AO action in assessing assessee at presumptive rate of tax u/s 44AD (of Income Tax Act, 1961) held wrong.
AO action in assessing assessee at presumptive rate of tax u/s 44AD (of Income Tax Act, 1961) held wrong.
Assessee showed book profit u/s 44AD (of Income Tax Act, 1961) @ 8% on gross receipt & did not maintain books of accounts. AO held it incorrect. On appeal CIT(A) held assessee ought to have maintained its books of accounts. On appeal ITAT held, In peculiar facts & circumstances that AO action in assessing assessee at presumptive rate of tax u/s 44AD (of Income Tax Act, 1961) is erroneous as well as prejudicial to interest of Revenue. Thus, CIT(A) order was held correct & was upheld by ITAT.-501511
Facts in brief:
1. Assessee has shown the profit u/s 44AD (of Income Tax Act, 1961) @ 8% on gross receipt of Rs.25,63,410/- and do not maintained books of accounts.
2. As assessee is engaged in the business of dying of fabrics/textile cloths, he is required to maintain books of account u/s 44AA (of Income Tax Act, 1961).
3. AO has completed the assessment without properly examining the applicability of section 44AD (of Income Tax Act, 1961).
4. On appeal, CIT(A) held, assessee ought to have maintained his books of account u/s 44AA (of Income Tax Act, 1961) being not covered by presumptive tax provision hereinabove.
5. CIT directed the Assessing Officer to frame a fresh assessment.
On appeal ITAT held,
6. It emerges that assessee is engaged in jobworks only and not in eligible retail trade in any goods or merchandise. Ld. Counsel at this stage submits that although his case is not covered by amended Section 44AD (of Income Tax Act, 1961), however, the bench can still guided by this provision to hold assessee's presumptive assessment @ 8% as be just and proper.
7. We find this plea to be entirely misconceived. We repeat that once the legislature has itself made amended Section ITA No. 1036/Ahd/2015 Shri Moh. Ummer Usmanbhai Mandalwala vs. Pr. CIT A.Y. 2010-11 44AD to be applicable w.e.f. 01.04.2011 in case of eligible assessees and businesses both, the same cannot be stretched back to apply from AY 2010-11 in question.
8. We hold in these peculiar facts and circumstances that Assessing Officer's action in assessing the assessee at presumptive rate of tax u/s 44AD (of Income Tax Act, 1961) is erroneous as well as prejudicial to interest of the Revenue. The CIT's order under challenge is affirmed accordingly.
9. This assessee's appeal is dismissed.
News Reference: Moh. Ummer Usmanbhai Mandalwala, ... vs Assessee
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