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Maintainance of accounts

sandesh (Accountant) (55 Points)

22 March 2010

Hi Friends,

I have a doubt.

Is it necessary to maintain books of accounts U/S 44 AA in case of small Traders like person carrying on general store business, small vendors when the turnover does not exceeds Rs. 10,00,000/- however the total Income exceeds Rs. 120,000/- in all the preceding 3 Financial years.

Thanks in advance..........

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3 Replies

CA Anurag Garg (Chartered Accountant) (339 Points)
Replied 22 March 2010

no section 44AA does not apply to sections 44AD, AE, AF

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Ram Avtar Singh (Nagari Sultanpur U.P.Delhi) (14487 Points)
Replied 22 March 2010

As per Section 44AA (2) (i) since total income is exceeding Rs.1,20,000/- hence he is required to maintain books of account.

Who are required to maintain or kept books of account ?
1) Persons carrying on particular Professions:

Legal,
Medical,
Architectural,
Engineering,
Accountancy,
Technical Consultancy,
Interior Decoration,
Acting as Authrised Representative before Tribunal or other authority,
Film Artist,
Company Secretary,
Information Technology (w.e.f. asst. year 2002-03

As per section 44AA read with Rule 6F the persons carrying on any of the professional mentioned above are required to maintain books of account
if years gross receipts of the profession exceed Rs. 1,50,000

2) Persons engaged in other Profession or business (other then above stated)
The books of accounts is compulsory if:

either the income from business or profession exceed Rs. 1,20,000
or the turnover or gross receipts exceed Rs. 10 Lacs.

3) Persons whom estimated income schemes is applicable:
Those persons who avail of Estimated Income Scheme under Section 44AD to 44AE are also required to maintain books of accounts if the profit is shown less than the stipulated under the relevant provision.

Which are the books of account to be maintained?

Rule 6F prescribes types of books and other documents to be maintained .

Cash Book
Journal , if mercantile system of accounting is followed.
Ledger
Carbon copies of bills, serially numbered and carbon copied or counterfoil of receipts issued in respect of sums exceeding Rs. 25; and
Original bills for expenses exceeding Rs 50 and payment voucher for petty expense, However in a case where the cash book maintained by the persons contain adequate particulars in respect of the expenditure incurred, the vouchers are not necessary in respect of expenses upto Rs.50.

Note: In Medical Profession, there are additional books required to be maintained as follows.

Daily Case Register in the prescribed proforma (Form NO.3C)
Inventory, as at the beginning and end of the year of stock of drugs, medicines and other consumable ac

How Prolonged Books To Be Possessed ?
These books have to be kept for six years.

Consequence for failure to maintain books of account
Penalty Can be imposed for Rs 25,000 u/s 271A by the A.O or CIT(A).

In which place the Books of Acconts be kept?
at the principal place of business or profession

sandesh (Accountant) (55 Points)
Replied 22 March 2010

Thanks for the reply.

But if the assessee does not opt for presumptive taxation and also offers for tax the income which is more than the percentage prescribed under sec 44AD /AE/ AF, then whether he is required to maintain the books.

And if yes how he can raise the bills on the customers if his business is of cash nature where raising of bills is not possible either for the receipt and for payments.