Case Law Details
Srinivasan Bhaskar Vs ACIT (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT), Chennai, considered an appeal filed by an individual consultant doctor against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2014-15. At the outset, the Tribunal condoned a delay of 361 days in filing the appeal after finding sufficient cause for the delay.
The assessee had originally filed the return of income declaring professional income along with the tax audit report. Subsequently, the assessment was reopened under Sections 147 and 148 of the Income-tax Act on the basis of information received from the Investigation Wing following a search conducted at Apollo Hospitals. The Assessing Officer completed the reassessment under Sections 143(3) read with 147 by making an addition of ₹17,10,700 towards alleged suppression of professional receipts. The addition was based on the statement of the hospital’s Manager (Operations), Ms. G. Subhadra, and data allegedly collected from the hospital, wherein the Assessing Officer estimated the consultation fees receivable by comparing the number of patients reflected in hospital records with the professional receipts disclosed by the assessee. The Commissioner (Appeals) dismissed the assessee’s appeal, leading to the present appeal before the Tribunal.
Before the Tribunal, the assessee submitted that the issue was already covered by earlier decisions of the Coordinate Benches in G. Ananthasubramaniam v. ITO and Dr. Sreenivasalu Reddy Ponnaluru v. ITO. It was contended that the addition had been made solely on the basis of the statement of Ms. G. Subhadra and estimated data collected by the Investigation Wing without any corroborative material. The assessee further submitted that despite repeated requests, neither the statements relied upon nor the material collected under Section 133(6) was furnished, no opportunity for cross-examination was granted, and the books of account, bank statements, Form 26AS, and a certificate issued by the Senior Vice-President (Finance) of Apollo Hospitals explaining that the outpatient database included several non-billed and non-charged patients had been produced before the authorities.
After considering the rival submissions, the Tribunal observed that the addition had been made entirely on the basis of information received from the Investigation Wing pursuant to the search conducted in Apollo Hospitals. It noted that the Coordinate Bench in Dr. Sreenivasalu Reddy Ponnaluru had already examined the very same statement of Ms. G. Subhadra and held that she merely collected certain data, had no personal knowledge regarding the consultation fees actually charged by each consultant doctor, and that the figures referred to by her were only estimates without physical verification or supporting evidence. The earlier Coordinate Bench had also recorded that consultation fees of non-employee doctors were neither collected by the hospital nor accounted for in its books and that several categories of patients, including review patients and patients covered under special schemes, were either charged concessional fees or not charged at all. The Tribunal further noted that the certificate issued by the Senior Vice-President (Finance), Apollo Hospitals confirmed that the outpatient list maintained by the Information Technology Department included several non-billed and non-charged patients. On those facts, the earlier Coordinate Bench had held that additions made merely on estimated consultation charges without corroborative evidence were unsustainable.
The Tribunal further observed that the decision in Dr. Sreenivasalu Reddy Ponnaluru had subsequently been followed in G. Ananthasubramaniam v. ITO, wherein the Coordinate Bench again held that additions based solely on the statement of Ms. G. Subhadra could not survive after that statement had already been held to possess no evidentiary value for making additions in the hands of consultant doctors.
Applying the same reasoning, the Tribunal found that the facts of the present case were indistinguishable from those considered in the earlier Coordinate Bench decisions. It noted that the Assessing Officer had not brought any independent material on record to establish that the assessee had actually received professional receipts over and above those disclosed in the books of account. No incriminating material had been found from the assessee, the books of account produced by the assessee had not been rejected, and no discrepancy had been pointed out in the books or bank accounts. The addition had been made only by adopting estimated consultation charges based on third-party information. Respectfully following the binding decisions of the Coordinate Benches, the Tribunal held that the addition of ₹17,10,700 was unsustainable in law and directed its deletion. Since the appeal succeeded on merits, the Tribunal did not consider it necessary to adjudicate the legal grounds challenging the validity of reopening under Sections 147 and 148 and left those grounds open. Accordingly, the appeal filed by the assessee was allowed.
Appellant was represented by: Mr. R.S. Balaji, Advocate
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) ADDL/JCIT (A), Panaji dated 30.12.2025 for the Assessment Year 2014-15.
2. In the instant appeals, the registry has noted the delay of 361days in filing the captioned appeal. We have gone through the condonation petition along with affidavit filed, we find that the reasons given by the assessee are sufficient cause for delay in filing the captioned appeals. Hence, we condone the delay and admit the appeals for adjudication.
2.1 Grounds of appeal raised by the assessee are as under:
1. The Assessee is an Individual working as Consultant Doctor at Apollo Hospitals and filed his Return of Income for the Assessment year 2014-15 on 20.09.2014 vide acknowledgement No. 360180121200914 along with Tax Audit Reports.
2. On the basis of Search in a third party premises, the appellant case was re-opened, Notice U/s. 148 issued and assessment was completed u/s. 143(3) r.w.s. 147 of the act on 29. 12. 2019 by way of additions of Rs. 17,10,700/- In the head of Income from Profession. These additions were made purely on the basis of unverified statements gathered by the Investigation wing of IT Dept. and the same being not put any verification by the Ld.AO.
3. Aggrieved by the arbitrary proceedings of the Ld.AO, the appellant has steps in to the office of the First appellate authority and the CIT (appeals) has dismissed the same on 30.12.2025 without touching the merits of the case. The Ld. CIT (appeals) failed to see that these additions were made only on the basis of a third party information and not from my own books of accounts, which was submitted before the Ld. Assessing Officer.
4. The Ld. CIT (A) failed to note that the Ld. AO wrongly assumed jurisdiction u/s. 147 of the act, based on 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 is ab initio void.
5. The alleged Information produced by Subhadra was not an official statement, no cross examination and no personal hearing opportunity was provided to me and it is against the Precedents laid by Hon’ble Supreme Court as in the case of Andaman Timbers Vs CCE Kolkata -II (15 SCC 785) and the decision of Hon’ble Bombay High Court in the case of HR Metha Vs ACIT in ITA No.58 of 2001.
6. 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.
7. The co-ordinate Bench of this Hon’ble ITAT has already discussed the identical facts in ITA No. 852 & 853 of 2020 and quashed the assessment proceedings.
8. For that the balance of convenience and merit of this appeal is lying in favour of the appellant.
9. For these and other grounds that may be adduced at the time of hearing the appellant prays that the Hon’ble ITAT be pleased to allow the appeal and render justice.
3. The assessee is an individual and a Consultant Doctor attached to Apollo Hospitals. The return of income for the Assessment Year 2014-15 was filed on 20.09.2014 declaring professional income along with the Tax Audit Report.Subsequently, the assessment was reopened u/s. 147 of the Income-tax Act, 1961 on the basis of information received from the Investigation Wing consequent to a search conducted in the premises of Apollo Hospitals. Notice u/s. 148 was issued and assessment was completed u/s. 143(3) read with section 147 on 29.12.2019 by making an addition of Rs.17,10,700/- towards alleged suppression of professional receipts.
3.1 The basis of the addition was the statement of one Ms. G. Subhadra, Manager (Operations), Apollo Hospitals, recorded during the course of search proceedings and certain data allegedly collected from the hospital. The Assessing Officer estimated the consultation fees receivable by the assessee on the basis of the number of patients reflected in the hospital records and compared the same with the professional receipts disclosed by the assessee.
4. Aggrieved, the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A), however, dismissed the appeal. Hence, the assessee is in further appeal before the Tribunal.
5. Before us, the ld.Authorised Representative (AR) submitted that the issue involved in the present appeal is squarely covered in favour of the assessee by the decisions of the Coordinate Bench of the Tribunal in the case of G. Ananthasubramaniam Vs. Income Tax Officer in ITA No.2505/Chny/2024 dated 15.01.2025, wherein the Tribunal followed its earlier decision in Dr. Sreenivasalu Reddy Ponnaluru Vs. ITO in ITA Nos.673 to 678/Chny/2022 dated 20.09.2022.
5.1 The ld.AR submitted that the additions in the present case have also been made solely on the basis of the statement of Ms. G. Subhadra and estimated data collected by the Investigation Wing without any corroborative material. It was further submitted that despite repeated requests, neither the statements relied upon nor the material collected u/s. 133(6) was furnished to the assessee. No opportunity of cross-examination was afforded. The assessee had produced the books of account, bank statements, Form 26AS and a certificate issued by the Senior Vice-President (Finance), Apollo Hospitals explaining that the out-patient database included several categories of patients who were either not billed or not charged, including review patients and patients under various schemes.
6. The ld. Departmental Representative (DR) relied upon the orders of the lower authorities. She vehemently read out para 8.2(c) of AO’s order and para 7.3 of ld.CIT(A)’s order and pleaded for the dismissal of the appeal.
7. We have heard the rival submissions and perused the material available on record.The undisputed facts reveal that the impugned addition has been made entirely on the basis of information received from the Investigation Wing pursuant to the search conducted in Apollo Hospitals. The Assessing Officer (AO) has estimated the professional receipts of the assessee by applying the consultation fee allegedly collected from the statement of Ms. G. Subhadra with reference to the number of out-patients reflected in the hospital records.
7.1 We find that an identical issue arising out of the very same search in Apollo Hospitals has already been examined by the Coordinate Bench of this Tribunal in the case of Dr. Sreenivasalu Reddy Ponnaluru (supra). The Coordinate Bench, after extensively analysing the statement of Ms. G. Subhadra, held that she merely collected certain data and had no personal knowledge regarding the consultation fee actually charged by each consultant doctor. The Tribunal further recorded that the consultation fees of non-employee doctors were neither collected by the hospital nor accounted for in its books and that the figures referred to by Ms. Subhadra were only estimates without any physical verification or supporting evidence.
7.2 The Coordinate Bench further held that several categories of patients, including review patients and patients covered under special schemes, were either charged concessional fees or were not charged at all. The certificate issued by the Senior Vice-President (Finance), Apollo Hospitals also confirmed that the out-patient list maintained by the Information Technology Department included several non-billed and non-charged patients. Consequently, the Tribunal held that the additions made merely on estimated consultation charges without any corroborative evidence were unsustainable and deleted the additions.
7.3 We further find that the aforesaid decision has subsequently been followed by another Coordinate Bench in the case of G. Ananthasubramaniam Vs. Income Tax Officer (ITA No.2505/Chny/2024 dated 15.01.2025), wherein the Tribunal again held that once the statement of Ms. G. Subhadra had already been held to possess no evidentiary value for making additions in the hands of consultant doctors, similar additions based solely on such statement could not survive. The Coordinate Bench in the case of G. Ananthasubramaniam Vs. Income Tax Officer (ITA No.2505/Chny/2024 dated 15.01.2025) held as under:
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.
5. 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.
6. 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.
8. 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:
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”.
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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!-.
- In the result, appeal filed by the assessee is allowed.
7.4 The facts before us are indistinguishable from those considered by the Coordinate Benches. In the present case also, the AO has not brought on record any independent material to establish that the assessee had actually received professional receipts over and above those disclosed in the books of account. No incriminating material was found from the assessee. The books of account produced by the assessee have not been rejected. No discrepancy has been pointed out in the books or bank accounts maintained by the assessee. The addition has been made only by adopting estimated consultation charges on the basis of third-party information.
7.5 Respectfully following the binding decisions of the Coordinate Benches in Dr. Sreenivasalu Reddy Ponnaluru (supra) and G. Ananthasubramaniam (supra), we hold that the impugned addition of Rs.17,10,700/- is unsustainable in law. Accordingly, the same is directed to be deleted.
7.6 Since the appeal succeeds on merits by following the binding precedents of the Coordinate Benches, we do not consider it necessary to adjudicate the other legal grounds challenging the validity of reopening u/s.147/148 and the assumption of jurisdiction. Those grounds are left open.
7.7 In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on the 14th day of July 2026, in Chennai.
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