9911796707
TMI Blog2023 (12) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ised ultimately upon making addition of Rs. 1,00,00,000/- in respect of cash deposited in the bank accounts representing sales of pharmaceuticals/medicine treated as unexplained cash credits under section 68 of the Act and Rs. 10,85,157/- upon estimation of income under section 44AD of the at 8% of the sales and the difference between the total income declared and the income estimated. The same stood confirmed by the first appellate authority. Hence the instant appeal before us. 4. During the year under consideration, the assessee shown a turnover Rs. 2,46,82,938/- and deposited as BN of Rs. 29,00,000/-during the demonetisation. Out of which, the assessee given loan of Rs. 1,00,00,000/- to 3 parties, as the assessee not produced any relevant documents to compare the sales and cash in hand for the Financial Year 2015-16 and Financial Year 2016-17 as well as the checklist and the cash on hand as on 08.11.2016 could not be verified as of the opinion of the ld.AO particularly in the absence of the details about stock produced by the assessee. The ld.AO was of the opinion that the assessee violated the permission given by the Government of India and uncontraverted the unexplained money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer from paragraph 7.1 of Page 6 to 9.7. "7.1 The Ld. AR submitted that the AO in the assessment order itself had explained that since the assessee was not maintaining cash book, it was hard to ascertain the actual of cash sales and credit sales. During the course of assessment also, it was submitted that the assessee had produced various vouchers for sales and purchase. At the most, the A.O. could have doubted the quantum of sales instead of treating the same as unexplained cash under Sec 68 and even the benefit of undisclosed sales was not given to the assessee. According to the Ld. AR, it was the AO and the CIT(A) had not considered the applicability of the assessee's explanation that the said deposits relate to cash sales except making a preposterous assertion that it was not acceptable. It was submitted that except for the small retail trade, the assessee had no other business. It was submitted that even though the assessee could not bring any corroborative evidence for the undisclosed cash sales, it was to be appreciated that Sec 68 is a rule of evidence and the Assessing Officer is expected to consider the explanation rendered in the context of circumstance of each case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. 9.1. 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 asscssee is accepted by the revenue. In our 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. The Haryana High Court in the case of CIT vs. Surinder Pal Anand [2010] 192 taxmann 264), under identical circumstances 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 assessee is engaged in the business of civil construction or supply of labour for civil construction, income shall be estimated at 8 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness 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 "Profit and gains of business or profession". (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of subsection (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed." 10. The provision 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 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 may be considered as income, but actually this is not the actual income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve 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 68/69A 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. 9.4 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 the Act. 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 of the Act, he cannot be punished for not maintaining the same. 9.5 Now coming to the argument of the learned D.R. that the addition has been made under section 69A of the Act, on which there is no bar under section 44AD of the Act, we are quite in agreement with the same. The only fetter provided under section 44AD of the Act are the applicability of provisions of sections 30 to 38 of the Act. The provisions of section 69A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 69 of the Act was not justifiable when the income was estimated under section 44 A.D of the Act. In the present case, assessee offered the income at 3.6% of total turnover of Rs. 2,46,82,938/- i.e. Rs. 8,89,227/-. The ld. AO has not accepted this income offered by the assessee from business. He considered the income of the assessee u/s 44AD of the Act at 8% of total turnover and determined the same at Rs. 19,74,635/-, which resulted in addition of income on this count at Rs. 10,85,157/-. Thereafter, the ld. AO picked up the credit entries with regard to deposit of SBN notes at Rs. 1 Crore to his bank account and made addition on this count. In our opinion, once the ld. AO rejected the books of accounts and estimated the income of the assessee, thereafter he is precluded from considering any other entries in the books of accounts, so as to make addition u/s 68 or 69 of the Act. Being so, the judgement of Cochin Bench in the case of Shri Thomas Eapen cited (supra) is directly on the issue under dispute. Accordingly, the addition is deleted. 9.1 Further, the ld. AO made addition u/s 68 of the Act on account of cash deposit by the assessee into his bank account during demonetizat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
