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TMI Blog2022 (11) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... or in cases of those businesses where the incomes are almost of static quantum of all the businesses, AO could have made the addition un/s 69A of the Act, once he had carved out the case out of the glitches of the provisions of section 44AD - No such exercise has been done either by the AO or by the CIT(A) in this case. From the record, it is undisputed fact that the assessee had not maintained books of account that is why he opted for 8% income as per section 44AD - The section also does not put obligation on the assessee to maintain books of account, more so, in view of the fact that his income has been assessed as per section 44AD he cannot be punished for not maintaining the same. Such additions go against the spirit of the Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. The ld. AR filed a reply dated 02.10.2013 stating therein that assessee was carrying business of supplying loose clay, rori and bajri being carried out from his residence. The AO has not been satisfied with the reply of the assessee that he has not maintained the books of account so no documentary evidences were produced to substantiate his sales claimed to extent of Rs.52,13,825/-. The AO reproduced the cash and deposits entries in the two bank accounts of the assessee, i.e., IDBI Bank, Dhangu Road, Pathankot and PNB, Dalhousie, Distt. Chamba totaling to Rs.46,88,000/-. The assessee to explain the source of the cash deposits, the AO being not satisfied with the reply of the assessee as treated Rs.24,24,961/- out of 52,13,825/- sales cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,691/- u/s 68 of the Act without appreciating the facts of the case and ignoring the turnover of Rs.52,13,825/-, the sales effected during the second part of the financial year in particular. The ld. counsel for the assessee has submitted that the assessee has provided the details of the cash deposits in the IDBI and PNB Bank being deposited out of the sales made amounting to Rs.52,13,825/- ad not Rs.19,90,735/- and Rs.2,81,000/- as mentioned by the authorities which is factually incorrect. He has argued that the assessee has not maintained books of account and where the assessee did not maintain the books of account and declared an income u/s 44AD. The provisions of section 68 of the Act cannot be invoked under the statute, in support he p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of the sales receipt were deposited in the bank accounts of the assessee. 6. The Ld addl. CIT(DR) supported the impugned order. 7. Heard the rival contentions, perused the material on record and written submissions filed before us. Admittedly, the assesse declared deemed profit u/s 44AD of the Act of Rs.4,17,106/- being 8% of Rs.52,13,825/- business turn over. 8. Section 44 AD 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 69A of the Act cannot be applied. Asking the assessee to prove to the satisfaction of the Assessing Officer, the expenditure to the extent of 92% of gross receipts, would also defeat the very purpose of presumptive taxation as provided under section 44AD of the Act or other 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 69A 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 don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 receipts paid or payable does not exceed Rs. 40 lakhs. 8. Once under the special provision, exemption from maintaining of books of account has been provided and presumptive tax at the rate of 8 per cent of the gross receipt itself is the basis for determining the taxable income, the assessee was not under obligation to explain individual entry of cash deposit in the bank unless such entry had no nexus with the gross receipts. The stand of the assessee before the Commissioner of Income-tax (Appeals) and the Tribunal that the said amount of Rs.14,95,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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