TaxTMI 
TaxTMI 
2025 (12) TMI 1354
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....the appellant is opposed to law, equity and weight of evidence, probabilities, facts and circumstances of the case. 2. The authorities below has failed to appreciate that inference can be drawn from the rate specified under the first proviso to section 44AD of the Income Tax Act, 1961 ("the Act"), though section 44AD is not applicable on the facts and circumstance of the case. 3. The authorities below ought to have taken guidance from the past profit percentage declared by the appellant and the industry average while estimating the income for the impugned assessment year on the facts and circumstances of the case. 4. The learned CIT(A) has failed to take cognizance of the fact that for the assessment year 2020-21,....
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.... works to the various Govt. agencies and received the payment through the Banking channels. The Government deducted the TDS amount u/s. 194C of the Act which was also duly reflected in Form 26AS. The assessee filed his return of income in Form ITR 2 even though his income comprises of business income since the portal had not accepted the return in ITR 4 without any audit report where the gross receipts exceeds Rs. 2 crores. In order to avoid delay in filing the return, the assessee filed the return in ITR 2 within the extended time and shown the income as income from other sources. In any event, the entire contract receipts are reflected in Form 26AS on which TDS was deducted. 3. The AO issued notice u/s. 143(2) of the Act on 01.06.2023 ....
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....rns. 5. The AO had not accepted the explanations and confirmed his proposals for the following reasons: 1) The estimation of income u/s. 44AD is not applicable to income from other sources 2) Assessee had not maintained regular books 3) Assessee had not proved that the expenses are incurred for earning the said income. The AO had disallowed the entire claim including the GST component and assessed the entire contract receipts as income from other sources. 6. As against the order of the AO, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) accepted that the assessee is doing the contract business and he should be assessed under the head "Profits & Gains of business or profession". The ....
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....& Gains of Business or Profession". Therefore the Ld.CIT(A) had changed the head of income as business income. Thereafter the Ld.CIT(A) had estimated the profit margin at 10% instead of 6% calculated by the assessee. 12. Right from the beginning, the assessee submitted that he earned net profit at 6.4% and 6% in respect of the A.Ys. 2020-21 and 2021-22 which was accepted by the Department. The assessee had also established that when the turnover increases, automatically the profit margin would get decreased but the assessee had shown the profit margin at 6%. From the various documents filed by the assessee, we cannot come to the conclusion that the profit margin adopted at 6% is not correct. 13. We have also perused the judgment of th....
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.... to the tribunal for fresh consideration in the light of the observations made above. In that view of the matter, the substantial question of law is answered in favour of the assessee and against the revenue and appeal is partly allowed." 14. We have also perused the judgment of the Hon'ble Madras High Court reported in (2013) 39 taxmann.com 10 (Mad) in the case of K. Kannan vs. ACIT wherein it was held as follows: "8. Before the Commissioner of Income Tax (Appeals), the assessee submitted that the total income of the assessee was not exceeding 4% at anytime in the preceding year when the turnover was low and that high percent of net profit in the assessment year 2006-07 was not possible when the turnover was high i.e. above Rs.....
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.... in the earlier years to refix the income at 5% of the gross turnover. Consequently, we do not find any justification in the Tribunal straightaway restoring the assessment at 8% of the gross turnover without any discussion on the merits of the Commissioner of Income Tax (Appeals) order. In the circumstances, after going through the order of the Commissioner of Income Tax (Appeals), we have no hesitation in restoring the order of the Commissioner of Income Tax (Appeals) and thereby set aside the order of the Tribunal." 15. The principles laid down by the Hon'ble High Court in the above judgments would support the case of the assessee. In the present case also, the assessee adopted the profit margin at 6% by taking a clue from the earlier ....