BADSHAH ABDUL PATEL,AURANGABAD vs. ITO WARD 1(1) AURANGABAD, AURANGABAD

This appeal by the assessee pertaining to Assessment Year 2018-19 is directed against the order dated 30.09.2024 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) which inturn is arising out of the Assessment Order passed u/s.143(3) r.w.ss 143(3A) & 143(3B) dated 03.03.2021.

Tersely the facts of the case are that the assessee is a Contractor/Builder with Material contract/Labour contract. Return of income for the A.Y. 2018-19 was furnished on Badshah Abdul Patel 29.08.2018 which was subsequently revised declaring total income of Rs.2,98,410/-. After the case selected for Complete Scrutiny for verification of large commission expenses and low net profit, following by issuance of statutory notices u/s.143(2)/142(1), the assessee submitted partial details. From the ITR details, the Assessing officer observed from the profit and loss account that the assessee has debited Rs.21,28,710/- as commission expenses. However, in response to notice u/s.142(1), the assessee has not submitted details to substantiate the commission expenses. In the circumstances, the Assessing Officer made addition of Rs.21,78,710/- as unexplained expenditure invoking the provisions of section 37(1) of the Act.

I have heard both the sides and perused the record placed before me. I note that the assessee in the instant case is a Contractor/Builder. The solitary issue that arises for my consideration is that the assessee in his income-tax return has Badshah Abdul Patel mentioned ‘Commission Expenses’ of Rs.21,28,710/- but subsequently during the course of assessment proceedings it was stated that it was ‘Construction Expenses’. Inadvertently, the mistake crept up while filing the income-tax return. The assessee failed to convince both the lower authorities on this issue.

Before me, the Ld. Counsel for the assessee has furnished the paper book containing 77 pages in order to support the contention that the assessee is into Construction business as Material and Labour Contractor and is consistently filing the income-tax returns showing the ‘Income from Construction’. It is also contended that the gross receipts for the year stood at Rs.30,12,600/- and the major amount of expenses is towards ‘Construction’ amounting to Rs.21,28,710/-. Copy of the ledger account of Construction Expenses is filed which mainly includes the amount incurred towards purchase of Bricks, Sand, and payment of labour. It is also claimed before me that the assessee fall under the Presumptive Taxation Scheme u/s.44AD of the Act and the income is estimated @8% of the gross receipts which comes to Rs.2,41,008/-, however, the assessee has shown higher amount of Rs.2,98,412/-. It is also claimed that unintentional mistake made by the person filing the income-tax return mentioned the word ‘Commission’ in place of ‘Construction’’ and the same should not be taken against the Badshah Abdul Patel assessee. It is submitted that the assessee in response to notice u/s.142(1) submitted his explanation vide submission dated 30.01.2021, which is placed at pages 25 to 29 of the paper book. The assessee also filed an affidavit in support of the said contention which is reproduced below :

In the result, the appeal of the assessee is allowed. Order pronounced on this 07th day of January, 2025.