Addition u/s 68 impermissible as income estimated u/s 44AD of the Income Tax Act

Mahendra Kumar Vs NFAC (ITAT Bangalore)

ITAT Bangalore held that as income is estimated under section 44AD of the Income Tax Act, so addition under section 68/69A of the Income Tax Act is impermissible.

Facts-The assessee, an individual engaged in the business of distribution and sale of pharmaceuticals and medicines on rental basis filed its return of income on for A.Y. 2017-18 by declaring an income of Rs.8,27,300/-.

During the course of assessment proceeding, notice u/s. 143(2) of the Act was issued and the assessment was finalised ultimately upon making addition of Rs.1,00,00,000/- in respect of cash deposited in the bank accounts representing sales of pharmaceuticals/medicine treated as unexplained cash credits u/s. 68 of the Act and Rs.10,85,157/- upon estimation of income u/s. 44AD of the Act at 8% of the sales and the difference between the total income declared and the income estimated.

Conclusion-Held that the ld.AO in assessee’s case has applied section 44AD of the Act and estimated profit at 8% of the turnover and in that view of the matter no further addition under section 68/69A of the Act is permissible.

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