income tax scrutiny

Give him full details of sales and tell him that u are covered u/s 44AF and profit is declared @ 5% of turnover and hence no books of accounts have been maintained as per the said section.

agreed with aditya...

Regds,

manoj

profits is 8% or 5% of Turnover please confirm?

Till AY 2010-2011, it is 5% and thereafter 8%

regards,

manoj

Since u r covered under section 44AF, the ITO can't demand for books of accounts. But one is always expected to at least draw his statement of affairs so that he may determine what is the availability of cash on hand, stock, creditors etc.

The ITO just want to check whether u are able to meet ur outgoings like household exp, children school fee, electricity/telephone/gas exp and cash deposits in ur saving bank accounts with ur income or not. If their is difficulty in drawing up the balance sheet, u may prepare statement of Incomings and Outgoings by taking opening bal of cash and stock (which u must have disclosed in ur last year's ITR), opening balances of ur bank accounts, add up income, SB interest, any other credits in ur SB account as incomings. In the outgoings side, show ur household drawings, debits in SB account, closing stock in hand & cash (as per ur current years ITR) and closing balances of ur bank accounts. The ITO will add the shortfall (if any) as ur undisclosed income after giving u a show cause notice. In my opinion, this shortfall (if any) should be surrendered by ur good self during the course of assessment proceedings u/s 143(2) to avoid penalty u/s 271(1)(c).  Never wait for the ITO to corner you, since surrendering at that time will not amount to surrender and will attract penalty u/s 271(1)(c).

In addition, U may also draw only cash flow statement (which involve only cash transactions and stock) to check the arithmetical accuracy of above statement.

Don’t worry, u may take help of some professional to help u out.

Is there similar provision in the Act somewhere like 44AF which can be applied in cases of professionals like Doctors, lawyers, etc. (declaring some% of receipts as profit)