No sec. 69C additions on basis of info received from sales tax dept. without giving hearing change to assessee

Facts:

a) The assessee filed return of income declaring certain taxable income.

b) Information received from Sales Tax Department revealed that the assessee was involved in taking accommodation entry of bogus purchases. On the basis of this information, the assessment was reopened by the AO. He made certain additions to income of the assessee under section 69C.

c) On appeal, the CIT(A) partly allowed the appeal of the assessee and restricted the disallowance to 25 per cent of the purchases.

On appeal, the Tribunal held as under:

No Sec. 69C additions when assessee is covered by presumptive taxation Scheme of Sec. 44AD

Facts:

a) The assessee, being a civil contractor, had declared its profits under section 44AD. The Assessing O􀁹icer made additions under Section 69C for unexplained expenditure.

b) The assessee was of the view that the AO could not disturb the profits declared as per the scheme of presumptive taxation. The CIT(Appeals) dismissed this ground of appeal and upheld the additions made by AO.

c) The aggrieved-assessee filed the instant appeal.

The ITAT held as under:

1) The provisions of the section 44AD are quite unambiguous to the effect that in case of an eligible business based on the gross receipts/total turnover, the income under the head 'profits & gains of business' shall be deemed to be @ 8% or any higher amount. It is undisputed that 'deemed' means presuming the existence of something which actually is not.