TMI Blog2013 (11) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... sha Vijayaraghavan (Judicial Member).-These are the crossappeals directed against the order of the Commissioner of Income-tax (Appeals)-VI, Hyderabad, dated January 30, 2009 for the assessment year 2004-05. Briefly stated the facts of the case are that the assessee is a partnership firm having a business of trading in crackers. A survey under section 133A was conducted on January 10, 2004 at the business premises of the assessee. As the assessee had not filed his return of income under section 139(1), a notice under section 142(1) was issued on December 10, 2004 and served on December 16, 2004 calling for the return. In response thereto the assessee had filed its return of income on January 28, 2005 admitting total income at Rs. 68,614. Thereafter, notice under section 148 was issued on November 22, 2006 and the same was served on November 24, 2006, to which the assessee did not respond. Subsequently, a notice under section 142(1) was issued and served on November 6, 2007 requiring the products of books, documents, etc. Since there was no compliance, another opportunity was afforded. The partner, Mr. Sanjay Kumar Bopay, attended on December 19, 2007 requesting for time until Dece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 6 percent of the sales effected and, therefore, the Assessing Officer ought to have accepted the percentage of profit. It is further submitted that the appellant is carrying on the activity of purchase and sale of crackers. It was pointed out by the authorised representative for the assessee that the purchases are effected from Sivakasi and most of the sales were made on wholesale basis to the traders at Hyderabad and therefore, the margin of the profit for the appellant herein is less. Further it was argued that the stock remaining after the day of festival has to be stock at throwaway prices and, therefore, the profit rate of 8 percent net is not justifiable. After considering the submissions of the assessee, the Commissioner of Income-tax (Appeals) held that section 44AF pertains to small retail business and the assessee on the other hand is a wholesaler. The Commissioner of Income-tax (Appeals) opined that it is not clear from the replies and information provided by the appellant as to the exact nature of the business of the appellant because no books or supporting documents have been produced. The Commissioner of Income-tax (Appeals) was of the view that section 44AF prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limits specified in clause (b) of section 40. (3) The written down value of any asset used for the purpose of the business referred to in sub-section (1) shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. (4) The provisions of sections 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the total turnover or, as the case may be, the income from the said business shall be excluded. (5) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-section (1), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB." According to the section 44AF of the Act, the income would be 5 percent of the turnover where the turnover is less than Rs. 40,00,000 subject to the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... robability into account. Further, he observed that the Assessing Officer has not produced any evidence to indicate that the purchases corresponding to the disclosed turnover where in addition to those evidenced by the demand draft of Rs. 21,97,000. Further, gross profit rate of 25 percent on the turnover of Rs. 32,65,486 comes to Rs. 8,16,731. The submission of the assessee that the purchases to the tune of Rs. 24,49,115 would have been made by the assessee closely tallies with the figure of demand drafts purchased by the assessee. Hence, the Commissioner of Income-tax (Appeals) deleted the addition of Rs. 21,97,000. The Assessing Officer also made an addition of Rs. 4,94,325 being gross profit on sale of unaccounted purchases. The Commissioner of Income-tax (Appeals) deleted the same as consequential to the deletion of addition of Rs. 21,97,000. Aggrieved, the Revenue is in appeal before us. Learned counsel for the assessee submitted that the assessee has not denied that the demand drafts were sent by them. However, it has been clearly stated that on October 25, 2003, the festival of Diwali was cele- brated. Since most of the sales takes place in cash during this season, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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