Assessee filing ITR under presumptive tax can’t be faulted for not giving details not mandated

Assessee could not be faulted for showing only cash in hand and bank balance as capital following presumptive taxation when there was no mandate to provide particular set of information in ITR

In a recent judgment, ITAT has held that when assesse had taken a recourse to filing the return on presumptive basis and there was no mandate under the law to provide particular set of information at the time of filing returns, then to discredit the submissions and the financials submitted to justify cash in hand was not justified.

ABCAUS Case Law Citation:
5199 (2026) (08) abacus.in ITAT

In the instant case, the appellant assessee had deposited large amount of cash in his saving bank account during the period of demonetization.  The case of assesse was taken up for scrutiny and the AO asked assesse to justify the deposit. The assesse filed a reply that he had shown income from business under presumptive provisions u/s 44AD of the Income Tax Act, 1961 (the Act) and such business receipts accumulated over the years were the source of cash deposits in the bank.

The AO was not satisfied with the explanation given by assesse and made addition u/s 69A of the Act which was sustained by the CIT(A).

The Tribunal observed that AO had primarily disregarded the assesse’s contention of having cash balances on the basis that in the returns filed in earlier years the amount of cash reflected was not sufficient to cover the cash deposits under question.

The Tribunal further observed that the assessee had filed cash statements and rightly submitted that when the return was filed in ITR-4 showing income from business on presumptive basis u/s 44AD and till the year AY: 2016-17 the Act did not require assesse to file details of cash, sundry debtors and other details. Therefore, it was not justified to corner the assesse on the basis that the returns of earlier years did not reflect the cash balance so as to justify the cash deposit in bank.

The Tribunal observed that the cash deposit under question was shown to be out of cash in hand of previous three years which assesse had justified on the basis of cash books of those years.

The Tribunal further observed that AO has doubted the deposits on the basis that there was a mismatch in the capital shown in the ITR and the reply filed for which assesse had sufficiently established that since return was filed on presumptive basis the assesse filed only cash in hand and balance with bank as part of the capital while in submissions to AO during the assessment proceedings complete details of balance sheet were filed.

In view of the above, the Tribunal opined that Tax authorities merely doubted the cash deposits on the basis of suspicion arising out of the manner in which assesse had earlier reported its income and assets, however, when assesse had taken a recourse to filing the return on presumptive basis and there was no mandate under the law to provide particular set of information at the time of filing returns, then to discredit the submissions and the financials submitted to justify cash in hand, was not justified.

Accordingly, the ground was decided in favour of the assesse.

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