THOTTIAPATTI MUTHUSAMY MOHAN,NAMAKKAL vs. THE INCOME TAX OFFICER, CIRCLE-1,, NAMAKKAL

Respectfully following the co-ordinate bench decision, we admit the appeal of the assessee for adjudication and overruled the objection of the Registry……”

In view of the above decisions of the Coordinate Benches of the Tribunal, the appeal filed by the assessee on payment of appeal fees at ₹.500/- is admitted for adjudication.

Brief facts relating to the case are that the assessee filed return of income on 13.10.2016 declaring a total income of ₹.2,90,000/-. The return was processed under section 143(1) of the Income Tax Act, 1961 [“Act” in short]. The case of the assessee was selected for limited scrutiny to verify whether the contract receipts/fees have been correctly offered for tax [receipts under section 194C and 194J (as per 26AS) are more than the receipts shown in ITR]. Accordingly, the Assessing Officer issued statutory notices under section 143(2), 142(1), 142(1) r.w.s. 129 as well as 142(1) r.w.s. 144 of the Act. However, there was no compliance from the assessee to any of the notices issued by the Assessing Officer. Thus, the Assessing Officer, taking 8% of the total receipts as shown in 26AS [8% of ₹.1,40,38,087/-] of the assessee amounting to ₹.11,23,047/- as total income of the assessee, completed the assessment under section 144 of the Act dated 14.12.2018.

Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A) with a delay of 146 days in filing the appeal. While not accepting the reasons stated by the assessee for the delay in filing the appeal, the ld. CIT(A) dismissed the appeal of the assessee in limine. On being aggrieved, the assessee is in appeal before the Tribunal.

The ld. AR Shri T.S. Lakshmi Venkataraman, F.C.A. drew our attention to para 5.1 of the impugned order and submits that the assessee has explained the reasons for the delay in filing the appeal that the assessee was under medical treatment from February, 2019 to June, 2019 and prayed for condoning the delay. He further submits that the assessee preferred an appeal against the assessment order before the ld. CIT(A) on 06.07.2019 and posted the appeal for hearing on 28.01.2025 and asked the assessee to furnish evidence for medical treatment. The ld. AR prayed to condone the delay of 146 days in filing the appeal before the ld. CIT(A). On merits, the ld. AR submits that the income of the assessee has to be computed under section 44AE(2) of the Act instead of section 44AD of the Act and prayed for suitable direction to the Assessing Officer to decide the issue afresh.

The ld. DR Ms. V. Supraja, Addl. CIT fairly conceded that the matter may be remanded to the file of the Assessing Officer for fresh consideration.

With regard to the delay in filing appeal before the first appellate authority, on perusal of the impugned order, we note that the assessee preferred the appeal before the ld. CIT(A) on 06.07.2019, whereas, the appeal was taken up for hearing on 28.01.2025 by issuing notice under section 250 of the Act. On perusal of para 5.1 of the impugned order, we note that before the ld. CIT(A), the assessee has explained reasonable cause for the delay in filing the appeal before the ld. CIT(A). Considering the reasonable cause for the delay in filing the appeal, the delay of 146 days is condoned.

On merits, we note that the assessment was completed under section 144 of the Act dated 14.12.2018. We note that in the absence of any written submissions, documentary evidences filed by the assessee, the Assessing Officer assessed the total income of the assessee by taking 8% of the total receipts as shown in 26AS. The contention of the assessee is that the Assessing Officer should have computed the income of the assessee under section 44AE(2) of the Act instead of section 44AD of the Act on the ground that the assessee was operating only 4 LPG tanker lorries and the income was offered under section 44AE of the Act. We note that the assessee also made specific ground in Form 35 filed before the ld. CIT(A). Moreover, the Assessing Officer has not assigned any specific reason for computing the income of the assessee under section 44AD instead of section 44AE of the Act. Under the above facts and circumstances, we are of the opinion that the Assessing Officer is not justified by taking 8% of the total receipts as shown in 26AS as income of the assessee by invoking the provisions of section 44AD of the Act when the assessee is operating less than ten goods carriages. Accordingly, we set aside the impugned order and direct the Assessing Officer to recompute the income of the assessee under section 44AE of the Act and pass order in accordance with law by affording one more opportunity of being heard to the assessee. Thus, the ground raised by the assessee is partly allowed.

In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 30th July, 2025 at Chennai.