Presumptive taxation under Section 44AD bars treating bank cash deposits as unexplained income when presumptive return is filed.

Where an assessee validly elects and declares income under the presumptive taxation scheme, the scheme itself determines taxable income and the Assessing Officer cannot treat individual cash bank deposits as unexplained income merely for lack of separate explanations; the Tribunal applied the principle that showing income at the presumptive rate negates any obligation to account for each bank entry and disfavors further additions for non compliance, upheld deletion of the addition to income made on account of cash deposits and allowed the appeal in favour of the assessee.

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Issues: Whether additions made by the Assessing Officer to cash deposits can be sustained where the assessee has filed return under the presumptive taxation scheme of section 44AD of the Income-tax Act, 1961.

Analysis: The assessee filed income under section 44AD on presumptive basis for the year and returned income at the prescribed presumptive rate. The Assessing Officer added cash bank deposits to income for lack of satisfactory explanation; the Commissioner (Appeals) partly deleted the addition based on bank debit entries. The Tribunal noted that once the assessee has validly opted for and declared income under the presumptive scheme, the scheme itself determines taxable income and does not require explanation of each cash deposit; the Tribunal relied on precedent holding that showing income at the presumptive rate under section 44AD negates obligation to explain every bank entry and that further additions cannot be made merely for non-compliance.

Conclusion: Addition to income on account of cash deposits is deleted and the appeal is allowed in favour of the assessee.

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