Taxpayer Filed ITR u/s 44AE By Mistake Although 44AD Applicable: ITAT Directs Fresh Verification of Transport Business Receipts [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) directed fresh verification in a case where the taxpayer claimed that he had filed return under Section 44AE by mistake, though Section 44AD was applicable to his transport business receipts.

Karam Veer, the assessee, had not filed return of income under Section 139 for AY 2012-13. The Assessing Officer received information that the assessee had deposited Rs.19,88,450 in cash in his Oriental Bank of Commerce account during FY 2011-12.

The AO also observed that the sources of mutual fund investments, time deposits and interest income remained unsubstantiated. Notice under Section 133(6) was issued, but there was no response. The assessment was reopened under Sections 147 and 148.

During reassessment, the AO issued notices under Sections 142(1) and 143(2). The assessee did not properly comply. The AO added Rs.19,88,450 as unexplained cash deposits and Rs.14,98,774 as unexplained bank credits. The AO also disallowed deduction of Rs.1,00,000 claimed under Chapter VIA for want of evidence.

Before the CIT(A), the assessee claimed that he had filed return on 25.09.2019 in response to notice under Section 148 and had opted for presumptive taxation under Section 44AE. He filed additional evidence. The CIT(A) called for a remand report, but the AO stated that the file was not opening. The CIT(A) refused to admit the additional evidence and upheld the additions.

Before the ITAT, the assessee’s counsel argued that there was a bona fide mistake in filing the return under Section 44AE. They argued that the assessee was in the transportation business, operated more than 10 trucks, and Section 44AD was applicable. The assessee also argued that returns for later years were filed under Section 44AD and accepted by the department.

The revenue counsel argued that the assessee had not filed details even for later years and had failed to substantiate the deposits.

The single-member bench of Ramit Kochar, Accountant Member, observed that the assessee’s evidence and explanations had not been properly examined by the lower authorities.

The tribunal set aside the orders of the AO and CIT(A). It remanded the matter to the AO for de novo assessment and directed the AO to admit the evidence filed by the assessee. The tribunal also directed that the assessee may be allowed to claim Section 44AD benefit if he satisfies the statutory conditions.

The appeal was allowed for statistical purposes.

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