ITAT deletes section 69A addition for Income Declared under section 44AD

Ankit Shankar Lal Tanwani Vs ACIT (ITAT Nagpur)

In the case of Ankit Shankar Lal Tanwani vs. ACIT (Income Tax Appellate Tribunal Nagpur), the appellant, Ankit Shankar Lal Tanwani, contested the order passed by the Commissioner of Income Tax (Appeals)–3, Nagpur, for the assessment year 2019-20. The primary issue revolved around the addition of income made by the Assessing Officer under section 69A of the Income Tax Act, 1961, treating it as unexplained money.

The appellant, engaged in the business of Kirana and general items, filed his original return of income under section 139(1) of the Act, declaring a total income of Rs. 17,05,640/-. During a search and seizure action conducted, cash amounting to Rs. 21,50,000/- was found in the appellant’s locker. The Assessing Officer treated the entire business income shown by the appellant, amounting to Rs. 17,05,640/-, as unexplained money under section 69A, as it lacked supporting bills and vouchers for turnover. The Commissioner of Income Tax (Appeals) upheld the Assessing Officer’s decision, considering the appellant’s income to be abnormal profit.

The appellant contended that since he had filed income tax returns under section 44AD of the Act, which does not require maintenance of books of account, section 69A was not applicable. The appellant provided sales account details to support his claimed income. The Tribunal reviewed relevant case laws cited by both parties.