2023 (4) TMI 814 - AT - Income Tax

Addition of entire professional receipts as 100% business profit of the appellant - Denial of benefit of Life Insurance Premium, housing loan interest and repayment of housing loan - HELD THAT - We note that assessee has filed his return of income in compliance to notice u/s 148 and subsequently claimed the TDS deducted on his professional receipts and other TDS deducted on the interest income etc. NFAC/Ld. CIT(A) did not consider assessee s case in accordance with law and confirmed the action of Assessing Officer blindly. Assessee is a small professional and his gross receipts are to the tune of Rs.6,34,765/- only. Therefore, we are of the view that it is justifiable to tax income at the rate of 8% of professional receipts. Therefore, we direct the Assessing Officer to consider the income of the assessee to the tune of Rs.50,781/- on account of professional receipts for the assessment year 2010-11 and frame de novo assessment after giving TDS benefit and deduction under Chapter-VIA of the Act. Appeal of the assessee is allowed.

Summary

Issues Involved:
The issues involved in the judgment are the addition of entire professional receipts as business profit, assessment without considering certain benefits, and the failure to submit explanation regarding professional receipts.

Addition of Professional Receipts as Business Profit:
The appeal pertains to the assessment year 2010-11 and challenges the addition of professional receipts of Rs.6,34,765 as 100% business profit. The assessing officer noted that the assessee, engaged in professional consultancy, did not file a return of income for the relevant year. Despite a notice u/s 148, the assessee did not offer the professional receipts for taxation or provide an explanation. Consequently, the assessing officer treated the professional receipts as unaccounted income and added it back to the total income.

Assessment Without Considering Benefits:
The appellant contended that the assessing officer erred in assessing the total income without allowing benefits such as Life Insurance Premium, housing loan interest, and repayment of housing loan. The appellant argued that the professional income was subject to Tax Deducted at Source (TDS) under section 194J of the Income Tax Act, which was not considered. Additionally, the appellant claimed entitlement to deductions under Chapter-VIA, specifically sections 80CCC and 80D. The appellant sought the benefit of TDS deduction and Chapter-VIA deductions.

Failure to Submit Explanation Regarding Professional Receipts:
The appellant failed to submit an explanation regarding the professional receipts despite being asked by the assessing officer. The lack of response led to the treating of the professional receipts as unaccounted income. The appellant's subsequent filing of the return after the assessment order was deemed invalid, as it was filed post the order. The contention that the appellant had filed the return in response to the notice u/s 148 was not accepted, resulting in the addition of Rs.6,34,765 being upheld.

Decision:
The appellate tribunal allowed the appeal in favor of the assessee. It noted that the assessee, due to ill health, could not appear before the assessing officer, leading to an ex parte order. Despite submitting documents and written submissions before the NFAC/Ld. CIT(A), the addition made by the assessing officer was confirmed without due consideration. The tribunal directed the assessing officer to tax the income at 8% of the professional receipts, amounting to Rs.50,781, for the assessment year 2010-11. The assessing officer was instructed to frame a de novo assessment, considering the TDS benefit and deductions under Chapter-VIA of the Act.