One of my client selected scrutiny assessment for AY 2008-2009. His total turnover 36 Lacs and their net profit is only 4.21% but their books of accounts are not audited. Now my client want to with section 44AF and he is agree to show 5% profit on 36 lacs. Can my client do this? Is their any case law related to this. What are the relief available for him?
Dear Arun,
I don't think so he will be able to show his profit @ 5% on 36 Lakhs now.
According to 44AF, if the turnover does not exceed Rs. 40 Lakhs then the assessee can show his net profit as 5% of the total turnover. If the assessee wants to show profits less than 5% of the total turnover, then the assessee shall have to get his accounts audited from a chartered accountant as per section 44AF.
If any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or furnish a report of such audit as required under section 44AB, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum equal to one-half per cent. of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred thousand rupees, whichever is less.
Regards,
Devendra Kulkarni
Hi Devendra
You not understand my problem. I am saying that case has been selected under security for AY 2008-2009. In this case client turnover is only 36 lacs and he has show profit only 4.5%. Further tax audit has not been made. The AO want to do Best Judgement Assessment. Now my query is this
1 Assessee want to show profit 5% on turnover and want to pay extra tax.
2 Is their any case law relating to this. if yes then told me
I don't know any case law, however you should fight that under Best judgement assessment as per Law (Section 44AF) the profit should be only 5%. Hope business is of Retail Business.
CAclubindia
