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Income Tax Appellate Tribunal, C/“SMC” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI
आदेश / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal is filed by the assessee, aggrieved by the order of the Learned Commissioner of Income Tax(A)-2, Chennai dated 27.07.2017 pertaining to assessment year 2013-14.
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The assessee has raised the following grounds for adjudication.
The order of The Commissioner of Income Tax (Appeals) 2, Chennai dated 27.07.2017 in I.T.A.No.246/CIT(A)-2/2015-16 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in sustaining the completion of assessment u/s.144 of the Act after rejecting the financial statements/accounts furnished for the purpose of estimating the profession income at 8% of the total receipts while rejecting the claim of expenses in the computation of taxable total income without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the reasons given for the estimated addition to impose tax were wholly unjustified and ought to have appreciated that the findings given in relation thereto in the impugned order were wrong, erroneous, unjustified, incorrect and not sustainable in law. 4. The CIT (Appeals) failed to appreciate that having not questioned the genuineness of the expenses incurred in the profession pursued by the appellant, the attempt to make estimated addition should be considered as bad in law. 5. The CIT (Appeals) failed to appreciate that there was no wrong statement of facts for recording the conclusions reached both in the assessment order and in the impugned order and ought to have appreciated that the misreading of financial statements/accounts would vitiate the said finding. 6. The CIT (Appeals) failed to appreciate that the detailed written submissions filed on 24.07.2017 was completely overlooked and brushed aside in recording the wrong findings in para 5 of the impugned order with a view to sustain the estimated addition of Rs.6,61,557/-.
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The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.
2.1 The main grievance of the assessee in the above grounds is tht
Ld.CIT(A) erred in sustaining the estimation of income and thereafter
estimating the income at 8% of the gross receipts.
The brief facts of the case are that the assessee is an
individual, engaged in legal profession and declared gross receipt of `1 lakh from the legal profession and claimed loss of `5,99,852/-.
The ld. Assessing Officer while examining the records observed that the gross receipts was `1 lakh as per Form 26AS and however, there
was another `1,30,000/- as revealed by list of receipts provided by
the assessee. Thus, the AO estimate the gross receipts at `2,30,000/- and estimated the income of assessee at 8% of the gross
receipts by invoking the provisions of the section 44AD of the Act. Thus, he overlooked the loss claimed by the assessee at `5,99,852/-
and computed the income from legal profession at `18,400/-. Thus,
ld. Assessing Officer made total addition to the income of assessee at `6,51,557/-. Aggrieved by the order of ld. Assessing Officer, the
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assessee carried the appeal before the Ld.CIT(A). On appeal,
Ld.CIT(A) upheld the order of ld. Assessing Officer. Against the order
of Ld.CIT(A), now the assessee is in appeal before us.
I have heard both the parties and perused the material on
record. The assessee originally declared the income from profession
as below:-
Excess of expenditure over income 6,43,157 ADD:Inadmissible expenses: Car Maintenance 3,516 Electricity charges 8,947 Driver’s salary 19,200 Depreciation 14,546 46,208 LESS:Income chargeable under separate head:- Interest on SB A/c with banks 2,903 (-)5,99,852
The AO estimated the gross receipts from `2,30,000/- from the legal
profession and he considered the income at `18,400/- and finally, he
added `6,51,557/- to the income of assessee, which is as follows:-
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Particulars Amount (`) Total income as admitted by the assessee 37,33,796/- Add: estimated profit as discussed above 6,51.557/- Total Assessed income 43,95,350/- Demand payable 2,20,770/-
4.1 In my opinion, the above computation is not correct. However,
the estimation of gross receipts at `2,30,000/- from legal profession
is justified as it is based on the evidences furnished by the assessee.
Further, estimating the income at 8% of the gross receipts by
invoking the provisions of the section 44AD is also justified as the
assessee has not maintained proper books of accounts. However,
the computation of income to be read as follows:-
Particulars Amount (`) income house property 45,42,372 Income from profession 18,400 Total (A) 45,60,772 LESS: Deduction Chapter VIA 2,20,770/- u/s.80C : 16,000 u/s.80G 1,96,516 Total(B) 2,12,516 (C) [ (A) - (B) ] Taxable income 43,48,256
Thus, the assessee would get a relief of `47,094/-. It is on account of
wrong computation of income by the ld. Assessing Officer.
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Accordingly, the grounds raised by the assessee in her appeal are partly allowed. 5. In the result, the appeal of assessee is partly allowed. Order pronounced on 05th December, 2017.
Sd/- (चं� पूजार�) (CHANDRA POOJARI) लेखा सद�य /ACCOUNTANT MEMBER
Chennai, Dated the 05th December, 2017. K s sundaram.
आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF