Tax audit u/s 44AB(e)

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This discussion addresses whether a tax audit under section 44AB(e) is required for a partnership firm with a turnover of £500,000 and a business loss of £115,000 for FY 2020-21. Despite a previous audit in FY 19-20, the consensus is that a tax audit is not mandatory this year due to the business loss, as Section 44AD(5) does not apply in such cases for firms.

Girish Sharma

Girish Sharma (Querist)

16 December 2021 One of my client a partnership firm having turnover of 5 lacs and business loss of Rs.115000/- in FY 2020-21 and having a loss on sale of fixed asset of Rs.10 lacs wants its books to get audited and file 3CD.
In last year FY 19-20 the turnover was Rs.63 lacs and audit was done u/s 44AB(e).
Please advise whether tax audit is required to be done this year or not as Sec. 44AD(5) reads as below :
Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.