Ammati Venkatachalapathisetty Satishkumar Vs ITO (ITAT Bangalore)
Presumptive Taxation U/s 44AD – Cash Deposits Within Turnover Cannot Be Treated as Unexplained – Additions Based Only on Survey Statement Deleted – ITAT Bangalore
Assessee, a retail trader running proprietary concern M/s Kumar Traders, declared income under presumptive scheme u/s 44AD. During survey proceedings, AO made multiple additions including ₹19 lakh cash deposits, ₹22.75 lakh investment in shop, ₹28.73 lakh income admitted during survey, and ₹22.75 lakh estimated profit based on alleged unaccounted sales across different assessment years.
For AY 2015-16, AO treated ₹19 lakh cash deposits as unexplained and ₹22.75 lakh investment in shops as unexplained investment. ITAT held that once turnover of ₹56.62 lakh declared under section 44AD was accepted and income offered at a higher rate than prescribed, cash deposits within the scale of business receipts cannot be treated as unexplained. Further, investment in shops was supported by loan, withdrawals, partition receipts and other funds, and no defect in documentary evidence was found. Accordingly, both additions were deleted.
For AY 2017-18, AO added ₹28.73 lakh income admitted during survey and ₹45,000 cash deposit. ITAT held that the amount allegedly admitted during survey formed part of the declared business turnover of ₹43.57 lakh, and once income is computed under presumptive taxation u/s 44AD, separate addition of business receipts would lead to double taxation of the same turnover. It was further held that statement recorded during survey alone cannot justify addition without corroborative evidence. Both additions were deleted.
For AY 2018-19, AO estimated turnover by extrapolating average daily sales admitted during survey, worked out alleged unaccounted sales and computed profit thereon. ITAT held that such extrapolation based merely on approximate statement during survey without supporting evidence amounts to guesswork. In absence of incriminating material such as unrecorded bills, excess stock, or defects in accounts, estimation of unaccounted sales cannot be sustained. Hence, the addition of ₹22.75 lakh sustained by CIT(A) was also deleted.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
