New Delhi, Aug. 8 -- Section 44AD of the Income Tax Act allows small business owners to declare income on a presumptive basis without maintaining detailed books of accounts. However, opting for this scheme does not mean that taxpayers can ignore explanations for any specific income.

A ruling by the Income Tax Appellate Tribunal (ITAT), Surat, highlighted this issue. A taxpayer who declared Rs.14.57 lakh income under Section 44AD faced an assessment of Rs.5.09 crore after the tax officer treated bank deposits and other credits as unexplained income.

The case was highlighted by Sujit Bangar, Founder, TaxBuddy, in a post on X.

Zakir Patel, a fruit market trader from Surat, filed his ITR for FY 2016-17 under the presumptive taxation scheme...