13 May 2009
Sir, My client is a retailer in readymade garments filing return u/s. 44AF @ 10% net income on turnover,since last 5 years. Survey conducted at the premises of assessee. stock short found by Rs. 10 lacs during survery. No cash found, no other objectional documents found. The gross profit rate is 30%. What will be the consequences? Whether AO can add entire 10 lacs or 30% of 10 lacs as G.P. or 10% of 10 lacs as N.P. as the assessee file return u/s. 44AF? My client is not ready to offer any additional income, as per his say the department has not counted the stock properly, What stand should I take? What submission I should make?
13 May 2009
A.O will,in all probability,add Rs.10 lacs to the admitted income. In appeal you may win on the ground of G.P % method. Your clients argument that department people didn't count stock correctly is feabile,if there is no documentatry evidence to prove the same. Submission should be decided in between you and your client.
CAclubindia
