Ramakrishnan, Chennai V. ITO, NCW-19(4), Chennai

ITA 51/CHNY/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3727 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 06-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india
• Section: 44AD

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI Įी महावीर ͧसंह, उपाÚय¢ एवं ᮰ी जी. मंजुनाथ, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 51/CHNY/2019 िनधाᭅरण वषᭅ /Assessment Year: 2015-16 Shri Ramakrishnan, C 412, Fourth Street, Periyar Nagar, Chennai – 600 082. PAN: AAEPR 7485C v. The Income Tax Officer, Non-Corporate Ward-19(4), Chennai - 34. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri Ramakrishnan, Assessee ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri P. Muthushankar, Addl.CIT स ु नवाई कȧ तारȣख/Date of Hearing : 27.04.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 27.04.2022 आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-12, Chennai in ITA No.139/CIT(A)-12/17-18 dated 31.10.2018. The assessment was framed by the Income Tax Officer, Non-Corporate Ward 19(4), Chennai u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) for the assessment year 2015-16 vide order dated 08.12.2017. 2 I.T.A. No.51/Chny/2019 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of AO in making assessment u/s.44AD of the Act on presumptive basis despite the fact that the assessee has maintained books of account as prescribed u/s.44AA of the Act. For this assessee has raised various grounds and even in concise grounds, he has raised various argumentative issues, which need not tobe reproduced. 3. At the outset, the assessee stated that the assessment was framed by the AO by applying the provision of section 44AD of the Act by presuming the percentage of income by stating that the assessee has declared a loss of Rs.6,64,234/- from the sale of future transactions and accordingly, he is not supposed to maintain the books of account nor to get the books of account audited. According to AO, since the total turnover / gross receipts during the financial year 2014-15 relevant to this assessment year 2015-16 does not exceed the amount of Rs.1 crore and the assessee’s nature of business being sale of future transactions (derivatives in recognized stock exchange) and hence, falls under eligible business as defined u/s.44AD of the Act. Therefore, the AO computed profit rate @ 8% and made addition of Rs.33,520/-. Aggrieved, assessee preferred 3 I.T.A. No.51/Chny/2019 appeal before CIT(A). The CIT(A) also confirmed the action of AO by observing in para 5.1 as under:- “5.1 The appellant has reiterated the submissions raised before the AO. The appellant has not maintained books of accounts. The turnover of the appellant was below Rs.1 crore. In such circumstances, the only option before the AO is to apply the provisions of Section 44AD. Had the appellant produced books of accounts, there was no necessity to assess the deemed income. The appellant has declared in his return that he is not liable for maintaining and auditing books of accounts.” 3.1 In view of the above, the assessee stated once he has maintained books of account and produced before the AO during the course of scrutiny assessment, the AO is supposed to make assessment as per the provisions of the Act and to determine the true income from the accounts particularly when the assessee has maintained books of account in term of section 44AA of the Act. Accordingly, the assessee stated that matter can be remanded back to the file of the AO to make assessment in term of normal provisions and not u/s.44AD of the Act. 4. On the other hand, the ld.Senior DR supported the orders of lower authorities. 5. We have heard rival contentions and gone through facts and circumstances of the case. We noted that admittedly the AO has made assessment by invoking provisions of section 44AD of the Act 4 I.T.A. No.51/Chny/2019 and estimated profit rate on presumptive basis. The assessee before us made statement at bar that he has maintained books of account, which were produced before the AO during scrutiny assessment proceedings and even now he is ready to produce before the AO, in case the matter is remanded back to the file of the AO. We noted from the provisions of section 44AD, sub-section (5), as existed during the relevant assessment year 2015-16 and the same reads as under:- (5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub- section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB. 5.1 From the above provision, it is clear that the assessee can declare lower profit also in case the assessee has maintained books of account and in this case, as claimed by the assessee before Bench that he has maintained books of account, in that eventuality we are of the view that the orders of lower authorities needs set aside. Hence, the orders of lower authorities are set aside and matter remanded back to the file of the AO for making assessment on the basis of books of account. Accordingly, the AO will reframe the 5 I.T.A. No.51/Chny/2019 assessment after allowing reasonable opportunity of being hearing to the assessee. 6. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 27 th April, 2022 at Chennai. Sd/- Sd/- (जी. मंजुनाथ) (G. MANJUNATHA) लेखा सद᭭य /ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 27 th April, 2022 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ (अपील)/CIT(A) 4. आयकर आयुᲦ /CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF.