REGARDING VIOLATION OF 44AD BLOCK PERIOD VIOLATION

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This query is : Resolved

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This discussion clarifies the rules around Section 44AD of the Income Tax Act, specifically concerning the 'block period' after a tax audit. If you've undergone a tax audit under Section 44AB in a preceding year, you generally cannot opt for the presumptive taxation scheme of Section 44AD for the next five years. Attempting to file under 44AD during this block period will likely result in your return being rejected.

AUDITORS EDAPPAL

AUDITORS EDAPPAL (Querist)

21 July 2025 I have received a notice under section 148 of the Income Tax Act, requiring me to file a return of income. I would like to clarify the following:

In the assessment year preceding the year under notice, my income was subject to a tax audit (i.e., books of accounts were audited under section 44AB). However, in the year prior to that, I had filed the return under the presumptive taxation scheme u/s 44AD.

Considering this, I understand that a tax audit in one year leads to a block period of five years during which the taxpayer cannot opt for 44AD if it was discontinued after having opted for it.

My queries are:

Can I opt for section 44AD again during this block period after having undergone a tax audit in the immediate preceding year?

What are the implications or consequences if I still choose to file under section 44AD during the block period?

Kindly advise on the correct approach in this scenario.