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Sec.44aa

Kaushik Dedhiya (Associate CWA CA Final) (133 Points)

07 February 2012

Friends need your help once again.. This time query relating to sec. 44AD/AE/AF linked with sec. 44AA..SUPPOSE a male assessee has not filed return of income, he has retail business and turnover of which was rs.20,00,000/- my ques. To u is whether he is liable for penalty u/s 271 for non maintenance of books of accounts u/s 44AA? Or he can avoid penalty as his income under presumptive taxation is below taxable limit? Kindly reply with justification..thanks in advance.

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5 Replies

kanagaraj (CHARTERED ACCOUNTANT) (793 Points)
Replied 07 February 2012

From the AY 2011-12 on wards the tax audit limit u/s is Rs.60 lacs. If it is <60 lacs you may file the return under presumptive basis, that is you must admit net profit @ 8% of the TO, if it is <8% then you have to maintain the accounts and get the same audited u/s 44 AB

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Kaushik Dedhiya (Associate CWA CA Final) (133 Points)
Replied 07 February 2012

But what if no income tax return is filed?? can A.O. impose penalty on that ground??

kanagaraj (CHARTERED ACCOUNTANT) (793 Points)
Replied 07 February 2012

If an assessee whose taxable income exceeds the MTL then he has to file his returns. In your case if you maintain the accounts and the profit is less than the limit then no return is to be filed. In your case the TO is 20,00,000/- and 8% of the TO is 1,60,000/- less than the prescribed limit and hence you may or may not file the returns and AO is not supposed to initiate the penalty proceedings

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Kaushik Dedhiya (Associate CWA CA Final) (133 Points)
Replied 07 February 2012

Thank you sir..so maintenance of books of accounts if gross receipt exceeds rs.1,20,000/- as per sec.44AA has very little scope in view of sec.44AD..For retailers.

GOPAL AGGARWAL (DOING NOTHING) (1339 Points)
Replied 07 February 2012

Manoj JI

He can avaoid the penalty if his income in 3 preceeding years is less than the limits specified u/s 44AA and tis is the only first year in which his income has exceeded the limit defined u/s 44AA.

In this case he can avoid penlaty for non maintainenance of books of accounts