Syed Khalid Saifullah, New Delhi V. ITO, New Delhi

ITA 4744/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3707 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 06-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Keywords: Presumptive income; Business income; Depreciation
• Section: 44AD; 143(3); 133(6); 69A; 147; 28; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. KULDIP SINGH, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 4744/DEL/2016 : ASSTT. YEAR : 2011-12 SYED KHALID SAIFULLAH, FLAT NO. 4, F-8, SHAHEEN BAG, 40, FUTA ROAD, ABUL FAZEL ENCLAVE, PART-II, ZAMIA NAGAR, NEW DELHI-110025 GUPTA AGGARWAL SHARDA & JAIN, CHARTERED ACCOUNTANTS, D-178, GROUND FLOOR, RAMPRASTHA COLONY, GHAZIABAD-201011 VS INCOME TAX OFFICER, WARD-28(4), NEW DELHI-110002 (APPELLANT) (RESPONDENT) PAN NO. AAXPS2952G ASSESSEE BY : SH. MANISH AGARWAL, CA REVENUE BY : SH. SARAS KUMAR, SR. DR DATE OF HEAR ING: 23 . 01 .20 20 DATE OF PRONOUNCEMENT: 24 .02 .20 20 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. CIT (A)-10, NEW DELHI DATED 28.06. 2016. 2. FOLLOWING THE GROUNDS HAVE BEEN RAISED BY THE AS SESSEE: 1. THAT THE LD. COMMISSIONER(APPEALS)-10 HAS ERRED , IN LAW AS WELL AS IN FACTS, BY SUSTAINING THE ADDITION OF RS.50.50 LACS AS UNEXPLAINED MONEY UNDER SECTION 69A OF THE ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) IS WRONG AND LIABLE TO BE REJECTED AND LD. CIT(A) SHOULD HAV E HELD SO. ITA NO. 4744/DEL/2016 SYED KHALID SAIFULLAH 2 3. THAT THE LD. CIT(A) HAS, IN LAW AS WELL AS IN FA CTS, WRONGLY REJECTED THE TRANSACTIONS DECLARED U/S 44AD AS TURN OVER. 4. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE EVIDENCES PROVIDED BY THE ASSESSEE. 5. THAT THE ASSESSEE HAD NOT BEEN GIVEN DUE OPPORTU NITY TO DEFEND ITS CASE ON INCOME BEING CHARGED UNDER THE P ROVISION OF 69A OF THE ACT. 3. THE ASSESSEE FILED HIS RETURN DECLARING INCOME O F RS.6,32,710/- ON 19,07.2011, AND ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 COMPLETED 24.02.2014. THE ASSESSEE IS A RETIRED TEA CHER FROM JAMIA MILIA ISLAMIA SCHOOL, JAMIA NAGAR, NEW DELHI. THE ASSESSE E HAD SHOWN INCOME FROM CIVIL CONTRACTOR BUSINESS, PENSION AND INTERES T INCOME. THE ASSESSEE HAS CLAIMED THAT DURING THE YEAR UNDER CONSIDERATIO N, HE HAS UNDER TAKEN CONSTRUCTION WORK AND ACHIEVED TURNOVER OF RS .50,50,000/-. IT WAS CLAIMED BY THE ASSESSEE THAT HE WAS NOT MAINTAINING THE BOOKS OF ACCOUNT AND HIS RETURN HAS BEEN FILE UNDER THE PROVISIONS O F SECTION 44AD OF THE ACT. 4. THE ASSESSING OFFICER NOTICED THAT ASSESSEE CLAI MED TO HAVE RECEIVED CONTRACT RECEIPTS OF RS.50,50,000/-. THEREFORE, HE ASKED THE ASSESSEE TO ESTABLISH THE SAME AS CONTRACTUAL RECEIPTS BY PRODU CING SUPPORTING DOCUMENTARY EVIDENCES LIKE COPY OF AGREEMENT, DETAI LS OF PROPERTY, DETAILS OF PAYMENT RECEIVED AND MATERIAL PURCHASED ALONG WI TH BILLS OR ANY OTHER EVIDENCE TO ESTABLISH THAT THE ABOVE RECEIPT IS A C ONTRACTUAL RECEIPT. IN COMPLIANCE, IT WAS EXPLAINED TO THE AO THAT ASSESSE E HAS UNDERTAKEN THE ABOVE CIVIL CONSTRUCTION ACTIVITIES ONLY IN THE FIN ANCIAL YEAR 2010-11 AND NO SUCH ACTIVITIES IS BEING CONDUCTED THEREAFTER. CONF IRMATION FROM SH. ZAMIR AHMED PAN AFAPA0916J WARD- 22(2), NEW DELHI WAS FIL ED SH. ZAMIR AHMED CERTIFIED THAT HE PAID AN AMOUNT OF RS.18 LAK H AGAINST CONSTRUCTION OF HOUSE NO. F-6B, SECOND FLOOR, SHAHEEN BAGH, ZAMI A, OKHLA, NEW DELHI. ITA NO. 4744/DEL/2016 SYED KHALID SAIFULLAH 3 5. IT WAS NOTICED BY THE AO THAT OUT OF THE ABOVE A MOUNT, AN AMOUNT OF RS.8 LAKH WAS RECEIVED IN CASH AND RS.10 LAKH WA S RECEIVED BY CHEQUE. BUT NO DETAIL OF CHEQUE RECEIPTS WERE FURNISHED BY THE ASSESSEE BEFORE THE AO. THE AO ISSUED NOTICE U/S 133(6) TO ASCERTAIN TH E GENUINENESS OF THE TRANSACTION, BUT THE SAME REMAIN UNCOMPLIED WITH. T HE ASSESSING OFFICER FURTHER VERIFIED THE FACTS FROM WARD-22(2), NEW DEL HI AND FOUND THAT SH. ZAMIR AHMED HAD NOT FILED INCOME-TAX RETURN FOR THE AY 2011-12. IN RESPECT OF OTHER PARTY I.E. SH. S.U. KHAN, THE ASSE SSEE NEITHER PROVIDED PAN DETAILS NOR ANY DETAIL WITH REGARD TO RECEIPT O F PAYMENT RECEIVED FROM THIS PARTY. IN VIEW OF ABOVE FACTS, IT WAS HELD BY THE AO THAT THE ASSESSEE HAS BACKGROUND OF TEACHING AND HIS CONTENTION THAT HE WAS ENGAGED IN CIVIL CONSTRUCTION ACTIVITIES CANNOT BE ACCEPTED TO , SINCE HE HAS NO PREVIOUS EXPERIENCE OF CIVIL CONSTRUCTION AND NO CONTINUITY IN THE SO-CALLED CONSTRUCTION ACTIVITIES ESTABLISHED IN HIS CASE. TH EREFORE, THE AO HELD THAT THE ABOVE CONTENTION HAS BEEN MADE BY THE ASSESSEE JUST AS AN AFTERTHOUGHT TO COVER UP THE UNDISCLOSED SOURCE OF INCOME. ACCORDINGLY, THE AO MADE ADDITION OF RS.50,50,000/- TO THE INCOM E DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THUS, TO TAL TAXABLE INCOME OF THE ASSESSEE WAS COMPUTED AT RS. 56.82,780/-. 6. THE LD. CIT (A) CONFIRMED THE ADDITION HOLDING T HAT THOUGH THE LD. AR FILED APPLICATION UNDER RULE 46A WHICH WAS FORWARDE D TO CONCERNED ASSESSING OFFICER WHEREIN APPELLANT FILED CONFIRMAT IONS ISSUED BY TWO PERSONS NAMELY, SH. ZAMIR AHMED AND SH. S.U. KHAN I N WHICH THEY CONFIRMED THE TRANSACTIONS BETWEEN THE APPELLANT AN D THEM TOWARDS CONSTRUCTION OF THEIR HOUSES. FURTHER, THE LD. CIT (A) NOTICED THAT BOTH THE ABOVE PERSONS HAVE NOT FILED THEIR ITRS FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION. IT WAS HELD THAT INFORMATION WITH RE GARD TO PAYMENT RECEIVED BY THE APPELLANT FROM THE ABOVE NAMED TWO PERSONS IS NOT VERIFIABLE FROM THE BANK STATEMENT OF THE ASSESSEE. THE REVENUE HELD THAT ITA NO. 4744/DEL/2016 SYED KHALID SAIFULLAH 4 INFORMATION SUPPLIED BY THE APPELLANT IS NOT SUFFIC IENT TO CROSS VERIFY HIS CONTENTION. 7. THE LD. CIT (A) FURTHER HELD THAT DURING THE ASS ESSMENT YEAR UNDER CONSIDERATION, APPELLANT DECLARED BUSINESS INCOME O F RS.4,04,000/- AS PER PROVISIONS OF SECTION 44AD OF THE ACT CLAIMING THAT NO BOOKS OF ACCOUNTS ARE REQUIRED TO BE MAINTAINED ONCE THE TAX IS PAID AS PER RATES PRESCRIBED UNDER THIS SECTION. THE LD. CIT (A) ALSO HELD THAT IT IS PRESCRIBED U/S 44AD THAT BOOKS ARE NOT REQUIRED TO MAINTAIN IF ASSESSEE DECLARES INCOME AS PER PROVISIONS OF SECTION 44AD. HOWEVER, THE LD. CIT (A ) PLACED A RIDER THAT A DUTY IS CAST, UPON THE APPELLANT TO ESTABLISH THE F ACT THAT HE WAS REALLY ENGAGED IN BUSINESS. THE UNDISPUTED FACT THAT THERE WAS NO PAST HISTORY OF THE ASSESSEE TO SHOW THAT HE WAS IN THE CONSTRUCTIO N BUSINESS EITHER BEFORE OR AFTER THIS YEAR. HENCE, THE LD. CIT (A) H ELD THAT THIS PROPOSITION RAISE DOUBT ABOUT THE AUTHENTICITY OF CLAIM OF THE APPELLANT THAT ONLY DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE CONDUCTED ACTIVITY OF CONSTRUCTION. ON PERUSAL OF THE BANK AC COUNT, THE LD. CIT (A) HELD THAT THERE WERE DEPOSITS BEFORE THE ISSUE OF C HEQUES TO THE ASSESSEE AND HENCE THE ACTIVITY CANNOT BE CONSIDERED AS GENU INE. 8. DURING THE ARGUMENTS BEFORE US, THE LD. AR EXPLA INED THROUGH THE DOCUMENTS FILED BEFORE THE LD. CIT (A). THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 10. FROM THE FACTS ON RECORDS, WE FIND THAT IN TOTO THE ASSESSEE HAS RECEIVED RS. 50,50,000/- TOWARDS THE CONSTRUCTION A CTIVITIES. THE SAME ARE REFLECTED IN THE INDIAN BANK ACCOUNT MAINTAINED B Y THE ASSESSEE. SH. ZAMIR AHAMED FILED A CONFIRMATION BEFORE THE LD. CI T (A) THAT HE HAS PAID ITA NO. 4744/DEL/2016 SYED KHALID SAIFULLAH 5 AN AMOUNT OF RS.18,00,000/- AGAINST THE CONSTRUCTIO N OF HIS HOUSE TO THE ASSESSEE. THE DETAILS OF THE PAYMENTS ARE AS UNDER: S.NO . DATE AMOUNT REMARK 1. 31.05.2010 RS. 5 , 00,000/ - CASH PAID 2 . 08.11.2010 RS. 2,00,000 / - CHEQ ISSUED. 3. 18.11.20L0 RS. 1,50,000/- CHEQ ISSUED. 4. 26.11.20IO RS. 1,50,000/- CHEQ ISSUED. 5. 29.11.20 IO RS. 2,50,000/- CHEQ ISSUED. 6. 29.11 .20 10 RS. 2,50,000/ - CHEQ ISSUED. 7. 10 .12. 2010 RS. 3,00,000/ - CASH PAID. 11. SIMILARLY, THE OTHER PERSON NAMELY, SH. S. U. K HAN CONFIRMED THAT HE HAS PAID RS.25,50,000/-. THE DETAILS OF THE PAYM ENTS ARE AS UNDER: DATE AMOUNT REMARK 12.01.2010 RS.1,00,000/- CASH 14.01.2010 RS.4,00,000/- CHEAUE 05.02.2010 RS.5,00,000/- CHEQUE 28.02.2010 83.5,00,000/- CHEQUE 20,04.2010 RS.4,43,530/ - CHEQUE 15.06.2010 RS.6,00,000/ - CHEQUE 21.02.2011 RS.6,470/ - CASH 12. THE ASSESSEE SUBMITTED THAT RS.7,00,000/- HAS B EEN RECEIVED BY THE OTHER PEOPLE TOWARDS THE CONSTRUCTION CONTRACT WORK . 13. IT WAS ALSO FOUND THAT THE SH. ZAMIR AHMED HAS PAID AN AMOUNT FOR CONSTRUCTION OF HOUSE AT F/6B, SECOND FLOOR, SAHIN BAGH, OKHLA, NEW DELHI. HE HAS COMPLIED TO THE NOTICE ISSUED U/S 136 OF THE ACT ISSUED BY THE ASSESSING OFFICER VIDE HIS REPLY DATED 05.03.20 14. THE NOTICE HAS BEEN ISSUED BY THE ASSESSING OFFICER ON 17.02.2014 WHICH WAS RECEIVED BY THE ASSESSEE ON 27.02.2014 WHEREAS THE ASSESSMENT ORDER WAS PASSED ON 24.02.2014. REGARDING THE ALLEGATION OF NON-FILING OF ITR, SH. ZAMIR AHMED INFORMED THE ASSESSING OFFICER THAT HE WAS IN EMPLOYMENT OF KINGDOM OF SAUDI ARABIA FROM 1984 TO 2012 AND HENCE NOT REQUIRED TO FILE ITA NO. 4744/DEL/2016 SYED KHALID SAIFULLAH 6 ITR. THE BANK STATEMENT HAS BEEN DULY PRODUCED BEFO RE THE REVENUE WHICH REFLECTS THE SAME ADDRESS ON WHICH THE CONSTR UCTION ACTIVITIES HAS BEEN UNDERTAKEN. HENCE, THE ALLEGATION OF THE REVEN UE THAT THE PAYER HAS NOT FILED THE ITR AND CONSEQUENT CONFIRMATION IN TH E HANDS OF THE ASSESSEE CANNOT BE HELD TO BE VALID. 14. REGARDING THE PAYMENT MADE BY SH. S.U. KHAN, WE FIND THAT HE HAS RESPONDED TO THE NOTICE ISSUED U/S 133(6) THROUGH S PEED POST VIDE LETTER DATED 26.02.2014. HE WAS WORKING IN AFGHANISTAN AS AN EMPLOYEE OF FAO/UN. HENCE, THE ALLEGATION OF THE REVENUE THAT T HE PAYER HAS NOT FILED THE ITR AND CONSEQUENT CONFIRMATION IN THE HANDS OF THE ASSESSEE CANNOT BE HELD TO BE VALID. 15. THE BANK STATEMENT OF THE ASSESSEE SHOWS THAT N UMBER OF PAYMENTS HAVE BEEN MADE AGAINST THE PURCHASE OF ITEMS LIKE I RON, STEEL, CEMENT AND OTHER BUILDING MATERIALS. HENCE, IT CANNOT BE S AID THAT THE ASSESSEE HAS NOT EXECUTED THE WORK OF CONSTRUCTION ACTIVITY. THE RETURNS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2010-11 EXAMINED B Y THE REVENUE U/S 147 PROVED THE FACT THAT THE ASSESSEE IS IN THE BUS INESS OF MANUFACTURING THE SIGN BOARDS AND REGISTERED WITH DELHI VAT DEPAR TMENT. WE ALSO FIND THAT THE AMOUNTS RECEIVED BY THE ASSESSEE ARE THE C ONSTRUCTION RECEIPTS RECEIVED FROM THE ASSESSEE AS PER THE BANK ACCOUNTS OF THE PAYER NAMELY, THE NRE SAVINGS BANK ACCOUNT MAINTAINED WITH SBI AN D ALSO FROM THE STANDARD CHARTERED BANK STATEMENT OF SH. ZAMIR AHME D. FROM THE FACTS BEFORE US, IT CAN BE CONCLUDED THAT THE AUTHORITIES HAVE MISLEAD THEMSELVES OWING TO NON-FILING OF THE RETURN BY THE PARTIES DISREGARDING THE FACT THAT ALL THE EVIDENCES TO PROVE THAT THE A MOUNTS HAVE BEEN PAID FOR CONSTRUCTION WORK ARE ON RECORD. ITA NO. 4744/DEL/2016 SYED KHALID SAIFULLAH 7 16. IN THIS BACKGROUND, THE PROVISIONS OF THE SECTI ON 44AD ARE EXAMINED. SECTION 44AD READS: SECTION 44AD. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 43C, IN THE CASE OF AN ELIGIBLE ASSESSEE ENGAGED IN AN ELIGIBLE BUSINESS, A SUM EQU AL TO EIGHT PER CENT OF THE TOTAL TURNOVER OR GROSS RECEIPTS OF THE ASSESSEE IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS OR, A S THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM CLAIMED TO HAVE BEEN EARNED BY THE ELIGIBLE ASSESSEE, SHALL BE DEEM ED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TA X UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' : [PROVIDED THAT THIS SUB-SECTION SHALL HAVE EFFECT A S IF FOR THE WORDS 'EIGHT PER CENT', THE WORDS 'SIX PER CENT' HA D BEEN SUBSTITUTED, IN RESPECT OF THE AMOUNT OF TOTAL TURN OVER OR GROSS RECEIPTS WHICH IS RECEIVED BY AN ACCOUNT PAYEE CHEQ UE OR AN ACCOUNT PAYEE BANK DRAFT OR USE OF ELECTRONIC CLEAR ING SYSTEM THROUGH A BANK ACCOUNT 16A[OR THROUGH SUCH OTHER EL ECTRONIC MODE AS MAY BE PRESCRIBED] DURING THE PREVIOUS YEAR OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTIO N 139 IN RESPECT OF THAT PREVIOUS YEAR.] (2) ANY DEDUCTION ALLOWABLE UNDER THE PROVISIONS OF SECTIONS 30 TO 38 SHALL, FOR THE PURPOSES OF SUB-SECTION (1), B E DEEMED TO HAVE BEEN ALREADY GIVEN FULL EFFECT TO AND NO FURTH ER DEDUCTION UNDER THOSE SECTIONS SHALL BE ALLOWED. 17[***] (3) THE WRITTEN DOWN VALUE OF ANY ASSET OF AN ELIGI BLE BUSINESS SHALL BE DEEMED TO HAVE BEEN CALCULATED AS IF THE E LIGIBLE ASSESSEE HAD CLAIMED AND HAD BEEN ACTUALLY ALLOWED THE DEDUCTION IN RESPECT OF THE DEPRECIATION FOR EACH O F THE RELEVANT ASSESSMENT YEARS. 18[(4) WHERE AN ELIGIBLE ASSESSEE DECLARES PROFIT F OR ANY PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF THIS SECT ION AND HE DECLARES PROFIT FOR ANY OF THE FIVE ASSESSMENT YEAR S RELEVANT TO THE PREVIOUS YEAR SUCCEEDING SUCH PREVIOUS YEAR NOT IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1), HE SHALL NOT BE ELIGIBLE TO CLAIM THE BENEFIT OF THE PROVISIONS OF THIS SECTION FOR FIVE ASSESSMENT YEARS SUBSEQUENT TO THE ASSESSMENT YEAR ITA NO. 4744/DEL/2016 SYED KHALID SAIFULLAH 8 RELEVANT TO THE PREVIOUS YEAR IN WHICH THE PROFIT H AS NOT BEEN DECLARED IN ACCORDANCE WITH THE PROVISIONS OF SUB-S ECTION (1). (5) NOTWITHSTANDING ANYTHING CONTAINED IN THE FOREG OING PROVISIONS OF THIS SECTION, AN ELIGIBLE ASSESSEE TO WHOM THE PROVISIONS OF SUB-SECTION (4) ARE APPLICABLE AND WH OSE TOTAL INCOME EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHAR GEABLE TO INCOME-TAX, SHALL BE REQUIRED TO KEEP AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIRED UNDER SUB-S ECTION (2) OF SECTION 44AA AND GET THEM AUDITED AND FURNISH A REPORT OF SUCH AUDIT AS REQUIRED UNDER SECTION 44AB.] 19[(6) THE PROVISIONS OF THIS SECTION, NOTWITHSTAND ING ANYTHING CONTAINED IN THE FOREGOING PROVISIONS, SHALL NOT AP PLY TO (I) A PERSON CARRYING ON PROFESSION AS REFERRED TO IN SUB-SECTION (1) OF SECTION 44AA; (II) A PERSON EARNING INCOME IN THE NATURE OF COMMI SSION OR BROKERAGE; OR (III) A PERSON CARRYING ON ANY AGENCY BUSINESS.] EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) 'ELIGIBLE ASSESSEE' MEANS, (I) AN INDIVIDUAL, HINDU UNDIVIDED FAMILY OR A PART NERSHIP FIRM, WHO IS A RESIDENT, BUT NOT A 20LIMITED LIABILITY PA RTNERSHIP FIRM AS DEFINED UNDER CLAUSE (N) OF SUB-SECTION (1) OF SECT ION 2 OF THE LIMITED LIABILITY PARTNERSHIP ACT, 2008 (6 OF 2009) ; AND (II) WHO HAS NOT CLAIMED DEDUCTION UNDER ANY OF THE SECTIONS 10A, 10AA, 10B, 10BA OR DEDUCTION UNDER ANY PROVISIONS O F CHAPTER VIA UNDER THE HEADING 'C. - DEDUCTIONS IN RESPECT O F CERTAIN INCOMES' IN THE RELEVANT ASSESSMENT YEAR; (B) 'ELIGIBLE BUSINESS' MEANS, (I) ANY BUSINESS EXCEPT THE BUSINESS OF PLYING, HIR ING OR LEASING GOODS CARRIAGES REFERRED TO IN SECTION 44AE; AND (II) WHOSE TOTAL TURNOVER OR GROSS RECEIPTS IN THE PREVIOUS YEAR DOES NOT EXCEED AN AMOUNT OF 21[TWO CRORE RUPEES].] 17. THE PROVISIONS OF SECTION 44AD HAVE BEEN WELL E XPLAINED IN THE CASE OF NAND LAL POPLI VS. DCIT 71 TAXMANN 246, THE SYNO PSIS PERUSED. ITA NO. 4744/DEL/2016 SYED KHALID SAIFULLAH 9 18. THE PROVISIONS OF SECTION 44AD ARE QUITE UNAMBI GUOUS TO THE EFFECT THAT IN CASE OF AN ELIGIBLE BUSINESS BASED O N THE GROSS RECEIPTS/TOTAL TURNOVER, THE INCOME UNDER THE HEAD 'PROFITS & GAINS OF BUSINESS' SHALL BE DEEMED TO BE AT THE RATE OF 8 PE R CENT OR ANY HIGHER AMOUNT. THE FIRST IMPORTANT TERM HERE IS 'DE EMED TO BE', WHICH PROVES THAT IN SUCH CASES THERE IS NO INCOME TO THE EXTENT OF SUCH PERCENTAGE, HOWEVER, TO THAT EXTENT, INCOME IS DEEMED. IT IS UNDISPUTED THAT 'DEEMED' MEANS PRESUMING THE EXISTE NCE OF SOMETHING WHICH ACTUALLY IS NOT. THEREFORE, IT IT Q UITE CLEAR THAT THOUGH FOR THE PURPOSE OF LEVY OF TAX AT RATE OF 8 PER CENT OR MORE MAY BE CONSIDERED AS INCOME, BUT ACTUALLY THIS IS N OT THE ACTUAL INCOME OF THE ASSESSEE. THIS IS ALSO THE PURPORT OF ALL PROVISIONS RELATING TO PRESUMPTIVE TAXATION. 19. PUTTING THE ABOVE ANALYSIS, IN CONVERSE, IT CAN BE EASILY INFERRED THAT THE SAME IS ALSO TRUE FOR THE EXPENDI TURE OF THE ASSESSEE. IF 8 PER CENT OF GROSS RECEIPTS ARE 'DEEM ED' INCOME OF THE ASSESSEE, THE REMAINING 92 PER CENT ARE ALSO 'DEEME D' EXPENDITURE OF THE ASSESSEE. MEANING THEREBY THAT ACTUAL EXPENDITU RE MAY NOT BE 92 PER CENT OF GROSS RECEIPTS, ONLY FOR THE PURPOSE S OF TAXATION, IT IS CONSIDERED TO BE SO. TO TAKE IT FURTHER, IT CAN BE SAID THAT THE EXPENDITURE MAY BE LESS THAN 92 PER CENT OR IT MAY ALSO BE MORE THAN 92 PER CENT OF GROSS RECEIPTS. 20. FURTHER, ON THE READING OF THE SUBSTANTIVE PART OF THE PROVISION, IT IS QUITE CLEAR THAT AN ASSESSEE AVAILING THE BEN EFIT OF SUCH PRESUMPTIVE TAXATION CAN CLAIM TO HAVE EARNED INCOM E AT THE RATE OF 8 PER CENT OR ABOVE OF THE GROSS RECEIPTS. IN THAT CASE, THE PROVISIONS OF SUB-SECTION (5) OF THE SAID SECTION WILL BE APPL ICABLE TO IT. 21. FROM THE COMBINED READING OF SUB-SECTION (1) AN D SUB-SECTION (5), IT IS APPARENT THAT THE OBLIGATION TO MAINTAIN THE BOOKS OF ITA NO. 4744/DEL/2016 SYED KHALID SAIFULLAH 10 ACCOUNT AND GET THEN AUDITED IS ONLY ON THE ASSESSE E WHO OPTS TO CLAIM THE INCOME BEING LESS THAN 8 PER CENT OF THE GROSS RECEIPTS. 22. WE FIND THAT THE ARGUMENT OF THE REVENUE THAT T HE TURNOVER OF THE ASSESSEE HAS BEEN DOUBTED BY THE ASSESSING OFFICER IS TOTALLY ILL-FOUND, IN VIEW OF THE OVERWHELMING EVIDENCES PROVING CONTRA. FURTHER, IT IS A FACT ON RECORD THAT THE ASSESSEE HAD NOT MAINTAINED BOOK S OF ACCOUNT THAT IS WHY HE OPTED FOR 8 PER CENT INCOME AS PER SECTION 4 4AD OF THE ACT. THE SECTION ALSO DOES NOT PUT OBLIGATION ON THE ASSESSE E TO MAINTAIN BOOKS OF ACCOUNT, MORE SO, IN VIEW OF THE FACT THAT HIS INCO ME HAS BEEN ASSESSED AS PER SECTION 44AD OF THE ACT, HE CANNOT BE PUNISHED FOR NOT MAINTAINING THE SAME. THE ARGUMENT OF THE REVENUE THAT THE ASSE SSEE WAS IN FACT, NOT IN THE ELIGIBLE BUSINESS UNTENABLE. 23. HENCE, KEEPING IN VIEW THE PROVISIONS OF THE AC T, THE CONFIRMATIONS OF THE PARTIES, HAVING PROVED THEIR SOURCES AND CRE DITWORTHINESS, THE ENTRIES IN THE BANK STATEMENT, THE PAYMENTS MADE FO R PURCHASE OF MATERIAL AND KEEPING IN VIEW, THE PLACE OF EXECUTIO N OF THE WORK, WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS LIABLE TO BE DELETED. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/02/2020. SD/- SD/- (KULDIP SINGH) (D R. B. R. R. KUMAR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: 24/02/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR