8% Profit Estimation on Cash Deposits for AY 2017-18 Justified: ITAT Lucknow

In our view, the legal heir of late assessee has furnished evidence to show that, prior to his death, the assessee was running a Kirana business which had a turnover of Rs.95,83,320/- that had been verified by the VAT authorities in the course of an assessment. We observe that the non-compliance before the ld. AO is explained by the illness and subsequent demise of the assessee during the period of assessment. Therefore, the lack of explanation furnished before the ld. AO, in the given circumstances of the case, should not be viewed as an attempt to evade notices but has to be seen in the light of the circumstances that befell the assessee and his family. Since, the total amount of cash deposit and even the total amount of credits in the said bank account are well below the turnover of the late assessee’s business, and since the ld. AO has verified this in the course of remand proceedings and not recorded any adverse comments, when given the opportunity to do so, we are of the opinion that the ld. CIT(A) is justified in accepting the request of the assessee’s legal heir to assess the income from the said business @ 8% of gross receipts in view of the provisions of section 44AD. Therefore, we uphold the order of the ld. CIT(A) and dismiss the appeal of the Revenue