2023 (10) TMI 379 - AT - Income Tax

Determination of income on presumptive basis - Determination of the income in accordance with the provisions of section 44BB - assessee s nature of business is to provide services and facilities for prospecting/ extraction/ production of mineral oil - HELD THAT - As relying on assessee s own case for AY 2011-12 2023 (10) TMI 311 - ITAT DEHRADUN we note that the Tribunal has elaborately considered the contract and provisions of law and finally come to the conclusion that income of the assessee should be determined on presumptive basis as per section 44BB(1) of the Act in the peculiar facts and circumstances of the case. We respectfully follow the same and direct accordingly.

Issues Involved:
1. Addition of Rs. 68,32,902/-
2. Opportunity to be heard and principles of natural justice
3. Computation of income u/s 44BB(1)
4. Computation of income u/s 44DA
5. Disallowance of cost of materials (Rs. 493,200/-)
6. Disallowance u/s 40a(ia) for non-deduction of TDS (Rs. 10,78,358/-)
7. Denial of depreciation and amortization claim (Rs. 49,75,184/-)
8. Disallowance of unverifiable expenses (Rs. 11,660/-)
9. Disallowance of prior period expenses (Rs. 2,74,500/-)
10. CIT(A)'s failure to consider grounds appealed
11. Initiation of penalty u/s 271G

Summary:

1. Addition of Rs. 68,32,902/-:
The assessee contested the addition proposed by the AO in the order passed u/s 143(3)/144C of the Act. However, this specific ground was not pressed by the assessee's counsel during the proceedings.

2. Opportunity to be heard and principles of natural justice:
The assessee argued that the AO did not afford a proper opportunity to be heard, which violated the principles of natural justice. This issue was not elaborated upon in the judgment.

3. Computation of income u/s 44BB(1):
The primary issue raised by the assessee was regarding the computation of income u/s 44BB(1). The Tribunal noted that in the preceding assessment year (AY 2011-12), the same contract was examined, and it was concluded that the assessee's nature of business falls within the ambit of section 44BB. The Tribunal followed its previous decision and directed that the income should be determined on a presumptive basis as per section 44BB(1).

4. Computation of income u/s 44DA:
The AO computed the income under section 44DA, but the Tribunal, following its earlier decision, held that the income should be computed under section 44BB(1) instead.

5. Disallowance of cost of materials (Rs. 493,200/-):
The AO disallowed Rs. 493,200/- claimed for the purchase of chemicals due to lack of evidence. The Tribunal upheld this disallowance as the assessee could not provide the necessary documentation.

6. Disallowance u/s 40a(ia) for non-deduction of TDS (Rs. 10,78,358/-):
The AO disallowed Rs. 10,78,358/- for non-deduction of TDS. The Tribunal did not specifically address this issue in detail, as the primary issue of computation under section 44BB(1) was resolved in favor of the assessee.

7. Denial of depreciation and amortization claim (Rs. 49,75,184/-):
The AO denied the claim for depreciation and amortization expenses of Rs. 49,75,184/-. The Tribunal did not delve into this issue, as the main contention regarding section 44BB(1) was resolved.

8. Disallowance of unverifiable expenses (Rs. 11,660/-):
The AO disallowed Rs. 11,660/- on the grounds that the expenses could not be verified. This issue was not specifically addressed by the Tribunal.

9. Disallowance of prior period expenses (Rs. 2,74,500/-):
The AO disallowed Rs. 2,74,500/- treating it as prior period expenses. The Tribunal did not specifically address this issue in detail.

10. CIT(A)'s failure to consider grounds appealed:
The assessee contended that the CIT(A) did not consider the grounds appealed after admitting the appeal u/s 246A. This issue was not specifically addressed by the Tribunal.

11. Initiation of penalty u/s 271G:
The assessee argued against the initiation of penalty u/s 271G. The Tribunal noted that the plea against the initiation of proceedings u/s 271G was premature and did not require directions at this stage.

Conclusion:
The appeal of the assessee was allowed primarily on the grounds that the income should be computed under section 44BB(1) as per the Tribunal's previous decision. Other issues were not pressed or were rendered academic due to the resolution of the primary issue.

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