Section for tax audit

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Tax audit applicability depends on past choice of presumptive taxation under Section 44AD. If 44AD was previously opted and minimum profit is not declared, audit under Section 44AB(e) may continue for 5 years. Once 44AB(e) is applied, audit obligation may continue until compliance conditions are met.

R.KANDASUBRAMANIAN

R.KANDASUBRAMANIAN (Querist)
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15 February 2026 Business loss and income from interest set off balance taxable income. More than exempted income. Since business loss is adjusted interest income balance taxable income is more than 50 laks. No presumptive taxation is adopted earlier years Last year adopted 44 ad(e). Which is correct section for this tax audit. Kindly advise

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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16 February 2026 Audit is NOT triggered because taxable income exceeds ₹50 lakh.

Audit section depends on:

Business turnover

Whether 44AD conditions violated

If you opted 44AD in previous year and now declaring lower than presumptive rate with income exceeding basic exemption limit, audit applies under Section 44AB(e).

R.KANDASUBRAMANIAN

R.KANDASUBRAMANIAN (Querist)
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16 February 2026 Thanks for the reply sir
But previous year wrongly mentioned the above section no presumptive taxation is adopted
Turnover only five lakhs and Ioss is about RS 20 lakhs and this set off against interest from bank RS 70 laks. Now which section of tax audit will apply.
Kindly advise

R.KANDASUBRAMANIAN

R.KANDASUBRAMANIAN (Querist)
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16 February 2026 Previous year no presumptive taxation is adopted sir. Kindly advise now

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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17 February 2026 Whether you had opted for sec. 44AD in any of preceding FIVE years?

R.KANDASUBRAMANIAN

R.KANDASUBRAMANIAN (Querist)
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17 February 2026 dear sir
thanks sir, Not adopted , please inform tax audit section and advise us

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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17 February 2026 If not opted for presumptive assessment in any preceding years why was audit conducted u/s. 44AB(e) for last year?

R.KANDASUBRAMANIAN

R.KANDASUBRAMANIAN (Querist)
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17 February 2026 sir, noted, wrongly entered sir, sales only four laks , bank interest Rs 70 laks , loss from business 20 laks since not declared 6% , we adopted this 44AB(e) kinldy advise us, thanks for meaaage

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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17 February 2026 Once you have submitted audit report u/s. 44AB(e); it implies you have accepted the liabilities as per sub-sec 44AD(5) IT act. It suggests that you are liable to carry out the audit under the section for next five years if the minimum profits are not declared as specified in these years. So, carry out audit u/s. 44AB(e) this year also as there is loss declaration.

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