2024 (2) TMI 154 - AT - Income Tax

Scrutiny assessment - Validity of assessment framed u/s 143(3) - Whether AO have examined the issues beyond his jurisdiction as conferred upon him under the limited scrutiny ? - HELD THAT - Admittedly the notice u/s 143(2) was issued for initiating the scrutiny assessment u/s limited scrutiny category to examine the issue regarding contract receipts / fees have been correctly offered for Tax or not. AO while examining the issue has examined all the receipts as emanating from Form 26AS of the assessee where the TDS have been deducted u/s 194C - AO further issued the questionnaire to the assessee and accordingly have come to know that the assessee have shown business income u/s 44AD and 44AE. Since the AO have come to know about the nature of the income of the assessee only after submissions of the assessee, therefore, it cannot be said that the Ld. AO have examined the issues beyond his jurisdiction as conferred upon him under the limited scrutiny mandate. Under such facts and circumstances ground no. 1 of the assessee is dismissed. Undisclosed profit from contract work and transport income - HELD THAT - The assumptions made by Ld. AO are without any basis, on the contrary the basis adopted by the Ld. AO was itself conflicting at places when the percentage of profit was calculated on the basis of turnover in 26AS, but have presumed that the turnover shown in 26AS was not considered by the assessee in the returned income, Ld. AO also presumed that the deemed profit u/s 44AE was not included in the profit shown by the assessee in ITR was again on the basis of presumption without any concrete evidence. Thus having no further information or decision contradicting the submissions and contentions of the Ld. AR, we find no basis to approve both the additions made by the Ld. AO, thus, we direct to delete the same. In result ground no. 2 3 of the assessee s appeal are allowed.

Summary

Issues involved:
The judgment involves issues related to the validity of assessment under section 143(3) of the Income Tax Act, 1961, addition of undisclosed profit from contract work, addition of transportation income, and condonation of delay in filing the appeal.

Validity of Assessment under Section 143(3):
The appeal challenged the assessment under section 143(3) without obtaining prior approval to convert limited scrutiny into complete scrutiny. The assessing officer proceeded without complying with CBDT instructions. The tribunal dismissed this ground, stating that the assessing officer acted within the limited scrutiny mandate.

Addition of Undisclosed Profit from Contract Work and Transportation Income:
The assessee contested the additions made by the assessing officer, arguing that the profits declared were in line with provisions of sections 44AD and 44AE. The assessing officer presumed additional contract receipts without concrete evidence, leading to double taxation. The tribunal found the assessing officer's assumptions baseless and directed the deletion of the additions, as they lacked factual basis.

Condonation of Delay in Filing the Appeal:
The delay in filing the appeal was attributed to postal system delays, beyond the assessee's control. The tribunal granted condonation of the two-day delay and allowed the appeal for hearing.

Conclusion:
The tribunal partially allowed the appeal, dismissing the challenge to the assessment validity but directing the deletion of additions related to undisclosed profit from contract work and transportation income. The general and academic nature of one ground did not require separate adjudication.