2022 (9) TMI 1441 - AT - Income Tax

Income allegedly escaped from returns - additions which are based on third-party statement - reliance on oral statement of one Manager (Operations) of Apollo Hospital - HELD THAT - Assessee is a 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 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. 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. Whole basis of addition is the statement of Ms. Subhadra G. manager operations 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. Thus 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 (8) TMI 1072 - SUPREME COURT has held that no addition can be made on the basis of third-party information gathered by the Investigation Wing of the Department. Decided in favour of assesse.

Summary

Issues Involved:
1. Validity of jurisdiction assumed under Section 147 of the Income Tax Act.
2. Addition based on unverified third-party statements.
3. Consideration of non-charged follow-up patients and other categories.
4. Estimation of consultation fees and income.

Detailed Analysis:

1. Validity of Jurisdiction Assumed Under Section 147 of the Income Tax Act:
The assessee challenged the jurisdiction assumed by the Assessing Officer (AO) under Section 147, arguing that it was based on an oral statement from Ms. Subhadra, who lacked locus standi and access to authentic data. The assessee contended that there was no valid material to form a belief that income had escaped assessment, making the notice under Section 148 void.

2. Addition Based on Unverified Third-Party Statements:
The assessee argued that the additions were based on mere estimations, suspicion, conjectures, and surmises. The AO had relied on data obtained during a search action on M/s Apollo Hospital Group and a statement from Ms. Subhadra, Manager (Operations). The assessee contended that the statement was not verified and that the data included several types of non-billed or non-charged patients. The Tribunal noted that the Manager (Operations) merely acted as a data collector and had no concrete data about the exact fee charged by the doctor. The Tribunal found that there was no corroborative evidence to support the AO's working, and the estimate was made on abstract figures.

3. Consideration of Non-Charged Follow-Up Patients and Other Categories:
The assessee submitted that follow-up patients and certain categories of patients were not charged. The Tribunal acknowledged that the data from Apollo Hospital included non-billed or non-charged patients, supporting the assessee's claim. The Tribunal found that the AO's estimation did not account for these exclusions and was not supported by documentary evidence.

4. Estimation of Consultation Fees and Income:
The AO estimated the concealed fee based on the number of patients and the fees charged, adding Rs.8,08,400/- to the assessee's income. The Tribunal found that the estimation was based on abstract figures and unsupported by concrete evidence. The Tribunal noted that the assessee was a regular income tax payer with substantial declared income, making it unlikely that the assessee would conceal income as estimated by the AO. The Tribunal cited the Supreme Court's decision in CIT vs Odeon Builders (P) Ltd, which held that no addition could be made based on third-party information gathered by the Investigation Wing.

Conclusion:
The Tribunal concluded that the impugned additions were not sustainable in law and deleted the additions for all the years. The Tribunal did not render findings on the validity of the assessment proceedings as the grounds were not urged during the hearing. All the appeals were partly allowed, and the order was pronounced on 20th September 2022.