Case Law Details
Mehjabeen Masood Khan Vs ITO (ITAT Mumbai)
Introduction: In a significant judgement, the Income Tax Appellate Tribunal (ITAT) in Mumbai ruled in favor of an assessee who is a production supervisor, asserting that there was no illegality in adopting presumptive taxation under section 44AD. This decision was made in the case Mehjabeen Masood Khan Vs ITO.
Analysis: This ruling becomes significant given the context of the tax dispute. The appellant, engaged as a production supervisor, had not initially filed a return of income for the AY 2015-16. Following a subsequent notice and eventual compliance, the appellant chose to compute income under section 44AD of the Act at 8% of the gross receipts. This approach was rejected by the AO and an addition as undisclosed income under section 68 of the Act of Rs. 14,73,600/- was made, leading to an appeal from the assessee.
The appellant’s contention was that the professional fees were duly explained and offered under section 44AD, with due taxes paid. Thus, they argued that section 68, relating to unexplained cash credits, was not applicable. The key point of contention here was the interpretation and application of sections 44AD and 68 of the Income Tax Act.
The ITAT, after hearing both sides of the argument, sided with the assessee. They ruled that the addition of professional receipts as undisclosed income under section 68 was not tenable, considering the assessee’s adoption of the provisions of section 44AD, which permits the computation of income on a presumptive basis.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
