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ITAT allows appeal, deletes addition under sec 40A(3) for AY 2007-08. Presumptive basis return justifies ruling. (3) The appeal was allowed by the ITAT, directing the deletion of the addition made under section 40A(3) of the Income Tax Act for the assessment year ...
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ITAT allows appeal, deletes addition under sec 40A(3) for AY 2007-08. Presumptive basis return justifies ruling. (3)
The appeal was allowed by the ITAT, directing the deletion of the addition made under section 40A(3) of the Income Tax Act for the assessment year 2007-08. The ITAT ruled in favor of the appellant, stating that since the return of income was filed on a presumptive basis under section 44AF, no further disallowance under section 40A(3) could be justified. The ITAT considered the appellant's argument regarding exceptional circumstances under Rule 6DD and supporting evidence, along with precedents cited from previous ITAT decisions, leading to the deletion of the addition.
Issues: Appeal against addition made under section 40A(3) of the Income Tax Act, 1961 for the assessment year 2007-08.
In this judgment, the assessee appealed against the addition of Rs. 2,99,981 made under section 40A(3) of the Income Tax Act, 1961 for the assessment year 2007-08. The main contention was that since the return of income was filed on a presumptive basis under section 44AF, no further disallowance under section 40A(3) could be justified. The appellant argued that the ld. CIT(A) erred in sustaining the addition without considering this aspect. The appellant also claimed that exceptional circumstances under Rule 6DD and supporting evidence in the form of affidavits were ignored by the ld. CIT(A) in confirming the disallowance. During the hearing, the appellant's representative pointed out a similar issue decided in the appellant's favor by ITAT Jaipur Bench in a previous case. The appellant relied on the decision of ITAT Ahemdabad Bench in a related case to support their argument that no further disallowance can be made under section 40A(3) once the return is filed under section 44AF. The ITAT, following previous decisions, allowed the appeal and directed the deletion of the addition, stating that the issues raised by the appellant were covered by previous ITAT orders. The appeal was allowed, and the addition was deleted based on the merits of the case and the precedents cited.
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