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TMI Blog2024 (6) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the assessee's case. The assessee in the year under consideration has declared income under section 44AD of the act with regard to the trading activities since the turnover from the trading activity is less than Rs. 2 crores. The assessee has declared income on presumptive basis under section 44AD and therefore the requirement for maintenance of books of accounts does not arise. Accordingly we see merit in the contention that addition under section 68 cannot be made in assessee's case since the assessee has offered income on estimation basis under section 44AD of the act. Thus the addition made by the assessing officer under section 68 of the entire turnover which the assessee declared under section 44 AD of the act is not tenable. Assessee appeal allowed. - SHRI NARENDER KUMAR CHOUDHRY, JM MS PADMAVATHY S, AM For the Appellant : Ms Dinkle Hariya a/w Ms. Simoni Chouhan, CA For the Respondent : Shri P.D. Chougule, Sr. DR ORDER Per Padmavathy S, AM: 1. This appeal of the revenue is against the order of Commissioner of Income Tax, Appeals, / National Faceless Appeal Centre [In short the CIT(A) ] dated 01.03.2023 for the AY 2017-18. 2. The assessee is a partner in R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AR submitted that the assessee has declared the income from trading in grey clothes under section 44AD of the Act whereby the assessee is not required to maintain any books of accounts. The Ld. AR further submitted that for the purpose of making an addition under section 68 of the act, the amount should have been credited in the books of accounts for which the assessee does not have proper explanation about the nature and source. In assessee's case no books of accounts maintained and the assessee has estimated the income under section 44AD of the Act. Therefore the Ld. AR argued that no addition can be made under section 68 in assessee's case since it is a settled position that when the assessee has declared income under section 44AD of the act no addition can be made under section 68. The Ld. AR also submitted that the assessee also produced various documents in support of the trading activity carried on by him which have been completely ignored by the assessing officer and the addition is made without examining the documents in support of the transactions. It is also submitted that the assessee has declared profit on the entire receipt under section 44AD of the Act more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts. In the light of this legal position, we will now consider the assessee's case. The assessee in the year under consideration has declared income under section 44AD of the act with regard to the trading activities since the turnover from the trading activity is less than Rs. 2 crores. The assessee has declared income on presumptive basis under section 44AD and therefore the requirement for maintenance of books of accounts does not arise. Accordingly we see merit in the contention that addition under section 68 cannot be made in assessee's case since the assessee has offered income on estimation basis under section 44AD of the act. We in this regard notice that similar issue has been considered by Delhi bench of the ITAT in the case of Narendra Kumar Gupta vs DCIT (ITA No.1186/Del/2023 dated 11.10.2023) wherein it is held that- 6. As regards the rejection of claim of cash from assessee's proprietorship concern, we find that books have not been rejected. It has also not been proved that cash withdrawn is also put to any other use. In such circumstances, there is no reason to reject the source of cash in this regard. In this regard, we draw support from the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sence of books of account goes to the root of validity of addition made u/s 68. The new ground raised by the assessee is legal in nature and hence, can be very well raised even at second appellate stage. The facts and documents to decide the ground are already available on record and no new documents are required to be adduced to decide this legal issue. The coordinate Bench in the case of Manasi Mahendra Pitkar vs. ITO (supra) under similar set of facts admitted the additional ground challenging the addition made by Assessing Officer u/s 68 of the Act merely on the basis of cash deposits in the bank account. The objection raised by the ld. DR is rejected. The new ground raised by the assessee before the Tribunal being legal in nature is admitted for adjudication on merits in the light of decision rendered by Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. vs. CIT reported as 229 ITR 383. 8. Before proceeding further to decide this issue it would be imperative to refer to the relevant provisions of section 68 of the Act. The same are reproduced herein under: 68 Where any sum is found credited in the books of an assessee maintained for any previous year, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is eligible to file return of income on the basis of presumptive income @ 8% of total turnover or gross receipts. In the present case undisputedly the assessee has not maintained books and has offered his business income to tax on presumptive basis u/s 44AD of the Act. The same has been accepted by the Assessing Officer except for addition u/s. 68 of the Act. It is not mandatory for the assessee to maintain books, if the return of income is filed under section 44AD of the Act. 12. As has been observed earlier that addition under section 68 can be made only if any sum is found credited in the books maintained by the assessee for any previous year and the assessee fails to offer valid explanation for credit of such sum in the books or explanation offered is rejected by the Assessing Officer. In other words maintains of books by the assessee is sine qua non for making addition u/s 68 of the Act. Since section 44AD does not obligates the assessee to maintain books, the provisions of section 68 cannot be invoked where the assessee has filed return of income under the provisions of section 44AD of the Act without maintaining books of account. 13. The Hon'ble High Court of Gauh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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