Kishan Kumar Gupta Vs ITO (ITAT Delhi)
In Kishan Kumar Gupta vs ITO (ITA No. 3842/DEL/2019, order dated 12.02.2025), the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) partly allowed the assessee’s appeal concerning additions under Sections 68 and 44AD of the Income Tax Act, 1961.
The assessee, a trader in agro and vegetable products, declared income under the presumptive taxation scheme of Section 44AD based on 8% of turnover amounting to ₹52,80,325 for Assessment Year 2014–15. He claimed that he was not required to maintain books of accounts. During assessment, the Assessing Officer (AO) found total cash deposits of ₹1,58,95,000 in the assessee’s bank account with Punjab National Bank. Out of this, the AO accepted ₹52,80,325 as sales receipts under Section 44AD but treated ₹78,00,000—transferred to T.A.H.A. Traders—as unexplained cash credits under Section 68, since the assessee failed to substantiate the source of these funds. The remaining ₹28,14,676 was treated as turnover, and an ad hoc addition of 8% profit (₹2,25,676) was made.
On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] confirmed both additions, holding that the payment of ₹78,00,000 was preceded by cash deposits and that the assessee had failed to provide documentary evidence of the genuineness of the transaction or the source of the funds. The CIT(A) observed that the explanation that the amount represented trade advances through banking channels was unsubstantiated.
