Partnership Firm audit applicability

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This discussion clarifies whether a partnership firm with a turnover of £5,100,000 for FY 2024-2025 requires a tax audit. Despite a net profit of £9,000 and significant cash transactions, the firm's previous five years of tax audits under Section 44AB(e) mean the audit will likely remain applicable for the current financial year. This is due to the restriction imposed by Section 44AD(4) and (5) of the Income Tax Act, which extends the audit requirement for five subsequent assessment years if profits weren't declared correctly.

varun bhakkad

varun bhakkad (Querist)

26 April 2025 A partnership firm having turnover of 5100000 for FY 2024-2025. Net Profit after partner salary and partner interest is 9000.Total cash receipt are 25 % of total receipts and total cash payment are 6.65% of total payments. For last 5 years tax audit was done under 44AB(e) of Income Tax Act. Will tax audit be applicable for FY 2024-2025?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

26 April 2025 Yes, as the sec. 44AB(e) is applicable w.r.t sec. 44AD(4) &(5) IT act... which states ..." he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1)." .... ( in aggregate tax audit applicable for six years )

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Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

28 September 2025 Good luck.....

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