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Tax audit in income tax

gauri agrawal (self employed) (223 Points)

21 July 2020

professional receipt is less than rs 50lakhs and profit declared is 5%. if the return is filed as normal business that is not as 44ada business it is mandatory to get tax audit u/s 44ab (d)

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7 Replies

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 21 July 2020

No in case assessee is individual or HUF, yes in case it is partnership firm.. as for individual or HUF income does not exceed maximum amount not chargeable to tax i.e. 250000 but in case of firm it exceeds..

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annu Goyal (1102 Points)
Replied 21 July 2020

In Case of Sec 44ada if professional receipt is less than 50lacs , then he have to show profit 50% of gross receipt
Liabilty to get account audit raised when-
1. Income is shown is less than 50%
2. Total income is more than exemption.

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 21 July 2020

If your Professional receipt is less than 50,00,000/- and you filed IT return as normal income and your income is below exemption limit than you are not required to audit your books of accounts.

CA Payal Gupta (Chartered Accountant) (154 Points)
Replied 21 July 2020

Dear Gauri,

Please consider the following views:

A. There is one question that arises, Did you opt for the presumptive scheme in the previous years? if yes then please note the following:

1. it means you have chosen to opt-out of the scheme and you will not avail the benefit of the presumptive scheme in the next 5 Assessment year.

2. You should ensure to show complete details of profit & loss account and balance sheet items in ITR as you opt for filing normal scheme then the applicability of tax audit will not arise if your receipts is less than INR 50 Lakhs in case of the profession.

B. If you haven't opted for the presumptive scheme earlier, then please note the following views:

1. You can show your profit and no applicability of Tax Audit arises.

2. Tax Audit will arise in normal business if your receipts exceed INR 50 Lakh.

Further, please note the applicability of tax audit u/s 44AB(d):

Declares income to be Lower than profit or gain so deemed to be profit or gain under section 44ADA (I.e. 50% of Gross Receipts).
Income exceeds the maximum amount chargeable to income-tax.

Hence, in your case, the Tax Audit will not be applicable.

Do let us know in case of any concerns.

gauri agrawal (self employed) (223 Points)
Replied 21 July 2020

Thanks for such detailed reply.

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CA Raj Doshi (Practising CA) (8924 Points)
Replied 21 July 2020

I opine that there is no restriction of non availing benefit for 5 years if opted out under 44ADA. The said provision is only for 44AD. I could be wrong. but please check and revert.

CA Payal Gupta (Chartered Accountant) (154 Points)
Replied 21 July 2020

Dear Raj,

Yes, there is no restriction of 5 years applicable in section 44ADA.

@ Gauri, Please check this, In my view pointer A(1), you can avail the benefit of section 44ADA in any year as a lock-in period of 5 years is not applicable.

This one is applicable in section 44AD.

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