Provision of sec. 68 Cannot be Invoked where Assessee filed Income Tax Return u/s 44AD on Presumptive Basis: ITAT [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal has held that provision of sec. 68 cannot be invoked where assessee filed return of income under section 44AD on presumptive basis.

The appellate, Narendra Chandubhai Rafaliya, is an individual engaged in the business of carrying out job work of power coating. The assessee filed return of income under section 44AD of the Income Tax Act, 1961 on presumptive basis and declared net income of Rs. 3,33,630/-.

During the course of assessment proceedings, the AO noticed cash deposits on various dates in the bank account of assessee aggregating to Rs. 63,58,700/-. The AO add the deposits to total income under section 68 of the Act alleging that the assessee has not been able to prove that he is actually carrying out job work activity since details of persons to whom services are provided and other details etc. have not been satisfactorily explained. On appeal CIT (A) grant partial relief by reducing the amount to 47,35,070/-. Hence the assessee filed appeal before ITAT.

The Tribunal by relying the decision of Mumbai ITAT has observed that where assessee was not maintaining any account books, bank statement could not be construed to be a book of account maintained by assessee; merely on basis of information that assessee made a 'cash deposit' in her saving bank account, no addition could be made as unexplained cash credit u/s 68.

The Coram of Mr. P.M. Jagtap, Vice President and Mr. Siddhartha Nautiyal, Judicial Member has held that “once the Assessing Officer has accepted the assessee’s figure of receipts from job work declared in the return of income on the basis of which return has been filed by the assessee on presumptive basis under section 44AD of the Act, then the Assessing Officer is precluded from making separate additions u/s 68 of the Act to the returned income on the basis that the assessee has not been able to prove the fact of carrying out job work activity in absence of adequate supporting documents etc. without disturbing the figure declared by the assessee offered as job work receipts”.

Mr. ParimalSinh Parmar and Mr. R.R. Makwana appeared for appellate and revenue respectively.

To Read the full text of the Order CLICK HERE

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