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Facts
The case involved a deceased assessee who sold glass bangles and declared income on a presumptive basis. The Assessing Officer (AO) reopened the case to verify cash deposits, suspecting they were not part of sales proceeds after reducing returned income.
Held
The Tribunal held that since the assessee declared income on a presumptive basis under Section 44AD, she was not required to maintain books of accounts. The deposits were considered part of business sales proceeds as they were less than the declared turnover.
Key Issues
Whether cash deposits in the bank account, less than the declared turnover, can be accepted as business sales proceeds when income is declared on a presumptive basis under Section 44AD.
Sections Cited
143(3), 147, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, CHANDIGARH
Before: HON’BLE SHRI LALIET KUMAR & 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) 2015- 16 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 23-01-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143 (3) r.w.s. 147 of the Act on 10-12- 2018. The deceased assessee is represented by Shri Vishal Gupta. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.
To verify cash deposit of Rs.30.48 Lacs as made by the deceased assessee in her bank account, the case was reopened. It transpired that the assessee used to sell glass bangles in various markets in India. The assessee made sales of Rs.46.89 Lacs and declared income on presumptive basis u/s 44AD. The bank deposits were stated to be part of sales proceeds. However, Ld. AO, after reducing returned income of Rs.3.75 Lacs, added the remaining deposit of Rs.26.73 Lacs in the hands of the assessee.
In the first appeal, the assessee refuted the allegation of Ld. AO that she was not carrying out any business. It was demonstrated that the assessee was engaged in business activities as was evident from returns of income for AYs 2010-11 onwards. The Ld. CIT, though concurred with this fact, observed that there was sudden jump in sales from Rs.4.83 Lacs to Rs.46.89 Lacs in this year. The assessee could not explain the same satisfactorily and therefore, the impugned addition was confirmed against with the assessee is in further appeal before us.
The undisputed position that emerges is that the deceased assessee has carried out this business since past many years. The only reason to disallow the claim of the assessee was that there was sudden jump in sales. It could be seen that the assessee has declared income on presumptive basis u/s 44AD and therefore, she was not required to maintain any books of accounts. No other source of income for the deceased assessee has been shown for us. The deposits are much less than the turnover as reflected by the assessee. Under these circumstances, the explanation that the deposits were part of business sales proceeds is to be accepted. Therefore, we delete the impugned addition as made by Ld. AO. The Ld. AO is directed to accept the returned income of the assessee. 5. The appeal stand allowed. Order pronounced on 22-04-2025.