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TMI Blog2016 (9) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 1,33,970/- on the gross receipts of ₹ 5,54,103/- from construction activities. As per the provisions of s. 44AD of the Act, an Assessee can claim lower profits and gains (i.e less than 8% of the gross receipts) only if he keeps and maintains such books of accounts and other documents as required u/s 44AA(2) of the Act and gets his accounts audited and furnishes a report of such audit as required under s. 44AB of the Act. In the present case, though the assessee has maintained books of accounts are required u/s 44AA(2) but had not got the accounts audited as required u/s 44AB of the Act, which according to us was a failure on the part of the assessee to comply with the requirement of section 44AD of the Act and thereby claim loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - As per the provisions of Section 44AD of the I.T.Act,1961, assessee should have declared income atleast at the rate of 8% of the receipts and in case the income is declared at less than 8% of the receipts, assessee was required to get its accounts audited u/s 44AB of the Act. AO noticed that in the case of assessee since the assessee had declared loss from construction activities it should have got the accounts audited u/s 44AB of the Act which was mandatorily required u/s.44AD of the Act and failure of the assessee to get the accounts audited u/s.44AB of the Act had resulted into escapement of income to the extent of 8% of receipts. AO accordingly reopened the assessment u/s.147 of the Act by issuing notice dated 31/1/2014 u/s. 148 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee declares lower profit. The appellant has further stated that the assessing officer has no power to assess the income u/s 44AD(1) when section 44AD(5) is applicable. Thus section 44AD(1) is not applicable to the assessee. In view of above submission, it is prayed by the appellant that the reopening of the assessment U/S 147 be quashed and the assessment order U/s 143 (3) r.w.s 147 of the Act be annulled. The appellant has further stated that assessee could not produce audit report u/s 44AB on account of a bonafide belief that section 44AD is not applicable to the assessee as he has incurred loss in the previous year. It is seen from the facts of the case that appellant's contention that regular assessment u/s.143(3) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not audited u/s.44AB of the I. T. Act. If an assessee claims lower profits and gains than the profits and gains specified in sub section (1), he has to keep and maintain such books of account and other documents as required under sub section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB. In this case the provision of section 44AD is applicable where the net profit @8% of gross profit is to be offered to tax which is not done by the appellant in the case. The A.O. has applied section 44AB and the net profit @8% of gross receipt of ₹ 541193/- is taken at ₹ 43295/-. In view of above discussion and on the. facts, the action of the A.O. in this case is justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framed by the AO. Before us, Ld AR reiterated the submissions made before lower authorities and further submitted that in the original order framed u/s 143(3), AO had accepted the loss of ₹ 1,33,970/- and subsequently only on account of change of opinion held that Assessee was required to get the accounts audited u/s.44AB for being eligible to claim loss. He submitted that this change of opinion was not permissible and therefore reopening should be declared to be invalid. He also placed reliance on the decision of Indore Tribunal in the case of ITO vs. Project India (2007) 109 ITD 87. Ld. DR on the other hand supported the order of AO and ld.CIT(A). 4. We have heard the rival submissions and perused the material on record. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings is beyond 4 years from the assessment year, therefore unless and until it is observed and found that the income has escaped assessment due to the failure on the part of the assessee to disclose truly and fully all material facts for the assessment, the AO is not authorized to make reassessment. In the present case, it is a fact that assessee has claimed loss of ₹ 1,33,970/- on the gross receipts of ₹ 5,54,103/- from construction activities. As per the provisions of s. 44AD of the Act, an Assessee can claim lower profits and gains (i.e less than 8% of the gross receipts) only if he keeps and maintains such books of accounts and other documents as required u/s 44AA(2) of the Act and gets his accounts audited and furnishe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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