2024 (6) TMI 1305 - HC - Income Tax

Validity of Reopening of assessment - TDS u/s 192 or 194J - petitioner would submit that the petitioner is a medical professional in the field of Anesthesia - case of the Department that the petitioner has wrongly claimed to be a professional and has filed returns in ITR-3 and that the hospitals have wrongly deducted tax under Section 194J instead of Section 192 - HELD THAT - The reasons stated in the notice issued under Section 148A(b) do not justify the conclusion that the petitioner is not a professional. Unless the Department has the document to substantiate that the petitioner is an employee in the respective hospitals, from whom the petitioner has received consideration and deductions were made wrongly under Section 194J instead of 192, the Department cannot re-open the assessment. The petitioner being an Anesthesiologist is consulting in several hospitals and thus, has received remuneration for the services rendered to these hospitals, although on monthly basis. There is no justification in reopening the assessment. Therefore, the impugned order is quashed. Consequently, the impugned notice issued under Section 148 of the Income Tax Act, 1961 is also quashed. Decided in favour of assessee.

Issues:
1. Writ petition for a Writ of Certiorari to quash the assessment records for the assessment year 2018-19.
2. Dispute regarding the petitioner's professional status and tax deductions by hospitals.
3. Notice under Section 148A(b) of the Income Tax Act, 1961 issued to the petitioner.
4. Petitioner's response to the notice and subsequent impugned order.
5. Interpretation of the nature of the petitioner's relationship with hospitals.
6. Legal arguments based on previous court decisions and tribunal rulings.
7. Department's contention of lack of evidence and sketchy response from the petitioner.

Detailed Analysis:

1. The petitioner filed a writ petition seeking to quash the assessment records for the assessment year 2018-19. The petitioner, a medical professional in the field of Anesthesia, filed a return of income for the said assessment year. The Department alleged that the petitioner wrongly claimed to be a professional and that hospitals wrongly deducted tax under Section 194J instead of Section 192. A notice under Section 148A(b) of the Income Tax Act, 1961 was issued to the petitioner on 26.03.2022.

2. The petitioner responded by asserting their status as an independently practicing doctor in the field of anesthesia, visiting various hospitals on appointment basis. They claimed that no income had escaped assessment and that the expenses claimed were related to their profession. The petitioner argued that they were not an employee of any hospital and that the nature of their work did not warrant such an exclusive attachment.

3. The impugned order concluded that income had escaped assessment and decided to issue a notice under Section 148 of the Income Tax Act, 1961 for the AY 2018-19. The petitioner contended that they were a professional and had rightly filed returns in ITR-3, with tax deductions made under Section 194J by hospitals where services were provided.

4. The petitioner relied on previous court decisions and tribunal rulings to support their argument that the relationship between the petitioner and hospitals was that of equals, not employer-employee. The Department argued that the petitioner failed to provide sufficient evidence to prove their non-employee status.

5. The High Court analyzed the Department's reasons for re-opening the assessment and found them insufficient to conclude that the petitioner was not a professional. The Court noted that unless the Department could substantiate the petitioner's employee status in the hospitals, the assessment should not be reopened. The Court ruled in favor of the petitioner, quashing the impugned order and the notice issued under Section 148 of the Income Tax Act, 1961.

6. In conclusion, the Court found no justification for reopening the assessment and ruled in favor of the petitioner, allowing the writ petition and closing the connected Miscellaneous Petitions.

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