Is Sec 44AA applicable for Commission agent having Gross Receipts Above 10 Lakhs or Below

This query is : Resolved

SANTOSH KUMAR SHARMA (Querist)
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14 May 2021 An assessee received Notice U/S 139(9) Erorr Code- 1022 as folowing :
"The return of income filed by you as per the above details is considered as defective with-in the meaning of section 139(9) of the IT Act for the following reason:
Reason
Probable Resolution
Taxpayer is offering Income under the head Profits and gains from Business or Profession. Hence, as per the provisions of Sec.44AA, the taxpayer is required to maintain books of accounts. As seen from the return of income filed, the taxpayer has offered regular business income in addition to Presumptive Income. However, Part A of the Profit and Loss Account and Balance Sheet are not filled, in respect of the regular business income.
The correction of this defect has to be made by filing a corrected return. In the corrected return of income, the Balance Sheet and Profit and Loss account have to be filled, to show the basis on which regular income from business has been computed. Please note that the books of accounts are required to be audited, if the regular business income disclosed in the return is less than the limits prescribed under the presumptive taxation provisions of the Income Tax Act. Accordingly, books of account are to be maintained and the report of audit has to be furnished. Please note that if the defect is not addressed with-in the time allowed, your return of income will be treated as invalid."
My Quarry is is the Commission agent is require to maintain Books U/S 44AA or not ? Please resolve my Problem. Please say how i can reply this Notice., Thanks & Regards

NAVEESH DHAR

NAVEESH DHAR (Expert)
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14 May 2021 yes 44aa is applicable for commission agent.. in other words you have to maintain books of account and trading &p/l account... you cant opt 44ad in case of commission agent

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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01 August 2024 Section 44AA of the Income Tax Act, 1961, deals with the maintenance of books of accounts by certain persons carrying on business or profession. Here are the relevant provisions for commission agents and others:

### Applicability of Section 44AA

1. **For Business or Profession**:
- Every person carrying on business or profession must maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of the Act.

2. **Specific Thresholds**:
- If the income from business or profession exceeds Rs. 1,20,000 or total sales, turnover, or gross receipts exceed Rs. 10,00,000 in any of the three preceding years.
- For individuals and HUFs carrying on business or profession, the threshold is Rs. 2,50,000 income or Rs. 25,00,000 turnover/gross receipts.

### Commission Agents

As a commission agent, if your gross receipts exceed Rs. 10,00,000, you are required to maintain books of accounts under Section 44AA. Given the notice under Section 139(9) with error code 1022, it seems you have not filled out the necessary parts of the Profit and Loss Account and Balance Sheet for the regular business income, which is a requirement under the law.

### Steps to Respond to the Notice

1. **Review Your Return**:
- Ensure that your return accurately reflects your business income, including both presumptive and regular income, if applicable.

2. **Fill Part A of the Profit and Loss Account and Balance Sheet**:
- Since you are required to maintain books of accounts, you need to fill out the detailed Profit and Loss Account and Balance Sheet sections in your ITR.

3. **File a Revised Return**:
- File a revised return addressing the defect mentioned in the notice. Ensure all necessary parts, including the Profit and Loss Account and Balance Sheet, are filled.

4. **Audit Report (if applicable)**:
- If your income from the business (other than presumptive income) is below the limit prescribed under presumptive taxation, you must get your books audited and submit the audit report as part of the return.

### Sample Reply

Here’s how you might structure your reply to the notice:

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**To: The Assessing Officer**

**Subject: Reply to Notice under Section 139(9) - Error Code 1022**

**Reference: Notice dated [Date] for AY [Assessment Year]**

Dear Sir/Madam,

With reference to the notice received under Section 139(9) of the Income Tax Act, 1961, for the assessment year [Assessment Year], I have reviewed the reason stated for the defective return. The notice mentions that the return is considered defective because Part A of the Profit and Loss Account and Balance Sheet were not filled.

I would like to inform you that I am a commission agent with gross receipts exceeding Rs. 10,00,000. As per the provisions of Section 44AA, I am required to maintain books of accounts.

To address the defect, I am filing a revised return with the necessary details filled in the Profit and Loss Account and Balance Sheet sections.

I trust this will resolve the issue and ensure compliance with the provisions of the Income Tax Act. Please find attached the revised return.

Thank you for your understanding and assistance.

Yours sincerely,

[Your Name]

[Your PAN]

[Your Address]

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### Conclusion

Ensure that you address the specific issue mentioned in the notice by providing the required details in your revised return. If necessary, consult with a tax professional to ensure full compliance and accurate filing.

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