ATISH BHAU PATIL,PALGHAR vs. ITO- 1, PALGHAR

PDF · subscribers
ITA 3042/MUM/2018Status: DisposedITAT Mumbai21 May 2019AY 2014-154 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the AO to assess the assessee under Section 44AD of the Act on a presumptive basis. It was held that no further disallowance should be made after computing income under Section 44AD.

What were the facts?

The assessee, a civil contractor, declared a net profit of 5.82% on gross receipts. The AO disallowed expenses on an ad-hoc basis after the assessee failed to explain them. The CIT(A) confirmed this disallowance.

What were the issues?

Whether ad-hoc disallowance of expenses is permissible after computing income on a presumptive basis under Section 44AD. Whether the ad-hoc disallowance resulted in a higher rate of return than prescribed under Section 44AD.

Which sections of the Income-tax Act were involved?

Section 44AD,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

For Appellant: Shri Mandar Vaidya, AR

आयकर अपीलीय अधिकरण “A” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI श्री महावीर स ुंह, न्याययक दस्य एवुं श्री एन. के. प्रिान लेखा दस्य के मक्ष । BEFORE SRI MAHAVIR SINGH, JM AND SRI NK PRADHAN, AM Aayakr ApIla saM./ (inaQa-arNa baYa- / Assessment Year 2014-15) Atish Bhau Patil The Income Tax Officer, At: Kirawali, Post: Warale, Aayakar Bhavan, PIDCO Vs. Tal: WADA Road, Palghar, Tal: Dist: Palghar, Maharashtra Palghar, Dist. Palghar (ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent) स्थायी लेखा सं./PAN No. ALTPP6914E अपीलाथी की ओर से / Appellant by : Shri Mandar Vaidya, AR प्रत्यथी की ओर से / Respondent by : Shri R.A Dhyani, DR सुनवाई की तारीख / Date of hearing: 14-05-2019 घोषणा की तारीख / Date of pronouncement : 21-05-2019 AadoSa / O R D E R महावीर स ुंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:

This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-3, Mumbai [in short CIT(A)], in appeal No. 10749-THN/16-17, dated 01.03.2018. The Assessment was framed by the Income Tax Officer, Ward-1, Palghar (in short ITO/ AO) for AY 2014-15 vide order dated 28.12.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in further disallowance of expenses on adhoc basis after computing the income under presumptive basis under section 44AD of the Act. For this assessee has raised the following two grounds: - “1. The Ld. CIT(A) fell in error of law in not appreciating that once income is computed on presumptive basis, u/s. 44AD of the Act, there can be no further disallowance of expenses on ad hoc basis.

2.

The Ld. CIT(A) failed to consider that the ad hoc disallowance of expenses would result into a rate of return much more than the rate prescribed u/s. 44AD.”

3.

We have heard the rival contentions and gone through the facts and circumstances of the case. Briefly stated facts are that the assessee is a civil contractor and declared net profit at the rate of 5.82% on the gross contract receipt of Rs. 2,47,70,640/-, thereby declared the profit amounting to Rs. 14,41,700/-. The AO require the assessee to explain the expenses claimed and as the assessee could not explain the expenses, he disallowed the expenses of Rs. 42,69,577/- claimed on account of purchase, wages and labour payments, labour transport charges, repair and maintenance, travelling and conveyance, Sundry expenses, Telephone Expenses, Electricity Expenses, Printing & Stationary Expenses, Staff welfare expenses and power/ fuel & Oil expenses. Aggrieved, assessee preferred the appeal before CIT(A), before CIT(A) the assessee claimed that the AO was not justified in 3 disallowing 20% of expenses on adhoc basis and required the CIT(A) to treat the assessee as Civil Contractor and assess under section 44AD of the Act on presumptive basis at the rate of 8% of the gross contract receipt. But the CIT(A) has not accepted the contention of the assessee and dismissing the appeal of assessee confirming the disallowance of expenses. Aggrieved, now assessee is in appeal before Tribunal.

4.

We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the assessee is a civil contractor and declared net profit at the rate of 5.82%. But now, the assessee is asking for assessment u/s44AD of the Act and hence, he should be assessed under these provisions. Hence, we direct the AO to assess the assessee under section 44AD of the Act and accordingly, compute the income and make assessment. The AO will not make any further disallowance after assessing the income of the assessee under section 44AD of the Act. We direct the AO accordingly. 5. In the result, the appeal assessee is partly allowed.

Order pronounced in the open court on 21.05.2019. (एन. के. प्रधान/ NK PRADHAN) (महावीर ससंह /MAHAVIR SINGH) (लेखा सदस्य / ACCOUNTANT MEMBER) (न्याययक सदस्य/ JUDICIAL MEMBER) मुंबई, ददनांक/ Mumbai, Dated: 21.05.2019. दीप रकार, व.यनजी धिव / Sudip Sarkar, Sr.PS

More judgments on Section 44AD

All 2,222 judgments and leading authorities on Section 44AD →

Recent GST High Court judgments

Search GST case law →