Shri Thomas Eapen Vs ITO (ITAT Cochin)
The assessee offered income u/s. 44AD, the assessee being a small trader in medicine. There is no dispute that the assessee falls under the provision of sec. 44AD since the turnover of the assessee is less than Rs. 1 crore from eligible business. The Assessing Officer also accepted that the assessee’s case falls under the purview of section 44AD and computed the income declared by the assessee at Rs.3,37,160/-and thereafter made addition towards undisclosed profit u/s. 68 of the Act. In other words, the Assessing Officer has not at all rejected the books of accounts of the assessee. Section 44AD provides that where the assessee is engaged in eligible business as proprietor under that section, a sum equal to 8% of the gross receipts shall be deemed to be the profits and gains of such business. Section 44AD exempts the assessee from maintenance of books of accounts. Once the income of the assessee is accepted u/s. 44AD, now the question arises for our consideration is whether the Assessing Officer could make further additions towards various discrepancies in the books of accounts of the assessee.
Section 44AD of the Act gives an option to the assessee to offer income on presumptive basis. These are special provisions. The assessee has opted for the same and offered to tax income at the rate of 8% of his turnover. The issue is whether, the Assessing Officer can examine statement of accounts in such cases, make additions towards undisclosed purchases, undisclosed expenditure, under valuation of closing stock etc., The turnover declared by the assessee is accepted by the revenue. In our considered opinion such additions go against the spirit of the Act. Section 44AD of the Act was introduced to help the small traders who have difficulties in maintaining books of account and other records. Tax is levied on presumptive basis.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal filed by the assessee is directed against the order of the CIT(A), Kottayam dated 06/08/2018 and pertains to the assessment year 2015-16.
2. At the outset, there was a delay of 231 days in filing the appeal before the Tribunal. The assessee has filed condonation petition alongwith affidavit stating that this appeal should have been filed on or before the 7th November, 2018 counting the period of sixty days from the date of communication of the order, but it could not be so filed due to the reason that he was diagnosed with kidney tumor resulting in removal of left kidney and was hospitalized during the assessment proceedings. Even after obtaining discharge from the hospital, he was constantly under clinical follow ups due to which he was not able to file the appeal within the due date. As and when the assessee got the penalty notice regarding the same assessment, the assessee contacted his authorized representative for further course of action and was advised to file the appeal before the Tribunal. In the above circumstances, he prayed that the delay in filing the appeal before the Tribunal may be condoned and the appeal may be treated as filed within the due date. In support of his claim, the assessee has also filed a copy of medical certificate dated 15/10/2019 and discharge certificate from St. Gregorios Medical Mission Hospital, Pathanamthitta.
3. The Ld. DR has not seriously opposed to the condonation petition.
4. We have gone through the condonation petition. As seen from the facts narrated in the petition, we find that there was sufficient cause for not filing the appeal within the due date and the reason advanced by the assessee is good and sufficient to condone the delay in filing the appeal. Hence, we condone the delay of 231 days in filing the appeal and admit the appeal for adjudication.
5. The facts of the case are that the assessee filed return of income for A.Y. 201516 on 16/03/2017 declaring total income of Rs.3,37,160/-. The assessment u/s. 143(3) of the I.T. Act was completed o 21/12/2017 by assessing the total income at Rs.34,73,680/- after making the following additions:
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