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Facts
The assessee, in the business of ticket reservation, declared income of Rs. 4,47,180/-. The Assessing Officer made an addition of Rs. 34,05,424/- under Section 68 for unexplained cash deposited from ticket sales, which was upheld by the CIT (Appeals).
Held
The Tribunal held that the assessee, opting for presumptive taxation under Section 44AD with turnover below Rs. 2 Crores, had correctly offered 8% of the gross turnover. The addition of Rs. 34,05,424/- under Section 68 by the authorities, based on cash deposits that were part of the turnover, was found to be erroneous and deleted.
Key Issues
Whether the addition under Section 68 for unexplained cash can be sustained when the assessee has declared income under Section 44AD based on their gross turnover, and the cash deposits are part of that declared turnover.
Sections Cited
68, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
The assessee is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 12.11.2024 passed for assessment year 2017-18.
The solitary issue of the assessee is that CIT (Appeals) has erred in confirming the addition of Rs.34,05,424/-.
ITA No.77/CHD/2025 A.Y.2017-18 2
With the assistance of ld. Representative, we have gone through the record carefully. A perusal of the assessment order would reveal that assessee has filed his return of income on 05.08.2017 declaring total income of Rs.4,47,180/-. The assessee, at the relevant time was running business of ticket reservation, for which he accepted cash for booking of tickets from clients. The same was deposited in the bank account. The ld.AO found that assessee has deposited a sum of Rs.34,05,424/- which has been added with the aid of Section 68 of the Income Tax Act on account of unexplained cash.
The appeal to the ld.CIT (Appeals) did not bring any relief to the assessee.
We find that stand of the assessee was that he has been offering income u/s 44AD of the Act. His gross turnover does not exceed Rs.2 Crores. The assessee is not required to maintain any account if his turnover does not exceed to the prescribed limit provided u/s 44AD and on the turnover, assessee has offered income @ 8%. We find that assessee has offered income @ 8% of the gross turnover which was only Rs.34,05,424/-. Both the Revenue Authorities have erred in A.Y.2017-18 3 not appreciating the transaction in right perspective and unnecessarily making the addition u/s 68 of the Act. Therefore, we allow the appeal and delete the addition made by the AO and confirmed by the CIT (Appeals).
In the result, appeal of the assessee is allowed.
Order pronounced on 06.08.2025.