Is Tax Audit Mandatory

ITR 429 views 8 replies

Sushil Narang

15 Points Joined December 2018

Hello Everyone

I have a query as to

Is tax audit Mandatory in the following case

My Client is doing business in electronic products

The Turnover over the last 5 years has been steadily growing from 40 lakhs in AY 2016-17 to 85 Lakhs in AY 19-20

He has been making profit of over 8% in AY 2016-17 , AY 2017-18, AY2018-19

Books of account have been maintained for all years and the return has been filed with

P& L and balance sheet for AY 2016-17 , AY2017-18 and AY 2018-19

however his Net profit has dropped to about 6% in AY 2019-20

My question is weather he is liable for TAX audit under Section 44AB

should the return be filed under Section 44AD

The Return can be still be filed as before with P&L and Balance Sheet without Tax Audit Report

Thanks in Advance

Sushil

Replies (8)

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

@ Mr Sushil.,

Which section You are filed Your ITR from AY 16-17 to AY 18-19...?

Note : As per sec 44AB Tax audit not applicable Your said turn over.

Also reply based on Your reply my question...

Sushil Narang

15 Points Joined December 2018

Dear sir

Thanks for a quick response

As the Net profit is over 8% we have filed with P& L and B/S

Not under 44AD in AY 16-17 to AY 18-19

CMA M.Keerthi chandra

C.A FINAL STUDENT AND QUALIFIED C.M.A

563 Points Joined December 2013

From A.Y 2017-18 , Once if you opt for 44 AD ( 8% or 6%) it has to be followed for the next consecutive 5 years unbroken.

If you want to opt out in any A.Y that is if you wish to prefer a 44 AB Audit as in the above case, for the next five years you cannot opt presumptive basis.(refer 44AD (4)).

Hence forth , considering above provisions you may decide the better course of action.

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

@ Mr Sushil Narang.,

If You are not opt 44ad then no problem for filling ITR AY 19-20 with 6% profit. But, Main condition You must be file u/s 44AA with books of accounts as per previous ITRs...

He is not liable for tax audit under 44AB as the turnover is 85 lakhs only

No need to file ITR under 44AD unless you desire

Yes sir. file ITR as per previous years without tax audit report. But with late fee under 234F and interest under 234 A B C as per section Provisions.

Sushil Narang

15 Points Joined December 2018

Thank you all for your responses

From the Inputs I gather that its not mandatory to go for Tax Audit as the turnover is less than 1.0 Crore and also

Since the returns have been filed with P&L and Balance Sheet for the AY 2016-17 to AY 2018-19

as per section 44AA. we can proceed to file as before although the Net profit % is around 6%

Please correct me if i have misinterpreted.

Thanks again

Kapadia Pravin

17264 Points Joined December 2018

Well understood 👍

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

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