K.Bhanumathi , Chennai V. The ACIT, Non Corporate Circle -1, Chennai

ITA 2277/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5730 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 18-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN JCIT D R
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Depreciation
• Section: 44AD

Judgement Text

, C/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.2277 /MDS./2017 ( ASSESSMENT YEAR : 2013-14 ) SMT.K.BHANUMATHI , 124,MURTHI VILLA, P.S.SIVASWAMY SALAI, MYLAPORE,CHENNAI 600 004. VS. THE ACIT, NON-CORPORATE CIRCLE-1, CHENNAI. PAN AAFPB 9194 H ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.A.S.SRIRAMAN,ADVOCATE / RESPONDENT BY : MR.B.SAGADEVAN, JCIT, D.R ! ' / DATE OF HEARING : 04.12.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 05.12.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-2, CHENNA I DATED 27.07.2017 PERTAINING TO ASSESSMENT YEAR 2013-14. ITA NO.2277 /MDS/2017 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS F OR ADJUDICATION. 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) 2, CHENNAI DATED 27.07.2017 IN I.T.A.NO.246/CIT(A)-2/2015-16 F OR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS , AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE COMPLE TION OF ASSESSMENT U/S.144 OF THE ACT AFTER REJECTING THE FINANCIAL ST ATEMENTS/ACCOUNTS FURNISHED FOR THE PURPOSE OF ESTIMATING THE PROFESS ION INCOME AT 8% OF THE TOTAL RECEIPTS WHILE REJECTING THE CLAIM OF EXP ENSES IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNING PROPER RE ASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE REASONS GIVEN FOR THE ESTIMATED ADDITION TO IMPOSE TAX WERE WHOLLY UNJUST IFIED AND OUGHT TO HAVE APPRECIATED THAT THE FINDINGS GIVEN IN RELATIO N THERETO IN THE IMPUGNED ORDER WERE WRONG, ERRONEOUS, UNJUSTIFIED, INCORRECT AND NOT SUSTAINABLE IN LAW. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT HAVI NG NOT QUESTIONED THE GENUINENESS OF THE EXPENSES INCURRED IN THE PROFESS ION PURSUED BY THE APPELLANT, THE ATTEMPT TO MAKE ESTIMATED ADDITION S HOULD BE CONSIDERED AS BAD IN LAW. 5. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THER E WAS NO WRONG STATEMENT OF FACTS FOR RECORDING THE CONCLUSIONS REACHED BOTH IN THE ASSESSMENT ORDER AND IN THE IMPUGNED ORDER AND OUGHT TO HAVE A PPRECIATED THAT THE MISREADING OF FINANCIAL STATEMENTS/ACCOUNTS WOULD V ITIATE THE SAID FINDING. 6. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE DETAILED WRITTEN SUBMISSIONS FILED ON 24.07.2017 WAS COMPLETELY OVER LOOKED AND BRUSHED ASIDE IN RECORDING THE WRONG FINDINGS IN PARA 5 OF THE IMPUGNED ORDER WITH A VIEW TO SUSTAIN THE ESTIMATED ADDITION OF RS.6,61 ,557/-. ITA NO.2277 /MDS/2017 3 7. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THER E WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPUGNED OR DER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURAL JUSTI CE WOULD BE NULLITY IN LAW. 2.1 THE MAIN GRIEVANCE OF THE ASSESSEE IN THE ABOV E GROUNDS IS THT LD.CIT(A) ERRED IN SUSTAINING THE ESTIMATION OF INC OME AND THEREAFTER ESTIMATING THE INCOME AT 8% OF THE GROSS RECEIPTS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL, ENGAGED IN LEGAL PROFESSION AND DECLARE D GROSS RECEIPT OF ` 1 LAKH FROM THE LEGAL PROFESSION AND CLAIMED LOSS O F ` 5,99,852/-. THE LD. ASSESSING OFFICER WHILE EXAMINING THE RECOR DS OBSERVED THAT THE GROSS RECEIPTS WAS ` 1 LAKH AS PER FORM 26AS AND HOWEVER, THERE WAS ANOTHER ` 1,30,000/- AS REVEALED BY LIST OF RECEIPTS PROVIDED BY THE ASSESSEE. THUS, THE AO ESTIMATE THE GROSS RECE IPTS AT ` 2,30,000/- AND ESTIMATED THE INCOME OF ASSESSEE AT 8% OF THE GROSS RECEIPTS BY INVOKING THE PROVISIONS OF THE SECTION 44AD OF THE ACT. THUS, HE OVERLOOKED THE LOSS CLAIMED BY THE ASSESSE E AT ` 5,99,852/- AND COMPUTED THE INCOME FROM LEGAL PROFESSION AT ` 18,400/-. THUS, LD. ASSESSING OFFICER MADE TOTAL ADDITION TO THE IN COME OF ASSESSEE AT ` 6,51,557/-. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ITA NO.2277 /MDS/2017 4 ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) UPHELD THE ORDER OF LD. ASSESSING OFFICER . AGAINST THE ORDER OF LD.CIT(A), NOW THE ASSESSEE IS IN APPEAL BEF ORE US. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE ASSESSEE ORIGINALLY DECLARED THE INCOM E FROM PROFESSION AS BELOW:- EXCESS OF EXPENDITURE OVER INCOME 6,43,157 ADD :INADMISSIBLE EXPENSES: CAR MAINTENANCE 3,516 ELECTRICITY CHARGES 8,947 DRIVERS SALARY 19,200 DEPRECIATION 14,546 46,208 LESS : INCOME CHARGEABLE UNDER SEPARATE HEAD:- INTEREST ON SB A/C WITH BANKS 2,903 (-)5,99,852 THE AO ESTIMATED THE GROSS RECEIPTS FROM ` 2,30,000/- FROM THE LEGAL PROFESSION AND HE CONSIDERED THE INCOME AT ` 18,400/- AND FINALLY, HE ADDED ` 6,51,557/- TO THE INCOME OF ASSESSEE, WHICH IS AS F OLLOWS:- ITA NO.2277 /MDS/2017 5 PARTICULARS AMOUNT ( `) TOTAL INCOME AS ADMITTED BY THE ASSESSEE 37,33,796 /- ADD: ESTIMATED PROFIT AS DISCUSSED ABOVE 6,51.557/- TOTAL ASSESSED INCOME 43,95,350/- DEMAND PAYABLE 2,20,770/- 4.1 IN MY OPINION, THE ABOVE COMPUTATION IS NOT CO RRECT. HOWEVER, THE ESTIMATION OF GROSS RECEIPTS AT ` 2,30,000/- FROM LEGAL PROFESSION IS JUSTIFIED AS IT IS BASED ON THE EVIDENCES FURNIS HED BY THE ASSESSEE. FURTHER, ESTIMATING THE INCOME AT 8% OF THE GROSS R ECEIPTS BY INVOKING THE PROVISIONS OF THE SECTION 44AD IS ALSO JUSTIFIED AS THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNT S. HOWEVER, THE COMPUTATION OF INCOME TO BE READ AS FOLLOWS:- PARTICULARS AMOUNT ( `) INCOME HOUSE PROPERTY 45,42,372 INCOME FROM PROFESSION 18,400 TOTAL (A) 45,60,772 LESS: DEDUCTION CHAPTER VIA U/S.80C : 16,000 U/S.80G 1,96,516 TOTAL (B) 2,12,516 (C) [ (A) - (B) ] TAXABLE INCOME 2,20,770/- 43,48,256 THUS, THE ASSESSEE WOULD GET A RELIEF OF ` 47,094/-. IT IS ON ACCOUNT OF WRONG COMPUTATION OF INCOME BY THE LD. ASSESSING OF FICER. ITA NO.2277 /MDS/2017 6 ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN HER APPEAL ARE PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 05 TH DECEMBER, 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 05 TH DECEMBER, 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF