ITO 25(2)(3), MUMBAI vs. SANJAYKUNWAR R .RATHOD, MUMBAI

PDF · subscribers
ITA 5671/MUM/2014Status: DisposedITAT Mumbai10 April 2017AY 2010-113 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) failed to address the AO's primary issue: whether the assessee actually carried out contract works. The CIT(A) seemed to focus on the head of income rather than the genuineness of the contract claim.

What were the facts?

The assessee declared income under Section 44AD based on contract receipts. The Assessing Officer (AO) added the entire contract receipts as income because the assessee failed to appear twice for verification. The CIT(A) deleted this addition, reasoning that TDS was deducted under Section 194C.

What were the issues?

Whether the CIT(A) was justified in deleting the addition of contract receipts without addressing the assessee's failure to prove the genuineness of the contract works.

Which sections of the Income-tax Act were involved?

Section 44AD,Section 194C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” Bench, Mumbai

Before: Shri B.R. Baskaran (AM)& Shri Ramlal Negi (JM)

For Respondent: Shri Aarsi Prasad
Hearing: 10.4.2017Pronounced: 10.4.2017

O R D E R Per B.R. Baskaran (AM) :-

The appeal filed by the Revenue is directed against the order dated 25.6.2014 passed by the learned CIT(A)-35, Mumbai and it relates to A.Y. 2010-11. Solitary issue urged by the Revenue is whether the learned CIT(A) was justified in deleting the addition of ` 37.97 lakhs relating to contract receipts made by the Assessing Officer.

2.

None appeared on behalf of the assessee even though the date of hearing was noted by the assessee on the last occasion. Hence, we proceed to dispose of the appeal ex-parte, without presence of the assessee.

3.

We have heard learned Departmental Representative and perused the record. The assessee had declared business income u/s. 44AD of the Act estimating the income at the rate of 9.08% of the contract receipts of ` 37,98,050/-. In order to verify the veracity and correctness of the claim of carrying on business activity, the Assessing Officer issued summons to the 2 Smt. Sanjaykunwar R. Rathod assessee two times, but the assessee failed to appear before the Assessing Officer. Hence the Assessing Officer assessed the entire amount of contract receipts of ` 37,98,050/- as income of the assessee. The learned CIT(A) deleted the same on the reasoning that payer of the contract amount has deducted tax u/s. 194C of the Act hence there is no reason to doubt or question the head of income in this case. Aggrieved, the Revenue has filed this appeal before us.

4.

We have noticed that the learned CIT(A) did not address the point of the AO that the assessee has failed to prove that she carried on contract works. On the contrary, the learned CIT(A) appears to be under the impression that the issue before her was related to the head of income under which the above said amount was chargeable, i.e., the assessee is questioning the assessment of contract receipts of ` 37.98 lakhs under the head “income from other sources”. Accordingly, the learned CIT(A) has expressed the view that there is no reason to doubt or question the head of income in the instant case when TDS has been deducted u/s. 194C of the Act. Thus, we noticed that the learned CIT(A) has failed to address main issue, viz., whether the claim of undertaking of contract was genuine or not. Under these set of facts, we are of the view that this issue requires fresh examination at the end of the learned CIT(A). Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to her file for adjudicating this issue afresh.

5.

In the result, the appeal filed by the Revenue is treated as allowed for statistical purposes.

Order has been pronounced in the Court on 10.4.2017.

More judgments on Section 44AD

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

Recent GST High Court judgments

Search GST case law →