2022 (11) TMI 964 - AT - Income Tax

Benefit of 44AD for non-maintaining the books of account - taxability of presumptive income - amount deposited in the bank account - Special provision for computing profits and gains of business on presumptive basis - HELD THAT - Respectfully considered the judgment of the Hon ble High Court of P H in Surinder Pal Anand 2010 (6) TMI 404 - PUNJAB AND HARYANA HIGH COURT the assessee had availed the presumptive scheme u/s 44AD during filing his return. The assessee has no liability to maintaining the books of account as per the provision of the Act. Also see Kanpurv.NitinSoni 2012 (5) TMI 121 - ALLAHABAD HIGH COURT The assessee had properly submitted through his counsel that the said amount was paid from his business receipt. The benefit should be allowed the assessee for availing section 44AD for non-maintaining the books of account. Considering the ratio decidendi of the judgments we are setting aside the orders of revenue authorities. Accordingly, the addition made by the AO is quashed. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against order of Commissioner of Income Tax (Appeals) for A.Y. 2011-12.
2. Validity of cash deposit in the bank account and determination of total income.
3. Application of presumptive scheme u/s 44AD and obligation to maintain books of account.
4. Interpretation of relevant case laws and their impact on the present case.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2011-12. The appellant, a trader, had filed returns under the presumptive scheme u/s 44AD of the Income Tax Act, 1961, declaring a total income of Rs. 1,40,880/- with a turnover of 15,50,000/-. The issue arose when a notice was issued for depositing cash in the appellant's bank account amounting to Rs. 12,66,500/-, leading to a discrepancy in the determination of total income.

2. The Assessing Officer (AO) adjusted the withdrawn amount with the deposited cash, resulting in a total income determination of Rs. 25,12,800/-. The appellant contended that the cash was deposited from gross business receipts and payments were made through banking channels. Despite the appellant's submissions, the AO upheld the increased total income. The Commissioner of Income Tax (Appeals) also affirmed the AO's decision, leading to the appellant's appeal before the Appellate Tribunal.

3. The appellant, relying on the High Court judgment in the case of CIT vs. Surinder Pal Anand, argued that under the presumptive scheme u/s 44AD, there was no obligation to explain individual cash deposits unless they were unrelated to gross receipts. Citing another High Court judgment, the Tribunal emphasized that the purpose of such provisions was to simplify proceedings for taxpayers availing presumptive income schemes, exempting them from maintaining detailed accounts.

4. After considering the appellant's submissions, relevant case laws, and the provisions of section 44AD, the Tribunal set aside the orders of the revenue authorities. It concluded that the appellant, by availing the presumptive scheme, was not required to maintain books of account and that the cash deposits were linked to business receipts. Consequently, the addition made by the AO was quashed, and the appellant's appeal was allowed.

This detailed analysis of the judgment highlights the key issues, arguments presented, relevant legal provisions, and the Tribunal's decision, providing a comprehensive overview of the case.