Say a partnership ( father and son) is running a business service for abroad company and receives payment in wire transfer to father's bank account. say gross receipt is 30lac
part of the funds goes to father's Fixed deposits and part of money is withdrawn using ATM card. and during end of financial year about 1 lac is paid towards LIC payment of policy taken on name of son.
According to a ruff calculation
* about 60% of money pushed to Fixed Deposits. Transaction on bank account statement proves it.
* remaining 40% withdrawn through ATM Card / Self from bank etc . and only 15% of money is used towards business needs and remaining used for home and personal expsense.
So effectively profit is 85% .
Then if the partnership opts to file return on 44AD with 20% as profit what will happen.
is there any provision on IT laws which permits AO to ask explanation on receipt/expense if we declare profit more than 8%
CAclubindia
