Presumptive income: Section 44AE: A.Y. 2001- 02: Transporters: Section 44AE stipulates tax on presumptive income, which may be more or less than actual income: Assessee is not required to maintain any account books: No addition could be made as income from other sources on ground that assessee was not able to explain discrepancies in account books.

The assessee, a proprietor of transport business possessed eight trucks. In the income-tax return for the A.Y. 2001-02, he disclosed income u/s.44AE. The Assessing Officer made additions to the income of the assessee on ground that the assessee did not have sufficient withdrawals to explain as to how he had been meeting daily expenses. He held that the assessee must have got income from other sources. The Tribunal deleted the addition holding that it could not be treated as income from other sources.

On appeal by the Revenue, the Allahabad High Court upheld the decision of the Tribunal and held as under:

(i) Section 44AE inserted by the Finance Act, 1994 provides special provision for computing profits and gains of business of plying, hiring or leasing goods carriages. It opens with an non obstante clause by giving an overriding effect over sections 28 to 43C, in the case of an assessee who owns not more than ten goods carriages. Income of such assessee chargeable to the tax under the head ‘Profits and gains of business or profession’ shall be deemed to be the aggregate of the profits and gains, from all the goods carriages owned by him in the previous year, computed in accordance with the provisions of s.s (2).

(ii) The very purpose and idea of enactment of provision like section 44AE is to provide hassle-free proceedings. Such provisions are made just to complete the assessment without further probing provided the conditions laid down in such enactments are fulfilled. The presumptive income, which may be less or more, is taxable. Such an assessee is not required to maintain any account books. This being so, even if, its actual income in a given case, is more than income calculated as per s.s (2) of section 44AE, cannot be taxed. (iii) Thus, it follows the query of the Assessing Officer as to how the assessee met his daily expenses, there being no withdrawal and conclusion of additional income was uncalled for. (iv) The addition made by the Assessing Officer due to increase in the capital cannot be taxed u/s.56 as income from other sources as the accretion, if any, in the capital is relatable to profit from transport business of the assessee. A reading of the assessment order would show that the addition was made on account of excess generation of income of the assessee from the goods carriages business, u/s.56.”