Unexplained income versus presumptive business receipts: unsupported salary claims failed, but rice-trading turnover was accepted as business income.

Unsubstantiated salary, commission and standard deduction claims were not accepted because the assessee produced no cogent evidence of employment, receipt or brokerage, so the additions as unexplained income were sustained. By contrast, rice-trading receipts supported by bills, confirmations and supplier details were treated as business receipts; income returned under the presumptive scheme did not require regular books of account, and section 69A could not be applied to recharacterise the same receipts as unexplained money. The result was that the salary and commission additions failed, while the rice-trading and presumptive-income additions were deleted, giving the assessee only partial relief.

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Issues: (i) Whether the assessee's salary and commission income, and the standard deduction claimed therefrom, could be sustained as unexplained money for the assessment years 2019-20 and 2020-21; (ii) Whether the cash receipts and returned income from rice trading disclosed under the presumptive scheme could be treated as unexplained money under section 69A of the Income-tax Act, 1961, and whether the assessee was carrying on rice trading business.

Issue (i): Whether the assessee's salary and commission income, and the standard deduction claimed therefrom, could be sustained as unexplained money for the assessment years 2019-20 and 2020-21.

Analysis: The assessee did not produce cogent evidence to substantiate the salary income, the alleged employment, or the commission and brokerage receipts. In the absence of supporting material, the claim for standard deduction could not be accepted and the income was not shown to have been proved as such. The additions and the treatment of the income as unexplained money were therefore not displaced by any reliable evidence.

Conclusion: The issue is decided against the assessee.

Issue (ii): Whether the cash receipts and returned income from rice trading disclosed under the presumptive scheme could be treated as unexplained money under section 69A of the Income-tax Act, 1961, and whether the assessee was carrying on rice trading business.

Analysis: The assessee produced bills, confirmations, supplier details, and other material showing trading in rice. Where income had been returned under section 44AD on presumptive basis, the assessee was not required to maintain regular books of account. On the facts, the trading receipts were accepted as business receipts, and treating the same income again as unexplained money would amount to impermissible double taxation. Section 69A was held inapplicable to such business receipts in the circumstances of the case.

Conclusion: The issue is decided in favour of the assessee.

Final Conclusion: The appeals concerning the salary and commission based additions failed, while the appeals concerning the rice-trading receipts and presumptive business income succeeded, resulting in only partial relief to the assessee overall.

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