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TMI Blog2019 (6) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... AD of the Act are not applicable to this case. Hence, we delete all the addition made in this case. The income returned, is directed to be accepted, by the Assessing Officer. - Appeal of the assessee is allowed. - I.T.A. No. 1750/Kol/2018 - - - Dated:- 8-5-2019 - Sri J. Sudhakar Reddy, Accountant Member For the Assessee : Shri A.K. Tibrewal, FCA For the Revenue : Shri C. J. Singh, JCIT Sr. D/R, ORDER PER J. SUDHAKAR REDDY :- This appeal filed by the assesse is directed against the order of the ld. Commissioner of Income Tax (Appeals) - 14, Kolkata, (hereinafter the ld. CIT (A) ), passed u/s 250 of the Income Tax Act, 1961 (the Act ), dt. 01/05/2018, for the Assessment Year 2012-13. 2. The assessee is a individual and is in the business of dealing in iron and steel, processing work. He filed his return of income for the impugned Assessment Year electronically on 30/03/2013 declaring total income of ₹ 1,60,960/-. The return was processed u/s 143(1) of the Act. The assessment was completed u/s 143(3) of the Act, determining total income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) and submitted that additions could be made in a case where the income is estimated u/s 44AD of the Act. 6. I have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, I hold as follows:- 7. Section 44AD of the Act, gives an option to the assessee to offer income on presumptive basis. These are special provisions. The assessee has opted for the same and offered to tax income at the rate of 8% of his turnover. The issue is whether, the Assessing Officer can examine statement of accounts in such cases, make additions towards undisclosed purchases, undisclosed expenditure, under valuation of closing stock etc., The turnover declared by the assessee is accepted by the revenue. In my considered opinion such additions go against the spirit of the Act. Section 44AD of the Act was introduced to help the small traders who have difficulties in maintaining books of account and other records. Tax is levied on presumptive basis. 8. The Hon ble Punjab Haryana High Court in the case of CIT vs. Surinder Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under the presumptive taxation as provided under section 44AD of the Act, the Assessing Officer can make addition under section 69C of the Act making the cash flow statement provided by the assessee the basis of his addition. 10. Section 44AD of the Act reads as under : 44AD (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession . (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed : 10. The provisions of the above section are quite unambiguous to the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... audited is only on the assessee who opts to claim the income being less than 8% of the gross receipts. 14. Now, applying the above to the facts of the present case, we observe that the Assessing Officer, for making the impugned addition has started with the presumption that an amount to the extent of 92% of the gross receipts is the expenditure incurred by the assessee, which is a totally wrong premise. If the income component is estimated, how the expenditure component on the basis of said income can be considered to have been 'actually' incurred. We must also observe here that this is not a case, where the Assessing Officer has doubted the gross receipts or gross turnover of the assessee. In fact, accepting the same, estimating income @ 8% on the same at presumptive rate, he preferred to make further addition under section 69C of the Act. The argument of the learned D.R. that the turnover of the assessee has been doubted by the Assessing Officer is totally ill-found, in view of the same. 15. Further, it is a fact on record that the assessee had not maintained books of account that is why he opted for 8% income as per section 44AD of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er such provision. Since the scheme of presumptive taxation has been formed in order to avoid the long drawn process of assessment in cases of small traders or in cases of those businesses where the incomes are almost of static quantum of all the businesses, the Assessing Officer could have made the addition under section 69C of the Act, once he had carved out the case out of the glitches of the provisions of section 44AD of the Act. No such exercise has been done by the Assessing Officer in this case. Before parting we would like to deal with the case law relied on by the learned D.R. 18. The only case law relied on by the learned D.R. is that of Ahmedabad Bench of the Tribunal in the case of Shivani Builders (supra). On perusal of the said order, we observe that the basis of finding given in this order is mainly the fact that the assessee had failed to record its turnover correctly in its books. However, no such finding is there in the present case. As already held by us in the preceding paragraph, the Assessing Officer himself while computing the income of the assessee has made the business income to be taxable @ 8% of the gross receipts as provided under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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