Priti Suresh Purohit Vs ACIT (ITAT Mumbai)
Presumptive Income Upheld; Technical Reopening Issues- JAO vs FAO- Kept Open Pending Supreme Court—ITAT Deletes Section 69A Addition under 44AD
The Mumbai SMC Bench of the ITAT allowed the assessee’s appeals for AYs 2020-21 to 2022-23, holding that receipts duly offered under the presumptive taxation scheme of section 44AD cannot be treated as unexplained money under section 69A, merely on the basis of a statement recorded during search.
The assessee, a small labour contractor, had declared gross receipts of ₹4.78 lakh and offered ₹1.25 lakh (over 26%) as presumptive income, far exceeding the statutory presumptive rate. The Assessing Officer rejected the claim mainly relying on the assessee’s statement recorded under section 132(4) describing herself as a housewife and on the absence of books of account or expense entries, and consequently taxed the entire receipts as unexplained money under section 69A.
The Tribunal held that maintenance of books is not mandatory under section 44AD, and the assessee had satisfactorily explained the source of receipts, supported by Form 26AS reflecting TDS deduction, disclosure in returns filed prior to the search, and the fact that similar presumptive income was accepted in a subsequent year in an assessment under section 143(3). It was reiterated that a statement without corroborative evidence cannot by itself justify an addition, particularly when no unexplained cash was found during search.
