Under Section 44AD, 8% of Income is presumed to be Income of the assesse. Hence automatically 92% shall be presumed to be expenditure of the assesse. Now, if assesse through his cash flow is not able to prove expenditure of 92%, but is able to substantiate much lesser expenditure, whether AO can invoke section 69C saying that source of balance expenditure [92%- Actual Expenditure] is not satisfactorily explained especially when section 44AD does not over ride section 69C.
Held by ITAT Chandigarh in Nand lal Popli [2016] 71 taxmann.com 246 (Chandigarh – Trib.)]
- a)Section 69C can be applied only if assesse has incurred some expenditure and not otherwise
- b)Asking the assessee to prove to the satisfaction of the Assessing Officer, the expenditure to the extent of 92% of gross receipts, would defeat the purpose of presumptive taxation as provided under section 44AD of the Act or other such provision. Since the scheme of presumptive taxation has been formed in order to avoid the long drawn process of assessment in cases of small traders or in cases of those businesses where the incomes are almost of static quantum of all the businesses,
Addtion u/s 69C can be made only once the case is carved out of glitches of S. 44AD. Hence no addition is sustainable u/s 69C