Mukhatar Ahamed Shaukat Ali Gotyalakar Vs ITO (ITAT Bangalore Bench)
Books Cannot Be Street-Vended Away u/s 145(3): No 8% Profit Estimation Without First Rejecting Audited Accounts
Summary: The assessee was an individual engaged as a street vendor selling readymade garments. He purchased goods & sold them to customers for cash, which was regularly deposited into his bank account.
The assessee did not file his return of income u/s 139(1) for AY 2018-19. Based on information concerning the cash deposits, reassessment proceedings were initiated & notice u/s 148 was issued.
In response, the assessee filed his return of income. Thereafter, notices u/ss 143(2) & 142(1) were issued seeking details concerning the nature & source of the cash deposits.
Cash Deposits Explained as Daily Business Sales
The assessee explained that the bank deposits represented proceeds from the daily cash sales effected in the ordinary course of his street-vending business.
- audit report in Form 3CB;
- profit and loss account;
- balance sheet; &
- books-based computation of business income.
He also pointed out that returns had been filed for AYs 2019-20 to 2022-23 along with audit reports. Therefore, he requested the AO not to proceed with a best judgment assessment u/s 144.
The AO subsequently issued another notice u/s 142(1) seeking further information relating to the cash deposits. The assessee did not respond to this notice.
