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44AD section

Krishna (Assistant) (656 Points)

16 June 2018

If assesee opt out of 44AD before 5 years then his accounts compulsory needs to be audited under 44AB ??

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 16 June 2018

No...

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177877 Points)
Replied 16 June 2018

Originally posted by : Krishna
	If assesee opt out of 44AD before 5 years then his accounts compulsory needs to be audited under 44AB ??

Yes, as per amendment u/s. 44AD....

excerpt of the section ........as follows.......

Sec. 44AD ........(4) Where an eligible assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1).

(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.] ""

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 16 June 2018

Dear Sir...

I'm not understand this reply...!

If Opt out from 44ad or opt to 44ad as per the query?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177877 Points)
Replied 16 June 2018

As per the amendment in the section, effective from 01.04.2017...........

In simple language.........

Once you declare income u/s. 44AD (opt in), you have to declare income under the section for minimum 5 years. (8%/6% profit main criteria)

But in case, you cannot declare the profit margin, i.e. when you declare with normal books of accounts (opt out) before continuous 5 years declaration under the section; you are liable for tax audit u/s. 44AB, not only for that particular year, but (as penalty) for next 5 years (i.e. you cannot opt in again) & have to audit books.

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 16 June 2018

Yes Sir...

But,

I think I wrongly understand the query...!!!

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Krishna (Assistant) (656 Points)
Replied 16 June 2018

"But in case, you cannot declare the profit margin, i.e. when you declare with normal books of accounts (opt out) before continuous 5 years; you are liable for rax audit u/s. 44AB, not only for that particular year, but (as penalty) for next 5 years (i.e. you cannot again opt in)"
sir if he opt out before 5 years & as per books of account his profit is 9% & he file regular itr 4 ; then audit under 44ab will require ???