ITAT deletes Income Tax Addition made solely on Third-party Information [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chennai bench deleted addition made solely on third-party information.

The assessee, Dr. Sreenivasulu Reddy Ponnaluru is an ENT specialist having consultancy at Apollo Hospital, Chennai. The assessee admitted income of Rs.43.89 lakhs 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 G. Subhadra, Manager.

A sworn statement was recorded from the manager. In the sworn statement the manager 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. The 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.

A Division Bench consisting of V Durga Rao, Judicial Member and Manoj Kumar Aggarwal, Accountant Member held that “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 Supreme Court in the case of CIT vs Odeon Builders (P) Ltd has held that no addition can be made on the basis of third-party information gathered by the Investigation Wing of the Department.”

“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” the Tribunal ruled.

To Read the full text of the Order CLICK HERE

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