REENA BHATIA, LUDHIANA,PUNJAB vs. JAO THE INCOME TAX OFFICER WARD 7(1) LDH, PUNJAB

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ITA 339/CHANDI/2025Status: DisposedITAT Chandigarh04 August 2025AY 2018-2019Bench: SHRI RAJPAL YADAV (Vice President), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)3 pages

AI SummaryAllowed

Facts

Ms. Reena Bhatia, engaged in trading shares/derivatives and manufacturing, declared presumptive income u/s 44AD. The AO doubted the genuineness of her business, treating some sales as unexplained money (u/s 69A) and others as income from other sources, completing the assessment at Rs. 39.34 Lacs. The CIT(A) confirmed this due to lack of detailed sales breakup.

Held

The Tribunal found that the assessee's presumptive income declared u/s 44AD was supported by bank credits and VAT/GST returns, and no detailed books were required under that section. Citing acceptance of similar income in a prior AY 2017-18 assessment u/s 143(3), the Tribunal ruled that the AO's addition of Rs. 34.75 Lacs was based on presumptions and was unsustainable. The presumptive income as declared by the assessee u/s 44AD is to be accepted.

Key Issues

Whether the Assessing Officer was justified in disallowing presumptive income declared under Section 44AD and treating sales as unexplained money or income from other sources, despite the assessee furnishing VAT/GST returns and previous acceptance of similar income.

Sections Cited

143(3), 44AD, 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH

Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 10-01-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 03-06-2021. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

The assessee derived income from trading of shares and derivatives. She also carried out manufacturing of engineering goods under proprietorship concern by the name M/s Shubham Engineers. The assessee prepared combined financial statements. On sale of shares / derivatives, the assessee arrived at business profit of Rs.4.01 Lacs whereas the assessee also credited business income u/s 44AD @6% on turnover of Rs.34.75 Lacs and declared income of Rs.2.08 Lacs which was credited in its Profit & Loss Account. The return of income as filed by the assessee for Rs.4.58 Lacs was subjected to scrutiny.

In support of business turnover, the assessee furnished copies of VAT / GST returns. Since sale in July was shown as Nil, Ld. AO doubted the genuineness of the business. In the result, the sale figures for April to June, 2017 for Rs.17.15 Lacs were held to be unexplained money u/s 69A whereas the sales for subsequent months for Rs.17.59 Lacs were held to be income from other sources. Finally, the assessment was completed at Rs.39.34 Lacs. The Ld. CIT(A) confirmed the assessment on the ground that the assessee did not furnish party-wise sales breakup and vendors details. Aggrieved, the assessee is in further appeal before us.

From the facts, it emerges that the assessee has declared presumptive profit of 6% on bank credits which would show that the sales turnover have happened through banking channels. The sales turnover is evidenced by VAT / GST returns. In terms of provisions of Sec.44AD, the assessee is not required to maintain regular books of accounts and accordingly, not required to furnish these details to lower authorities. Similar business income is reflected by the assessee in AY 2017-18 which have been accepted by Ld. AO in scrutiny assessment u/s 143(3) vide order dated 20-12-2019. The conclusion that the business is not genuine is on mere presumptions only without there being any supporting evidence on record. Therefore, impugned addition of Rs.34.75 Lacs is unsustainable on facts. The presumptive income as declared by the assessee u/s 44AD is to be accepted. We order so.