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Income Tax Appellate Tribunal, KOLKATA-PATNA ‘e-COURT’, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Dr. Manish Borad
Per Rajpal Yadav, Vice-President (KZ):- The present three appeals are directed at the instance of assessee against the separate orders of ld. Commissioner of Income Tax (Appeals), National Faceless , 316, 317/PAT/2023 Assessment Years:2015-16, 2016-17 & 2017-18 Upendra Shukla Appeal Centre (NFAC), Delhi dated 25th August, 2023 passed in A.Y. 2015-16 to 2017-18.
The assessee has taken six grounds of appeal in each year. However, his grievances revolve around a single issue, namely whether income of the assessee deserves to be determined under section 44AD of the Income Tax Act or not?
1. 3. Before adverting to the brief facts, we would like to observe that the ld. 1st Appellate Authority has dismissed all the appeals for want of prosecution. Therefore, we cannot make reference of any material mainly from the order of ld. CIT(Appeals). The ld. Counsel for the assessee has filed a detailed written submission, which is common to all the three assessments. In this written submission, he has compiled the details in tabulation proforma, which depicts the nature of dispute. We would like to take note of those details, which read as under:- SI. Particulars Assessment years No. 2015-16 2016-17 2017-18 i. 2475000 2700000 2700000 Gross professional fees received from Mentors Eduserve. ii. 1295455 1372312 1351240 Net professional income returned invoking section 44AD of the Act. iii. Percentage of income over receipts. 52.34% 50.82% 50.04% iv. Expenses claimed by the assesee 1179545 1327688 1348760 V. Net returned income. 1149576 1302780 1277697 vi. 15% of the Gross receipts. 371250 405000 405000 vii. Addition after restricted expenses to 808295 922688 943760 15% of the gross receipts. viii. Net assessed income. 1957875 2225468 2221460 , 316, 317/PAT/2023 Assessment Years:2015-16, 2016-17 & 2017-18 Upendra Shukla
With the assistance of ld. Representatives, we have gone through the record carefully. It emerges out from the record that the assessee is a qualified Engineer and was providing professional services to a Coaching Institute M/s. Mentors Eduserv Group. In this Institution, he was engaged in developing the study material with whom teaching could be enhanced, etc. A search was carried out under section 132 of the Income Tax Act at the business premises of the said Coaching Institute. According to the revenue, during the course of search, it was revealed that professional fee was received by the Faculty Members from the Coaching Institute and those professionals are claiming expenditure, which are not admissible to them. Accordingly, ld. Assessing Officer has determined the taxable income. The details noticed by us above would depict the true picture about the gross receipts received by the assessee in these three years. The assessee has declared income under section 44AD of the Income Tax Act. The ld. Assessing Officer was of the view that the assessee should not declare the income under section 44AD of the Income Tax Act, rather entitled for expenditure at 15%. The net income computed by the ld. Assessing Officer, vis-à-vis declared by the assessee is discernible in Column No. 2 & 8 of the above details.
, 316, 317/PAT/2023 Assessment Years:2015-16, 2016-17 & 2017-18 Upendra Shukla 5. The ld. Counsel for the assessee, at the very outset, took us through the finding of the ld. Assessing Officer, which is verbatim same. Our attention was drawn to paragraph 8, wherein ld. Assessing Officer himself categorized that these incomes are not salary receipts, rather professional receipts, but thereafter he made a clarification for justifying the allowance of expenditure at 15%. To our mind, this stand of the ld. Assessing Officer is not justifiable. The moment he arrived at a conclusion that the assessee was a professional. He has availed professional receipts for the consultancy provided by him to the Coaching Institute, then his income ought to have been determined under section 44AD. Our attention was drawn to section 44AA of the Income Tax Act, which contemplates for maintenance of accounts by certain persons carrying on profession or business. Sub-clause (1) of this section further provides that “every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration………shall keep and maintain such books of account and other documents as may enable the ld. Assessing Officer to compute his total income in accordance with the provisions of this Act”. Thus, Section 44AA does provide that if a person is engaged in technical consultancy, then he would also maintain the books of account. Section 44ADA further contemplates that if a person is engaged in a profession referred to sub - , 316, 317/PAT/2023 Assessment Years:2015-16, 2016-17 & 2017-18 Upendra Shukla section (1) of section 44AA and whose total gross receipts do not exceed 50 lakhs rupees in a previous year, then he would be entitled to offer income equal to 50% of the total gross receipts. Thus, conjoint reading of both these sections would indicate that a person, who was supposed to maintain accounts for his profession or business, then, he is exempted from maintaining such accounts if his gross receipt does not exceed 50 lakhs rupees and he offers income 50% of the gross receipts under a presumptive taxation scheme contemplated in section 44ADA.
The case of the assessee is that his job was of technical consultation. His gross receipts do not exceed Rs.50 lakhs in any of the year. He has offered the income at 50% of those gross receipts. The ld. Assessing Officer has erred in assuming the gross receipts as taxable and only expenditure could be allowed to 15%. To our mind, this approach of the ld. Assessing Officer is not supported by the law, rather it is an exercise of arbitrary powers by the revenue. The ld. CIT(Appeals) ought to have not dismissed the appeal for want of prosecution. He was not required to consider any material except the assessment order and he could have easily decided the appeals. The Quasi-Judicial Authorities are not being respected on account of their powers, to legalize injustice on account of technical reasons, but are being respected for removing , 316, 317/PAT/2023 Assessment Years:2015-16, 2016-17 & 2017-18 Upendra Shukla injustice. Therefore, we allow all these appeals and direct the ld. Assessing Officer to accept the return of income declared by the assessee. All the additions made by the ld. Assessing Officer are deleted.