TMI Blog2006 (4) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... s and to estimate the business income applying the provisions of section 44AF of the Income-tax Act, 1961. According to the Assessing Officer, there was only one issue to be addressed in this case, viz., whether the assessee can return a business profit less than 5 per cent under section 44AF, if the assessee has his accounts audited after the specified date. Section 44AF(5) states explicitly that "... the assessee may claim lower profits and gains than the profits and gains specified in sub-section (1) (of section 44AF), if the assessee keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets its accounts audited and furnishes a report of such audit as required under section 44AB". Section 44AB states that "Every person ... (c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD or 44AE or 44AF, as the case may be, and has claimed his income to lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year, ... get his accounts of such previous year audited by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concession provided under sub-section (5) of section 44AF, but penalty under section 271B of the Act. It was further contended that nowhere under section 44AF it is provided that if the audit report is not filed within the specified time, the provisions of this section 44AF would automatically have to be applied. It was also argued that the Board's Circular No.3, dated 9th February, 2001 does not provide for application of the provisions of section 44AF in case of default in any other assessment year. 4. After considering the facts and circumstances of the case and the submissions of the assessee, the CIT(A) came to the conclusion that sub-clause (2)(iii) of section 44AA and clause (c) of section 44AB have to be read in consonance with section 44AF(5) and when so read, it becomes obvious that the Assessing Officer has proceeded on the correct basis. According to her, in order to claim an income lower than that deemed under section 44AF, the assessee has not only to maintain accounts as prescribed under section 44AA(2)(iii) and furnish report in Form 3C but also get its accounts audited and furnish audit report (Form 3CD) well within specified/prescribed time. After explaining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 5. At the time of hearing, the learned counsel of the assessee, apart from reiterating the grounds of appeal raised before us as his submissions also made similar submissions as made before the lower authorities. On the other hand, the learned Departmental Representative reiterated the contents of the orders of the authorities below as his submissions (which has already been extracted elsewhere of this order). He further submitted that the assessee cannot be exonerated from the application of section 44AF when it has not complied with the conditions mentioned in section 44AF(5) of the Income-tax Act, 1961, if it wanted to avail the option provided under that sub-section. 6. We have heard rival submissions and considered the facts and materials on record. The moot point in this appeal is whether the assessee can be denied the benefit of sub-section (5) of section 44AF claiming lower profits and gains than the profits and gains as specified in sub-section (1) of section 44AF by keeping and maintaining such books of account and documents and getting the same accounts audited but furnishing the report of such audit beyond the date specified in section 44AB of the Income-tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applicable, otherwise, i.e., if the turnover is below Rs. 40 lakhs the income from profits and gains of business or profession from the retail trade of an assessee will be assessed at 5 per cent of the total turnover in the previous year; (ii) Once the income from retail business of the assessee is computed at 5 per cent of the total turnover, it would be deemed that the provisions of sections 30 to 38 had already been given full effect to; (iii) If the assessee is doing the retail business and is maintaining such books of account and other documents as required under sub-section (2) of section 44AA and gets its accounts audited and furnishes a report of such audit as required under section 44AB, notwithstanding anything contained in sub-sections (1) to (4) of section 44AF, such assessee may claim lower profits and gains than the profits and gains specified in sub-section (1) of section 44AF. In other words, if a retail trader wants to claim a lower profit than 5 per cent of the turnover as mentioned in section 44AF(1), then such assessee has to maintain the books of account and other documents as required under section 44AA and get its accounts audited and furnish a report ..... X X X X Extracts X X X X X X X X Extracts X X X X
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