CHANDRASHEKHAR KONDUJI PAWAR,NAGPUR vs. DCIT/ACIT CIRCLE 1, NAGPUR

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ITA 209/NAG/2026Status: DisposedITAT Nagpur02 September 2026AY 2017-183 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that only the net profit from the contract business should be taxed, not the gross receipts. It estimated the net profit at 10% of the gross receipts, amounting to Rs. 71,560/-, and deleted the remaining addition.

What were the facts?

The assessee, a retired BSF employee, started a security contract business and had gross receipts of Rs. 7,15,599/- reflected in Form 26AS. However, he only declared salary income and claimed TDS credit, not reporting the contract business income. The CPC processed the return by treating gross contract receipts as income, which was upheld by the CIT(A) on rectification.

What were the issues?

Whether gross contract receipts or net profit should be taxed, and if presumptive taxation under Section 44AD is applicable for estimating business income.

Which sections of the Income-tax Act were involved?

Section 154,Section 44AD,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR SMC BENCH, NAGPUR

Before: SHRI MANISH BORAD

For Appellant: Shri Dinesh Jogani, Advocate
For Respondent: Shri Abhay Shende, Sr.DR
Hearing: 30/07/2026Pronounced: 02/09/2026

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR "SMC" BENCH, NAGPUR BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER (Through virtual)

ITA No. 209/NAG/2026 (Asst. Year : 2017-18) Chandrashekhar Konduji CPC, Benguluru Pawar, Plot No.50, vs Vaishali Nagar, Hingan Road, BHSRP Camp, Nagpur-440016 PAN : BVPPP 2125 Q Assessee Revenue

Assessee by : Shri Dinesh Jogani, Advocate Department by : Shri Abhay Shende, Sr.DR Date of hearing : 30/07/2026 Date of Pronouncement : 02/09/2026

O R D E R This appeal by the assessee is directed against the order of Ld. ADDL/JCIT (Appeals)-5, Kolkata (for short, “CIT(A)”) dated 15.01.2026 passed u/sec. 250 of the Income Tax Act, 1961 (for short, “Act”) which is arising out of rectification order dated 02.02.2022 passed u/sec. 154 of the Act for the Assessment Year (A.Y.) 2017-18.

2.

Sole issue raised is against the finding of Ld.CIT(A) confirming the action of Ld. Assessing Officer (AO) making addition for gross contract receipts at Rs. 7,15,599/-.

3.

I have heard the rival submissions and perused the material placed before me. I notice that assessee is a retired employee of Border Security Force (BSF). During the year, he started proprietary business of security contract in the name of

2 ITA No.209/PUN/2026 (Chandrashekhar Konduji Pawar) M/s. Shreeji Security Services. During the year, gross contract receipt of Rs. 7,15,599/- are appearing in Form No. 26AS, on which tax has been deducted at source at Rs. 14,315/-. In the return of income for A.Y. 2017-18, assessee has only declared income from salary at Rs. 2,40,000/- and has not declared income from contract business, however, TDS credit of Rs. 14,315/- has been claimed. Centralized Processing Center (CPC), while processing the return, has taken the contract receipts at Rs. 7,15,599/- as income from other sources and assessed the income at Rs. 7,15,599/-. The assessee filed an application for rectification u/sec. 154 of the Act, but did not succeed. Assessee approached the Ld.CIT(A), but Ld.CIT(A) did not find infirmity in the rectification order passed u/sec. 154 of the Act. Now the assessee is in appeal before this Tribunal prayng that the only income component should be subjected to tax and not gross contract receipts. Ld.DR supported the order of Ld.CIT(A).

4.

I find that when the matter came up for adjudcation before the Ld.CIT(A), he ought to have considered Form No. 26AS, which clearly reflects the information that assessee has received contract receipts, and that the net profit and not the gross contract receipts should have been treated as income of the assessee. Section 44AD of the Act provides for the computation of profits and gains of business on a presumptive basis. Where the assessee declares profit at the prescribed rate of 8% or more of the gross contract receipts, the assessee is not required to maintain regular books of account, subject to the conditions prescribed under the said provision. I am of the considered view that assessee should be subjected to tax only on the net profit of the contract business and, therefore, the income from contract business on the gross contract turnover of Rs. 7,15,599/- is estimated @ 10% i.e. 71,560/-, thereby computing

3 ITA No.209/PUN/2026 (Chandrashekhar Konduji Pawar) the total income of the assessee at Rs. 3,31,600/- i.e. income from salary at Rs.2,40,000/- and from business at Rs. 71,560/- In the result, as against the addition of Rs. 7,15,599/- only Rs. 71,560/- is sustained towards estimated net profit from contract business and the remaining addition of Rs.6,44,039/- stands deleted. Finding of Ld.CIT(A) is reversed and the effective grounds of appeal on merits are partly allowed.

5.

In the result, appeal of the assessee is partly allowed as per the terms indicated hereinabove.

Order pronounced on 02nd September, 2026 under Rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963

Sd/- (MANISH BORAD) ACCOUNTANT MEMBER Pune & Dated : 02nd Sept., 2026 vr/- Copy of the Order forwarded to: 1. Assessee 2. Revenue 3. PCIT concerned. 4. DR, ITAT, “SMC” Bench, Nagpur. 5. Guard File

BY ORDER //True Copy// Senior Private Secretary ITAT, Nagpur

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