Income Tax Appellate Tribunal - Patna
Rajiv Ranjan,Tucson (Usa) vs Acit, Circle 1, Patna on 30 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
PATNA BENCH, PATNA
(VIRTUAL HEARING AT KOLKATA)
SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
SHRI SONJOY SARMA, JUDICIAL MEMBER
ITA No. 404/PAT/2024
Assessment Year : 2013-2014
Rajiv Ranjan, Vs. ACIT, Circle 1, Patna,
3111 East 4th Street Apartment Assistant Commissioner
213, Tueson, AZ 85716, USA - of Income Tax, Patna -
85716 800001
[PAN: ALWPR8954K]
APPELLANT RESPONDENT
Assessee by : Sh. Avi Sarkar, Advocate
Revenue by : Sh. Manav Adak, Sr. DR
Date of hearing : 21.04.2026
Date of Pronouncement : 30.04.2026
ORDER
PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") by the Ld. Commissioner of Income Tax, (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "the Ld. CIT(A)], dated 2 ITA No.404/PAT/2024 Rajiv Ranjan 29.12.2023, DIN & Order No. ITBA/NFAC/S/250/2023- 24/1059198138(1) on the following grounds of appeal:
"1. Grounds of Appeal I. For that the Ld CIT Appeal has erred in law in not rejecting/ cancelling the assessment order passed u/s 143(3) of the Act by the Ld AO. It is bad in law and void ab-initio as a result of (i) the selection of the scrutiny of the assessee's tax return for AY 2013-14, and (ii) Ld. AO making an assessment by de facto rejecting the assessee's books of account and instead imputing 100% of the assessee's gross receipt as his earned income for AY 2013-14. In other words, the l.d. AO implied that the assessee incurred no expense at all during the year to earn his income from his profession, which is unreasonable and implausible.
2. For that the Ld. CIT (Appeals) has erred in law in not treating the Ld. AO's assessment order being also bad in law on the ground that the 1 d. AO, without applying section 145 of the Act, estimated the assessee's profit @ 100% of the gross receipt and that the Ld. CIT (Appeals), also without applying Section 145 of the Act. "
2. At the outset of hearing, we noted that the appeal filed by the assessee is delayed by 71 days. In this regard, the assessee has filed a condonation petition explaining the reason for not filing appeal within the due date specified in the provision of the Act.
3. On going through the above reasons/explanations, we noted that the assessee had reasonable cause for not filing the appeal within the specified time. Therefore, in line of the judgment of Collector, Land Acquisition vs Mst. Katiji, (1987) 167 ITR 171 (SC), we condone the delay and the appeal is taking for adjudication.
4. Briefly stated the facts of the case are that the assessee is an individual engaged in the business of profession as a management consultant in in Apollo Hospital, filed his return of income on 25.06.2013 declaring income of Rs. 12,21,670/- from profession and other source by 3 ITA No.404/PAT/2024 Rajiv Ranjan opting section 44AD of the Act and determined as professional income @ 20% of gross receipts i.e. Rs. 11,00,000/- (20% of 55,00,000/-). The case was selected for scrutiny and statutory notices were issued to the assessee. On perusal of the computation of income, the AO observed that as per Form No. 26AS, the TDS was deducted @ 10% u/s 194J of the Act and further perusal of certificate dated 18.09.2015 issued by the Apollo Hospital Enterprises Ltd., Chennai, it appears that the assessee engaged in consultant services in the said hospital. The relevant part of the certificate is as under:
"This is to officially state that Apollo Hospitals Enterprises Ltd. had engaged the services of Mr. Rajiv Ranjan for providing advisory services especially with regard to Business Development of AHEL."
5. Apollo Hospital Enterprises Limited has made following payments (INR) with the tax deducted at source @ 20% to Rajiv Ranjan for his advisory services to the AHEL during April 2012 to March 2013. The assessee declared the income u/s 44AD of the Act after referring to section 44AD by the AO. He concluded that the provision of section 44AD of the Act is not applicable to the assessee and he added the entire receipts as income. Accordingly, income was assessed at Rs. 56,21,670/-
6. Aggrieved from the above order, the assessee filed appeal before the Ld. CIT(A). During the course of first appellate proceedings, the assessee filed detailed written submissions after considering the submission of the assessee, the Ld. CIT(A) has held as under:
4ITA No.404/PAT/2024
Rajiv Ranjan "6.2. Section 44AD is for presumptively computing income of businesses whose turnover is less than Rs.1 crore. Under this provision income can be computed at 8% of the gross receipts (or a higher income) instead of declaring income on the basis of detailed books of accounts. Explanation (b)(i) to section 44AD(6), provides that eligible business under this section is "any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE"
Section 44AD (6)(1) provides that this section will not apply to a person carrying on profession as referred to in sub-section (1) of section 44AA. Professions identified in section 44AA are 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. Profession of consultancy comes under section 44AA and is therefore not covered by presumptive provision of section 44AD.
6.3. It may also be noted that where as section D of Chapter IV talks about 'business and profession together, in section 44AD, the reference is only to business and not profession. It is now trite knowledge that there is a difference between profession and business Profession presumes that the assessee has a special knowledge on the basis of which income is earned, business makes no such presumption. Since the appellant is a professional, section 44AD, which is restricted to businesses, is not applicable to him. I therefore uphold the findings of the AO.
6.4. However, it is unjust to tax gross receipts as income of the appellant. In the absence of books, it is not possible to work out the exact income of the appellant. With effect from AY 2017, presumptive taxation for professionals was introduced u/s 44ADA. This section can be taken as a thumb rule to work out the income of the appellant. Under this section, professionals with receipts upto Rs.50 lakhs can declare income at 50% of their gross receipts. In the case of the appellant, gross receipt is more than Rs.50 lakh. Therefore ends of justice would demand that income should be more than 50% of the gross receipts. Accordingly I direct the AO to compute income from profession at 60% of the gross receipt (60% of Rs. 55,00,000 -33,00,000). The balance receipts may be presumed to be the expenses incurred for earning this income.
7. Aggrieved from the above order, the assessee filed appeal before the ITAT.
8. During the course of hearing, the Ld. Counsel reiterated the submission made before the lower authorities. The assessee has filed an additional evidence in the form of agreement without signed in the plain paper and it was not filed during the course of assessment proceedings as well as during the first appellate proceedings.5 ITA No.404/PAT/2024
Rajiv Ranjan
9. The Ld. DR objected for accepting the additional evidence filed by the assessee and the case of the assessee does not fall as per section 44AA(1) of the Act. The case of the assessee comes of the Act as per section 44AA(2). The assessee was required to maintain his books of accounts. The assessee filed return of income u/s 44AD of the Act and declaring income @ 20% of the gross receipts but section 44AD is not applicable since the assessee does not come under "eligible business"
and "eligible assessee" as per section 44AD Explanation (a) & (b) . The assessee has not maintained any books of accounts in spite of the provision of section44AA(2) of the Act is applicable. He filed return of income on presumptive basis of tax u/s 44AD of the Act. On going through the order of Ld. CIT(A) (noted supra) at Para No. 6.2 to 6.4, the Ld. CIT(A) has given relief reasonably .
10. After considering the entire submissions the assessee does not come under the explanation (a) & (b) of section 44AD, since the assessee is not carrying any business activity. In the ordinary commercial parlance the business is understanding as exchange of goods or for any consideration and the rendering services or not covered in the above sence. The assessee is not carrying any business activity. On carefully reading of the order of the Ld. CIT(A), we do not find any infirmity in the order of Ld. CIT(A), the order of Ld. CIT(A) is a reasoned order. Accordingly, we direct to AO to compute the income from profession @ 6 ITA No.404/PAT/2024 Rajiv Ranjan 60% of the gross receipts (60% of Rs. 55,00,000/- = 33,00,000/-), necessary computation shall be followed.
11. In the result, appeal of the assessee is partly allowed Order pronounced on 30.04.2026.
Sd/- Sd/-
(Sonjoy Sarma) (Laxmi Prasad Sahu)
Judicial Member Accountant Member
Dated: 30.04.2026
AK, Sr. P.S.
Copy of the order forwarded to:
1. Appellant
2. Respondent
3. Pr. CIT
4. CIT(A)
5. CIT(DR)
//True copy//
By order
Assistant Registrar, Kolkata Benches