Harjot Singh Vs Principal Commissioner Income Tax-Central (Punjab High Court)
Assessment of Income Under Section 44AD instead of 44ADA: HC Upholds Section 263 revision
In a recent ruling, the Punjab and Haryana High Court upheld the Principal Commissioner of Income Tax-Central’s (PCIT) revision order under Section 263 of the Income Tax Act, 1961, in the case of Harjot Singh. The court confirmed that the assessment should have been conducted under Section 44ADA, not Section 44AD.
Case Background: The appeal was filed against an order by the Income Tax Appellate Tribunal (ITAT), which affirmed the PCIT’s decision that the assessment made by the Assessing Officer (AO) was erroneous and prejudicial to the revenue. The AO had assessed the income under Section 44AD, but the PCIT argued that it should have been assessed under Section 44ADA.
Assessment Dispute: During a search operation, Harjot Singh surrendered additional income of Rs. 15,11,555. The AO assessed the income considering it under Section 44AD, arriving at a total income of Rs. 39,15,840 for the assessment year 2018-19.
PCIT’s Revision Order: The PCIT noted discrepancies in the assessment, stating that the professional receipts and related expenses should have been evaluated under Section 44ADA, which mandates a 50% assessment of professional receipts. The surrendered income should have been assessed under Section 115BBE at a special rate.
