9911796707
TMI Blog2019 (6) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... m the Assessing Officer the assessee submitted that he had opted for provisions of Section 44AD of the Act while filing the return of income for the impugned Assessment Year 2012-13 and was under no obligation to maintain books of accounts. He submitted that he does not have quantitative details of stock etc. as directed to be filed by the Assessing Officer. Nevertheless he filed a profit and loss account and balance sheet before the Assessing Officer. The Assessing Officer examined these statements and made the following additions towards:- a) Undisclosed purchases. b) Unexplained expenditure u/s. 69C of the Act. c) Undisclosed sundry debtor. d) Bogus unsecured loan. e) Under valuation of closing stock. 2.1. The assessee carried the matter in appeal. Before the ld. CIT(A), the assessee contended that when he had opted to declare income under the provisions of Section 44AD of the Act, no separate additions can be made by the Assessing Officer on such estimated profits. The ld. CIT(A), did not agree with these submissions. He relied on certain decisions wherein it has be held that an addition can be made u/s 68 of the Act, when profits are estimated. He gave part relief t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome shall be estimated at 8 per cent, of the gross receipts paid or payable to the assessee in the previous year on account of such business or a sum higher than the aforesaid sum as may be declared by the assessee in his return of income notwithstanding anything to the contrary contained in sections 28 to 43C of the Act. This income is to be deemed to be the profits and gains of said business chargeable of tax under the head "profits and gains" of business. However, the said provisions are applicable where the gross receipts paid or payable does not exceed Rs. 40 lakhs. 8. Once under the special provision, exemption from maintaining of books of account has been provided and presumptive tax at the rate of 8 per cent of the gross receipt itself is the basis for determining the taxable income, the assessee was not under obligation to explain individual entry of cash deposit in the bank unless such entry had no nexus with the gross receipts. The stand of the assessee before the Commissioner of Income-tax (Appeals) and the ITAT that the said amount of Rs. 14,95,300 was on account of business receipts had been accepted. Learned counsel for the appellant with reference to any mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered as income, but actually this is not the actual income of the assessee. This is also the purport of all provisions relating to presumptive taxation. 11. Putting the above analysis, in converse, it can be easily inferred that the same is also true for the expenditure of the assessee. If 8% of gross receipts are 'deemed' income of the assessee, the remaining 92% are also 'deemed' expenditure of the assessee. Meaning thereby that actual expenditure may not be 92% of gross receipts, only for the purposes of taxation, it is considered to be so. To take it further, it can be said that the expenditure may be less than 92% or it may also be more than 92% of gross receipts. 12. Further, on the reading on the substantive part of the provision, it is quite clear that an assessee availing the benefit of such presumptive taxation can claim to have earned income @ 8% or above of the gross receipts. In that case, the provisions of sub-section (5) of the said section will be applicable to it, which reads as under : "44AD (5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under section 44AD of the Act are the applicability of provisions of section 30 to 38 of the Act. The provisions of section 69C of the Act reads as under : "69C. Unexplained expenditure, etc.- Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year : Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income." 17. The crucial words in the said section for the purposes of present appeal are 'any financial year an assessee has incurred any expenditure'. But can we say on the facts & circumstances of the present case that the assessee has 'incurred' any expenses. From an analysis of section 44AD of the Act contained hereinabove, we have already held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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