:- 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.
Hon'ble Apex Court in the case of
Commissioner Of Income Tax, U.P v. Devi
Prasad Vishwanath Prasad; 72 ITR 194 observed that
where there is an unexplained credit, it is open to the AO to hold that it is
income of the assessee, and no further burden lies on the AO to show that the
income is from any particular source. It is for the assessee to prove that,
even if the sundry creditors represents income, it is income from a source which has already been taxed. There is
nothing in law which prevents the AO in an appropriate case in taxing both the
sundry credit, the source and nature of which
is not satisfactorily explained, and the business income estimate by him after
rejecting the books of account of the assessee as unreliable.
No separate addition under business income where profit
Rate applied :-
Commissioner Of Income-Tax v.
Raghvendra Singh.; 14 MTC 415 (All), where ex- parte
assessment under Section 144 of the Income Tax Act was made. In such situation,
the AO cannot make addition under Section 68 which has to be necessarily on the
basis of entries in the books which not are rejected. It was further observed that
when the books are not maintained, then 8% net profit can be computed on the
gross receipts in the case of civil contractor.
CIT v. Aggarwal Engineering Co.;
302 ITR 246 (P&H), where it was observed that once
the net profit rate was applied, no further addition was called for in respect
of purchase and introduction of cash.
CIT v. Purshottam Lal Tamrakar; 270 ITR 314;
CIT v. Banwari Lal Banshidhar; 229 ITR 229 (All); and
Amitabh Construction Pvt. Ltd. v. Additional
Commissioner of Income Tax; 335 ITR 523 (Jharkhand).
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