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Facts
The assessee, Sharad Sinha, treated income from M/s. Mentors Eduserve as professional receipts and claimed related expenses. A survey on Mentors Eduserve revealed the payments were salary, not professional charges, leading to disallowance of expenses by the Assessing Officer and CIT(A), who upheld the classification as salary.
Held
The Tribunal noted that evidence used from search/survey operations against the assessee was not provided for rebuttal, and the assessee claimed a professional service agreement. Therefore, the issues were restored to the Assessing Officer for re-adjudication, directing to provide the assessee with relevant evidence and sufficient hearing opportunities.
Key Issues
Classification of income from Mentors Eduserve as professional fees or salary, and whether evidence used by revenue was adequately provided to the assessee for rebuttal.
Sections Cited
Section 250, Section 194J, Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “PATNA” BENCH, PATNA
Before: SHRI GEORGE MATHAN
Present for: Appellant by : N o n e Respondent by : Shri Ashwani Kr. Singal, JCIT Date of Hearing : 01.04.2025 Date of Pronouncement : 01.04.2025 O R D E R This is an appeal filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] vide order no. ITBA/NFAC/S/250/2024- 25/1065546153(1) dated 11.06.2024 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2016-17.
The Ld. AR was not properly uniformed, therefore, the Ld. AR for the assessee was not heard. Shri Ashwani Kr. Singal, JCIT appeared on behalf of the revenue.
It was submitted by the Ld. DR that the assessee is working for M/s. Mentors Eduserve. It was the submission that the assessee had claimed income received from M/s. Mentors Eduserve as professional receipt. It was the submission that there was survey/search in the case of M/s.
Sharad Sinha, AY: 2016-17 Mentors Eduserve group and it was found that the assessee was being paid salary and not professional charges. It was the submission that as salary was being paid and it was noticed that the assessee has claimed expenditure against the said salary received, the expenditure claimed was disallowed. It was the submission that mere deducting TDS under section 194J would not make the salary receipts of the assessee as professional receipt. It was the submission that the orders of the Assessing Officer and the Ld. CIT(A) are liable to be upheld.
We have heard the Ld. DR and perused the material available on record. One of the primary issues raised by the assessee is that evidences found by the revenue during the search/survey operations in the premises of M/s. Mentors Eduserve and it was being used against the assessee has not been put to assessee for his rebuttal. A further perusal of the grounds of appeal shows that the assessee has categorically claimed that there was professional service agreement between the assessee and the Mentors Eduserve group. A perusal of the assessment order shows that though show cause notice was issued to the assessee on 10.03.2022 the assessee has not furnished any information. This being so, in the interest of justice the issues in this appeal is restored to the file of the Assessing Officer for re-adjudication after granting the assessee sufficient opportunities of being heard. The Assessing Officer shall provide the copies of any agreement which is proposed to use against the assessee for his comments/reply, if any, before completing the setting aside assessment.
In the result, the appeal of the assessee is partly allowed for statistical purpose.
Order dictated and pronounced in the open court. Sd/- (George Mathan) Judicial Member Dated: 1st APRIL, 2025