TMI Blog2007 (8) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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(1) would automatically have to be applied. It was also argued that the Board s Circular No. 3 dated 9-2-2001 does not provide for application of the provisions of section 44AF in case default in any other assessment year. 5. After considering the facts and circumstances of the case and the submissions of the assessee, the Commissioner of Income-tax (Appeals) 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. The CIT(A) further held that sub-section (5) of section 44AF provided that an assessee may claim lower profits and gains than the profits and gains specified in sub-section (5) of section 44AF subject to the satisfaction of conditions specified therein. The words "profits and gains" do not include losses. The appellant has claimed business loss for bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under that sub-section. 7. We have heard the submissions of the ld. Departmental Representative and considered the facts and materials on record. On identical issue this Tribunal in ITA No. 18/Coch./2005 dated 7-4-2006 in the assessee s own case has held as under : "6. . . . The moot point in this appeal is whether the assessee can be denied the benefit of sub-section (5) of section 44AF on claiming lower profits and gains than the profits and gains as specified in sub-section (1) to 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, 1961. Section 44AF (1) to (5) read as under : 44AF. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee engaged in retail trade in any goods or merchandise, a sum equal to five per cent of the total turnover in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee 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 the 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 of such report as required under section 44AB of Income-tax Act, 1961. 8. Now we have to look into the consequences that would follow if the assessee maintains such accounts and gets the same audited but files the said audit report beyond the due date specified in section 44AB. There is nothing mentioned in section 44AB as to what is the consequence if such audit report is not filed within the specified date mentioned therein. However, in section 271B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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