TaxTMI 
TaxTMI 
2026 (10) TMI 168
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....ition bank as unexplained cash credits u/s. 68 of the Act. account of cash deposited in (2) The appellant submits that the cash deposited in banks was from the balance accumulated on account of business sale proceeds which was already been offered under presumptive taxation, hence, it cannot be said as unexplained cash credits, and again addition of these sale receipts, would be double taxation, hence, the same is required to be deleted. (3) The appellant submits that the addition made u/s. 68 of the Act, is not justified as the Ld. CIT(A), NFAC had overlooked the fact that appellant is taxed under presumptive taxation u/s. 44AD of the Act, where no books of accounts are required to be maintained, hence no "credit entry" c....
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....h credit under Section 68 read with Section 115BBE of the Act. 3. The brief facts of the case are that the assessee is an individual and proprietor engaged in the business of retail trading in textiles at Surat. For the assessment year under consideration, the assessee e-filed her return of income declaring total income of Rs. 21,06,790/-. The income was computed and offered to tax under the presumptive taxation provisions of Section 44AD of the Act on total turnover of Rs. 1,92,83,450/-. The return of income was subsequently selected for scrutiny assessment under CASS. 4. During the course of assessment proceedings, the AO observed that the assessee had deposited substantial amounts of cash in her bank accounts during the relevant fi....
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....ents placed on record, the actual cash deposited during the demonetization period was Rs. 46,00,000/-, comprising Rs. 15,00,000/- deposited on 24/11/2016 in The Surat People's Co-op Bank Ltd. and Rs. 31,00,000/- deposited on 30/11/2016 in HDFC Bank, and that the remaining deposits pertained to other periods. 7. The Ld. AR further submitted that the assessee had filed her return of income under the presumptive taxation provisions of Section 44AD of the Act and had declared net profit of more than 10.92% on the disclosed turnover. It was submitted that Section 44AD contains a non obstante clause overriding Sections 28 to 43C of the Act and an eligible assessee is not required to maintain regular books of account in the manner contemplated ....
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....n Global Pvt. Ltd. [2022] 441 ITR 550 (Delhi) and CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC). 10. It was also submitted that the comparative basis adopted by the AO was arbitrary, since A.Y. 2016-17 represented the first year of business operations of the assessee and the turnover in that year was substantially lower. It was pointed out that the assessee had deposited Rs. 24,00,000/- in cash in April 2016 itself, which, according to the Ld. AR, demonstrated that cash deposits were a regular feature of the assessee's business. 11. Without prejudice to the above submissions, the Ld. AR submitted that, in any event, the entire amount of cash deposits could not be treated as income and, at the most, only the profit elemen....
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.... has offered her income under the presumptive taxation provisions of Section 44AD of the Act. The assessee declared turnover of Rs. 1,92,83,450/- and total income of Rs. 21,06,790/-. 15. The first issue which arises for our consideration is whether the addition under Section 68 of the Act can be sustained in the facts of the present case, where the assessee has offered income under the presumptive provisions of Section 44AD. Section 68 applies where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no satisfactory explanation regarding the nature and source thereof. In the present case, the assessee was assessed under the presumptive provisions of Section 44AD and was not requi....
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....rd to the purchases or the stock position so as to establish that the corresponding sales were fictitious or unrelated to the assessee's business. The assessee had declared turnover of Rs. 1,92,83,450/- and had offered the resultant income to tax under Section 44AD of the Act. 19. The assessee has specifically demonstrated that the sales during the period preceding demonetization were substantial, with sales in October 2016 amounting to Rs. 42,13,983/-. The explanation that cash generated from the business sales was subsequently deposited in the bank account during the demonetization period, therefore, cannot be rejected merely on the basis of a comparison with the cash deposits made in the immediately preceding year. 20. The method a....