Section 44ad lays down that an assessee need not get the books audited and keep and maintain such books of account as required u/s 44aa even if he claims that his total income falls short of 8% of the turnover. But for this his total income must not exceed the basic exemption limit.
It is logical to note here that the total income might have fallen short of the maximum amount not chargeable to tax due to business income being less than 8% of the total income. This provision does not require assessees to justify their lower income (i.e., lower than 8% of the turnover) by maintaining such books of account as specified in Section 44AA and get is audited as required u/s 44AB thereby enabling assesses to claim income @ 7% or lower of total turnover as long as it does not exceed the basic exemption limt with an intention to reduce tax liability.
For eg. A person with a turnover of Rs 90, 00, 000 may claim an income taxable as Rs. 90, 000. i.e., 1% of turnover) without keeping and maintaining such books of accounts and get it audited.
I seeking justification for this fact in the IT act, 1961. Please reply me at Ashok6799 @ gmail.com
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