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Related IT return

Anu Verma (Sr.Consultant) (87 Points)

08 May 2017

Hi, One of our client(propreitor) wholeseller of fruits want to file their Income Tax return 1st time his total sales of fruits in 2016-17 is 79 lakhs. He has one current account but there is no transaction and also he has 4 saving accounts and total inflow in his account is 7 lakh approx.My points is how to file I.Tax return under section 44AD or need to audit his account properly what is the best way to filing his return? Thanks

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9 Replies

Farhaad Jiwani (Tax Consultant at Nagpur) (303 Points)
Replied 08 May 2017

if you are confirmed about the gross t/o is 79lakhs so file ITR considering the same u/s 44AD. Make sure to tell your client to deposit receipt in Current a/c next year onwards.

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srinivas (Finance Manager) (239 Points)
Replied 08 May 2017

Dear Mr.Anu,

As per your question, your client monthly avg turnover is 6.5 lakhs. It is good turnover and must file I.T.returns every year. Ask to your client to keep regular transaction through bank. Income tax dept accept only Rs.20,000 cash transaction per day for one transaction. Get all cash transaction from ur client and prepare cash transaction, then file the I.T.returns.

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CA Raj Doshi (Practising CA) (8924 Points)
Replied 09 May 2017

Srinivasji please explain " Income tax dept accept only Rs.20,000 cash transaction per day for one transaction. "

harsha (Article) (208 Points)
Replied 09 May 2017

it means, one cannot give or accept morethan 20,000 in cash. if it is accepted in cash, he is liable to 100% penalty u/s 271D. so pls make ur records in such a way that receipt from each person or transaction in one day doesnt exceed 20,000.

Anu Verma (Sr.Consultant) (87 Points)
Replied 09 May 2017

@ Mr.Farhaad- If we are going with U/S 44AD on receipts basis of his bank account either it current account or saving account.

Point is total receipts of his all bank account is 7 Lakh and acctual sales is 79 lakh and when I will file the ITR 7,00,000/- * 8%. there is no taxability but on the actual basic he is laible to pay tax .

and when he investing some money to purchase land and property that time he has some problem by Income tax dept such as BLACK money.

Hope you understand the my client problem.

Pls suggest the best method to avoid hassle/notice from Income tax dept.

Thanks

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Siddharth Chhajer (ARTICLE) (24 Points)
Replied 09 May 2017

there is no where mentioned that the assessee who files ITR u/s 44AD has to compulsorily receive all the money through bank only.. Though it is advisable to receive in cheques (or NEFT RTGS whatsoever) but it is not the mandate.. so now you have to adjust every sale bill of your client making sure that no bill for cash sale is more than 20,000 and cash received from his debtors or buyers on one day against one bill isn't more than 20,000.. Tax Evasive nature is apparent from this but this is the only recourse in this situation.. Deal with the Department whenever you are asked for this.. I hope this will help you.. If not and you have some different way out do let me know so that i can correct my perception regarding this..

Muralidharan (Chartrered Accountants) (115 Points)
Replied 10 May 2017

Mr Harsha's reply in relation to 271D r/w 269SS speaks of loan or deposit or advance for immovable properties. So long as it is a sale, according to my opinion, accepting Rs.20000/- in cash may not create any problem but as per the amended provisions of the Act, no assessee shall receive cash in excess of Rs.2 lakhs from a single customer per transaction under Rule 114E needs to be reported. Hence, several invoices to different parties which is less than the threshold limit may not be affected.

Mr Harsha can correct me if I am wrong

Farhaad Jiwani (Tax Consultant at Nagpur) (303 Points)
Replied 10 May 2017

@ Anu vermaji...
1) on receipt basis u shud only consider current account receipts.
2) I am saying make ITR taking 79lakhs as t/o (cash+bank deposit, if any). then obviously expenses shud have to be shown in cash nature.
3) wef 01.04.17 IT DEPTT has restricted capital expenditure so till 31.03.17 u can other capital expenditure, for land/property purchase purpose only bank route is permissible.