Cash-In-Hand Out Of Business Profits Declared In Return U/s 44AD, Can't Be Plainly Added As Unexplained Money: Delhi ITAT
Pankaj Bajpai
16 March 2024 8:30 PM IST
While allowing the appeal against the addition on account of unexplained money, the New Delhi ITAT held that if the assessee's contention is that it had turnover exceeding the limit u/s 44AD of the Income Tax Act, then CIT(A) ought to have acted in accordance with law.The Bench comprising of Kul Bharat (Judicial Member) observed that, “If the assessee's contention is that it had...
While allowing the appeal against the addition on account of unexplained money, the New Delhi ITAT held that if the assessee's contention is that it had turnover exceeding the limit u/s 44AD of the Income Tax Act, then CIT(A) ought to have acted in accordance with law.
The Bench comprising of Kul Bharat (Judicial Member) observed that, “If the assessee's contention is that it had turnover exceeding the limit u/s 44AD, the learned CIT(A) ought to have taken action in accordance with law. However, he merely sustained the addition made by the AO. Therefore, the claim of the assessee regarding business transaction in cash is not adverted by the lower authorities by giving a clear finding.” (Para 5)
As per the brief facts of the case, the assessee company has preferred the appeal challenging by the action of the CIT(A) in confirming the Addition made by the AO of Rs. 571,276/- as unexplained money in spite of the fact that the same had already been explained as cash-in-hand out of the business profits of Rs. 614,567/- declared u/s 44AD in the return of income filed.
The Bench noted that the assessee's claim regarding cash in hand was rejected but without giving any reason for the same.
The Bench disagreed with the CIT(A)'s view that the limit for eligibility u / s 44AD was Rs. 60,00,000/- only, therefore, the case of the appellant does not fall within the provisions of section 44AD as the limit of Rs. 1 Cr. was increased by the Finance Act, 2016 (w.e.f 01.04.2017). Therefore, the assessee was required to maintain books of accounts and prove the availability of cash in hand.
Therefore, on finding the fact that assessee having cash in hand cannot be rejected without giving any reason for the same, ITAT allowed assesssee's appeal.
Counsel for appellant/ Taxpayer: None
Counsel for Respondent/Department: Om Parkash
Case Title: Manish Kumar Mittal verses Income-tax Officer
Case Number: ITA No. 6882/DEL/2019
