Surender Singh Vs ITO (ITAT Delhi)
Sec.44AD Shield: Business Receipts in Bank Not Unexplained Cash Credits; Tribunal Deletes Addition on Cash Deposits – Already Counted in Presumptive Income
Assessee had filed his return of income for AY 2012-13 under the presumptive taxation scheme u/s 44AD, declaring turnover of ₹21.42 lakh & income of ₹2.54 lakh (business profit ₹2.51 lakh). The case was reopened because Assessee had made cash deposits of ₹15.91 lakh in his bank account, which AO treated as unexplained & added back to income.
Assessee explained that the deposits were nothing but business receipts forming part of his turnover, which was already subjected to presumptive taxation. It was contended that out of the total turnover of ₹21.42 lakh, cash turnover was exactly ₹15.91 lakh, matching the bank deposits. Moreover, withdrawals from the bank (₹21.42 lakh) were also available to substantiate cash circulation. Hence, there was no case for separate addition.
AO, however, ignored this explanation & made addition of the full ₹15.91 lakh as unexplained deposits. CIT(A) confirmed the addition, rejecting Assessee’s reconciliation of deposits & withdrawals.
On second appeal, ITAT found merit in Assessee’s claim. Tribunal observed that once AO had accepted turnover & income declared under Section 44AD, the cash deposits representing that turnover could not again be treated as unexplained cash credits. The deposits were clearly business receipts & fully covered by the presumptive scheme. Assessee also had sufficient cash available from earlier withdrawals to support the deposits.
