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Facts
The assessee, who had not filed an ITR and offered contract receipts, was issued notices under sections 147/148 of the Act. Upon partial compliance and filing of a return, the AO disallowed the claim under Section 44AD and made an addition. The CIT(A) affirmed the addition.
Held
The Tribunal held that the assessee had not duly received various notices issued by the AO, except for the notice dated 04.01.2023. The return filed in response to this notice was considered valid and within time, allowing the benefit of Section 44AD.
Key Issues
Whether the return filed by the assessee was belated, and if the assessee is eligible for the benefit of Section 44AD when there are doubts regarding the service of notices.
Sections Cited
147, 148, 142(1), 250, 139(1), 44AD, 194C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI “SMC” BENCH, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY, JM
सुनवाई की तारीख / Date of Hearing : 07/02/2025 घोषणा की तारीख/Date of Pronouncement : 28/02/2025 आदेश / O R D E R PER NARENDER KUMAR CHOUDHRY:
This appeal has been preferred by the assessee against the order dated 30.09.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2018-2019.
In this case, a specific information was flagged, as per risk management strategy formulated by the CBDT, through insight portal of the Department, according to which, the Assessee though has carried out the transactions of Rs.7,05,703/- (payments to contractors) as reflected in TDS-194C of the Act, during the assessment year under consideration, however the Assessee has 2 Harishchandra Ramultawan Yadav not filed any Income Tax Return (ITR) and has not offered the contract receipts for taxation, therefore in order to verify the said transactions, the case of the Assessee was reopened u/s 147/148 of the Act, by issuing notice dated 30.03.2022 u/s 148 of the Act, by which the Assessee was asked to comply with the same, till 30.04.2022. However, the Assessee made no response. Thereafter, an intimation letter dated 17.08.2022 and notices u/s 142(1) of the Act dated 08.12.2022 & 22.12.2022 were also issued to the Assessee, however, still the Assessee made no compliance. Thereafter, another notice 04.01.2023 u/s 142(1) of the Act dated, was issued to the Assessee by which the Assessee was asked to comply with the same but up to 09.01.2023. In response to the said notice, the Assessee made partial compliance by filing partial reply. Thereafter, various other statutory notices were issued. As per assessment order, the same remained to be complied with and therefore the Assessing Officer (AO), by considering the case of the Assessee and the facts and circumstances and the return filed by the Assessee on 08.01.2023 , whereby the Assessee has shown gross receipts to the tune of Rs.12,68,636/- and offered the presumptive income u/s 44AD of the Act @ 8% of the gross receipt i.e. Rs.2,11,101/-, ultimately rejected the Assessee’s claim u/s 44AD of the ACT and made the addition of Rs.12,69,701/-and added to the total income of the Assessee.
The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner, who vide impugned order affirmed the aforesaid addition, by holding as under:
3 Harishchandra Ramultawan Yadav “The Grounds of appeal, the facts and circumstances of the case, the submissions of the assessee and the case laws adduced have been carefully considered. “The facts of the case are that AO had specific information that the assessee had income Rs. 705,703/- from contract receipts but had not filed ITR. Accordingly, the case was reopened u/s 147. The Assessee filed in ROI in response to notice u/s 148 and claimed that he was opting for presumptive taxation scheme wherein he declared Gross receipts of Rs 12,68,636/-. The AO did not accept the claim of the assessee under section 44AD and added the receipts to income and arrived at a total income of Rs. 12,69,701/-. Aggrieved, the Assessee is in appeal. The Assessee must file income tax return within the due date specified under Section 139(1) of the Income Tax Act to avail of the benefit of Section 44AD. If the taxpayer fails to file the return within the due date under Section 139(1), they lose the benefit of presumptive taxation under Section 44AD for that assessment year. The Hon'ble Bombay High Court has observed in DIT vs. Spacewood Furnishers Pvt. Ltd. (2016) that the benefits of a presumptive taxation scheme like Section 44AD are conditional upon the taxpayer complying with the statutory requirements, including timely filing of returns”. Accordingly, the Grounds of Appeal are dismissed.”
The Assessee, being aggrieved, has filed the instant appeal and has claimed that the Assessee has never received any notices as mentioned by the AO in para 2 (page 2 of the assessment order) except notice u/s 142(1) of the Act dated 04.01.2023 in response to which the Assessee on dated 09.01.2023 filed its return of income declaring gross total income to the tune of Rs.2,12,166/- and claiming the benefit of the provision of section 44AD of the Act. As the Assessee has not received any notice, except mentioned above, therefore the time for filing of the return of income start from the date of such notice but not otherwise, therefore the same can be considered, as filed in response to the notice u/s 148 of the Act dated 30.03.2022. 4 Harishchandra Ramultawan Yadav
On the country, the Ld. D.R. refuted the claim of the Assessee by supporting the orders passed by the authorities below and claiming that the Assessee has not followed the condition as prescribed u/s 44AD of the Act, hence no benefit can be given and the return filed by the Assessee may be construed as filed belatedly.
Heard the parties and perused the material available on record. This Court has given thoughtful considerations to the peculiar facts and circumstances of the case, as appears in para no.2 of the assessment order and as demonstrated above. As per Assessment order, the AO though sent various notices and in the response column it is mentioned "not received" but there is nothing on record to suggest that the aforesaid notices, except the notice dated 04.01.2023, in response to which the Assessee filed its return of income on dated 09.01.2023, have ever duly been served upon the Assessee. The Assessee has also demonstrated from the notice sent on 29.03.2022 (page no.35 of paper book) that that notice appears to be issued u/s 148 of the Act, however, does not bear the name of the recipient, therefore, the same cannot be construed as notice sent/served to the Assessee. Considering the peculiar facts and circumstances of the case in totality, this Court is inclined to allow the return filed by the Assessee on 09.01.2023, as filed in response to the notice dated 04.01.2023 and/or notice dated 30.03.2022 u/s 148 of the Act as valid and within time and therefore the said return filed by the Assessee cannot construed as filed belatedly as held by the Ld. Commissioner. Thus, in the aforesaid facts and circumstances, the appeal of the Assessee is liable to be allowed, by allowing the benefit of the provision of section 44AD of the Act and deleting the addition under consideration and therefore the addition is deleted.
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