Parvej Sheikh Vs ITO (ITAT Jaipur)
No Expense Claimed, No Expense Can Be Disallowed: ITAT Deletes CBEC Import Difference Where Business Income Was Offered Presumptively u/s 44AD
Summary: The Jaipur Bench of the Income Tax Appellate Tribunal has held that where business income is computed presumptively u/s 44AD by applying the prescribed percentage to turnover, a separate addition cannot be made by disallowing an alleged business expenditure because the assessee has not claimed any actual expenditure while computing taxable income.
The Tribunal accordingly deleted an addition of ₹4,53,222, representing the difference between import data available with CBEC and the figures reflected in the assessee’s presumptive return. The Tribunal also adopted a liberal approach in condoning delays caused by the death of the assessee’s consultant during the COVID-19 period and a subsequent change in professional counsel.
Difference in Import Figures Leads to Addition
The assessee had commenced the business of manufacturing e-rickshaws during AY 2018-19. His case was selected for scrutiny based on information received from CBEC regarding imports of ₹4,53,222.
The assessee had imported machinery from China valued at approximately ₹29.17 lakh and made payments of about ₹28.47 lakh after receiving a discount from the foreign vendor.
The assessee declared his business income on a presumptive basis u/s 44AD by applying the rate of 8% to his gross turnover. He did not prepare the computation by separately claiming deduction of each business expenditure.
