SHRI CHANDRASEKHARA THAMMA REDDY,NEW DELHI vs. ITO WARD- 53(2), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘SMC’ NEW DELHI SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA No.314/Del/2021 Assessment Year: 2016-17 Shri Chandrasekhara Vs. Income-Tax Officer, Thamma Reddy, 156, Ward-53(2), Palika Bazar, Connaught New Delhi Place, New Delhi-1100 01 PAN :AAEPR4295G (Appellant) (Respondent)

Appellant by Ms.Sumangla Saxena, Adv. Respondent by Shri Om Parkash, Sr. DR

Date of hearing 03.08.2022 Date of pronouncement 01.11.2022

ORDER This is an appeal by the assessee against order dated 26.02.2020

of Learned Commissioner of Income-Tax (Appeals)-25, New Delhi

for the assessment year 2016-17.

amount of Rs.2,15,340 made under Section 44AD of the Act.

the business of trading in leather products and readymade garments.

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For the assessment year under dispute, assessee filed his return of

income on 26.7.2016 declaring income of Rs.3,36,286.

verifying the material on record, noticed that in the year under

consideration, the assessee has exported goods worth Rs.25,03,399.

Therefore, he called upon the assessee to furnish necessary details and

explain why such receipts should not be treated as income of the

assessee. In response to the query raised, the assessee accepted that he

had made exports of the amount in question and furnished copy of

draft bill of lading. Alleging that the assessee failed to furnish any

other information, the Assessing Officer treated 50% of the export

value as his income and the rest 50% as the expense incurred by him

for purchasing the exported goods. Thus, in effect, he added back the

amount of Rs.25,03,399 representing the export value of goods.

Learned Commissioner (Appeals). Partly accepting the contention of

the assessee, Learned Commissioner (Appeals) held that the entire

amount relating to export of goods cannot be added but profit

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estimated at 10% of the export value of the goods is to be added.

Accordingly, he restricted the addition to Rs.2,50,340.

for the assessee and Shri Om Prakash, learned Departmental

Representative. Though, it is a fact that in the year under

consideration, the assessee had exported goods worth Rs.25,03,399 to

a party in Trinidad & Tabago, however, before Learned Commissioner

(Appeals), the primary contention of the assessee was to the effect that

the assessee follows cash system of accounting and in the year under

consideration, he has not received any amount towards the export of

goods. The assessee had submitted that after much persuasion, the assessee could receive part of the payment i.e. USD 20,000 on 30th

May 2019 and the amount was offered to tax in the relevant

assessment year. Of course, the assessee took an alternative argument

to the effect that in worst case, the addition can be made under Section

44AD of the Act. As it appears, Learned Commissioner (Appeals)

while completely ignoring the primary contention of the assessee has

accepted the alternative contention by restricting the addition to 10%

of the export value. This, in my view, is totally unjustified. When

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assessee’s claim that he is following cash system of accounting and no

part of the export sales was received during the year is not

controverted, no addition, even, on presumptive basis should have

been made. More so, when it is the case of the assessee that the part

payment in respect of exported goods received in assessment year

2020-21 has been offered to tax in the said assessment year.

the addition of Rs.2,50,340 sustained by Learned Commissioner

(Appeals). Accordingly, the addition is deleted.

Order pronounced in the open court on 1st November, 2022. Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Dated: 1st November, 2022. Mohan Lal