Comment on Taxation Simplified
commented on
06 Mar 2014, 01:31 AM
Example
X is carrying on small business . The Turnover is Rs. 50 lakh. The profit as per his books or calculation is Rs. 8 Lakhs. However, he opts to return the income under section 44AD @ 8% i.e Rs. 4 Lakh. The proceeds of business are deposited in a bank account.
Can the AO assess the difference amount as undisclosed income?
No, The Answer is No due to following reasons:
– The section has been amended for the benefit of the assessee.
– The word Claim signifies the right of assessee, and it is not an obligation of the assessee.
The distinction between Right and obligation is very necesrary here.
The language of section of section 44AD(1) requires claims to have been made by an assessee for returning higher income.
If there is no claim made by assessee in return for higher income, there is no higher income.
JUDICIAL DECISIONS
• The following judicial decisions support this view:
– Samta construction Co V. Pawan Kumar sharma(2000) 244 ITR 845 (MP)
– CIT V. ARVIND MIILS LTD(1992) 193 ITR 255(SC)
-AC,BANGLORE VELLIAPA TEXTILES LIMITED AND ANOTHER (2003) ITR 560(SC)