Appeal partly allowed, income addition reduced, unexplained income deletion under Section 44AD.

The appeal was partly allowed with the delay in filing the appeal condoned. The addition of Rs. 5,05,050/- was modified to only consider 8% of the amount as income. Additionally, the addition of Rs. 3 lakhs as unexplained income was deleted, emphasizing that under Section 44AD, further additions based on unexplained deposits are not warranted. The court's decision was pronounced on 11th September 2020.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Addition of Rs. 5,05,050/- due to discrepancy in declared turnover.
3. Addition of Rs. 3 lakhs as unexplained income.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal by the assessee was delayed by three days. The assessee filed a condonation petition explaining that the delay was due to an accident involving the courier carrying the appeal papers. After reviewing the petition, it was found that there was "good and sufficient cause" for the delay. Consequently, the delay was condoned, and the appeal was admitted for adjudication.

2. Addition of Rs. 5,05,050/- Due to Discrepancy in Declared Turnover:
The assessee declared a turnover of Rs. 41,41,302/-, while the turnover in Form 26AS was Rs. 46,46,352/-, resulting in a discrepancy of Rs. 5,05,050/-. The assessee argued that this discrepancy was due to the inclusion of certain advances in the turnover and that only 8% of this amount should be considered as income under Section 44AD of the I.T. Act. The Tribunal agreed, stating that "the entire undisclosed turnover of Rs. 5,05,050/- cannot be considered as income of the assessee." Instead, the AO was directed to consider 8% of the amount as income. Thus, this ground of appeal was partly allowed.

3. Addition of Rs. 3 Lakhs as Unexplained Income:
The AO made an addition of Rs. 3 lakhs to the income declared by the assessee, citing unexplained deposits in the bank account. The Tribunal referenced several cases, including the case of Sri Girish V. Yalakkishettar vs. ITO, where it was held that under Section 44AD, the assessee is not required to maintain books of account, and the AO cannot make additions based on suspicions or conjectures without concrete evidence. The Tribunal reiterated that "Section 44AD exempts the assessee from maintenance of books of accounts" and that the AO must base assessments on evidence rather than suspicion. Consequently, the Tribunal directed the AO to delete the addition of Rs. 3 lakhs, as the assessment under Section 44AD does not warrant such additions. This ground of appeal was also partly allowed.

Conclusion:
The appeal was partly allowed. The delay in filing the appeal was condoned. The addition of Rs. 5,05,050/- was modified to consider only 8% of the amount as income. The addition of Rs. 3 lakhs was deleted, reaffirming that under Section 44AD, further additions based on unexplained deposits are not justified. The order was pronounced in the open court on 11th September, 2020.

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