The Income Tax Appellate Tribunal (ITAT) Chennai ruled on August 19, 2026, reducing a doctor's taxable income by half despite his failure to file income tax returns and respond to subsequent tax notices. According to reports from Mint, the tribunal held that the doctor's entire gross professional receipts could not automatically be treated as net taxable income merely because he had failed to file an ITR. The ruling concerned the doctor's tax assessment for Assessment Year 2018-19.
The dispute involved Selvakumar Arumugam, who had professional receipts of ₹35.01 lakh, which were also reflected in his Form 26AS. As reported by Mint, since he failed to file ITR and did not respond to notices issued during the reassessment proceedings, the Assessing Officer treated the entire amount as his professional income and completed the assessment under Section 147 read with Section 144 of the Income-tax Act. The doctor subsequently argued that, as a professional covered by Section 44ADA, only 50% of his gross receipts should be treated as taxable income, with his professional receipts being below the applicable ₹50 lakh threshold. He also pointed out that in subsequent years he had filed returns declaring 50% of his professional receipts as income under Section 44ADA, and those returns had been accepted by the tax department while processing them under Section 143(1).
The tribunal made a clear distinction between claiming the statutory benefit under Section 44ADA and estimating taxable income, as reported by Mint. ITAT Chennai considered the tax treatment of the doctor's income in subsequent years, wherein the income tax department had accepted income declared at 50% of professional receipts under Section 44ADA. The tribunal directed the AO to consider ₹17,50,750, or 50% of the ₹35,01,500 professional receipts, as the doctor's professional income and calculate taxes accordingly. However, it did not rule on whether a taxpayer who had failed to file ITR could formally claim the presumptive taxation benefit. According to Moneycontrol, the tribunal stated that "adoption of 50 percent of the gross professional receipts would be a reasonable basis for determining the professional income for the year under consideration."
According to Moneycontrol, the ruling does not establish a general right for non-filers to invoke Section 44ADA after the event, as the tribunal expressly left that legal question open. Divya Bhanushali, CPO, TaxBuddy, emphasized that "taxpayers should not read this ruling as meaning they can skip filing a return and claim the 44ADA benefit later." She noted that the doctor still faced reassessment proceedings and the share-transaction addition was not disturbed, with relief being limited to the question of what constituted a reasonable estimate of income based on specific case facts. The case provides relief to non-filers facing reassessment, particularly where their profession, past tax filings and other available evidence support a reasonable estimate of income rather than treating their entire gross receipts as taxable income.
