Landmark Judgment: Assessee opting for presumptive income scheme is not under any obligation to explain individual entry of cash deposit in bank

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Landmark Judgment: Assessee opting for presumptive income scheme is not under any obligation to explain individual entry of cash deposit in bank

 

Presumptive taxation / estimation of profit by applying rate :- separate addition :- whether each entry need to explain :- creditors part of business income :- creditor representing other then business income

Once under special provision of section 44AD, exemption from maintenance of books of account has been provided and presumptive tax at rate of 8 per cent of gross receipt itself is basis for determining taxable income, assessee is not under any obligation to explain individual entry of cash deposit in bank unless such entry has no nexus with gross receipts.

CIT v. Surinder Pal Anand [2010] 192 TAXMAN 264 (PUNJ. & HAR.)

  • In an appropriate case, Assessing Officer can make addition in respect of both cash credits under section 68 as well as business income estimated by him under section 44AD after rejecting books of account maintained by assessee finding those books as unreliable

CIT v. G.S. Tiwari & Co – [2014] 41 taxmann.com 17 (Allahabad)

In the case of CIT v. Maduri Rajaiahgari Kistaiah; 120 ITR 294 (AP), it was observed that where a particular business income of the assessee has been estimated and determined and in such a case certain sundry creditors are found, the AO may be precluded from adding the said unexplained sundry creditors as undisclosed income from the business, the income of which was determined on estimate basis. But where the unexplained sundry creditors are not referable to the business income of the assessee which was estimated, the AO is not precluded from treating the unexplained sundry creditors as income from other sources such as salaries securities or any other income from a business, the source of which was not disclosed by the assessee. Where certain unexplained sundry creditors are found in the account books of the assessee, whose business income is determined on estimate basis and not on the basis of his returned income, the AO is not prevented from treating the unexplained sundry creditors standing in the books of account as income from undisclosed sources.

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