E.g -Assesses is a Doctor. Gross receipts for FY 18-19 is 15 lakhs. Doctor is maintaing books of accounts voluntary only for self use. Profit as per books is 10 lakhs viz a viz deemed profit u/s 44ADA of 7.5 lakhs.
Assesses files IT return showing deemed profit at 7.5 lakhs and discharged the tax thereon.
In the books of accounts,he transfer profit of 10 lakhs to his capital account.
Query 1 - Whether assessee paying taxes on deemed profits even when actual profit is higher saved from any further tax liability ? Will the Income Tax authority accept a profit and loss statement showing 10 lakh profit and not do addition to income ?
Query 2 - Can a CA certify such financials ( say to be submitted to bank for loan purpose ) which would show a higher profit viz a viz the I.T return?
Query 3 - In case assessee in next year gets liable for audit as profit is lower than deemed profit
In that case, due to voluntary maintenance of books of accounts, We have the last year financials but that would contain capital balance higher by 2.5 lakhs . What will be implication / liability of Tax Auditor signing such balance sheet where excess capital of 2.5 lakhs is the one on which income tax is not paid ?
If any expert can lobby this issue with CBDT and get a clarificatory circular from CBDT on these aspects, it would clear the stance taken by income tax practitioners , bound the tax officers by not making any abnormal additions and reduce litigation.
please resolve the above queries
Regards
CA. Raj Doshi
ans queryno-1 assesee just need to pay tax only deemed income... as in the case of presumptive taxation scheme assessee need to prepare any books of accounts until and unless declare less profit..
assume if he prepare books of personal purpose and statement showing 10L profit then why assessee will show their higher profit to tax department..???
anyone doesn't want to pay higher tax ...
CAclubindia
