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2019 (10) TMI 625 - AT - Income TaxPenalty levied u/s 271A - applicability of section 44AD - HELD THAT:- Incriminating materials have been used for the purpose of determining the income of assessee, is not coming out. When the turnover of assessee exceeds the limit prescribed for the applicability of provisions of section 44AD then obviously provisions of section 44AD cannot be applied. In fact, a perusal of the provisions of section 44AD also clearly shows that the assessee could disclose a lower income, if he maintains books of accounts and is able to substantiate the claim of lower income. In the present case, there are records available from which the income of assessee could be reasonably determined. In any case even the audit of account u/s.44AB of the Act being the Audit report submitted by the Auditor are on the basis of the tally accounts maintained, and cash vouchers have been found in the course of search. True, the substantial effort would be required for determining the correct income, but that would not be ground enough for rejecting the books of accounts of the assessee and estimating the income directly. Even if estimation was to be adopted, then comparative study would have to have been done. Obviously, the assessee”s accounts for the earlier and subsequent years could be based as comparative study. This being so, as the assessment has been done for estimating the income and CIT(A) has reduced the said estimate. The estimation itself is impermissible under law, especially in view of the fact that incriminating materials have been found in the course of search. Consequently, the assessment order and the impugned order of CIT(A) in respect of present appeals are set- aside and the issues in the appeals are restored to the file of AO for re-adjudication and for determination of the correct income of assessee on the basis of the materials available and found the course of search. The Assessing Officer shall not resort to short cut method of applying provisions of section 44AD of the Act, when the turnover of assessee exceeds the prescribed limit u/s.44AD - All the appeals of assessee are partly allowed for statistical purposes.
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