TMI Blog2007 (8) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... ble and payables in the business and not necessarily for determining the income. The appellant was under a bona fide impression that under the provisions of sections 44AE and 44AF, there was no obligation for the appellant to declare the profits as per the books in the return which were higher than the presumptive profits as per these sections. As per the legal provisions, the appellant's impression of the law was fully justified and hence, the appellant could not be said to have concealed or filed inaccurate particulars of income. As per the ratio of SC decision in the case of Vegetable Products Ltd 88 ITR 192, because two interpretations of the provisions were possible, the penalty could not be sustained in this case. The appellant after the survey operation had agreed to be taxed on the higher income as per the books subject to no penalty be levied and hence, his Agreement could not justify the levy of penalty. (3) The learned CIT(A) was not justified in rejecting the appellant's explanation in this regard and in confirming the penalty under section 271 (1)(c)." 3. The assessee-firm was dealing in building material on retail basis and was deriving income from truck p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -------- Total income 2,32,544 ---------------------------------------------------------- 5. The Assessing Officer, then, levied penalty of Rs. 1,79,059 on 27-4-2004 under section 271(l)(c), computed as under:- ---------------------------------------------------------- Particulars Amount (Rs.) ---------------------------------------------------------- Tax on Income as per revised return i.e., 89,529 Rs. 2,32,544 Tax on Income as per original return i.e., Nil - Tax on concealed income 89,529 Minimum penalty @ 100% 89,529 Maximum penalty @ 300% 2,68,587 Penalty levied @ 200% 1,79 059 ---------------------------------------------------------- 6. The CIT(A) confirmed the penalty, though he reduced the quantum to minimum of Rs. 89,529. His order has been challenged by the assessee in the present appeal. 7. Shri. S.U. Pathak, the ld. AR, reiterated the arguments put forward on behalf of the assessee before the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. Before proceeding to answer this question we need to examine the provisions of section 44AF read with sections 44AA and 44AB of the Act. 12. It needs to be noted that section 44AF was inserted by the Finance Act, 1997, with effect from 1-4-1998, in order to introduce a new scheme for making special provision, for computing profits and gains of retail business, whose total turnover did not exceed an amount of Rs. 40 lakhs in the relevant year, on presumptive basis, at 5 per cent of the total turnover. The objective was to simplify the procedure for small taxpayers by introducing a scheme of presumptive taxation. Section 44AF reads as under. "Special provisions for computing profits and gains of retail business.-(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 of 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 chargeable to tax under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) and 44AB(c), the position in law, relating to an assessee who is engaged in retail business and whose total turnover does not exceed an amount of Rs. 40 lakhs, emerges as under:- (i) An assessee, who is engaged in retail business and whose total turnover does not exceed an amount of Rs. 40 lakhs in the relevant year, shall be deemed to have earned profits and gains from such business at 5 per cent of the total turnover. (ii) The provisions of sections 44AA(1) and 44AB(c), requiring an assessee to maintain books of account and get them audited, do not apply to business referred to in section 44AF(1). (iii) However, if an assessee, who is engaged in retail business and whose total turnover does not exceed an amount of Rs. 40 lakhs in the relevant year, claims that the profit and gains from such business was less than 5 per cent of the total turnover, in that case he will be required to maintain books of account under section 44AA(2)(iii) and also to get them audited under section 44AB(c). (iv) The section 44AF starts with a non obstante clause giving overriding effect to the provisions of this section over the provisions of sections 28 to 43C. 16. In a normal situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
