Section 44AD : Assessee’s request to restrict the rate from 8% to 3% on the contract receipts which was never substantiated by the books of accounts nor was a part of the provisions, can not be entertained

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Section 44AD : Assessee’s request to restrict the rate from 8% to 3% on the contract receipts which was never substantiated by the books of accounts nor was a part of the provisions, can not be entertained.

Unity Automation Solution Ltd Vs ITO
– Assessee’s appeal dismissed: DELHI ITAT
THE assessee is running a business of Sale and Service of CCTV cameras and other security equipment’s under brand name of  unity automation service limited. It had been assessed under Section 147 read with Section 143(3) for the A.Y. 2010-11. The assessee company had not filed its Income Tax Return under Section 139(1)  for  A.Y. 2010-11. The assessee Company deposited Cash of Rs. 8.3 lakh with Standard Chartered Bank and total receipts for the year under consideration was Rs. 3.5 crore. The AO issued Notice u/s 148 on 30.03.2017 for opening assessment proceedings of A.Y. 2010-11. The assessee company filed its IT Return on 16.10.2017 declaring loss of Rs. 27 lakh  with Acknowledgement No in compliance to the Notice u/s 148. Director of the Company attended the hearing and filed Audited financial statement including Balance Sheet and P & L A/c for the A.Y. 2010-11. The AO completed the assessment proceeding and assessed the total income of Rs. 28 lakh  i.e. 8% of total receipts of Rs. 3.5 crore  by taking the guidance from Section 44AD and disallowed the claim of loss of Rs. 27 lakh. On appeal, CIT(A) confirmed order of AO and dismissed the appeal of the assessee. Aggrieved assessee filed appeal before tribunal.
On appeal, the tribunal held that,
Whether for the purpose of Sec 44AD, assessee’s request to restrict the rate from 8% to 3% on the contract receipts which was never substantiated by the books of accounts nor was a part of the provisions, can be entertained – NO : ITAT
++ the CIT(A) had given a categorical finding that the AO rightly invoked the provisions of Section 44AD and applied rate of 8% on the contract receipts of the assessee during the year under consideration. The CIT(A) further observed that the request of the assessee to restrict the rate to 3% was never substantiated by the books of accounts nor was a part of the provisions. Thus, there was no need to interfere with the findings of the CIT(A). Therefore, the appeal of the assessee was dismissed.
ITA No.4816/Del/2019.
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