Now Reading: ITAT says bank deposits cannot automatically be taxed under Section 44AD
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ITAT says bank deposits cannot automatically be taxed under Section 44AD
ITAT says bank deposits cannot automatically be taxed under Section 44AD
The Income Tax Appellate Tribunal’s Surat bench has ruled that bank deposits cannot automatically be treated as taxable income under Section 44AD. Tax authorities must first examine the source and nature of…
The Story in Brief
The Income Tax Appellate Tribunal’s Surat bench has ruled that bank deposits cannot automatically be treated as taxable income under Section 44AD. Tax authorities must first examine the source and nature of the money, the tribunal said. The case involved fruit trader Zakir Yakubbhai Patel, who declared taxable income of Rs 14.57 lakh under the presumptive taxation scheme. The assessing officer estimated his income at about Rs 5.09 crore after examining deposits made during demonetisation.
The officer had added about Rs 2.43 crore in bank deposits, Rs 71.87 lakh in unsecured loans and Rs 1.79 crore in loans and advances. Patel said the actual deposits were Rs 89.16 lakh and that some loans belonged to earlier years. The tribunal found errors in the figures but sent the case back for fresh verification rather than cancelling the assessment.
The Indian Opinion
The lazy narrative that Section 44AD gives small businesses a free pass is wrong, but so is treating every bank credit as profit. A presumptive scheme still has conditions, and unexplained money can invite scrutiny. This case points to a more basic duty: tax officers must reconcile their figures with bank records before making a huge addition. The final assessment after verification, not the initial Rs 5.09 crore estimate, will show whether the department’s case holds.
Source: hindustantimes.com
This story was synthesised by AI from the source linked above.
