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2022 (9) TMI 1249 - AT - Income TaxUnaccounted professional income - Income estimation - Reliance on statements recorded during the survey - applicability of provisions of section 44ADA - AO allowed the deduction of 25% towards the expenses out of the total undisclosed professional income disclosed by the assessee and concluded the assessment - HELD THAT:- Inspite of repeated requests, the statement recorded during the course of survey from the assessee was not placed on record either by the learned AR or by the learned DR. The solitary issue for our adjudication is whether the declaration made by the assessee is entitled to deduction of 50% towards expenditure against a sum declared during the course of survey. The assessee is an Advocate aged 65. The amounts disclosed as unaccounted professional income is admittedly gross receipt and not net. A.O. himself has allowed 25% towards expenditure out of amount disclosed as unaccounted professional receipts. The fact the assessee had declared only gross undeclared professional receipts is also evident from the A.O.’s and CIT(A)’s order. Assessee had disclosed gross undeclared professional income and A.O. estimated 25% of the expenditure incurred for earning the same. Section 44ADA permits a professional like the assessee to compute his total income on presumptive basis wherein 50% of the expenditure is allowed as deduction towards the gross receipts (provided the gross receipts does not exceed during the relevant assessment year more than Rs.50 lakh). In the instant case, admittedly, the gross professional receipts of the assessee during the relevant year exceeded Rs.50 lakh. Therefore, the assessee would not be governed by the provisions of section 44ADA of the I.T.Act. However, we can take a clue from the above said section, which permits a deduction of 50% gross receipts as expenditure. In the instant case, admittedly, since the AO and the CIT(A) had also taken the assessee’s declaration as gross receipts from professional income, the figures arrived for arriving at the total income is only an estimation. The assessee , out of the undisclosed professional income would have certainly incurred expenses such as filing fees, clerkage charges, etc. On the facts of the instant case, we are of the view that the grant of 25% of the gross receipts towards expenses is very much on the lower side. In the interest of justice and equity, we are of the view that the expenditure of 40% towards the gross receipts should be allowed as deduction. Appeal filed by the assessee is partly allowed
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