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Facts
The assessee, engaged in the catering business, declared income under Section 44AD. The AO added the entire cash deposit of ₹68,00,000 as the source was not satisfactorily explained, while the CIT(A) partly deleted the addition. The assessee contended that the cash was received in the ordinary course of business.
Held
The Tribunal held that if an assessee opts for the presumptive taxation scheme under Section 44AD and offers income accordingly, there is no obligation to explain individual cash deposit entries. The addition sustained by the CIT(A) was set aside.
Key Issues
Validity of addition made on cash deposits when income is declared under Section 44AD and whether explanation of each deposit is required.
Sections Cited
44AD, 143(1), 143(2), 142(1)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 19.11.2025 for the AY 2014-15.
The only issue raised by the assessee in the grounds of appeal is against the confirmation of addition of ₹36,62,530/- by the ld. CIT (A) as made by the ld. AO in respect of cash deposits during the year.
The facts in brief are that the assessee filed the return of income on 12.02.2014, which was processed u/s 143(1) of the Act. the case of the assessee was selected for scrutiny and the notice u/s 143(2) and 142(1) of the Act, along with questionnaire were duly issued and served upon the assessee. The assessee furnished before the ld. AO all the details and information as called for. During the year the assessee deposited cash of ₹68 lacs in his bank account. Accordingly,
In the appellate proceedings lde. CIT(A) after taking into account the evidences and submissions of the assessee , partly allowed the appeal by deleting the addition to the tune of ₹ 31,37,470/-.
After hearing the rival contentions and perusing the materials available on record, we find that the assessee is running a catering business under trade license in the name of CRUMBILICIOUS-DIPYAMAN DUTT No. 0062576 for F.Y. 2013-14 dated 17.06.2023. During the year, the assessee disclosed total turnover of ₹65,68,500/- and returned a profit of ₹5,56,133/- u/s 44AD of the Act on presumptive basis. The assessee is not maintaining any books of accounts. The ld. CIT (A) has allowed the relief to the assessee only to the extent of debit entries in the bank account of the assessee, however, the ld. CIT (A) failed to appreciate the fact that the assessee has filed the return of income on presumptive basis and this is also undisputed that the assessee is engaged in the business of catering etc. under proper trade license issued by Municipal Corporation, Kolkata. The assessee submitted before us that the money was received from the business in the ordinary course of business and therefore, the ld. CIT (A) has not appreciated the fact correctly and only deleted the addition to the tune of ₹31,37,470/- based upon debit entries in the bank account as against the total disallowance and addition made by the ld. AO of ₹68
In our opinion, once the assessee has opted the presumptive scheme and offered the income u/s 44AD of the Act, no other addition can be made. The case of the assessee is squarely covered by the decision of Punjab and Haryana High Courtin case of Commissioner of Income- tax-II vs. Surinder Pal Anand [2010] 192 Taxman 264 (Punjab & Haryana)/[2011] 242 CTR 61 (Punjab & Haryana)[29-06-2010], wherein it has been held that once the assessee has shown the income at the rate of 8% u/s 44AD of the Act then there is no obligation to explain each and every entry of cash deposit in the bank account. We also note that the addition has been made by the ld. AO merely on the ground that there was non-compliance on the part of the assessee. Under these circumstances, we are inclined to set aside the order of the ld. CIT (A) and direct the ld. AO to delete the addition.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 17.02.2026.