Hemant M. Shah HUF Vs ITO (ITAT Mumbai)
In a significant ruling for taxpayers opting for presumptive taxation schemes, the Income Tax Appellate Tribunal (ITAT) Mumbai bench has held that choosing the presumptive taxation scheme under Section 44AD of the Income Tax Act does not grant immunity from additions made under Section 68 for unexplained cash credits, particularly in cases of suspicious transactions. The decision came in the appeal of Hemant M. Shah HUF versus the Income Tax Officer (ITO), where the assessee challenged an addition of Rs. 53,09,550/- related to alleged fictitious purchases.
The core of the appellant’s argument rested on the premise that when income is declared under the presumptive taxation scheme of Section 44AD, which begins with a non-obstante clause, no other additions, including those under Section 68, can be made. The assessee also contended that Section 68 was not applicable to the facts of their case.
The dispute originated when the Assessing Officer (AO) received information via the “Insight Portal” flagging “Suspicious Transactions Report” concerning “Antique Exim Pvt. Ltd.” This company was under investigation by the Directorate of Revenue Intelligence (DRI) for allegedly importing cheap diamonds at inflated rates to facilitate outward remittances. During this investigation, “Namo Diamonds Pvt. Ltd.” was identified as a potential conduit or accommodation entry provider.
