44AD and Salary Return

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Mr. A experienced a job loss and engaged in business during FY 2020-21, receiving loans and advances. He then returned to salary employment in FY 2021-22. The query concerns the appropriate Income Tax Return (ITR) for FY 2020-21, considering options like ITR-4 under Section 44AD, ITR-3 for normal business income, or ITR-1 with other income. The discussion confirms that filing under 44AD is permissible even if business income is temporary, as it avoids future audit complications.

CA Khyati Pithadia

CA Khyati Pithadia (Querist)
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24 March 2022 Mr. A is having salary income regularly till FY 2019-20.
However, during COVID he lost job and was doing some business during FY 2020-21 and having banking transactions likes loans & advances.

And after situations is favorable again he has salary income for FY 2021-22.

So, normally he files ITR-1 so which return can we file for FY 2020-21 ?
Can he file ITR - 4 considering 44AD income or ITR - 3 normal business income or ITR - 1 showing other income.

Can anyone help on this.