44ad

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

15 August 2012 Dear expert,
If a party opts Sec. 44AD and department is not in possession of any adverse material against assesse. Thereafter, still the department can ask assesse to produce books of a/c of relevant year or not.
Please advise me.

U S Sharma

U S Sharma (Expert)
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16 August 2012 if the file is selected for scurtiny or regular assessment, then department has right to ask for a/cs

Querist : Anonymous

Querist : Anonymous (Querist)

16 August 2012 When assessee has not maintained accounts and filed his return u/s 44AD accordingly, then in my view department should not ask for accounts. Otherwise, there is no benefit to opt Section 44AD, if still the assessee is liable to show his accounts.

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Prakash Kochar

Prakash Kochar (Expert)
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18 August 2012 No need to maintain any sort of regular books of accounts if a person declares profit u/s 44AD @ 8% or more of his gross receipts or gross turnover.

Assessee bears the onus of proof to prove the turnover.

The onus of proof is on the assessee. It is his duty to prove the turnover. If books of accounts are not maintained, it will be very difficult to prove, because there is no specific provision for the same.

But it is advisable that some temporary books of accounts like sale books or day books etc., must be maintained so as to prove gross turnover or gross receipt and he is eligible to get benefit of section 44AD.

If the assessee has been maintaining books of account or other records under any other law say under VAT or sales tax law then such books may be produced (if needed) before AO to prove that the gross receipts are below Rs 60 lakhs.

following documents may be provided prove the turnover?
• - copies of invoices issued during FY
• - copies of cash memo
• - copies of Purchase bill
• - Bank statement, to verify credits
• - Inventory details, if any maintained
• - Returns filed under sales tax/vat/excise/service Tax laws.

Querist : Anonymous

Querist : Anonymous (Querist)

18 August 2012 Yes, assessee has maintained invoice book, but as Mr. U S Sharma stated above that in case of scrutiny department can ask for account books. But I dont understand that when assessee has opted Sec. 44AD to escape from account books, then what else assessee can produce before department except his bill book or bank passbook or form 16A?

Prakash Kochar

Prakash Kochar (Expert)
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18 August 2012 No books of account need be maintained, AO will not compel to produce cash book and ledger.
He may ask for assets and liabilities statement.

Querist : Anonymous

Querist : Anonymous (Querist)

18 August 2012 how to determine liabilities as no books of account maintained except bill book?
and in the statement of assets, only assets emoplyed in business are to mention or personal assets like ancestral residendial house etc also to mention.