Income under section 44ad

This query is : Resolved

CA Pramod Jain (Querist)
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31 October 2015 One person engaged in business of catering had a turnover of 90 Lac during A.Y.2014-15 and he filled return showing NP @ 5.40% i.e. 486000/- now he has received scruitny notice for A.Y.2014-15 for producing books of account etc. he actually is not maintaing book of accounts, pl advice whether he should revise his return by showing NP @ 8% or how to face it?

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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31 October 2015 If he revises his return after scrutiny notice than it will not do good since it will be taken adversely that he filed revised return to show income @ 8% only after receiving scrutiny notice and penalty under section 271(1)(c) may also be levied for not furnishing the particulars of income correctly. You have not mentioned whether tax audit was made or not since he was liable for the same u/s 44AD read with section 44AB. Now since he does not maintain books of account only option in my opinion is to admit it during assessment proceedings and agree for rejection of books of account and trading addition. At the same time since turnover does not exceed Rs. 1 crore trading addition in any case can not be more than 8% which is stipulated u/s 44AD. If more than 8% NP rate is applied it may be challenged in appeal.

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