BHARAT JAIN,SARITA VIHAR, NEW DELHI V. AO/ADIT-CPC BENGALURU , CIVIC CENTRE,NEW DELHI

ITA 4986/DEL/2024

AI Insights

The case involves Bharat Jain, a non-resident, who appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) for the Assessment Year 2020-21. The primary contention was the incorrect application of section 44ADA of the Income-tax Act, 1961, which pertains to presumptive taxation for residents engaged in professional services. The lower authorities had applied this section, assuming the assessee was a resident and had not maintained proper books of account, leading to a presumptive tax rate of 50%. The Tribunal, however, recognized that section 44ADA does not apply to non-residents and thus reversed the decision of the lower authorities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714403 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2020-2021
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHAND
• Assessee Lawyers: NITIN KANWAR
• Keywords: Residential status
• Section: 154

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER and SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.4986/DEL/2024 (Assessment Year: 2020-21) Bharat Jain, vs. ADIT – CPC, Flat No.133, Pocket G, SFS Flats, Bengaluru. Maharaja Agarsen Marg, Sarita Vihar, New Delhi – 110 076. (PAN : AAAPJ4180E) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Nitin Kanwar, Advocate Shri Shivam Jain, Advocate Shri Rajiv Kumar, Advocate REVENUE BY : Shri Ramesh Chand, Sr. DR Date of Hearing : 14.05.2024 Date of Order : 06.08.2024 O R D E R PER S.RIFAUR RAHMAN,ACCOUNTANT MEMBER : 1. This appeal has been filed by the assessee against the order of ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) [“ld. CIT(A)”, for short] dated 28.08.2024 for the Assessment Year 2020-21. 2. At the time of hearing, ld. AR of the assessee brought to our notice return of income filed by the assessee for the AY 2020-21 wherein the status of Printed from counselvise.com 2 ITA No.4986/DEL/2024 the assessee was clearly mentioned as non-resident as residential status of the assessee in ITR 3 filed on 16.12.2020 with the acknowledgement no.826193800161220. With the above facts on record, he submitted that the authorities below proceeded to apply the provisions of section 44ADA of the Income-tax Act, 1961 (for short ‘the Act’) for the reason that assessee has not maintained proper books of account for carrying on the professional activities, therefore, they applied the presumptive tax @ 50%. He submitted that provisions of section 44ADA are not applicable to the non-resident and it was wrongly applied in assessee’s case. He further submitted that the ld. CIT (A) dismissed the appeal by observing as under:- “4.2 Aggrieved by the said denial of carried forward of loss from profession of Rs.10,07,790/-, which according to the appellant was due to an erroneous entry, not appreciated by the CPC, the appellant had preferred an appeal and submitted Form No.35 together with SoF and GoA which were carefully considered. Subsequently, a paper book contained in 123 sheets of paper were submitted and the same were examined. 4.3 The solitary grievance of the assessee is that the restriction of loss to be carried forward to Rs.24,371/- as against the claim of Rs.10,31,161/- is illogical and it was due to an erroneous entry which requires to be corrected. Therefore, the examination of the entries in column nos.64 & 65 of ITR-3 plays the essential process of adjudication in the case under consideration. For easier comprehension the screenshot of the relevant columns, is captured and provided below: Printed from counselvise.com 3 ITA No. ITA No.4986/DEL/2024 Printed from counselvise.com 4 ITA No.4986/DEL/2024 4.4 It is evident from the entries in the column nos.64 & 65 of ITR-3 that the appellant had not maintained proper books of accounts in his professional activity and hence the computation of total income is made in accordance to the provision of section 44ADA on a presumptive basis. The gross receipt in the profession of the appellant is Rs.1000/- and after providing for the deduction @ 50% on the total gross receipts, the taxable income ought to be Rs.500/-, since, as per the provisions of section 44ADA, all deductions allowable u/s 30 to 38 are deemed to be allowed. 4.5 Therefore irrespective of the fact that the expenditure has been incorporated in a wrong column or otherwise, the entire claim of expenditure, cannot be allowed and therefore the restriction imposed by the CPC while processing the return of income u/s 143(1) and the subsequent rejection for rectification u/s 154 is found to be in order and does not call for any interference. The JAO is directed to compute the taxable income accordingly. 5. As a result, the grounds of appeal of the appellant are dismissed.” Accordingly, he prayed that the addition proposed by the Assessing Officer and sustained by the ld. CIT (A) is not justified. 3. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 4. Considered the rival submissions and material placed on record. The assessee is a non-resident and filed the return of income as such. However, the Assessing Officer observed that assessee has declared professional income in his return of income and observed that assessee has not maintained proper books of account as per section 44ADA of the Act and accordingly, he invoked the same and proposed addition. As per the provisions of section 44ADA, this section is not applicable to the non- Printed from counselvise.com 5 ITA No.4986/DEL/2024 resident of India which is applicable only to the professionals who were resident in India. Therefore, invoking the provisions of section 44ADA in the present case is unjustified. Accordingly, we allow the grounds raised by the assessee by deleting the addition proposed by the Assessing Officer. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 6th day of August, 2025. Sd/- sd/- (SATBEER SINGH GODARA) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 06.08.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "