Is this misuse of sectioon 44ad?

Sohil (Learner) (631 Points)

15 April 2016  

Person has 30 Lalk purchase and 50 Lakh gross sale including vat and all.ALso shows 10 Lakh stock in hand.In short profit is easily more than 10 lakh rupees.

 

On 50 Lakh he pays tax @ 8% 4lakh profit.

He invest in 80c 1.5l and says basic profit goes to 2.5 lakh hence no tax liable.

Is this practice valid?