TaxTMI 
TaxTMI 
2007 (8) TMI 399
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....te the receivable and payables in the business and not necessarily for determining the income. The appellant was under a bona fide impression that under the provisions of sections 44AE and 44AF, there was no obligation for the appellant to declare the profits as per the books in the return which were higher than the presumptive profits as per these sections. As per the legal provisions, the appellant's impression of the law was fully justified and hence, the appellant could not be said to have concealed or filed inaccurate particulars of income. As per the ratio of SC decision in the case of Vegetable Products Ltd 88 ITR 192, because two interpretations of the provisions were possible, the penalty could not be sustained in this case. The appellant after the survey operation had agreed to be taxed on the higher income as per the books subject to no penalty be levied and hence, his Agreement could not justify the levy of penalty. (3) The learned CIT(A) was not justified in rejecting the appellant's explanation in this regard and in confirming the penalty under section 271 (1)(c)." 3. The assessee-firm was dealing in building material on retail basis and was deriving income from....
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....p; NIL ---------------------------------------------------------- 4. During a survey conducted under section 133A of the Act, at the business premises of the assessee on 28-8-2002, it was noticed that the assessee was maintaining regular books of account which showed higher income than what was offered by the assessee for tax in its return of income. The assessee, subsequently, filed a revised return on 5-9-2002 as under:- ---------------------------------------------------------- Particulars Amount (Rs.) Amount (Rs.) ---------------------------------------------------------- Income from business Net profit as per P&L A/c 4,68,561 Add: Bad debts claimed 54,487 5,23,048 Less: Set off of loss ....
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.... CIT(A). The submissions made by him are summarized below:- - that the assessee, was dealing in building material on retail basis and the turnover was only Rs. 18,26,129 and, therefore, it was covered by the provisions of section 44AF. - that the number of trucks used by the assessee in the truck plying business was less than ten and, therefore, it was covered by the provisions of section 44AE. - that, in view of above, the assessee rightly computed its income on presumptive basis as per the provision of sections 44AF and 44AE of the Act. - that the assessee, was under no obligation to declare an income higher than what was prescribed under sections 44AF and 44AE, merely because the books of account were maintained. - that the assessee had not committed any default for which penalty could be levied under section 271(1)(c) of the Act. 8. Smt. Anjala Sahu, the ld. DR, supported the order of the CIT(A). She vehemently argued saying that the order of the CIT(A) needed to be upheld. 9. We have considered the rival submissions in the light of material on record and we are of the view that the order of the CIT(A) confirming the penalty levied by the Assessing Officer under section ....
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....s of business or profession"; Provided that nothing contained in this sub-section shall apply in respect of an assessee whose total turnover exceeds an amount of forty lakh rupees in the previous year. (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1) be deemed to have been already given full effect to and no further deduction under those sections shall 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 for each of the relevant assessment years. (4) The provisions of sections 44AA and 44AB shall not apply insofar as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the total turnover or, as the case may be, the ....
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....ail business have to be computed under the provisions of sections 28 to 43C of the Act. The expression 'business' is defined in section 2(13) of the Act and sections 28 to 43C set down the manner of computation of profits and gains of business. But section 44AF starts with a non obstante clause giving an overriding effect to the provisions of this section over the provisions of sections 28 to 43C. The true effect of a non obstante clause in a section is that the provisions mentioned therein have full operation and that the provisions embraced in the non obstante clause do not become an impediment for the operation of that section. 17. Also, the deeming provision in section 44AF(1) creates a legal fiction, saying that in the case of such an assessee the profits and gains from such business will be assumed to be that, calculated at 5 per cent of the total turnover. And it is trite law that in construing a legal fiction, it will be proper and necessary to assume all those facts on which alone the fiction can operate. A legal fiction has to be carried to its logical conclusion. 18. Lord Asquith in East End Dwelling Co. Ltd. v. Finsbury Borough Council [1952] AC 109/[1951] 2 All ER 58....