The Punjab & Haryana High Court recently upheld the revisional order passed by the Principal Commissioner Income Tax ( PCIT ) under section 263 of the Income tax act as the assessment wrongly passed by the Assessing Officer ( AO ) under section 44ADA of the Act.
Harjot Singh, the assessee is an individual filed his return. Upon search operation, the assessee surrendered an additional income of Rs.15,11,555/- on account of excess stock, construction of residential house and renovation of business premises.
The Income tax Assessing Officer assessed the income from professional usage before depreciation and interest apart from income under section 44AD and reached to the conclusion of overall income to be Rs.39,15,840/- for assessment year 2018-19. The PCIT exercising his revisionary jurisdiction, found the order of the AO was erroneous and prejudicial to the interest of Revenue.
The Bench found that AO has given the benefit to the assessee considering the income in terms of Section 44AD. The Bench noted that the assessment had to be done under the head ‘income from other sources’ under section 115 BBE.
The Division Bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth observed that the assessee had neither got his accounts audited from the accountant nor furnished report of such audit as per provisions of section 44AB of the income tax law. The assessee’s case, prima facie was covered under section 44ADA but the return of Income filed was not in accordance with the provisions of section 44ADA.
The high court dismissed appeal and upheld the order of the PCIT, as the AO is prejudicial to the interest of the revenue.
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