Case Law Details
Pramod Pareek Vs ITO (ITAT Jaipur)
Conclusion: Where income was offered on presumptive basis under section 44AD, there was no need to maintain books of accounts therefore addition made against the vegetable vendor was deleted for failure to substantiate the unexplained cash deposit.
Held: During the course of assessment proceedings, AO found that assessee had made cash sales of Rs.17,76,160/- against cash purchase of Rs. 1,90,500/- only. He submitted that he was not required to maintain any books of accounts as income was declared u/s 44AD for which assessee furnished copies of P&L account as well as balance sheet. AO noted that against the cash deposits assessee issued cheque in the name of share brokers almost on the same date for which no detailed had been furnished by assesee. Thus AO observed that it was failure on the part of the assessee to substantiate the unexplained cash deposit of Rs. 17,01,150/- in his bank account and AO treated as income of assessee under the head ‘’Income from other sources’’. Thus, AO completed assessment u/s 147 r.w.s. 143(3) and made addition at Rs.17,01,150/-. It was held that assessee was a vegetable vendor and he declared his income on presumptive basis u/s 44AD of the Act @ 8% being Rs. 1,42,093/-. Being income declared u/s 44AD, assessee was not required to maintain books of accounts. It was noted from assessment order wherein the AO alleged that the assessee made cash sale of Rs.17,76,160/- against cash purchase of Rs. 1,90,500/- for which assessee submitted that out of the cash deposited by the assessee in his bank account payments were made for purchase of vegetables, resultantly, out of total purchases of Rs. 11,00,997/-, Rs.9,10,947/- were made through banking channel, Rs.1,90,500/- were in cash and Rs. 1,25,000/- remained as payable and this factual position was clearly disenable from the books of accounts and financial statements submitted by the assessee. It was also noted from the assessment order that assessee had paid interest of Rs.57,935/- on the outstanding balance of the bank account maintained by the assessee and assessee was having cash balance with him. It was noted that the AO had considered certain percentage at which interest had been paid by the assessee i.e. 22.20% but the AO had not given any basis of arriving at such interest percentage. Assessee had supplied all the details before the lower authorities like books of accounts, details of financial statement and bank account etc. but it was ignored. Thus, the addition sustained amounting to Rs.13,83,300/- by CIT(A) was deleted.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal filed by the assessee is directed against order of the ld. CIT(A)- 2, Jaipur dated 7-02-2020 for the assessment year 2008-09 wherein the assessee has raised the following grounds of appeal.
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