TURNOVER LESS THAN 1 CR. AND LOSS , AUDIT IS COMPULSORY?

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This discussion clarifies whether a tax audit is compulsory for businesses with a turnover under 1 crore, particularly when profits are low. It explains that for partnership firms, a tax audit may be applicable even with low declared profits, especially if books of accounts are maintained. The criteria differ from individual cases where taxable income is the primary factor for audit applicability.

CMA ALKESH PATEL

CMA ALKESH PATEL (Querist)

25 May 2020 HELLO SIR,
I HAVE 9200000 TURNOVER AND I WOULD SHOW MY PROFIT ONLY 10000 , SO I GO THREW TAX AUDIT OR NOT?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

25 May 2020 Tax audit not required as income less than taxable threshold.

CMA ALKESH PATEL

CMA ALKESH PATEL (Querist)

25 May 2020 hello sir,
sorry but it is a Partnership Firm.so what?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

25 May 2020 Tax audit applicable in case of partnership firm showing profit.

Shrikant Toshniwal

Shrikant Toshniwal (Expert)

26 May 2020 Dear frd, Why Tax audit...? If proper books of accounts maintained in partnership firm
Explain

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 May 2020 Profit less than 8%/6% declared hence tax audit applicable even books of accounts maintained.

Shrikant Toshniwal

Shrikant Toshniwal (Expert)

26 May 2020 so in individual case also profit less than 8%/ 6% audit applicable .explain

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 May 2020 Below Taxable income is the criteria for tax audit not applicable.
For firm Rs 1000 income is taxable whereas for individual income above 2.50 lacs is only taxable.

Shrikant Toshniwal

Shrikant Toshniwal (Expert)

27 May 2020 As per u says if we declare a profit below taxable income no tax audit and above taxable income but less 6%/8% tax audit applicable . Both sec 44ad and 44ab are interlink and creating a contradiction in your answer. As one person showing below taxable no income tax audit and one persons show taxable income tax audit applicable.
plz refer the section and explain as per ur comment (Below Taxable income is the criteria for tax audit not applicable.)

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 May 2020 Tax audit applicable in this case.refer section 44AB.

An assessee who declare profit for any previous year in accordance with section 44AD and he decreases profit for any of one 5 assessment year relevant to the previous year succeeding such previous year lower than the profit computed as per section 44AD and his income exceeds the amount which is not chargeable to tax.

Shrikant Toshniwal

Shrikant Toshniwal (Expert)

27 May 2020 Thats true but Return not filed earlier u/s 44AD and now net profit % less than 8% and therefore there is no breach of section 44AD(4) and so not under purview of tax audit .

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 May 2020 Yes,.............................

CMA ALKESH PATEL

CMA ALKESH PATEL (Querist)

27 May 2020 HELLO SIR,
IN MY CASE, PARTNERSHIP FIRM AND NOT USE SEC 44AD, NORAML BOOKS OF ACCOUNTS MAINTAIN AND I LIKE TO SHOW PROFIT BELOW 8%/6%,
SO CAN I GET TAX AUDIT OR NOT ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 May 2020 In such a case no no tax audit.

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