Section 68 requires credits in books of account; presumptive taxation under section 44AD bars such addition without maintained books.

Section 68 can be invoked only where a credited sum is found in the assessee's books of account. Where business income is returned on a presumptive basis under section 44AD and no books are required to be maintained, that foundational condition is absent. A bank passbook is not treated as books of account for this purpose, and the same receipts cannot be taxed again under section 68 after presumptive taxation. The addition was therefore unsustainable and was deleted.

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Issues: Whether an addition under section 68 of the Income-tax Act, 1961 could be made in respect of turnover declared on presumptive basis under section 44AD of the Income-tax Act, 1961 where no books of account were maintained.

Analysis: Section 68 applies only where a sum is found credited in the books of an assessee. The definition of books of account under section 2(12A) includes regular account records, but not a bank passbook. Where income is offered under section 44AD on a presumptive basis, maintenance of books of account is not mandatory. In such a situation, the foundational requirement for invoking section 68 is absent. The declared business receipts were already subjected to presumptive taxation, and taxing the same receipts again under section 68 would be impermissible.

Conclusion: The addition under section 68 was not sustainable and was rightly deleted in favour of the assessee.

Ratio Decidendi: Section 68 cannot be invoked unless the impugned credit is found in books of account maintained by the assessee; where income is returned under section 44AD without books of account, that precondition is not satisfied.

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