2011-12 have been culled out wherein the grounds raised by the assessee read as under: –
1. The orders of ld AO and learned CIT(A) are contrary to law, unjust, and against facts and circumstances of the case.
2. The Ld CIT (A) failed to note that the Ld. AO wrongly assumed jurisdiction u/s.147 of the Act, based on oral statement of one Ms. Subhadra, Manager (Operations) of Apollo Hospital, who had no locus standi nor access to the authentic data or records of patients to give· such statement and without having any valid material to form a belief that income had escaped assessment and thus, the notice u/s.148 of the Act is ab initio void.
3. The addition was based on unverified statements gathered by Investigation Wing, and the same being not put to any verification by the Ld.AO while passing the orders u/s 143(3) rws 147, with an addition of Rs.8,08,400/- as income allegedly escaped from returns, whereas, the appellant has filed his return of income based on data furnished by the Hospital.
4. The Ld. AO and the Ld. CIT (A) failed to consider that the follow-up patients and many categories of patients were not charged by the appellant doctor.
5. For the above reasons and other reasons that may be adduced at the time of hearing, the Order u/s 250 by the CIT(A) may kindly be quashed and justice be rendered.
6. The appellant craves to amend, alter or delete any of the above grounds of appeal.
As is evident, the assessee is aggrieved by confirmation of certain additions which are based on third-party statement.
2. The Ld. AR advanced arguments and assailed the additions on the ground that the same are based on mere estimations, suspicion, conjectures and surmises. The Ld. AR submitted that whole additions have been made on abstract facts and figures without there being any material evidence on record to justify / corroborate the impugned additions.
The Ld. Sr. DR, on the other hand, submitted that the additions are based on data obtained by the department during search action.
Having heard rival submissions, our adjudication would be as under.
Assessment Proceedings
3.1 The assessee is an ENT specialist having consultancy at Apollo Hospital, Chennai. The assessee admitted income of Rs.43.89 Lacs in the return of income. The case was reopened pursuant to receipt of certain information from investigation wing which was based on data obtained by the department during search action on M/s Apollo Hospital Group coupled with statement of Ms. G. Subhadra, Manager (Operations).
3.2 The investigation wing carried out search and seizure operation in case of M/s Apollo Hospital Group, Chennai on 05.01.2016. It transpired that the hospital was providing a platform for its visiting specialist doctors to carry out consultancy services to the out-patients in its hospital premises by allotting space on monthly rent. It was also noted that specialist doctors who provided such consultation collected fees separately. These doctors were visiting doctors who received professional charges from the hospital also. The hospital provided cubicles to the doctor in lieu of monthly rent. The hospital also maintained the data of the out-patients taking appointments with various doctors along with the details of the visits of the patients and the doctors who provided medical services to these patients.
3.3 Armed with this information, the assessee’s case was reopened and notice was issued u/s 148. Upon verification, it was found that OPD consultation fees offered by the assessee was not tallying with the data collected during search action. The assessee submitted that the OPD patients list maintained by Hospital includes several types of non-billed or non-charged patients. All the appointments are not billed and all inpatients are not charged for follow-up consultations. Further, no fee is charged for revisits on humanitarian grounds and no fees is charged on references from VIPs, friends, Government officials, hospital staff etc. If all such exclusions are removed, the gross receipts would tally. The assessee also submitted that it charged consultation fee of Rs.200/- per patient and not Rs.400/- per patient as alleged.
3.4 The requisite information was gathered from Apollo Hospital u/s 133(6) which include list of outpatients for whom appointment was provided by the assessee. The data obtained from the hospital included the name of the patient, appointment date and time taken, visit time and concluding time which was separately maintained for each doctor. It was further stated that the doctors are free to charge outpatient fee based on their experience and credentials. The hospital provided the details of outpatients consulted by the doctor during AYs 2011-12 to 2016-17 as per the appointment module in CD format. The information was also collected from Assessing Officer of M/s. Apollo Hospitals.
3.5 A sworn statement was recorded from Smt. G. Subhadra-Manager (Operations), Outpatient services. In the sworn statement Smt. G. Subhadra, provided hard copy of fees charged by the doctors who were doing private consultation in Apollo Hospitals from 2012 onwards. She also confirmed such fees collected by the doctors directly are not accounted in the books of Apollo Hospitals. As per the list provided by her, as part of sworn statement, no fee is charged for review undertaken within a period of 15 days from new patients.
3.6 The data as obtained from the hospital was counter-checked with the data furnished by the Investigation wing. The data being the same, a copy of the data was provided to the assessee for their information. The assessee was requested to segregate the data as first visit patients, patients revisiting within 15 days and revisits made after 15 days. The assessee, vide reply dated 17.10.2018, submitted details of fee collected in cash.
3.7 As per the data furnished by M/s. Apollo Hospitals, the number of patients who took consultation from doctor during the previous year was 6502 and the fee collected by him would be Rs.400 for new patients and Rs.400 for follow up visits after 30 days. As per the data analyzed, out of the total patients, 1346 were first visit and 2758 were follow up visits after excluding not consulted, Master Health check-up (MHC) patients. 3.8 The assessee reiterated that he has declared professional cash receipt of Rs.4.19 Lacs which is computed for 1678 patients @Rs.250/-per patient. The 5872 number of patients were review patients who were not charged. However, Ld. AO held that the submissions were not supported by any documentary evidences. The ld. AO also rejected the plea of the assessee that fee of Rs.400/- per patient was not charged particularly in view of the fact that the assessee was a specialized doctor who was sought after consultant.
3.9 Finally, Ld. AO estimated the concealed fee as under
First visit 1346 @Rs.400 Rs.5,38,400/-
Follow up visit 2758 @Rs.250 Rs.6,89,500/-
After adjusting fee of Rs.4.19 Lacs as already offered by the assessee, balance fees of Rs.8.08 Lacs was added to assessee’s income. Similar estimation was made for all the other years also. The additions so made could be tabulated as under: –
