| Question And Answer | |
|---|---|
| Subject: | Presumptive Taxation and additions |
| Category: | Income-Tax |
| Querist: | Prerna Bora |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | addition, Presumptive Income, presumptive taxation scheme |
| Date: | January 8, 2022 |
Assessee is individual and filling return regularly by offering income U/sec. 44AD . During the course of assessment proceedings assesee submitted the summary of cash account and bank account deposits in bank account is less than the Turnover also submitted statement of affairs .Assessing Officer has added entire turnover as unexplained receipts u/sec. 69A of the Act on the ground that assessee has not given the evidence of items traded and proof of sales . Is the action of AO is correct , he has not given any show cause Notice in this context. Pl guide
As we understand, the assessee had offered income under section 44AD of the Income-tax Act, 1961 (Act). There is no dispute that the assessee falls under the provision of section 44AD of the Act. The Ld. Assessing Officer has also accepted that the assessee’s case falls under the purview of section 44AD of the Act and thereafter made addition under section 69A of the Act. In other words, the Assessing Officer has not at all rejected the books of accounts of the assessee.
The Hon’ble Supreme Court in the case of Lakhmichand Baijanath v CIT [1959] 35 ITR 416 (SC) held that when an amount is credited in business books, it is not an unreasonable inference to draw that it is a receipt from business
The Hon’ble Punjab & Haryana High Court in the case of CIT vs. Surinder Pal Anand [2010] 192 taxmann 264 held that once under special provision of section 44AD of the Act, exemption from maintenance of books of account has been provided and presumptive tax at rate of 8 per cent of gross receipt itself is basis for determining taxable income, assessee is not under any obligation to explain individual entry of cash deposit in bank unless such entry has no nexus with gross receipts.
Similar view has been taken by the Income-tax Appellate Tribunal in the case of Nand Lal Popli v. DCIT [2016] 71 taxmann.com 246 (Chandigarh – Trib.) where it was held that where profit declared by assessee under presumptive taxation as provided under section 44AD of the Act was accepted, Assessing Officer could not make separate addition by invoking provisions of section 69C of the Act.
Similar view has been taken by the Income-tax Appellate Tribunal in the case of in the case of Thomas Eapen v. ITO [2020] 113 taxmann.com 268 (Cochin – Trib.) where it was held that where assessee, a small trader in medicine falling under section 44AD of the Act, offered income on presumptive taxation basis, provision of section 69A of the Act could not be applied to make addition in respect of undisclosed cash credits found in assessee’s bank account.