Section 44 ad (5)

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Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2011 Can any one pls explain the said sub clause of 44AD which says that Audit can be done only if I have declared less than 8% and my total income is more than 1,60,000/- but what if I declare less than 8% and my total income is less than 1,60,000/- then am I subject to audit or not as the sub section says

less than 8% and total income more than 1,60,000 subject to audit and if not then what is the position pls clarify.

Thanks in advance.

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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10 August 2011 If Profit < 160000 and Profit < 8%, then no need to get audit as per the law which seems a bit illogical. But that is what the law is saying and you can follow it.

Querist : Anonymous

Querist : Anonymous (Querist)

11 August 2011 but then waht is the use of 8% logic even a trades with 55 lacs turnover will declare a profit less than 1.6 lacs and will not even file the return of Income assuming he has only one source of income.

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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11 August 2011 That is what i am saying dear that it becomes a bit illogical at some places.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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11 August 2011 The purpose of sub-section (1) seems to be defeated by the drafting mechanism of sub section (5) as it starts with the clause -
" Notwithstanding anything contained in the foregoing provisions of the section..."
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But the absence of the phrase " to the contrary " between the words 'anything' and 'contained' creates suspicion.

The drafting difference can be perceived from subsection (1) of Section 44AD(1) itself where the initial para has been drafted by using " to the contrary" .
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So , it is advisable to take calculated risk on the basis of Section 44AD(5).
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