ITR 4 section 44AD

1. There is nothing wrong in what was formulated as law. If the question is relating to the purpose of law where people would exploit it by showing profit @ 8% instead of actual profit which could be higher. 
2. Presumptive taxation u/s 44AD or sec 44ADA or sec 44AE is introduced not to burden small taxpayers with the maintenance of books of accounts and carrying out an audit. There may be cases where their actual profit could be higher than 8% of the T.O but that should not make a difference as he is a small player and Income tax is giving him an added benefit for running a small business. Increasing this % will result in people not opting for presumptive taxation and they need to go regular return which will be maintaining books of accounts. That ultimately will increase the cost to the assessee. 
3. Once it's been set as law it will not be illegal and it is a fair advantage to small taxpayers to show their profit @ 8% on their T.O and reduce compliance burden. 
Please correct me if the above explanation was not clear.