Section 68 addition fails where cash deposits form part of presumptive turnover and no regular books are maintained.

Cash deposits reflected in bank accounts were held not to be addable under section 68 where the assessee had returned business income under the presumptive scheme in section 44AD and maintained no regular books of account. Section 68 applies only to credits found in books of account, and a bank passbook or bank statement is not treated as such books under the Act. As the revenue did not establish that the deposits were separate from the declared turnover, the statutory conditions for invoking section 68 were not met, and the addition was deleted in favour of the assessee.

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Issues: Whether cash deposits reflected in bank accounts could be added under section 68 where the assessee had declared income under the presumptive taxation scheme under section 44AD and had not maintained regular books of account.

Analysis: The assessee had declared business receipts in the return filed under section 44AD, and the cash deposits were asserted to form part of those receipts. Section 68 operates only in respect of sums found credited in the books of account maintained by the assessee. The definition of books of account under the Act does not include a bank passbook or bank statement. Since the assessee was under a presumptive taxation regime and the revenue did not show that the impugned deposits were separate from the declared turnover, the prerequisites for invoking section 68 were not satisfied.

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

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