Chandrashekhar Konduji Pawar Vs CPC (ITAT Nagpur Bench)
Turnover Is Not Income: ITAT Applies Profit Logic u/s 44AD & Cuts ₹7.15-Lakh Gross-Receipt Addition to ₹71,560 in Rectification Appeal u/s 154
Facts of the Case
The assessee, Shri Chandrashekhar Konduji Pawar, was a retired employee of the Border Security Force. After retirement, he commenced a proprietary business of providing security services under the name M/s Shreeji Security Services.
During AY 2017-18, the assessee received gross contract payments of ₹7,15,599. These receipts were reported in Form 26AS, on which tax of ₹14,315 had been deducted at source.
In the return of income, however, the assessee declared only salary income of ₹2,40,000. He did not disclose any income from the security contract business, although he claimed credit for the corresponding TDS of ₹14,315.
While processing the return, the Centralised Processing Centre noticed the contract receipts appearing in Form 26AS. The CPC treated the entire amount of ₹7,15,599 as income from other sources, instead of treating it as gross business turnover from which only the profit element could be brought to tax.
Thus, the gross receipt itself was effectively assessed as income without allowing any deduction for the expenses necessarily incurred in earning the contract revenue.
