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5. The Assessing Officer noted that the appellant had, in letter dated 2/10/2007, admitted expenses of Rs.5,000/- per month on the family including his wife and son. The AO felt that this was inadequate and considering factors like inflation, education of children, social/religious functions, etc., should have been about Rs.8,000/- per month and since no withdrawals have been shown, the addition of Rs.96,000/- was made. The AO also noted that the assessee was trading in food grains in the name of Jalaram Trading Co. However, the books of accounts were not maintained and the assessee failed to furnish infomation/details which was repeatedly required, vide notices/questionnaires. The AO therefore felt that provisions of section 44AF were applicable in case of assessee who was a retailer and so estimated the income of Rs.1,15,880/- on the turnover of Rs.30.07 lakhs (after deducting the disclosed business income of Rs.34,501/-). The AO also observed that creditors/depositors to the extent of Rs.12,85,197/- were shown in the balance-sheet as on 31/3/2006 of which no details were filed. Hence he treated them as unexplained cash credit. The AO further observed that the documents seized from the residence of one Lalitbhai K Patel and Kanjtibhai Patel, particularly page 94 of annexure A4, revealed that the land comprised in Block No. 95, 96 and 113 in Jethalpur had been transacted for a consideration, much higher than was disclosed in the returns of the owners, including the append so capital gains have been understated to the extent of Rs.4,78,535/-.

(iii) In respect of the addition for business income, it was submitted that adequate opportunity was not given. Moreover, the appellant was a wholesale trader of agriculture products in name of Jalaram Trading Co. and income of Rs.34,507/- was disclosed. The audit u/s 44B was not carried out as the turnover was less than Rs.40 lakhs. The AO had vide his questionnaire dated 20/8/2007 (S.No. 17) sought the English/Hindi version of the Books of account which was answered by the appellant as 'NIL' in reply dated 2/10/2007. This led the AO to believe that proper books of account were not maintained and book results were to be rejected. However the AO has himself referred to the total turnover of Rs.30.07 lakhs as penalty the P&L Account. Thus, the Assessing Officer's insistence on books of account not being audited u/s. 44AB was misplaced. The AO has taken recourse to section 44AF without detailing how and why the other entries in the P&L Account were all cooked up/unverifiable. Thus the conclusion drawn and application of section 44AF was not justified. The addition of Rs.1,50,381/- is deleted."