Tejsingh Dhansingh Rajpurohit Vs ITO (ITAT Mumbai)
Section 68 invokable only if books are maintained by Assessee; No books maintained u/s 44AD? Section 68 addition not sustainable: rules ITAT Mumbai
The key issue before the Tribunal was the addition u/s 68 for unexplained cash and cheque deposits in the bank.
Assessee, a trader in plastic items filed return under presumptive taxation u/s 44AD. Assessee made total deposits in banks by cash or otherwise at Rs 54,05,402 whereas the gross sales/receipts were disclosed at Rs 27,14,204 only. AO added the difference of ₹26.91 lakh as unexplained. ITAT in earlier round remanded the matter for reconciliation. AO recomputed unexplained deposits at Rs 14.51 lakh (cash Rs11.79 lakh + cheque Rs2.71 lakh) and made addition u/s 68. Assessee claimed these were receipts from earlier year’s debtors, but failed to furnish evidence. CIT(A) upheld AO’s addition.
Tribunal ruled that maintenance of books by Assessee is sine qua non for making addition u/s. 68. Since Sec 44AD does not obligates Assessee to maintain books, the provisions of sec 68 cannot be invoked where the assessee has filed return of income under the provisions of sec 44AD without maintaining books of account.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
