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2022 (11) TMI 360 - AT - Income TaxAddition u/s 68 - assessee has shown its return of income u/s 44 AD - Admittedly, the assesse declared deemed profit u/s 44AD being 8% business turn over - HELD THAT:- As 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 very purpose of presumptive taxation as provided u/s 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, AO could have made the addition un/s 69A of the Act, once he had carved out the case out of the glitches of the provisions of section 44AD - No such exercise has been done either by the AO or by the CIT(A) in this case. From the record, it is undisputed fact 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 he cannot be punished for not maintaining the same. Such additions go against the spirit of the Section 44AD of the Act, which was introduced to help the small traders who have difficulties in maintaining books of account and other records. Tax is levied on presumptive basis. Since, AO nor the CIT(A) had done any exercise to carved out the case out of the glitches of the provisions of section 44AD of the Act. The authorities below have not given any reason as to why the provisions of Section 44AD of the Act are not applicable to this case and hence, the addition confirmed was against the spirit of the Section 44AD of the Act. - Assessee appeal allowed.
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