2022 (9) TMI 1017

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....showing a net profit of 4.37%. The Assessing Officer has enhanced the Sales by Rs. 3,15,627/- and applied adhoc rate of net profit @ 8% on enhanced sales which is applicable for section 44AD. Me Lord is requested to allow the net Profit in between 4.36% to 8.00% i.e. at 5% on sales as disclosed in the audited financial statements." 2. The assessee is an individual and engaged in the business of trading of Sarees in the name and style of SPY Sarees. The assessee filed a return of income for the year under consideration on 17.10.2016 declaring total income of Rs. 3,81,100/-. The case was selected for scrutiny through CASS. During the scrutiny assessment, the Assessing Officer asked the assessee to produce complete books of accounts and vouc....

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....he assessee inviting the rejection of the book results under section 145(3) of the Act. He has further submitted that the Assessing Officer has applied the net profit of 8% which is arbitrary and excessive. This is the first year of the assessee's business and assessee has declared a net profit of 4.37% which is very much in the line of net profit reported in this trade. He has further contended that the provisions of section 44AD are not applicable in the case of the assessee when the books of accounts of the assessee were duly audited and the turnover of the assessee is much more higher than the limit the prescribed under section 44AD. The learned AR has thus submitted that the net profit declared by the assessee is very reasonable having....

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....roduce complete books of accounts and therefore, the Assessing Officer was having no option but to estimate the income of the assessee by adopting the net profit rate at 8% as provided under section 44AD of the Income Tax Act. The learned DR has further submitted that though the provisions of section 44AD are not applicable in the case of the assessee however, the net profit rate prescribed under the provisions of section 44AD can be taken as guiding factor. 5. I have considered the rival submissions as well as relevant material on record. Since the issue of rejection of books of accounts is not raised before the Tribunal, therefore, I do not propose to go into the correctness of the decision of the Assessing Officer on this point. However....