RAMAKRISHNAN,CHENNAI vs. ITO, NCW-19(4), CHENNAI

O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-12, Chennai in dated 31.10.2018. The assessment was framed by the Income Tax Officer, Non-Corporate Ward 19(4), Chennai u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) for the assessment year 2015-16 vide order dated 08.12.2017.

3 appeal before CIT(A). The CIT(A) also confirmed the action of AO by observing in para 5.1 as under:- “5.1 The appellant has reiterated the submissions raised before the AO. The appellant has not maintained books of accounts. The turnover of the appellant was below Rs.1 crore. In such circumstances, the only option before the AO is to apply the provisions of Section 44AD. Had the appellant produced books of accounts, there was no necessity to assess the deemed income. The appellant has declared in his return that he is not liable for maintaining and auditing books of accounts.”

3.1 In view of the above, the assessee stated once he has maintained books of account and produced before the AO during the course of scrutiny assessment, the AO is supposed to make assessment as per the provisions of the Act and to determine the true income from the accounts particularly when the assessee has maintained books of account in term of section 44AA of the Act. Accordingly, the assessee stated that matter can be remanded back to the file of the AO to make assessment in term of normal provisions and not u/s.44AD of the Act.

4 and estimated profit rate on presumptive basis. The assessee before us made statement at bar that he has maintained books of account, which were produced before the AO during scrutiny assessment proceedings and even now he is ready to produce before the AO, in case the matter is remanded back to the file of the AO. We noted from the provisions of section 44AD, sub-section (5), as existed during the relevant assessment year 2015-16 and the same reads as under:- (5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub- section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

5.1 From the above provision, it is clear that the assessee can declare lower profit also in case the assessee has maintained books of account and in this case, as claimed by the assessee before Bench that he has maintained books of account, in that eventuality we are of the view that the orders of lower authorities needs set aside. Hence, the orders of lower authorities are set aside and matter remanded back to the file of the AO for making assessment on the basis of books of account. Accordingly, the AO will reframe the 5 assessment after allowing reasonable opportunity of being hearing to the assessee.

Order pronounced in the open court on 27th April, 2022 at Chennai.