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2016 (9) TMI 806 - ITAT AHMEDABAD

2016 (9) TMI 806 - ITAT AHMEDABAD - TMI - Reopening of assessment - loss claimed on the gross receipts - assessee has maintained books of accounts are required u/s 44AA(2) but had not got the accounts audited as required u/s 44AB - Held that:- In the present case, since initiation of reassessment proceedings is beyond 4 years from the assessment year, therefore unless and until it is observed and found that the income has escaped assessment due to the failure on the part of the assessee to discl .....

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(2) of the Act and gets his accounts audited and furnishes a report of such audit as required under s. 44AB of the Act. In the present case, though the assessee has maintained books of accounts are required u/s 44AA(2) but had not got the accounts audited as required u/s 44AB of the Act, which according to us was a failure on the part of the assessee to comply with the requirement of section 44AD of the Act and thereby claim loss. In such a situation, we are of the view that no interference to t .....

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Chaturvedi, Accountant Member This appeal by the Assessee is directed against the order of the Commissioner of Income Tax(Appeals)-1, Ahmedabad dated 28/09/2015 for the assessment year 2008-09. 2. The relevant facts as culled out from the materials on record are as under:- 2.1. Assessee is a company stated to be engaged in the business of civil engineering consultancy and construction activities. Assessee filed its return of income for AY 2008-09 on 27.9.2008 declaring total loss of ₹ 1,3 .....

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st at the rate of 8% of the receipts and in case the income is declared at less than 8% of the receipts, assessee was required to get its accounts audited u/s 44AB of the Act. AO noticed that in the case of assessee since the assessee had declared loss from construction activities it should have got the accounts audited u/s 44AB of the Act which was mandatorily required u/s.44AD of the Act and failure of the assessee to get the accounts audited u/s.44AB of the Act had resulted into escapement of .....

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ed the appeal of the assessee by holding as under: 2.3. / have gone through the facts and the submission of the appellant carefully. In the assessment order A.O has observed that the appellant as per the provisions of section 44AD, the person engaged in the business of civil construction and whose receipts from the said business does not exceed ₹ 40 lacs, either has to declare profit @8% of Gross Receipts from Civil construction activity or in case if lower profit is declared, has to got i .....

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e appellant has stated that as per section 44AD (5), the assessing officer cannot make section 44AD(1) applicable to the assessee, when the assessee declares lower profit. The appellant has further stated that the assessing officer has no power to assess the income u/s 44AD(1) when section 44AD(5) is applicable. Thus section 44AD(1) is not applicable to the assessee. In view of above submission, it is prayed by the appellant that the reopening of the assessment U/S 147 be quashed and the assessm .....

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is re-opened, is not tenable. It is seen from the records that during the course of assessment U/s. 143(3) it was no where discussed whether a provision of section 44AD are applicable in assessee's case or not. Since the issue of applicability of section 44AD has not been adjudicated during the course of assessment u/s.143(3), assessee's contention on change of opinion has no force. There is sufficient reason for the AO to reopen the case as the appellant has neither declared the profit .....

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ion (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." The appellant's turnover in the business of civil construction is less than 40 lacs. It is not negated by the appellant that the books of account are not audited u/s.44AB of the I. T. Act. If an assessee claims lower profits and gains than the profits and gains sp .....

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; 541193/- is taken at ₹ 43295/-. In view of above discussion and on the. facts, the action of the A.O. in this case is justified and therefore addition of ₹ 43295/- is confirmed. The appeal is dismissed on this issue. 2.2. Aggrieved by the order of ld.CIT(A), assessee is now in appeal before us and has raised the following grounds:- 1. The learned assessing officer has erred in law by calculating total income of assessee company at ₹ 43,295/- (8% of ₹ 5,41,193/-) as per .....

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,33,970/- was issued. Now with the change of ITO the opinion is changed and the case is re-opened issuing notice u/s 148 of IT Act which is again the law. 4. It is therefore prayed that:- (i) the additions made by Assessing officer of ₹ 43,295/- be deleted. (ii) the appellant may be allowed to add, amend, alter or raise additional grounds of appeal till finalization of Appeal (iii) the assessment order of the learned Assessing Officer may be set aside and the representation made by the app .....

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ermissible and therefore reopening should be declared to be invalid. He also placed reliance on the decision of Indore Tribunal in the case of ITO vs. Project India (2007) 109 ITD 87. Ld. DR on the other hand supported the order of AO and ld.CIT(A). 4. We have heard the rival submissions and perused the material on record. In the present case, it is an undisputed fact that assessee is engaged in the construction activities and for AY 2008-09, it had earned receipts of ₹ 5,54,103/- and from .....

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s provisions provided in Section 147/148 of the Act. It is only on the Assessing Officer strictly satisfying the provisions of Section 147 of the Act, that it acquires jurisdiction to reopen an assessment. Section 147 of the Act, clothes the Assessing Officer with jurisdiction to reopen an assessment on satisfaction of the following:- (a) The Assessing Officer must have reason to believe that (b) Income chargeable to tax has escaped the assessment and (c) In cases where the assessment sought to .....

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