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2016 (4) TMI 1086 - ITAT AHMEDABAD

2016 (4) TMI 1086 - ITAT AHMEDABAD - TMI - Applicability of provisions of section 44AF - Held that:- Total turnover is shown at ₹ 11,31,029/- which is not doubted by the lower authorities at any stage and the purchases of the assessee are explained and the profits of ₹ 2,22,214/- shown by the assessee is much higher than the profit @ 5% of turnover of ₹ 11,31,029/- calculated at ₹ 56,551/-, we are of the view that assessee’s disclosed income u/s 44AF of the Act at ₹ .....

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addition was called for disallowance of purchases at ₹ 3,42,757/- and sustaining of disallowance on expenses @ 10% of ₹ 2,42,086/-, the same are deleted. - Decided in favour of assessee - ITA No.77/Ahd/2012 - Dated:- 18-3-2016 - Shri Rajpal Yadav, JM, & Shri Manish Borad, AM. For The Appellant : Shri Jignesh N. Mehta, AR For The Respondent : Smt. Sonia Kumar, Sr. DR ORDER PER Manish Borad, Accountant Member. This appeal of the assessee is directed against the order of ld. CITT(A .....

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8377; 3,42,757/- as added by the Leaned A.O. Since Your appellant is engaged in retail trading of bags, suitcases an Trunk of VIP Limited is entitled for filling of return of income u/s. 44AF of the Income Tax Act, the assessment made by the A.O.by rejecting the plea of Your appellant of provisions of Section 44AF of the Act may please be deleted. 2. Without prejudice the Ground of Appeal at Point 1 above, the learned CIT (A) has erred in upholding addition on account of Disallowance of business .....

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of trading of begs, suitcase and trunks of VIP Ltd. and other manufacturers. Return of income was filed on 31.3.2009 showing total income of Rs.NIL. The case was selected for scrutiny assessment and notices u/s 143(2) of the Act was issued on 27.8.2009 followed by notice u/s 142(1) of the Act, date 18.1.2010 along with detailed questionnaire calling for various details. During the course of assessment proceedings financial statements including trading and profit and loss a/c and supporting of pu .....

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1 Addition on account of disallowance of purchases Rs.3,42,757/- 2 Addition on account of disallowance of expenses Rs.60,022/- 3 Addition on account of unexplained creditors Rs.5,063/- 4 Addition on account of unexplained credit Rs.1,48,302/- 3. Aggrieved, assessee went in appeal before ld. CIT(A) who partly allowed the appeal of assessee by dismissing the ground of applying provisions of section 44AF of the Act as per business of assessee, deleted addition for unexplained creditors of ₹ .....

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turnover of ₹ 11.31 lacs from retail trade business profit worked out under the provisions of sec.44AF of the Act calculated @ 5% comes to ₹ 56551/- whereas assessee firm has disclosed net profit of ₹ 2,22,214/- before deduction of interest and remuneration payable to partner(s). Ld. AR further submitted that during the course of assessment proceedings all documents relating to purchases and sales were provided to the assessing authority including the copy of sales-tax return .....

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Luggage Ltd., Ahmedabad, which is a well-known company. Ld. AR therefore, requested that assessee s business is fully covered under the provisions of 44AF of the Act as assessees is in retail trade business and has shown profits higher than the profits required to be shown by retain trade business u/s 44AF of the Act and the additions sustained by ld. CIT(A) to be deleted and returned income of the assessee be accepted. 6. On the other hand, ld. DR supported the orders of lower authorities. 7. W .....

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from Aristocate Luggage Ltd. During the course of assessment proceedings sufficient details were placed on record before the assessing authority about purchases and sales effected during the year and genuineness of sales has not been questioned by the assessing authority at any stage. Ld. Assessing Officer has doubted the purchases of ₹ 13,71,028/- on which addition @ 25% has been made even when complete details of datewise purchases and names, addresses and amount of suppliers were place .....

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ds as under :- 44AF. 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 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 .....

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all be allowed : Provided that where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and 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 .....

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