Income tax notice

This query is : Resolved

CMA ALKESH PATEL (Querist)
Follow

30 June 2019 HELLO SIR,
I RECEIVED INCOME TAX NOTICE,
As per Section 44AD(6) of the Income Tax Act, 1961, the provisions of Sec.44AD are not applicable to – (1) persons carrying on professions that are referred to in Sec.44AA(1), (2) persons earning income in the nature of commission or brokerage, and (3) persons carrying on any agency business.As seen from the return of income filed, the nature of business code mentioned is which falls in the categories mentioned above. Hence, the provisions of Sec.44AD are not applicable, in your case
AND RESPONDS IN RESPECT
As the provisions of Section 44AD are not applicable, in your case, the claim of computing profits and gains of business on presumptive basis, under this special provision is not allowable. Hence, the above defect has to be corrected by way of computing the profits and gains of business under the normal provisions and not under Sec.44AD and offering the same.
MY QUESTION IS THAT CAN I FILE ITR 4 SEC44AE AS MY CLIENT IS TRANSPORTER AND CAN I GIVE REPLY IN WHICH FORM ?

Shrikant Toshniwal

Shrikant Toshniwal (Expert)
Follow

30 June 2019 DEAR SIR U CAN FILE A REVISED RETURN IS U R FIRST OPTION
FOR NEXT IS NOTICE DETAIL REQUIRED

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

31 July 2024 Yes, you can respond to the Income Tax notice and file the correct Income Tax Return form based on the nature of your client’s business. Here’s how you can address the situation:

### **1. **Filing Correct Income Tax Return Form**

Since the notice specifies that Section 44AD is not applicable, it indicates that you need to comply with the normal provisions for calculating profits and gains of business. However, you mentioned that your client is a transporter. For transporters, Section 44AE of the Income Tax Act is often applicable.

**Section 44AE** applies to businesses engaged in the transportation of goods by road and allows for presumptive taxation. If your client is a transporter, they may be eligible to file under **ITR-4** and claim benefits under Section 44AE.

### **2. **Steps to Follow**

**a. **File the Correct ITR Form:**

- **ITR-4:** Use this form if you are opting for presumptive taxation under Section 44AE. This form is specifically designed for individuals, Hindu Undivided Families (HUFs), and firms who opt for presumptive taxation under Section 44AE, 44AD, or 44ADA.
- Ensure you select the correct section (Section 44AE) while filling out the form.

**b. **Responding to the Notice:**

- **Draft a Reply:** In your response to the notice, explain that your client is engaged in the business of transportation and therefore eligible for presumptive taxation under Section 44AE.
- **Include Form Details:** Mention that you will be filing ITR-4 and will be claiming the benefits under Section 44AE.
- **Provide Supporting Documents:** Attach any relevant documents that support your claim, such as details of transportation business, income details, and expenses related to the business.

**c. **File the Revised Return:**

- **Correct the Return:** If you have already filed a return under Section 44AD, you need to file a revised return under Section 44AE using ITR-4.
- **Submission:** Submit the revised ITR-4 form electronically through the Income Tax e-filing portal.

### **Sample Reply to the Income Tax Notice:**

Here's a sample response you might send to the Income Tax Department:

---

**Subject: Response to Income Tax Notice - Filing Under Section 44AE**

Dear Sir/Madam,

Ref: Income Tax Notice dated [Insert Date] regarding applicability of Section 44AD

I acknowledge receipt of your notice concerning the applicability of Section 44AD for the Assessment Year [Insert AY]. As stated in the notice, Section 44AD is not applicable to our case as our business involves [Specify Nature of Business - e.g., transportation of goods].

Please note that our client is engaged in the transportation business and is eligible for presumptive taxation under Section 44AE. Accordingly, we will be filing the revised return using Form ITR-4, and will claim the benefits under Section 44AE.

We are in the process of filing the revised return and will ensure that all computations and claims are made as per the provisions of Section 44AE. Attached are the relevant documents supporting the nature of the business and income details.

Thank you for your attention to this matter.

Sincerely,
[Your Name]
[Your PAN Number]
[Your Contact Information]

---

### **Key Points:**

- **Eligibility for Section 44AE:** Ensure your client meets the criteria for Section 44AE.
- **Revised Return:** If a mistake was made in the original return, file a revised return as per the correct provisions.
- **Documentation:** Maintain proper documentation to support your claim and to facilitate smooth processing of the return.

If you need further assistance or have complex scenarios, consulting with a tax professional or advisor is advisable.

Upgrade to CAclubindia Pro. Subscribe Now!