SAAN GLOBAL,NOIDA vs. ITO (TDS), NOIDA

Case called twice. None appears at the assessee’s behest. She is accordingly proceeded ex-parte.

Learned departmental representative at the outset invites the tribunal’s attention to the CIT(A)/NFAC’s lower appellate discussion rejecting the assessee’s presumptive taxation benefit claim u/s 44AD of the Act reading as follows:

“6.1 In the assessment order the AO stated that the said company, i.e. M/s Payswiff Solutions Pvt. Ltd. considered the payment on account of professional Sonal Purushottam Agarwal services rendered by the appellant and hence TDS was made under section 194J of the Income Tax Act. If the payment was in the nature of contractual services, the TDS would have been made under section 194C. The appellant could produce only a sample project report prepared by himself which was aimed for submitting proposal to Allahabad bank for MOPS/POS solution on referral model on behalf of the company. The AO stated that the appellant acted as an agent on behalf of company and submits proposal which is nothing but in the nature of an agent or an employee of the company. If it was an agency, the appellant was liable to maintain books of accounts under section 44ADA as per act and the gross turnover exceeded the limit of Rs.1,20,000 during the financial year 2018-19. Hence appellant was not entitled to claim the benefit of presumptive income under section 44 AD as the receipt was in the nature of rendering professional services which is confirmed through TDS made under section 194J by the company. Moreover the appellant was rendering service to only one company and that too for a very short period. The AO further stated that the presumptive income is not allowable where the assessee has not voluntarily disclosed income by filing his return. Thereby the income from profession was determined at Rs.13,90,000 reduced by Rs.1,11,000 as declared in the return filed under section 148 of the Act. The balance of Rs.12,78,800 was added to the income as income from profession chargeable under Section 28 of the Act. 6.2 The nature of business as declared by the appellant before this office is market research and public opinion polling which was declared in the ITR. The contention of the appellant is that mere TDS u/s 194J by service receiver does not prove the nature of business of the appellant. After examination of the assessment order and submissions made at the time of appeal proceedings, it is seen that the appellant failed to produce any documentary evidence with regard to his contract with M/s Payswiff Solutions Pvt. Ltd. He has only produced sample proposals shared during his assignment to some of the customers and his service was nothing but to travel to multiple locations and reach out to banks prospective clients of the company and sale the products to the customers which doesn't come under the nomenclature of profession and hence he has claimed as per provisions of section 44AD of the Act. The explanation given by the appellant in this regard is not acceptable as no copy of agreement or contract has been produced against the contract value of Rs.13,90,000. In consideration of the TDS made under section 194J of the Act by the service provider, addition made by the AO of Rs.12,78,800 is found to be correct. Therefore, Sonal Purushottam Agarwal considering the facts and circumstances of the case and material on record, as the appellant failed to prove the nature of income, the action of the AO in treating the entire Rs. 13,90,000/- as professional receipts and making the resultant addition of Rs. 12,78,800/- to the returned income is upheld and the ground raised in this regard is dismissed.”

4. Suffice to say, it has come on record that both the learned lower authorities have quoted the assessee’s failure in not filing or proving all the relevant details so as to be eligible section 44AD presumptive assessment.

That being the case and in the larger interest of justice it is deemed appropriate to restore the assessee’s instant sole substantive ground back to the assessing authority for fresh appropriate adjudication within three effective opportunities subject to a rider that assessee shall plead and prove the case at his own risk and responsibility, in consequential proceedings. Ordered accordingly.