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necessity of audit under income tax

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Is audit compulsory when there is loss under income tax Act ?
Replies (5)
If you consistently file your income tax return, then it is better to file ITR even if your income is below taxable limit or loss occurs. Otherwise Income Tax Department may send you a notice for non filing of ITR.
tax audit is mandatory on the basis of turnover/gross receipts and not on the basis of profit/loss. so even if loss is there and turnover crosses the prescribed limit then tax audit is compulsory
what if income is shown under 44AD?
if assessee is declaring income less than the prescribed %u/s 44AD, then he is required to get accounts audited provided his total turnover is <2cr

Sub Section (1) of section 44AD reads as follows: (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”. Sub section (5) of section 44AD reads as follows: (5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) 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. By Simultaneous Reading Sub section (1) and (5) following points are to be considered 1. The profit and gain of the assessee in eligible business is 8% or More than he do not require to get books of account audited under section 44AD read with section 44AB 2. If the Profit claimed is less than 8% of total turnover or gross receipt 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 get them audited under section 44AB here both the conditions are fulfilled because the word used in section is "and" if any one is not satisfy than no need to get the books of account audited and in case of "loss" the total income does not exceeds the maximum amount which is chargeable to income-tax so no need to get the books of accounts audited. Thanks.


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