Neeraj Dewangan Vs ITO (ITAT Raipur)
The Income Tax Appellate Tribunal (ITAT), Raipur, dismissed the assessee’s appeal against the order of the CIT(Appeals)/NFAC dated 19.03.2026 for Assessment Year 2024-25, upholding the application of the presumptive taxation provisions under Sections 44AA and 44ADA of the Income Tax Act. The assessee had filed the return under Section 139(1) by declaring presumptive income under Section 44AD and reported total income of ₹6,92,100. The assessee operated a proprietorship concern, M/s Geophoenix, engaged in execution-based and support services, including liaison and facilitation for obtaining statutory NOCs from Government Departments and coordinate marking as per clients’ instructions.
The case was selected for scrutiny under CASS on the ground that substantial receipts were subjected to TDS under Section 194J while income had been declared under Section 44AD instead of Section 44ADA. During assessment, the Assessing Officer issued notices under Sections 143(2), 142(1), and 133(6) to the assessee and certain clients. The clients confirmed deduction of tax at source under Section 194J on receipts aggregating to ₹37,80,000. The Assessing Officer treated the receipts as professional income covered by Section 44ADA and made an addition of ₹14,17,500.
Before the CIT(A), the assessee contended that deduction of TDS under Section 194J by clients was beyond his control and could not determine the nature of income. The CIT(A) observed that the assessee had not produced any corrected Form 26AS or other corroborative evidence to support the claim that Section 44AD remained applicable. Accordingly, the addition made by the Assessing Officer was confirmed and the appeal was dismissed.
Before the Tribunal, the assessee sought to contend that Section 44ADA was inapplicable. The Tribunal examined Sections 44ADA and 44AA together and noted that Section 44AA specifically includes “technical consultancy” within the professions covered. Referring to the nature of the assessee’s activities, namely execution-based and support services involving liaison, facilitation for obtaining statutory NOCs, and coordinate marking, the Tribunal observed that such work could not be performed by a layman and required specific technical skill and knowledge. On that basis, the Tribunal held that the assessee’s activities fell within the expression “technical consultancy” under Section 44AA read with Section 44ADA.
Finding no infirmity in the order of the CIT(A)/NFAC, the Tribunal upheld the application of Section 44ADA and dismissed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 19.03.2026 for the assessment year 2024-25 as per the grounds of appeal on record.
2. The brief facts in this case are as follows:
“4.2 The brief of the case is that the appellant filed his return of income u/s 139(1) of the Act by adopting presumptive income u/s 44AD of the Act and declared total income u/s 6,92,100/-. The appellant is running proprietorship concern by the name of M/s Geophoenix engaged in execution-based and support services which includes liaising and facilitation for obtaining statutory NOCs from Government Department and coordinate marking as per client instruction. The appellant’s case was selected for scrutiny under CASS for the following reasons: –
a) “Substantial receipts u/s.194J and income shown u/s 44AD instead of 44ADA.”
The AO issued notices u/s 143(2) and 142(1) of the Act, letter and show cause notice. The AO requested the appellant to offer his explanation in regards his client details, his receipts from clients and tax deduction details. Subsequently, the AO issued notices u/s 133(6) to the appellant’s clients namely M/s MSP Steel & Power Ltd, M/s Indoves Industrial Pvt Ltd and M/s Satya Power and Ispat Pvt Ltd. The response received from the above clients of the appellant, confirmed that the TDS on the receipts from them are deducted u/s 194JB of the Act. Further, the appellant offered his explanations, the AO upon perusal of the submissions made by the appellant held that the total receipts is of Rs.37,80,000/- on which TDS u/s 194JB is deducted. The AO added Rs.14,17,500/- (Rs.18,90,000/-minus Rs.4,72,500/-) u/s 44ADA to the income of the appellant.”
3. The Ld. CIT(Appeals)/NFAC on this issue has held and observed as follows:
“Ground Nos.1 and 2: –
The ground Nos. 1 and 2 raised by the appellant are interlinked and relate to the addition made by the AO to the tune of Rs.14,17,500/-. The AO in his order narrated that the appellant had rendered professional/ technical services and during the year under consideration, the appellant was in receipt of Rs.37,80,000/- and on which the TDS was deducted u/s.194JB of the Act. The appellant before the undersigned contended that the deduction of TDS by clients u/s.194J was beyond his control and cannot determine the nature of income in the hands of recipient. That being the case, the appellant is ought to have brought forward the corrected statement of 26AS from his clients in order to substantiate his claim. Further, the appellant did not produce any such corroborative evidence in order to prove his claim and therefore the undersigned find no infirmity in the addition made by the AO by reclassifying the presumptive income declared by the appellant from 44AD to 44ADA. In view of the facts, the claim of the appellant is found to be not acceptable and therefore, the ground Nos.1 and 2 raised by the appellant are dismissed accordingly.
7. In the result, the appeal filed by the appellant is dismissed.”
4. The Ld. Counsel for the assessee tried to declassify the assessee from the rigors of Section 44ADA of the Act. In this regard, it would be relevant to extract the portion of the Section 44ADA & Section 44AA, which reads as follows:
“44ADA. (1) Notwithstanding anything contained in sections 28 to 43C, in case of an assessee, being an individual or a partnership firm other than a limited liability partnership as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), who is a resident in India, and is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head “Profits and gains of business or profession”
“44AA. (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.”
5. Reading both these provisions together, it is observed that the periphery of Section 44AA of the Act is exclusive in nature and is of wide interpretation, wherein, it is written as “……….. or technical consultancy”. The Ld. Counsel read through the type of works which were done by the assessee. Further, as mentioned in the order of the Ld. CIT(Appeals)/NFAC that the assessee is running proprietorship concern by the name of M/s. Geophoenix engaged in execution based and support services including liasing and facilitation for obtaining statutory NOCs from Government Department and coordinate marking as per client instruction. These works cannot be done by a layman and it requires specific technical skill and knowledge to execute for the clients, therefore, as per Section 44AA r.w.s. 44ADA, the assessee falls within the definition of “……………….. or technical consultancy” and hence, Section 44ADA shall be applicable in the case of the assessee. Accordingly, I do not find any infirmity with the findings of the Ld. CIT(Appeals)/ NFAC which is upheld.
6. In the result, appeal of the assessee is dismissed.
Order pronounced in open court on 2nd day of July, 2026.
