Clarification on defective return

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Student
52 Points Joined April 2010

Hi all,

My client's return got defective. He has a turnover of Rs.10 lakh and opted for presumptive taxation ad 60000 was offered as income. While filling the particulars in ITR 3, we skipped P&L Section and filled 'NO ACCOUNTS CASE' section. Similarly in Balance sheet also we filled NO ACCOUNT CASE section only. But a communication was received from the IT Dept that his return is defective stating that.

"a) The Gross receipts is not mentioned in the Profit & Loss A/c, OR b) The profit shown is less than 6% of the gross receipts as prescribed u/s 44AD but has not mentioned the maintenance of the books of accounts and audit report u/s 44AB in Part A-General and the total income exceeds the maximum amount not chargeable to income tax"

1. Please tell me what was wrong.

2. Also  want to know whether I should fill only the P&L and re-submit or should I tick the 44 AA section and fill up the  Balance sheet also ? 

Please help.

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On 30 October 2017 at 20:09 Report
Replies (22)
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Chartered Accountant
350 Points Joined February 2014
As per Section 44AA you have to maintain your books since your profit is less than 8% of the turnover.
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On 30 October 2017 at 21:27
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Chartered Accountant
350 Points Joined February 2014
Revise your return and you have to do Tax Audit also..
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On 30 October 2017 at 21:28
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22 Points Joined May 2017
this deemand is generated because you are not entered in p/l last 4 figure ...
dear, when we fill return under non mataince of book of a/c there are some mendatry fields as follows....
1. last 4 figure of p/L ( groos receipt Rs. 1000000 in you case , expenses , and net receipt Rs. 600000 )
2. last four figure in BS ( cash , debtors , creditors , stock )
after than plz generate XML and file the return
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On 30 October 2017 at 22:28
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22 Points Joined May 2017
and you are not able to tax audit because your turnover is under exempted limit
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On 30 October 2017 at 22:30
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Chartered Accountant
350 Points Joined February 2014
Nirma Agrawal Mam, the profit above is less than 8% so Maintaining books of Accounts is mandatory and also to the same books of accounts should be Audited by CA.
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On 30 October 2017 at 22:32
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22 Points Joined May 2017
sir but his turnover his turnover is under limit
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On 30 October 2017 at 22:39
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22 Points Joined May 2017
and they claim also 44AD if his all receipt thorough out the cheques
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On 30 October 2017 at 22:40
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Chartered Accountant
350 Points Joined February 2014
Yes although the turnover is below the limit but under section 44AD he has to get his accounts audited.
But the same will be not applicable if they can show their total receipts through Bank Account
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On 30 October 2017 at 22:43
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22 Points Joined May 2017
but sir a/c get audit under sec. 44AB in 44AD we can claim presumptive income
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On 30 October 2017 at 23:03
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Chartered Accountant
350 Points Joined February 2014
Yes. Thats 44AB.. Sorry for the mistake
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On 30 October 2017 at 23:06
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22 Points Joined May 2017
sir plz tell me what is conclusion in this case
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On 30 October 2017 at 23:07
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Chartered Accountant
350 Points Joined February 2014
If the turnover is less than 6% he has to get his Accounts audited. Otherwise he has to show his total receipts through Bank only.
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On 30 October 2017 at 23:09
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Chartered Accountant
350 Points Joined February 2014
If he is unable to show the total receipts through Bank then 8% will be his presumptive income and since he has already shown less than 8 % income again he has to get his accounts audited under section 44AB
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On 30 October 2017 at 23:11
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22 Points Joined May 2017
but sir according to sec. 44AA if his client is individual then he/ she not liable for maintains of books of a/c because his turnover is less than 25000000 and net income less than 250000 so why his accounts get audited
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On 31 October 2017 at 06:10


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