KOYYA GANGA VENKATA SATYA BHASKAR RAO,EAST GODAVARI DIST vs. INCOME TAX OFICER, WARD-1, TUNI

Brief facts of the case are that the assessee, deriving income from running a rice mill, hatchery and from plying of lorry, filed his return of income on 31.03.2018, declaring total income of Rs.5,06,030/-, transportation charges of Rs.4,96,177/- received from A.P.Civil Supplies for transportation of paddy, which was addmitted as agricultural income by mistake. The return was processed by the CPC and the intimation u/s 143(1) of the Act was issued on 05.09.2018, wherein, the agricultural income was disallowed and addition was made under the head “income from other sources” and the total income was determined at Rs.10,02,210/-. The assessee noticed that there was a mistake crept in admitting the transportation charges as agricultural income, therefore, filed a petition for rectification of the intimation, explaining that the amount admitted under agricultural income was actually the transport charges received from AP Civil Supplies and the assessee had no agricultural income. The assessee further submiited that as the amount of Rs.4,96,177/- was gross transport receipts, making additon of the entire amount in the intimation is not correct. The assessee submitted revised computation of income, wherein, he admitted income of Rs.90,000/- from plying of lorry, computed in terms of section 44AE of the Act and requested the AO to rectify the intimation by accepting the income admitted and by deleting the addition of Rs.4,96,177/- made under the head “income from other sources”. The AO passed Rectification Order u/s 154 of the Act, without accepting the claim of the assessee. The AO stated that the assessee claimed the tax of Rs.9,914/- deducted at source by the AP Civil Supplies and hence, the CPC rightly made the additon of the corresponding income.

Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal :

The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.

With regard to Ground No.2, the only contention of the Ld.AR is that the assessee wrongly reported Rs.4,96,177/- as agricultural income in the return of income, but it is contract charges as per Form 26AS. Without appreciating the said fact, the AO(CPC) made disallowance, considering the transport charges of Rs.4,96,177/- as business income of the assessee. Apart from this, the assessee as per section 44AE has admitted income of Rs.90,000/- against the receipt of Rs.4,96,177/-. Moreover, the assessee had also deducted TDS u/s 194C of the Act. Therefore, pleaded that considering the same, the Hon’ble Tribunal may be pleased to set aside the erroneous order passed by the Ld.AO and allow the appeal of the assessee.

On the other hand, the Ld.DR argued that the assessee himself filed the return of income, showing the agricultural income of Rs.4,96,177/-. But the assessee has not filed any proof in support of his agricultural income. Hence, the AO rightly treated the amount of Rs.4,96,177/- as business income of the assessee and made the assessment. Therefore, pleaded to uphold the orders passed by the lower authorities.

I have heard both the parties and perused the material placed on record. After considering the arguments of both the counsels, I am of the view, that it is an undisputed fact that the assessee is not having any agricultural income, but, the assessee is having transport business and thereby earned income of Rs.4,96,177/- and also deducted TDS u/s 194C of the Act. The assessee is having only one lorry, therefore, the provision of section 44AE is applicable. Considering the TDS deduction, I have no desitation to come to the conclusion, that the assessee earned this income of Rs.4,96,177/- only from his transport business, therefore, section 44AE is applicable and the assessee has already admitted Rs.90,000/- as income from transport business, therefore, the AO is not justified to ignore the statutory provision of section 44AE and treat this income as business income of the assessee, just based on the mistake committed by the assessee, i.e. showing the receipt as agricultural income. Hence, I direct the AO to treat the income of the assessee as Rs.90,000/- u/s 44AE of the Act.

In the result, appeal of the assessee in is allowed and I.T.A.No.146/Viz/2023 is dismissed in-limine as not pressed.