44AD - ACCOUNTS PREPARATION

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This discussion clarifies whether preparing a Profit & Loss statement and Balance Sheet is necessary when filing under Section 44AD of the Income Tax Act. While not strictly required for ITR-4 filing, these statements are often needed by banks for loan applications. The conversation also addresses the validity of financial statements attested by Tax Return Preparers (TRPs) versus Chartered Accountants (CAs), noting that acceptance depends on the receiving authority's rules.

Accounts & Tax Consultant

Accounts & Tax Consultant (Querist)
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01 May 2023 Respected Experts,

Can we prepare P&L, BS for Filing IT U/s 44AD of Income Tax Act 1961.

Im aware that there is no provisions for expenses and Depreciation in ITR4

Still drafting a P&L & BS is necessary?

I saw many of the CA's and Tax Consultants, are just providing Computation sheet for 44AD

Whereas it is not acceptable in the Banker's end - while the client submitting documents for Loan purpose, and the Banker asking to provide BS& PL.

Kindly advise

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 May 2023 For ITR 4 the detailed financial statements are not required and hence may or may not be prepared by accountants; but for bank loan the same can be prepared and certified copies can be submitted to bank.

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Accounts & Tax Consultant

Accounts & Tax Consultant (Querist)
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01 May 2023 Respected Sir,

Thank you so much for the clarification.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 May 2023 You are welcome.

Accounts & Tax Consultant

Accounts & Tax Consultant (Querist)
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01 May 2023 Respected Sir,

One of my relatives, filed his Income Tax with the help of a Tax Consultant

He shared me the Financial Statement with Saral Copy of the IT Filed.( it is a Non Tax Audit File)

I observed that, the Tax Consultant attested the Financials with his Own Seal and Signature Stating as below

EXTRACTED FROM THE BOOKS OF ACCOUNTS PRODUCED BEFORE ME;

Mr. XYX( MASKED)
Reg. INCOME TAX PRACTITIONERS
AUDITORS & TAX RETURN PREPARERS
Reg No -XXXX- TRP ID - XXXX

My Question is - Does that Financial is a Valid one ?

Since it is signed by a Non CA ( TRP/ Consultant)

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 May 2023 Validation and its requirements vary to different concerns/objectives/rules etc.
It may be acceptable by Bank, while may not be accepted by ITD/CBIC.

Accounts & Tax Consultant

Accounts & Tax Consultant (Querist)
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01 May 2023 Thank you sir

But signing in Financials by a TRP is not considered as illegal right.

If yes

How to become enrolled with TRP or to become a Income Tax practitioner

Kindly advise

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 May 2023 It will be illegal when submitted to agencies, where rule specifies it to be signed by a CA/CS/CMA.
Or illegal if violates the boundaries assigned to him as per his course/license. E.g. He cannot certify audit report.
But agencies like bank have no such rule, so it will not be illegal to it. If the bank manager insists the documents to be signed by CA, then it will not be accepted.

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Accounts & Tax Consultant

Accounts & Tax Consultant (Querist)
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01 May 2023 Thank you so much sir,

I want to become a TRP - can you suggest me how to apply please.

Sorry for the multiple questions.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 May 2023 Refer:: https://www.indiafilings.com/learn/income-tax-return-preparer/

&/or https://incometaxmumbai.gov.in/tax-return-preparer-scheme/

& https://incometaxindia.gov.in/pages/rules/tax-return-preparer-scheme.aspx

You may inquire for details at ..... https://www.niit.com/india/training/newsroom/Pages/press-rel.aspx?PID=60

Accounts & Tax Consultant

Accounts & Tax Consultant (Querist)
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01 May 2023 Respected Sir,

Again Thanks much for your quick response and valuable advise !

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