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2019 (11) TMI 1240 - AT - Income TaxAddition u/s 68/69A - unexplained deposits in the Bank account - assessee offered income u/s. 44AD - HELD THAT:- If the income component is estimated, how the expenditure component on the basis of said income can be considered to have been ‘actually incurred’ and it is only presumption that an amount of 92% of gross receipts was incurred by the assessee as expenditure. We must also observe here that this is not a case, where the AO has doubted the gross receipts or gross turnover of the assessee. In fact, accepting the same, estimating income @ 8% on the same at presumptive rate, he preferred to make further addition under section 68/69A. The argument of the learned D.R. that the turnover of ihe assessee has been doubted by the AO is totally ill-found, in view of the same. It is a fact on record that the assessee had not maintained books of account that is why he opted for 8% income as per section 44AD. The section also does not put obligation on the assessee to maintain books of account, more so, in view of the fact that his income has been assessed as per section 44AD of the Act, he cannot be punished for not maintaining the same. From an analysis of section 44A we have already held that the assessee had not incurred the expenses to the extent of 92% of the gross receipts. Therefore, in the present case, the provisions of section 69A cannot be applied. Asking the assessee to prove to the satisfaction of the AO, the expenditure to the extent of 92% of gross receipts, would also defeat the purpose of presumptive taxation as provided under section 44AD or other such provision. Since the scheme of presumptive taxation has been formed in order to avoid the long drawn process of assessment in cases of small traders or in cases of those businesses where the incomes are almost of static quantum of all the businesses, the AO could have made the addition under section 69A of the Act, once he had carved out the case out of the glitches of the provisions of section 44AD of the Act. No such exercise has been done by the Assessing Officer in this case. Applying the propositions of law laid down in the above case law lo the facts of the case on hand, we delete the addition in question. AO nor the CIT(A) have given any reason as to why the provisions of Section 44AD of the Act are not applicable to this case. This ground of appeal of the assessee is allowed
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