Can I split this in to two? I mean, first complete the missing details as requested in the notice (to fill Balance sheet) and file it before the expiry of the notice. And then, proceed with the audit if required after expiry of the notice.

Hi Chandra Prakash,

Please dont split it into two, notice u/s 139(9) clearly mentions Tax audit report if income declared is less than 44AD presumptive rate. Kindly do it asap.

@ Rinkal

Filing of TAR was advised not only for carry forward off loss but also to be on safer side if any scrutiny is done against the assesee, where he would be liable for penalty in case he doesnt file TAR . As in case of sec 234 A , it would attract if and only if assessee doesnt respond to notice and the return is considered defective. Thats is what i meant. Due date is not extended as assessee doesnot have international transaction or is not required under any law to get his accounts audited or is not a working partner in firm.

@ Chandra Prakash,

The reasons for which your return shall be considered defective are:

1) if all particulars are not filled in ITR

2) If tax is not paid

3) if annexures, documents etc need to be furnished with ROI is not furnished.

If you do not resp*rnd to notice in given time then it will treated as invalid return and other provisions of act will apply accordingly including interest and penalty section.

And due date for your case to file TAR is july 31st(Due date is not extended in your case) . I dont see any hidrances as TAR in your case can be issued asap as there are only trading transactions, please find right CA and get it done.

Regards

Karthik V Kulkarni

@ Karthik :

The due date for person who are required to get accounts audited is 30september or as extended by cbdt (here it is 31 st October,2015) If a person is covered under tax audit irrespective of whether he is getting audited due to lower income of presumptive business  sec 44ad.

Sec 139(1) clearly mentions that due date for tax audit person is 30th September. How then in the given case can you consider the due date to be 31st July.( obviously here he is considering of tax audit done, accordingly due date will be 30/09 as extended to 31/10)

 Just because he has recd notice, due date cannot be changed. Only if he opts for not going for audit then due date will be 31 July.

@ Chandraprakash:

Above all due date will have no worth if you do not reply the notice timely

Hi Rinkal,

Thanks for correcting me, yes you are right.

Hi chandra Prakash,

The due date is extended for TAR till 31st october, you have time till 31st Oct and please donot respond to notice , just file a fresh return with TAR by 31st of Oct.

This option is available only if you are going to file TAR, not if you declare the income on presumptive basis u/s 44AD, just dont respond to notice, let your return filed become defective, just file a fresh return within 31st october . As your return will be defective no action can be taken by dept , as the due date of filing returns is not over with TAR, due date extended to 31st Oct, so please ignore the notice, let it become defective/ invalid return and file return with TAR by 31st October, there will be no consequences whatsoever now, as due date of filing has been extended to 31st Oct. (This advise is only applicable only if you file TAR u/s 44AD rw 44AB) if you chose to return presumptive income @ 8% then your due date will be 31st July.

Sorry for the inconvenience caused by last two comments.

Regards

Karthik V Kulkarni

Thanks Rinkal and Karthik. I know its not so simple specially for a person like me (with no background in commece etc.)
 What does TAR stand for (tax audit report?).

Today, I will be meeting another CA (CA inter) and will check what he has to say. I will keep posted the updates.

Hi Chandra Prakash,

CA inter is not going to help, kindly approach a professional CA, TAR means tax audit report. A qualified CA with practice in taxation will give somewhere about the same opinion as given here.

Regards

Karthik V Kulkarni

I agree with karthik on that point. You need to meet a CA and not inter Ca as inter ca does not possess necessary qualification reqd as described in it act.

And yes TAR is abbreviation for tax audit report. Sorry for using short form? Was not intentionally written in abbreviation

@ Chandra Prakash , the advice given to you is most prudent and I too endorse the view.

You may ignore the below text as it might confuse you.

This part of my post is directed specifically to Mizz Rinkal and Shree Karthik

First of all I want to thank both of you for sharing your views. It was nice reading them and I enjoyed it.

Several views were given during this post and I have question in respect of some specific  points. This discussion might help in some other case. Kindly consider to give your views and rectify me wherever I am wrong. I hope it does not make you feel bothersome.

"Though you have option to claim the benifit of presumptive income u/s 44AD and can declare income of 8% , now filing revised return shall not be advisable , reason being if the AO scrutinises your account and gets to know that you have revised the said return only to escape tax audit and penalty then he may hold you responsible for concealment of particulars and put penalty on you u/s 271 (1) (c)."

How can AO levy penalty u/s 271(1)(c) ? This penalty is levied if assessee has concealed any particulars or have furnished inaccurate particulars. S.44AD itself gives an assessee an option to either pay tax on 8% of the deemed income.

Assessee has not concelaed any particulars , he is showing income as per S.44AD and there is no inaccuracy either. Even if the case is selected for scrutiny assessee would be able to explain everything and there shall be no consequences.

If it exists kindly let me know how?

""In CIT vs Grey coast foundry works (ahd) it was held that " where omission or wrong statement in the original return is discovered by the department as result of enquiry and there after a revised return is furnished making amendment that would not amount to a revised return as contemplated u/s 139(5)" ."

Sir, the facts of the case are different. In this case the return was accepted u/s143(1) and the revised return was filed pursuance to discoveries under scrutiny assessment. Hence the errors were captured by the AO before the revision was carried . It is valid to not to consider the revised return.

In this case, the return has yet not been processed u/s 143(1) and assessee is given an oppourtunity to rectify the return. If we do any rectification which is permissible then it should be valid. Further we are not revising the return u/s 139(5) but rectifying u/s 139(9).

My next question is not because of extension of due date.

"But the problem starts here , if you are a resident of Punjab / Haryana or Chandigarh you are safe but if you are resident in any other state then the due date for filing audit report u/s 44AB is over. You are liable for penalty u/s 271 A and B for not maintaining books of accounts and not getting tax audit done."

I have 2 issues in this.

Lets for the moment take a scenario where the due date was not exteneded while keeping the other facts same. The time limit of 15 days falls after the due date 30/09/2015 (which is in this case)

In the given case assessee was given an opurtunity to submit the audit report, which can not be submitted without getting accounts audited.

My next question is

Where the assessee was given time to submit the audit report by virtue of S.139(9), whether penalty u/s 271 B can be levied for not getting accounts audited  on or before the due date as specified u/s139(1)?

Sir, you said that assessee can be liable to penalty u/s 271B since the due date has lapsed [We have assumed that in this scenario due date is 30/09/ only]

But sir when I read S.271 B it says

" If any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or furnish a report of such audit as required under section 44AB, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum equal to one-half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred fifty thousand rupees, whichever is less."

In my understanding penalty can be levied when accounts are not audited and it is not leviable where accounts are not audited on or before specified date but are audited at a later date.S.271B nowhere specifies that audit should be done on or before the specified date If the assessee gets his accounts audited after the due date and then submit the report after the due date but within 15 days limit of S.139(9) then no penalty can be levied.

My second issue is

If  your view is taken that assessee should have got his accounts audited on or before the specified date then theres rather another issue. The CBDT order extended the due date of filing the return and the due date of filing audit report ONLY. It has not extended the due date of getting the books of accounts audited (which as per S.44AB remains to be the specified date as explained under the said provision)

So if after 30/09 (specified date u/s 139(1)) if anyone get accounts audited then penalty can be levied to him also. So Chandra Prakashs Sir would be liable to penalty even now [when due date has been extended]

This does not seems correct.

Kindly resolve.

For your ready reference-:

Extracts from S.44AB

..... Every assessee......get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.

As per Explanation (ii) to the said section

 "specified date", in relation to the accounts of the assessee of the previous year relevant to an assessment year, means the due date for furnishing the return of income under sub-section (1) of section 139.

The order of CBDT says

In supersession of orders under Section 119 of the Income-tax Act, 1961 ('Act') dated 30th September, 20 15 vide file of even number, the Central Board of Direct Taxes, in exercise of powers conferred under Section 119 of the Act, hereby orders that the returns of income and audit reports u/s 44AB due for e-filing by 30th September, 20 15 may be filed, across the country, by 3 1 st October, 2015.

Here is the order extending the due date.

https://incometaxindiaefiling.gov.in/eFiling/Portal/StaticPDF_News/Order-US-119-of-the-Income-tax-Act-1961-01-10-2015.pdf

Hi Z,

Thanks for the queries, 

Hope this will resolve the confusion:

1) As for the part of your question relating to Sec 271(1)(c), it might not outrighlty come under the straight reading of words but when assessee has himself disclosed a certain income and later on changes the same , by taking shelter of certain provision i.e 44AD is bad in eyes of law even when notice u/s 139(9) was issued to rectify the same.

In case of a revised return, ommission or wrong statements are allowed to be corrected only if they are bonafide. Not to evade certain conditions put in a certain section. Like it is evident that the assessee is liable u/s 44AD and is declaring lower income , so after taking notice to sec 139(9) assessee doesnot furnish TAR or give to tax 8% of his total income, that would be covered u/s 271(1)(c) i.e deliberate furnishing of inaccurate particulars.I have clearly mentioned that 271(1)(c) might be applicable, not that it is entirely and absolutely applicable. All these assumptions are only on the basis if scruitny was carried on by AO in case of assessee.

Return with defect u/s 139(9) if rectified will be treated as return accepted u/s 143(1) if no other rectification notice is sent. Or If notice is responded to then it will be defective return and all other prov like 234A, B , C , 271 A , 140A etc as per their applicablity. 

Once return is accepted as rectified and scruitny u/s 143(3) is carried on only then AO might or mightnot take a stand based on facts of the case.

In case of 271A & B then you are right once 271 A is attracted there is no more liablity u/s 271B ( Ram prakash puri case law), where as in the assessees case either 271 A or B might be attracted. As 44AA doesnot specify books to be maintained by assessee in cases covered u/s 44AD , it only states such books as to allow AO to compute the income. So if the bank a/c and demat account can be consiedered as books of accounts then sec 271 B will be attracted or else 271 A. Though the applicablity of the same will not come if all the errors are rectified within time given in notice or as per relevant sections(as relaxation measures).

Only if it is not done so the penalty will be levied. 271 B stipulates "as required under sec 44AB" so as per 44AB TAR is needed to submited within time limit u/s139(1), the only relaxation in this case would be u/s 139(9) and rectifying the same within time limit specifeid there in.

Penalty proceedings under the act are always independent of assessment proceedings. 

In my opinion ( The same is under discussion with well experieced senior CAs) :

Due date extension is for filing of TAR, sec 44AB also mentions when tax audit report should be done, the accounts should be audited before specifed date and furnish by that date , the specified date is stipulated u/s 139(1), As the press relase states all audit report due for e-filing are allowed to be filed by 31st oct, so in here audit needs to be one before sept 30th and filed by 31st oct. But the same confusion is taken away by procedural methods as audit report needs to be electronically filed and digitially signed, the filing of audit report is as equal as issue of audit report.

Chandra Prakash would not be liable because a CA handling Tax audit will know how to handle, I have asked chandra prakash to take advantage of the said extension. 

If Chandra Prakash had approached me i would have consulted him to igonre notice and file return by 31st oct, as it needs to be digitally signed, the day I digitally sign and file audit report would be day i issue audit report to client, meaning i have done tax audit done on that day, Tax authorities have no power in assessing when the procedure of tax audit is done and when it is ended.

If at all a scruity appears considering him as assessee in default i would plead before AO that due to inadvarent difficulty same was not able to be rectified by assessee and a correct return was filed within due date.

Regards

Karthik V Kulkarni

Hi I am having the exact same problem as mr chander. But I will go with presumptive income. Can someone let me know how to prepare balance sheet (in which section) for the intraday profits.

Thanks

Siddharth

If you want to go with presumptive income. I.e loss, then you have to get tax audit done. Butif you want to forego the loss and declare 8% income then turnover will be calculated as net difference between purchase and sale price multiplied with no of units. It may be positive or negative, both will be added to arrive at turnover. From it the brokerage and other taxes will be reduced to arrive at gross receipts. You need to file itr4 in case your exempt income exceeds 5000/- or you want to show speculative loss else itr4s needs to be filed

And balancesheet is a separate schedule in it. If you show 8% income then select no account case in p&l and balance sheet schedule. But if you are opting for tax audit then you need to show entire p&l and balance sheet schedule

Hi..thanks for reply. I have salary income and stcg as well but only intra day activity in business. There are no sundry debtors , creditors or cash in hand as such. What do I fill up in these columns

The p&l and balancesheet in no account case or in regular books of account are to be provided of the said business, I.e speculative business only in your case. In balancesheet, fill 0 wherever applicable

Got it...also I will be making changes to other part of the return, in my salary income. There were discovered by myself separately. I can do it under 139(9) or do I need to go for 139(5).