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Facts
The assessee, a retail vendor of liquor, received substantial receipts from RSBCL and PACL India Limited. The Assessing Officer (AO) treated these receipts as undisclosed income and made additions. The CIT(A) dismissed the appeal on the grounds of non-compliance with Section 249(4)(b) of the Act.
Held
The tribunal held that the CIT(A) erred in dismissing the appeal on technical grounds. The tribunal found Section 44AD applicable to the assessee's business, allowing for taxation based on a profit margin of 8% on receipts. The tribunal directed the AO to determine income based on this profit margin.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal on technical grounds without adjudicating on merits, and if Section 44AD applies to the assessee's business of retail liquor vending.
Sections Cited
250, 194A, 194H, 148, 144, 147, 139, 249(4)(b), 44AD, 44AA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “SMC”, JAIPUR
Before: SHRI GAGAN GOYAL & SHRI NARINDER KUMAR
This appeal by assessee is directed against the order of NFAC, Delhi dated 23.10.2024 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’). The assessee has raised the following grounds of appeal: -
The Ld. CIT (A), NFAC has erred on facts and in law in dismissing the appeal filed by the assessee holding that since the assessee has not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable by it, the appeal is not liable to be admitted by incorrectly interpreting the provisions of section 249 (4)(b) of the IT Act, 1961.
2. The Ld. CIT (A), NFAC has erred on facts and in law in not deciding the appeal on merit by ignoring that amount reflected in Form No. 26AS is not the income but it is turnover on which income can be assessed by applying the profit rate u/s. 44AD of the Act and thus addition of Rs. 28, 83,556/- made by AO is otherwise unjustified.
The appellant craves to alter, amend and modify any ground of appeal.
4. Necessary cost be awarded to the assessee.
The brief facts of the case are that the assessee was amongst the non-filers of the return u/s. 139 of the Act. In the case of the assessee information as per ITS details, the assessee received receipts u/s. 194A and 194H of the Act to the tune of Rs. 28,83,556/- from M/s. Rajasthan State Beverages Corp. Limited (RSBCL) and M/s. PACL India Limited during the year under consideration. In view of this a notice u/s. 148 of the Act was issued vide dated: 23.03.2018. As the assessee was non-compliant, the case was assessed u/s. 144 r.w.s. 147 of the Act and the whole receipt of Rs. 28, 83,556/- was treated as undisclosed income. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT (A), who in turn dismissed the appeal of the assessee on the ground that the assessee has violated the provisions of section 249(4) (b) of the Act. The assessee being further aggrieved filed the present appeal before us.
3. We have gone through the order of the AO, order of the Ld. CIT (A) and submissions of the assessee alongwith grounds taken before us. It is observed that the assessee under consideration is retail vendor of liquor and TCS of Rs. 40,300/- and TDS of Rs. 2,204/- was already deducted/collected from the assessee on liquor purchase by M/s. RSBCL and as the facts even before the AO and Ld. CIT (A) are self-explanatory that the assessee was retail liquor vendor, the whole number of receipts can’t be the taxable figure. Rather the profit embedded therein only can be taxed.
In the light of above facts, being a retail trader of liquor section 44AD is squarely applicable to the assessee and a profit margin @ 8% on total receipts can be a taxable figure which comes out to Rs. 2,29,680/- (On 28,70,999/-) and Rs. 12,559/- being receipt of commission from M/s. PACL Ltd. Totaling Rs. 2,42,239/-. The whole tax liability on the same would certainly be covered by the amount of TCS and TDS amounting to Rs. 42,504/-. In view of these facts and considering the provisions as contained in section 249(4)(b) of the Act alongwith the scheme of advance tax, the decision of the Ld. CIT(A) in dismissing the appeal on the ground of section 249(4)(b) of the Act found to be erroneous. In the result, Ground No. 1 raised by the assessee is allowed and technically matter should have been restored back to the file of the Ld. CIT (A) for reconsideration based on the facts of the case and law applicable. But as the all-pertinent facts are available on record before us and to avoid another round of hearing and wastage of public time and money, we deem it fit to adjudicate the matter, taking into consideration the Ground No.2 raised by the assessee.
The facts that the assessee under consideration is a retail liquor vendor is not under challenge. In view of this, we don’t hesitate in holding that the provisions of section 44AA of the Act squarely applicable to facts of the assessee. In the light of above, the AO is directed to determine the income of the assessee @8% on the total receipt and calculate the tax liability of the assessee accordingly after giving credit of TCS and TDS already deducted and reflected in Form No. 26AS. Resultantly, Ground No. 2 raised by the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on the 13th Day of March 2025.