Tax audit
This query is : Resolved
Amit Agarwal
(Querist)
11 September 2013
Dear Experts,
One of my Client is having a cloth manufacturing business (Kids Wear). Its Turnover during FY 2012-13 is Rs. 3 Crores. He is also running one more proprietorship business of Courier with a separate Trade Licence and its turnover during the year is Rs. 19 Lakhs. So whether both the business needs to be Tax Audited OR only the cloth business. Please clarify?
One of my Client is having a cloth manufacturing business (Kids Wear). Its Turnover during FY 2012-13 is Rs. 3 Crores. He is also running one more proprietorship business of Courier with a separate Trade Licence and its turnover during the year is Rs. 19 Lakhs. So whether both the business needs to be Tax Audited OR only the cloth business. Please clarify?
CA Parul Saxena
(Expert)
11 September 2013
Only business of manufacturing business needs to be tax audited.
Ganeshbabu K
(Expert)
11 September 2013
Both firms are required to be audited for 44Ab,,because you cannot file two returns,,so both business to be audited under section 44AB and a single return can be filed after uploading tax audit report online
Amit Agarwal
(Querist)
11 September 2013
Dear Experts,
Thank you for your answers but which way to go, question still stands?
Thank you for your answers but which way to go, question still stands?
26 July 2025
Great question! Here’s how it works:
---
### Tax Audit Applicability for Multiple Businesses (Proprietorship)
1. **Are the two businesses considered as one or separate?**
* Since both businesses are run under **separate trade licenses** and are distinct (one is cloth manufacturing, other is courier), **they are treated as separate businesses**.
2. **What about turnover aggregation?**
* For tax audit purposes under Section 44AB, **turnover is considered separately for each business** if they are separate businesses with separate books of accounts.
3. **Tax audit threshold:**
* Tax audit is mandatory if turnover exceeds Rs. 1 crore for business (for FY 2012-13).
* Cloth manufacturing turnover is Rs. 3 crore → **Tax audit required**
* Courier business turnover is Rs. 19 lakhs → **No tax audit required** (below 1 crore threshold)
---
### Conclusion:
* Tax audit **required only for cloth manufacturing business** (Rs. 3 crore turnover).
* Tax audit **not required for courier business** (Rs. 19 lakhs turnover).
* Make sure books and accounts are maintained separately for both businesses to avoid confusion.
---
If your client files a single ITR, then incomes from both businesses will be reported in the same return, but audit report is needed only for the business crossing the threshold.
---
If you want, I can help you with sample notes or relevant sections of the Income Tax Act for your records. Need that?
---
### Tax Audit Applicability for Multiple Businesses (Proprietorship)
1. **Are the two businesses considered as one or separate?**
* Since both businesses are run under **separate trade licenses** and are distinct (one is cloth manufacturing, other is courier), **they are treated as separate businesses**.
2. **What about turnover aggregation?**
* For tax audit purposes under Section 44AB, **turnover is considered separately for each business** if they are separate businesses with separate books of accounts.
3. **Tax audit threshold:**
* Tax audit is mandatory if turnover exceeds Rs. 1 crore for business (for FY 2012-13).
* Cloth manufacturing turnover is Rs. 3 crore → **Tax audit required**
* Courier business turnover is Rs. 19 lakhs → **No tax audit required** (below 1 crore threshold)
---
### Conclusion:
* Tax audit **required only for cloth manufacturing business** (Rs. 3 crore turnover).
* Tax audit **not required for courier business** (Rs. 19 lakhs turnover).
* Make sure books and accounts are maintained separately for both businesses to avoid confusion.
---
If your client files a single ITR, then incomes from both businesses will be reported in the same return, but audit report is needed only for the business crossing the threshold.
---
If you want, I can help you with sample notes or relevant sections of the Income Tax Act for your records. Need that?
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