Tax Audit Audit

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This discussion clarifies the tax audit requirements under Section 44AB of the Income Tax Act. It explains that a tax audit is generally mandatory for businesses with turnover exceeding one crore rupees, but this limit increases to ten crore rupees for individuals meeting specific cash transaction criteria. For an F&O trader whose turnover exceeds Rs. 1 crore and has incurred a loss, even if a tax audit isn't mandatory, filing an ITR-3 under normal assessment is possible. However, carrying forward losses might not be allowed if the original return filing deadline has passed, unless a tax audit is conducted.

CHANDRAMOHAN

CHANDRAMOHAN (Querist)

05 September 2022 Audit of accounts of certain persons carrying on business or profession.

44AB.Every person,—

(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year; 3[*]

4'Provided that in the case of a person whose––

(a) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent. of the said amount; and

(b) aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent. of the said payment,

this clause shall have effect as if for the words “one crore rupees”, the words 5“[ten crore rupees]” had been substituted; or';

6[Provided further that for the purposes of this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the payment or receipt, as the case may be, in cash.]

F&O Trader - Turnover exceeds Rs.1cr (As per calculation rule) and there is loss in current year.
Earlier in last 5 yrs only ITR 1 Filed.

Since, turnover limit for tax audit in digital transaction case is 10cr ----- can we do tax audit in above case to claim loss?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

05 September 2022 As tax audit is not mandatory in above case (TO limit 10 Crs.), you can file ITR3 u/s. 139(4) of IT act, under normal assessment; i.e. books of accounts maintained, with BS and P&L acc.

CHANDRAMOHAN

CHANDRAMOHAN (Querist)

05 September 2022 But carry forward of loss is not allowed as time limit for original return was lapsed. So, to carry forward loss can we do audit? If yes, then which clause to be selected in form 3CA