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2022 (6) TMI 1518 - AT - Income TaxReturned income shown by the assessee u/s 44AD - Addition u/s 69A - assessee has shown the abnormal amount of profit U/s. 44AD to explain the money found and seized from locker - department has further relied on statement recorded U/s. 131 and stated assessee has kept cash in his locker and stated that the source of income is retail business and does not have any documents to prove cash found in the locker - HELD THAT - It is admitted fact on record that the assessee has not been maintaining any books of account and opted to file return of income u/s 44AD - assessee had already submitted copy of sale account before the Dy. Director of Income Tax (Hqs.) and also before the Assessing Officer as well as before the learned CIT(A). Provisions of section 44AD do not put obligation on the assessee to maintain the books of account as the income has been assessed as per section 44AD of the Act. The addition made by the Assessing Officer under section 69A of the Act and there is no bar under section 44AD of the Act. The only fetter provided under section 44AD of the Act is the applicability of the provisions of sections 32 to 38 of the Act. Since the assessee is involved in a small business activity and filed return of income under presumptive provisions under section 44AD of the Act and the assessee had already submitted sales account before the authorities below and the assessee had also filed capital position along with the return of income showing the cash balance kept in locker. Considering the same as abnormal profit the Assessing Officer has not educed sufficient evidence to show that the income of the assessee which falls under the provisions of section 69A of the Act. Since the assessee is not maintaining any books of account and in such situation only net profit as per provisions of section 44AD of the Act is required to be estimated as a net profit and not the entire turnover. The assessee submitted that the cash deposited pertains to his retail business. The assessee filed the sales register which has not been discarded by any of the authorities below. Considering the total turnover sale of the assessee net income determined under section 44AD of the Act shown by the assessee has to be accepted as there is no provision in the Income Tax Act 1961 to reduce the income of the assessee. It is also admitted fact that in the earlier years the department has accepted income U/s. 44AD of the Income Tax Act. Thus income determined under section 69A of the Act is directed to be treated as regular return of income of the assessee and returned income shown by the assessee is hereby directed to be accepted. Addition u/s 68 - amount shown as opening balance as on 1st April 2017 in the capital position filed by the assessee before AO - AO stated that no supporting document was filed by the assessee regarding opening balance - As per CIT(A) Assessee is not doing any business activity and has added the opening balance as unexplained cash credit u/s 68 - HELD THAT - We find that there is no merit in making the addition on account of opening capital in the case of the assessee u/s 68 of the Act as we are of the considered opinion that the aforesaid provisions of section 68 are not applicable to the present case of the assessee. We further find that the assessee has also filed copy of computation of income acknowledgement of income and copy of capital position. Assessee had filed return of income u/s 44AD showing income for the assessment year 2017-18 and paid taxes accordingly. The aforesaid return of income has been accepted by the Department and no addition has been made. We also find a copy of capital position in which the capital of Rs.3.67 lakh has been accepted by the Department and no addition has been made and profit of the assessee was accepted under section 44AD of the Act by the Department. Since the closing balance of Rs.3.67 lakh has been accepted in the return of income for the previous year relevant to the assessment year 2017-18 i.e. as on 31st March 2017 therefore there is no justification in making any addition of opening capital and not accepting the opening capital as on 1st April 2017 at Rs.3.67 lakh. Addition u/s 68 deleted. Decided in favour of assessee.
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