https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=326440 https://www.taxtmi.com/caselaws?id=326440 Presumptive computation of profits for taxation for business - taxing the peak amount - presumptive profit u/s 44AD/44AF - Held that:- A sum equal to 8% of gross receipts can be shown by assessee for being engaged in the work of exhibition of work contract (civil construction work) and as per the provisions of section 44AF when assessee is engaged in a retail business then a sum equal to 5% of the total turnover can be shown as income if the total income as per the books of accounts is less than the presumptive profit u/s 44AD/44AF of the Act. We find that the assessee is having some income from jari labour having total receipts of Rs. 4,10,560/-. Work of jari labour involves the work performed by labourers doing work on sarees putting jari meaning thereby that there is some element of contractual work which is performed by the assessee on behalf of the dealer who gives sarees/raw materials to the assessee and in turn assessee performs the contractual work with the help of labourers on the sarees. On the other hand, the undisclosed credit of Rs. 16,87,380/- have been pleaded by the assessee to have been carried on in the course of business of trading in sarees and dress materials and such type of business comes within the purview of provisions of section 44AF relating to profits and gains on retain business. In total the turnover of the assessee at Rs. 20,97,940/- (Rs.4,10,560/- + 16,87,380/-) has been accepted by both the lower authorities. Ld. CIT(A) has applied the net profit rate shown by the assessee on his labour contract income i.e. 47% on the total undisclosed credits of Rs. 16,87,380/-.by replacing the two additions made by the Assessing Officer including one related to peak credit. Thus when separate provisions are available for estimation of profits u/s 44AD and 44AF of the Act then it will not be proper to apply exhorbitant net profits rate on the total undisclosed credit which too have been accepted by both the lower authorities as business receipts. Once the business has been established and there is a special provisions for a businessman having turnover less than Rs. 60 lacs for applying net profit @ 5%/8% of the gross turnover as the case may be then we do not find the action of ld. CIT(A) to be proper in applying 47% rate of profit. However, looking to the facts that assessee has not disclosed the turnover routed through State Bank of India, Surat in its regular books of account then it will be justifiable to apply the higher of the two rates i.e. out of 5% and 8% which is 8% in this case on the total turnover of Rs. 16,87,380/- which works out at 1.34.990/- and also sustaining addition of peak credit at Rs. 82,690/- because assessee has not given any satisfactory explanation about the source of investment made towards this business and also we do not find any basis in the submissions of assessee that some amounts were debited in the capital account and has been invested in this account for the very reason that the impugned bank account was not disclosed in the return of income filed. We, therefore, quash the order of ld. CIT(A) and sustain the additions made by the Assessing Officer at Rs. 2,18,249/-.- Decided partly in favour of assessee Case-Laws Income Tax Wed, 02 Mar 2016 00:00:00 +0530