C S SATHISH KUMAR, COIMBATORE vs. ACIT, NON CORP WARD-3(2), CHENNAI

आयकर अपीलीय अधिकरण, ‘ बी’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI श्री एबी टी वर्की, न्याययर्क सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.3933/Chny/2025 धनिाारण वर्ा / Assessment Year: 2019-20

The Assistant Commissioner of C.S.Sathish Kumar vs. Income-tax, 5, S.P.Kumarasamy Street Non-Corporate Ward – 3(2) Rathinapuri, Coimbatore. Coimbatore – 641 027. [PAN: BHCPS4977A] (प्रत्यथी/Respondent) (अपीलाथी/Appellant)

अपीलाथी की ओर से/Appellant by : Shri.P.N.Rajan, Advocate प्रत्यथी की ओर से/Respondent by : Shri.Shiva Srinivas, CIT सुनवाई की तारीख/Date of Hearing : 24.03.2026 घोषणा की तारीख/Date of Pronouncement : 05.05.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : The present appeal is filed by the assessee against the order dated 16.07.2025 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “ld.CIT(A)”), dismissing the appeal filed by the assessee against the assessment order dated 10.12.2024 passed u/s.147 read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), pertaining to Assessment Year (A.Y.) 2019-20. 2. At the outset, there is a delay of 84 days in filing of appeal before this Tribunal. We have perused the condonation of delay application and the

:-2-: ITA. No:3933/Chny/2025 affidavit filed by the assessee and are of the view that there is sufficient cause for the delay in filing the appeal. Therefore, the delay is condoned and the case is taken up for adjudication on merits. 3. The assessee is an individual, carrying on business and has filed his return of income on 19.05.2023 declaring a total income of Rs.3,51,010/- u/s.44AD of the Act which includes income from commission to the tune of Rs.2,28,665/-. The total gross receipts were shown to the tune of Rs.29,59,816/-. As per the information, the assessee was in receipt of commission of Rs.10,79,802/- from one M/s.Dream Makers Global Pvt. Ltd. and hence the assessee’ case was reopened by way of notice dated 29.03.2023 issued u/s.148A(b) of the Act. Subsequently, order u/s.148A(d) of the Act was passed on 21.04.2023 and on the same day, a notice u/s.148 of the Act was issued upon the assessee. In response to the notice u/s.148 of the Act, the assessee filed his return of income admitting the gross receipts as Rs.29,59,816/- and declared a net profit of Rs.2,96,335/- and offered Rs.8,45,088/- as income from other sources. 4. The Assessing Officer, however, noted that the assessee had credit to the tune of Rs.40,92,971/- in his savings account and Rs.53,13,456/- in his current account, both held with the ICICI bank under the name of SK trading. These credits totally amount to Rs.90,06,427/- and of this, the assessee has shown gross receipts of Rs.29,59,816/- only. The Assessing Officer was of the opinion that the assessee has failed to disclose the remaining sum of Rs.64,46,611/-, which is the business receipts of the assessee and therefore net profit on the undisclosed business receipts were estimated at 8% and thus proposed to add a sum of Rs.5,15,728/- as the business income of the assessee. To this effect a show-cause notice dated 03.10.2024 was issued to the assessee. The assessee, in response to the show-cause notice, submitted that the proposed addition is done without considering the debit entries since the assessee frequently transferred monies from these accounts to his individual account for personal needs. Moreover, the assessee also makes

:-3-: ITA. No:3933/Chny/2025 insurance payments to Star Insurance Premium and other insurance companies on behalf of his clients which he reimburses from them. 5. In order to pay the insurance premium for his clients, the assessee uses his credit card and the dues on the same on the same is paid using the monies in the savings and current accounts. The assessee further submitted that the Assessing Officer has not rejected the books of accounts in which the profit declared by the assessee stood at Rs.9,67,430/- and hence, if the proposed addition of Rs.5,15,728/- is made, it will amount to double taxation. However, the Assessing Officer was not satisfied with the reply of the assessee and added a sum of Rs.5,15,728/- as business income of the assessee. Subsequently, the Assessing Officer passed the assessment order u/s.147 read with section 144B of the Act on 10.12.2024 wherein a sum of Rs.5,15,728/- was added as the income of the assessee and thereby raised a demand of Rs.4,68,279/-. 6. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld.CIT(A) on 05.04.2025. Thereafter, notices were issued upon the assessee who responded to the same. In the appellate proceedings, the assessee recapitulated its submission and relied on the decision of the Income Tax Appellate Tribunal, Jaipur Bench in Elcon Druga and Formulation ltd. V. ITO [ITA No.995/JP/2013]. The ld.CIT(A), after considering the reply of the assessee and Section 44AD of the Act, confirmed the order of the Assessing Officer. The ld.CIT(A) in his order stated that the plea of the assessee that once it is decided to estimate the profit, he cannot consider the profit declared as per books, is not maintainable in the context of section 44AD.The Assessing Officer has not rejected the books within the meaning of Section 145(3) of the Act since the essence of section 44AD is to presume an income without maintaining any books of accounts. The Ao has also not estimated any profit in addition to the profit as per books. While stating so, he also noted that the gross receipts of Rs.90,06,427/- identified by the Assessing Officer is higher than gross receipts declared by the assessee to the tune of Rs.29,59,816/-. In such an instance, for the proper application of Section 44AD, the Assessing Officer has computed

:-4-: ITA. No:3933/Chny/2025 8% on Rs.64,46,611/-, being the difference in the gross receipts declared by the assessee and the gross receipts found by the Assessing Officer, which is the total bank credits, is correct. He further added that although the assessee has claimed that some of the credits are towards specific transactions, the assessee has failed to demonstrate it with relevant documents. The facts of the case laws relied upon by the assessee are entirely different from the facts of the assessee’s case. For these reasons, the ld.CIT(A) sustained the addition of the Assessing Officer and passed an order u/s.250 of the Act on 16.07.2025 confirming the order of the Assessing Officer. 7. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us. 8. Before us, the ld.AR for assessee reiterated their submissions made before the lower authorities. The assessee also contended that the assessee had not declared his income u/s.44AD of the Act and in support of the same, the copy of ITR was placed on record. 9. Per contra, the ld.DR, reiterated the findings of Assessing Officer and ld.CIT(A) and prayed that the appeal be dismissed. 10. We have heard rival submissions, perused the materials on record and gone through the orders of the authorities. It is an admitted fact that the assessee had gross receipts of Rs.90,06,427/- out of which only Rs.29,59,813/- was offered as gross receipts and the tax thereon was paid under the presumptive taxation. The ITR filed by the assessee specifies that the assessee had declared his income u/s.44AD of the Act and the sales figure was offered only at Rs.29,59,813/-. As such, the remaining sum of Rs.64,46,611/- is also subjected to taxation since this figure represents the gross receipts of the assessee. Section 44AD of the Act provides for the presumptive scheme wherein an assessee can declare profits @ 8% or above on the gross receipts. However, the assessee must offer the entire gross receipts under the presumptive scheme. Merely because a part of the gross receipts was offered

:-5-: ITA. No:3933/Chny/2025 does not discount the assessee from being taxed, if the whole of gross receipts is not offered. 11. The assessee initially filed the return declaring income u/s.44AD of the Act on the basis of gross receipts of Rs.29,59,816/-. However, during the assessment proceedings, it was found that there were substantial credits in the assessee’s bank accounts aggregating to Rs.90,06,427/-. The assessee could not satisfactorily reconcile or substantiate the nature of these credits with supporting documentary evidence. The explanation that certain amounts pertained to transfers, insurance payments on behalf of clients or credit card settlements remained largely uncorroborated. Even before us, no materials were placed on record. 12. In such circumstances, the Assessing Officer was justified in treating the differential amount of Rs.64,46,611/- as undisclosed business receipts. Once additional business receipts are identified, the application of presumptive taxation u/s.44AD of the Act to such receipts also is reasonable and legally sustainable approach. The estimation of income at 8% on the undisclosed receipts, resulting in an addition of Rs.5,15,728/-, is in consonance with the scheme of section 44AD of the Act. 13. The contention of the assessee that the books of accounts were not rejected u/s.145(3) does not advance his case. As per section 44AD of the Act, maintenance and reliance on detailed books is not the foundation; rather, income is computed on a presumptive basis. Further, the Assessing Officer has not made a separate estimation over and above declared profits but has only brought to tax income embedded in unaccounted business receipts. 14. The plea of double taxation is also not tenable, as the addition pertains to receipts that were never disclosed in the original computation or in response to the return filed u/s.148 of the Act. The burden was on the assessee to prove that the bank credits did not represent business turnover, which he failed to discharge.

:-6-: ITA. No:3933/Chny/2025 15. In the present facts and circumstances of the case, we are of the considered opinion that the findings of the ld.CIT(A) are well-reasoned. Accordingly, the addition made by the Assessing Officer and sustained by the ld.CIT(A) is upheld. The grounds raised by the assessee are dismissed. In view of the above discussion, we hereby confirm the addition made as business income to the tune of Rs.5,15,728/- by dismissing the grounds of appeal raised by the assessee and ordered accordingly. 16. In this result, the appeal of the assessee is dismissed.

Order pronounced in the court on 05th May, 2026 at Chennai. Sd/- Sd/- (एबी टी वर्की ) (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) (ABY T VARKEY) लेखासदस्य/Accountant Member न्यायिर्क सदस्य/Judicial Member

चेन्नई/Chennai, ददनांक/Dated, the 05th May, 2026. Devadas आदेश की प्रतितलति अग्रेतिि/Copy to: 1. अिीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– NFAC 4. तिभागीय प्रतितनति/DR 5. गार्ड फाईल/GF DEVADAS Digitally signed by DEVADAS GOPALANA GOPALANACHARY Date: 2026.05.11 CHARY 14:53:14 +05'30'