The Jaipur bench of Income Tax Appellate Tribunal (ITAT) recently held that if income is offered on presumptive basis under section 44AD of Income Tax Act 1961 there was no need to maintain books of accounts therefore the bench deleted the addition against the vegetable vendor.
44AD of the Income Tax Act 1961 provides relief to small taxpayers. Taxpayers who engaged in any business other than playing, hiring, and leasing referred to section 44E of the Act
The fact of the case is that, during the course of assessment proceedings, the Assessing Officer (AO) fund that the assessee Pramod Pareek is a vegetable vendor who had made cash sales of Rs.17,76,160/- against cash purchase of Rs.s1,90,500/- only. The assessee submitted reply to the AO that he is not required maintaining any books of accounts as income is declared under section 44AD of the Income Tax Act 1961 for which the assessee furnished copies of Profit and Loss account as well as balance sheet.
The AO noted that against the cash deposits the assessee issued a cheque in the name of share brokers almost on the same date for which no details had been furnished by the assessee. Thus the AO observed that it is failure on the part of the assessee to substantiate the unexplained cash deposit in his bank account with Standard Chartered Bank of Rs.11,31,350/- and in Allahabad Bank of Rs.5,69,800/- which the AO treated as income of the assessee under the head ‘’Income from other sources’’.
After completing the assessment AO makes addition to the computed income. When the first appeal was filed before the Commissioner of Income Tax Appeal they had restricted the addition to the extent of Rs.13,83,300/- giving the relief of Rs.3,17,850/- to the assessee.
Thereafter assessee filed a second appeal before the ITAT.
Rajeev Sogani counsel for the assessee submitted that during the relevant previous year out of the vegetable business and the assessee declared his income on presumptive basis under section 44AD of the Income Tax Act 1961. Being income declared under section 44AD of the Act, the assessee was not required to maintain books of accounts.
Moreover counsel for assessee point out that once the assessee has offered income under section 44AD of the Income Tax Act 1961 on presumptive basis then assessee is not required to maintain books of account on a regular basis but the assessee produced the books of account before the lower authorities
Monisha Choudhary counsel for the revenue contented that confirmed the decision of the lower authorities.
After considering the contentions of the both parties the single bench of ITAT Sandeep Gosain (Judicial Member) allowed the appeal filed by the assessee and observed that during the course of hearing the assessee had supplied all thedetails before the lower authorities like books of accounts, details offinancial statement and bank account but it was ignored.
Further the bench observed that during the previous year the assessee declared his income on presumptive basis as per section 44AD of Income Tax Act 1961 therefore if the income declared under section 44AD of the Income Tax Act 1961 the assessee was not required to maintain books of accounts.
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