Case Law Details
Mahesh K. Bhutiya Vs ITO (ITAT Rajkot)
We have noted that the Revenue has accepted the income returned by the assessee from his business by applying 5% profit rate to his turnover of Rs. 20,85,825/-. It is evident therefore that it is an accepted fact that the assessee is a very small businessman and it is common knowledge that such small businessmen conduct almost their entire business in cash. Therefore it cannot be ruled out completely that the entire turnover of the assessee was in cash. Having said so another very pertinent fact is that neither do such small businessmen maintain any books of accounts worth its while nor are they required under law to maintain books of accounts as per Section 44AD of the Act, as per which the assessee had returned the impugned income on presumptive basis. But having said so, the assessee still needs to substantiate his turnover with certain documentary evidences so that the correct estimation of his net profits by applying the rate specified under the section can be made. However in the peculiar facts of the case before us the assessee was asked to justify this fact after a lapse of six years in reassessment proceedings. Considering the fact that he was a very small businessman, operating in unorganized sector, it was asking for too much to produce bills to substantiate his turnover in cash that too after a lapse of six years. In these peculiar facts and circumstances we are of the view that having accepted the fact that the assessee had conduced business to the tune of Rs. 20 lakhs odd which in all probability was conducted in cash and the department having found out no other source of income available with the assessee, the entire deposits of Rs. 18,66,000/- in cash in the bank can be safely attributed to the business receipts of the assessee only. We may add that very small businessmen like the assessee for whom the law itself provides a convenient method for declaring their incomes by returning taxes on at a presumptive rate, thus doing away with the onerous requirement of maintaining books of account and other documents , noting that it acted as a detterent to such businessmen from declaring their income ,the Revenue is expected to take a considerate and holistic view on such matters and not waste its efforts and energies in making such paltry additions .
In view of the above facts and circumstances we hold that that the addition of Rs. 18,66,000/- on account of alleged unexplained cash deposit be deleted.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
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