Assessment proceedings u/s 143(2)

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Querist : Anonymous

Querist : Anonymous (Querist)

16 December 2012 Dear All,
I have a client who got a notice u/s 143(2)for A.Y. 2010-11 on 20th September 2012. He had filed a belated return of income for the A.Y. on 21st March 2012. Now while going through his bank statements I found that his actual turnover from business is 2 cores. He has not got his books of accounts audited. My question is can I conduct his audit u/s 44AB now. How do I deal with this assessment?
Thanks!

Querist : Anonymous

Querist : Anonymous (Querist)

17 December 2012 Guys please help me on this

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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14 July 2024 Given the scenario you've described, let's break down the situation and address your queries:

### Assessment Proceedings under Section 143(2)

1. **Notice under Section 143(2)**:
- Your client received a notice under Section 143(2) for the Assessment Year (AY) 2010-11 on 20th September 2012. This notice indicates that the Assessing Officer (AO) intends to scrutinize the return filed by your client.

2. **Belated Return**:
- Your client filed a belated return for AY 2010-11 on 21st March 2012. A belated return is filed after the due date specified under Section 139(1) of the Income Tax Act.

3. **Audit Requirement under Section 44AB**:
- For businesses with turnover exceeding specified limits (which was 60 lakhs for AY 2010-11), an audit under Section 44AB is mandatory. Since your client's actual turnover is 2 crores, an audit under Section 44AB was required for AY 2010-11.

4. **Conducting Audit under Section 44AB Now**:
- **Retrospective Audit**: Generally, audit under Section 44AB should have been conducted before filing the return. However, in certain cases, the AO may allow for a retrospective audit if sufficient grounds are provided, such as inadvertent non-compliance or genuine reasons for not getting the audit done earlier.
- **Legal Consideration**: It's crucial to consult with a tax professional or a chartered accountant experienced in tax matters to determine if a retrospective audit can be initiated now. The tax advisor can assist in making an application to the AO for condoning the delay in audit and seeking permission to conduct it now.

5. **Dealing with Assessment**:
- **Response to Notice**: Respond promptly to the notice under Section 143(2) by providing all required information, documents, and explanations regarding the turnover, income, and expenses reported in the return.
- **Rectification of Audit Compliance**: If allowed, conduct the audit under Section 44AB and submit the audit report along with the necessary filings to the AO. This is important to regularize the compliance and ensure that the audit findings are correctly reflected in the assessment.

### Conclusion:

Given the retrospective nature of the audit requirement under Section 44AB and the scrutiny notice under Section 143(2), it's advisable to seek professional advice immediately. The tax advisor can guide you through the process of conducting the audit, rectifying compliance issues, and responding effectively to the assessment proceedings. This proactive approach will help mitigate any potential penalties or adverse consequences from non-compliance with audit requirements under the Income Tax Act.

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