R.Thangaraj, Tuticorin V. ITO, Tuticorin

ITA 166/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6029 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: MANOHAR DOSS
• Section: 44AD; 148

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC B BENCH, CHENNAI . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS.166/MDS/2016 ( / ASSESSMENT YEAR: 2008-09) SHRI R THANGARAJ, 203, ETTAYAPURAM ROAD, TUTICORIN 628 001. VS THE INCOME TAX OFFICER, ITO WARD - 4, TUTICORIN. PAN: AGDPR8077R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI MANOHAR DOSS, ADVOCATE /RESPONDENT BY : SHRI B. SAGADEVAN, JCIT /DATE OF HEARING : 09.10.2017 !' /DATE OF PRONOUNCEMENT : 12.10.2017 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-1, MADURAI DATED 19.11.2015 IN ITA NO.0116/2010-11 FOR THE ASSESSMENT YEAR 2008-09 PASSED U/S.250(6) R.W.S.143 (3) & 147 OF THE ACT. 2 ITA NO.166/MDS/2016 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD.CIT(A) WHO HAD ERRED IN CONF IRMING THE ORDER OF THE LD.AO WITH RESPECT TO:- (I) ADDITION MADE BY ESTIMATING 8% OF THE TOTAL CON TRACT RECEIPTS OF RS.26,12,316/- WHICH WORKS OUT TO RS.2, 08,985/- (II) ADDITION MADE BY ESTIMATING THE INCOME OF THE ASSESSEE U/S.44AE OF THE ACT, FOR RS.84,000/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS AS CIVIL CONTRAC T WITH GOVERNMENT DEPARTMENTS AND TRANSPORT OPERATOR, FILE D HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 14.11. 2008 ADMITTING TOTAL INCOME OF RS.1,38,540/-. INITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT AND SUBSEQUENTLY TH E CASE WAS REOPENED U/S.147 OF THE ACT BY ISSUE OF NOTICE U/S. 148 OF THE ACT ON 04.03.2010 SINCE THE ASSESSEE HAD DISCLOSED LESS THAN 8% OF TOTAL CONTRACT RECEIPTS AS PER SECTION 44AD O F THE ACT. 3 ITA NO.166/MDS/2016 4. GROUND NO.2(I) : ADDITION OF RS.2,08,985/- BY ESTIM ATING INCOME U/S.44AD OF THE ACT:- DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDI NGS, IT WAS OBSERVED THAT THE ASSESSEE HAD ADMITTED INCOME OF RS.92,022/- IN RESPECT OF CONTRACT RECEIPT OF RS.26 ,12,316/- WHICH WORKS OUT TO ONLY 3.52% OF THE TURNOVER. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED AUDIT REPORT U/S.44AB OF THE ACT TO ESTABLISH THE GENUINENESS OF HIS INCOME OF RS.92,022/-. THE LD.AR FURTHER EXPLAINED THAT T HE AUDIT REPORT WAS NOT ENCLOSED IN THE RETURN OF INCOME SINCE THE RETURN WAS E-FILED WHEREIN THERE IS NO SCOPE FOR FURNISHING TH E AUDIT REPORT. THE LD.AO REJECTED THE SUBMISSION OF THE ASSESSEE A ND ESTIMATED THE INCOME OF THE ASSESSEE AT 8% OF THE T OTAL RECEIPT IN ACCORDANCE WITH SECTION 44AD OF THE ACT IGNORING THE PROVISIONS OF SECTION 44AB OF THE ACT BECAUSE THE A SSESSEE HAD NOT FURNISHED THE AUDIT REPORT WITHIN THE DUE DATE. ON APPEAL THE LD.CIT(A) UPHELD THE VIEW OF THE LD.AO BECAUSE THE ASSESSEE HAD NOT FILLED THE DETAILS WITH RESPECT TO AUDIT RE PORT U/S.44AB OF THE ACT IN THE RETURN OF INCOME. 4 ITA NO.166/MDS/2016 4.1 THE LD.AR SUBMITTED BEFORE US THAT THE ASSESSEE HAD MAINTAINED THE BOOKS OF ACCOUNTS AND HAD DRAWN THE PROFIT & LOSS STATEMENT WHICH WORKS OUT TO RS.92,022/-. THE LD.AO HAD FAILED TO EXAMINE THE GENUINENESS OF HIS BOOKS AND ALSO REJECTED THE AUDIT REPORT BECAUSE IT WAS FURNISHED AT THE TI ME OF ASSESSMENT AND THEREBY ESTIMATED THE INCOME OF THE ASSESSEE AT 8% AS PER SECTION 44AD OF THE ACT, WHICH IS ERRO NEOUS. HE THEREFORE PLEADED THAT THE ADDITION MADE BY THE LD. AO ON THIS COUNT MAY BE DELETED. THE LD.DR ON THE OTHER HAND RELIED ON THE ORDER OF THE LD.REVENUE AUTHORITIES. 4.2 I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE HA D A GENUINE REASON FOR NOT FILING THE AUDIT REPORT ALONG WITH T HE RETURN OF INCOME. FURTHER, THERE WERE SOME OMISSIONS WHILE F ILING THE RETURN OF INCOME. HOWEVER THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS SUBMITTED THE REQUISITE AUDI T REPORT AND FURNISHED THE BOOKS OF ACCOUNTS. CONSIDERING THESE FACTS I AM OF THE VIEW THAT THE LD.AO HAS GROSSLY ERRED IN NOT EX AMINING THE BOOKS OF ACCOUNTS AND SIMPLY ESTIMATED THE INCOME U /S.44AD OF THE ACT IGNORING THE PROVISIONS OF SECTION 44AB OF THE ACT WHEN 5 ITA NO.166/MDS/2016 THE ASSESSEE HAD FILED THE AUDIT REPORT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THIS ACT OF THE LD.AO IS N OT JUSTIFIED. SINCE THE ADDITION MADE IS NOMINAL, IT WOULD NOT BE ALSO JUSTIFIABLE TO REMIT BACK THE MATTER FOR DE-NOVA CO NSIDERATION. THEREFORE IN THE INTEREST OF JUSTICE, I HEREBY DIRE CT THE LD.AO TO DELETE THE ADDITION OF RS.2,08,985/- MADE BY ESTIMA TING THE INCOME U/S.44AD OF THE ACT. 5. GROUND NO.2(II) : ADDITION OF RS.84,000/- BY ESTIMA TING INCOME U/S.44AE OF THE ACT:- THE ASSESSEE OWNS TWO LORRIES IN HIS TRANSPORT OP ERATIONS. IN HIS RETURN OF INCOME, HE HAD DECLARED LOSS WITH RESPECT TO TRANSPORT OPERATIONS. SINCE THE ASSESSEE HAD NOT F ILED THE AUDIT REPORT U/S.44AB OF THE ACT, THE LD.AO ESTIMATED THE INCOME OF THE ASSESSEE INVOKING THE PROVISIONS OF SECTION 44A E OF THE ACT AND THEREBY MADE ADDITION OF RS.84,000/-. THE LD.C IT(A) FOR THE REASONS STATED SUPRA CONFIRMED THE ORDER OF THE LD. AO. 5.1 SINCE ON SIMILAR ISSUE, WITH RESPECT TO INVOKIN G THE PROVISIONS OF SECTION 44AD OF THE ACT, I HAD HELD T HAT THE ACTION 6 ITA NO.166/MDS/2016 OF THE LD.AO IS NOT JUSTIFIABLE AND THEREAFTER DELE TED THE ADDITION, FOLLOWING THE SAME RATIO, I HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION MADE U/S.44AE OF THE ACT FOR RS.84,000/-. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 12 TH OCTOBER, 2017 AT CHENNAI. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER #$ /CHENNAI, %& /DATED12TH OCTOBER, 2017 RSR & () *) /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. - /CIT 5. )./ 0 /DR 6. /1 /GF