audit u/s 44ad

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Pawan Singhal (Querist)
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26 February 2011 The assessee has to get the accounts audit if the following two conditions are satisfied as per section44ad

1. his profits and gains from the eligible business are lower than the profits and gains 8% of turnover and

2. Whose total income exceeds the maximum amount which is not chargeable to income-tax.

Here see both the conditions are simultaneous and the assessee required to get his accounts audit only if his profits from the business u/s 44AD are lower than 8% of this turnover and further his total income is more than maximum amount which is not liable to tax

so tax audit required or not if he declared lower income and his total income is lower then taxable income.

CA. Lohith Jagadeesh

CA. Lohith Jagadeesh (Expert)
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27 February 2011 Hi,

I here by reproduce what is given under the Income tax Act 1961 for the AYr 2011-12

"(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB."

Further the provisions of Section 139 is reproduced here below

"[(1) Every person9,—

(a) being a company 1[or a firm]; or

(b) being a person other than a company 1[or a firm], if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,

shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed2 form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :

Interpretation

Going by the above provisions there appears to be an error in the draft by the use of the word "AND" in Sec 44AD.

In my opinion that is not the Intension of the Law as the the purpose of bringing in such provisions may get defected.

However one can Argue about it & take a stand which you havE stated in your Querry.

Thank You,

Regards
CA.Lohith.J
B.Com,ACA,CS,(ICWA),SAPM Hons,ITF Hons

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