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Sec 44aa

Vinod (CA in Practice) (445 Points)

02 December 2011

I have one doubt related to Sec. 44AA of IT Act 1961:

As per Sec. 44AA, the assessee need not maintain books of accounts if his income from business is less than Rs. 120,000/- in all the preceding 3 previous years.

One assessee having income more than Rs. 120,000/- (he only knows that) has not maintained any books by claiming that his income is less than Rs. 120,000/-. But, how the assessing officer can verify whether his income is below or above 120,000/- , since he has not maintained any books at all under the privilage of Sec. 44AA ?

Please advise..

vinodaca74 @ gmail.com

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CA PRABHAKAR JHA (ACA) (313 Points)
Replied 02 December 2011

Originally posted by : Vinod
	I have one doubt related to Sec. 44AA of IT Act 1961: As per Sec. 44AA, the assessee need not maintain books of accounts if his income from business is less than120,000/- in all the preceding 3 previous years. One assessee having income more than120,000/- (he only knows that) has not maintained any books by claiming that his income is less than120,000/-. But, how the assessing officer can verify whether his income is below or above 120,000/- , since he has not maintained any books at all under the privilage of Sec. 44AA ? Please advise.. vinodaca74 @ gmail.com

Mr. Vindo, AO need not to verify whether books of accounts are maintained or not, untill anything contrary appears before him. If some indicators of tax evasion appears to him he will require assessee to furnish records and return to assess his income and ensure that tax evasion has taken place.

If the assess has income exceeding 120000 but not in exceeding the maximum exemption limit it is not material for the income tax department to waste his resources and time over it.

In cases where evasion comes into play and AO has opinion that books of account has not maintained as prescribed, penalty may be levied u/s 271

Finally, AO only need verfication when he is not able to assess income of assessee.

Hope this will solve your purpose,

Thanking you,