Anshika Mishra Vs ACIT (ITAT Delhi)
Delhi ITAT Deletes 44AD Addition – Gross Receipts Already Offered to Tax Cannot Again Be Treated as Unexplained Credits u/s 68
The Delhi ITAT deleted additions made against the assessee after holding that receipts already disclosed under the presumptive taxation scheme of section 44AD cannot again be taxed as unexplained cash credits under section 68. The Tribunal strongly reiterated that the same receipts cannot be subjected to double taxation merely because the AO was dissatisfied with the supporting documentation.
The assessee, an individual, had filed return declaring income of about ₹5 lakh under section 44AD on gross receipts of ₹15.95 lakh. Pursuant to search proceedings conducted in the family group, reassessment proceedings were initiated and the AO treated the very same gross receipts declared under section 44AD as unexplained cash credits u/s 68. An additional sum of ₹1 lakh cash deposit was also treated as unexplained.
The assessee argued that once income from receipts had already been offered under presumptive taxation, the AO could not again tax the entire receipts as unexplained credits. It was further contended that section 68 itself was inapplicable because the assessee, being covered under section 44AD, was not required to maintain books of account and bank statements cannot be equated with “books” for the purpose of section 68.
The Tribunal noted an important factual aspect — arising from the same search proceedings, same appraisal report, same invoices and same transacting parties, the CIT(A) for AYs 2021-22, 2022-23 and 2023-24 had already deleted similar additions after accepting the genuineness of transactions and finding absence of any independent enquiry by the AO.
The ITAT then relied extensively on the Jaipur Tribunal ruling in Dr. Vishan Swaroop Gupta v. ITO, which in turn followed the Bombay High Court decision in CIT v. Bhaichand N. Gandhi, to reiterate that a bank passbook or bank statement is not a “book of account” maintained by the assessee. Therefore, in absence of books maintained by the assessee, section 68 could not be invoked merely on the basis of bank entries.
The Tribunal further observed that the assessee had furnished documentary evidences supporting the business receipts and the additions were made largely on assumptions without any corroborative material. The separate addition of ₹1 lakh cash deposit was also deleted after accepting the explanation that the deposit came from earlier withdrawals and personal cash availability.
Accordingly, the Delhi ITAT deleted the additions in entirety and allowed the assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT DELHI
