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TMI Blog2020 (6) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... eover, most of the applications of income is directly linked to the business of the assessee declared u/s 44AD - Thus no addition is warranted. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ment/expenses, it is for the assessee to prove the sources for investment/ expenses from sources which has already been taxed. Deemed income of the nature covered u/s 69, 69A, 69B & 69C are treated separately since such income is not income from salary, house property, business, capital gains or income from other sources. The provisions of the above sections treat unexplained investments, unexplained money, bullion etc and unexplained expenditure as deemed income where the nature and source of investment/ expenditure have not been explained or satisfactorily explained. Section 44AD provides for estimation of business income under certain circumstances. The argument of the assessee that when income is estimated u/s 44AD as a prescribed percentage or at a higher percentage as offered by the assessee, provisions of section 69 to 69C cannot be invoked is not acceptable. Due weightage for income derived from business at the higher rate of estimation has been given in the inflow side of the cash flow statement along with other receipts/income. If the assessee fails to establish the nexus between the cash inflow and cash out flow, the excess cash out flow remains unexplained between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Thomas Eappen is on different facts and the same are not applicable to the case of the Appellant. 4.5 Further, it is for the Appellant to prove that the cash flow statement drawn by the Assessing Officer has been duly considered in the turnover considered for computation of income under section 44AD of the Act As the Appellant had failed to explain the relevant facts regarding the transactions made in commodity exchange, the Assessing Officer is right in computing the unexplained investment by drawing a cash flow statement. Hence, the addition of ₹ 11,52,273 is confirmed and the grounds raised by the Appellant are dismissed." 5. Aggrieved by the order of the CIT(A), the assessee has preferred this appeal before the Tribunal. The learned Counsel for the assessee submitted that the Assessing Officer is not legally right in making the addition when the income is declared u/s 44AD of the I.T.Act. It was submitted that section 44AD of the I.T.Act is presumptive taxation scheme in order to ease the tax burden on small taxpayers and the assessee was eligible for declaring income u/s 44AD of the I.T.Act. Further it was submitted that the assessee was not maintaining any boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the books of account of the assessee once the income of the assessee is accepted u/s 44AD of the I.T.Act. Section 44AD of the I.T.Act was introduced to help the small businessmen, who have difficulties in maintaining books of account and other records. Tax is levied on presumptive basis. The Haryana High Court in the case of CIT vs. Surinder Pal Anand (2010) 192 Taxman 264, had held as follows:- "7. Section 44AD of the Act was inserted by the Finance Act, 1994 with effect from 1-4-1994. Sub-section (1) of section 44AD clearly provides that where an assessce is engaged in the business of civil construction or supply of labour for civil construction, income shall be estimated at 8 per cent of the gross receipts paid or payable to the assessee in the previous year on account of such business or a sum higher than the aforesaid sum as may be declared by the assessee in his return of income notwithstanding anything to the contrary contained in sections 28 to 43C of the Act. This income is to be deemed to be the profits and gains of said business chargeable of tax under the head "profits and gains" of business. However, the said provisions are applicable where the gross rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount that an amount of ₹ 2,50,000 has been considered as the household expenses of her husband Sri Sreekumar N in his scrutiny assessment proceedings, now ₹ 1,50,000 is treated as assessee's household expenses." I am of the view that the estimation made by the A.O. for household expenses are totally arbitrary and without any supporting evidence especially when in hands of assessee's husband a sum of ₹ 2,50,000 was estimated as household expenses. 7.2 The Chandigarh Bench of the Tribunal in the case of Nand Lal Popil v. DCIT (supra) has held that - "The provisions of the above section are quite unambiguous to the effect that in case of an eligible business based on the gross receipts / total turnover, the income under the head `profits & gains of business' shall be deemed to be @ 8% or any higher amount. The first important term here is `deemed to be', which proves that in such cases there is no income to the extent of such percentage, however, to that extent, income is deemed. It is undisputed that `deemed' means presuming the existence of something which actually is not. Therefore, it is quite clear that though for the purpose of levy of income tax 8% or more m ..... 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