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Showing contexts for: section 44af in La Sonia Wines, Mumbai vs Assessee on 25 August, 2015Matching Fragments
ITA Nos.3163-3168/15 2] On the facts and circumstances and in law, the learned Commissioner of Income Tax (A) - 49 totally erred in estimating deemed profit rate of 5% on the turnover u/s. 44AF of the Income Tax Act, 1961. The assessee has maintained the Book of Accounts as per section 44AA and got his Books of Accounts audited u/s. 44AB of the Income Tax Act, 1961.
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Sales 11289203 14822740 16511490 15941080 19494500 23304050 24133710 Net 139512 148484 226753 165350 300616 169896 7778760 profit Net 1.23 1.00 1.37 1.03 1.54 0.72 32.23 profit as %of sales 5.2 The AO mentioned that the assessee offered additional income in the year of search only. Hence, it cannot be said that there was no suppression of income in the preceding years. It is mentioned that the ITA Nos.3163-3168/15 assessee could not explain the drastic variation in net profit rate. It is mentioned that Section 44AF also envisages a profit rate of 5% on turnover in the retail trade cases referred therein. The AO mentioned that considering the fact that the sales are not verifiable, it will not be unreasonable to compute the profits at the rate of 5% of the disclosed sales. Accordingly the AO computed the net profit at Rs.5,64,460/-, for A.Y.2005-06, Rs.7,41,137/- for A.Y.2006-07, Rs.8,25,575/- for A.Y.2007-
4) It is submitted that the Ld. AO failed to bring on record any comparative instances of profit rate so as to justify the addition. Further, it is settled position that profit rate addition can only be made on the basis of the assessee's own figures and that too for earlier years and not subsequent years.
5) The appellant further submits that the assumption of 5% net profit is only in the case where the conditions of Section 44AF of the Act are satisfied. In the case of the appellant since the turnover is above 40 lacs the provisions of Section 44AF are not satisfied hence the Assessing Officer is not justified in relying on the said provisions to assume the profit of 5%.