Section 68 cannot rest on bank passbook entries where presumptive taxation under section 44AD dispenses with books of account.

Section 68 could not be applied because the credit entries were found only in a bank passbook, which is not the assessee's books of account; where income is returned under section 44AD and no books are required to be maintained, the statutory condition for an addition under section 68 is absent, so the addition was deleted. Claims for deduction under sections 80C and 80D were not properly examined on the supporting material, so those issues were restored to the Assessing Officer for fresh verification with an opportunity to furnish evidence, resulting in partial relief to the assessee.

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Issues: (i) Whether an addition under section 68 could be sustained when the assessee had returned income under presumptive taxation under section 44AD without maintaining books of account and the credit entries were reflected only in the bank passbook. (ii) Whether the claims for deduction under sections 80C and 80D required restoration for fresh verification.

Issue (i): Whether an addition under section 68 could be sustained when the assessee had returned income under presumptive taxation under section 44AD without maintaining books of account and the credit entries were reflected only in the bank passbook.

Analysis: Section 68 applies only where a sum is found credited in the books of account maintained by the assessee. Income returned under section 44AD carries no obligation to maintain books of account. A bank passbook is not the assessee's books of account and cannot, by itself, found an addition under section 68. On the facts, the impugned addition rested on passbook entries and the statutory condition for invoking section 68 was absent.

Conclusion: The addition under section 68 was deleted and this issue was decided in favour of the assessee.

Issue (ii): Whether the claims for deduction under sections 80C and 80D required restoration for fresh verification.

Analysis: The deduction claims were supported by documents that were not properly examined by the lower authorities. Since the claims depended on verification of the supporting material, the matters required reconsideration by the Assessing Officer with an opportunity to the assessee to furnish the relevant evidence.

Conclusion: The issues relating to deductions under sections 80C and 80D were restored to the Assessing Officer for verification.

Final Conclusion: The appeal succeeded on the principal addition and the remaining deduction claims were sent back for verification, resulting in a partial allowance of the assessee's challenge.

Ratio Decidendi: Section 68 cannot be invoked unless the credit is found in books of account maintained by the assessee, and a bank passbook does not constitute such books; where income is returned under section 44AD without books, the provision has no application.

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