| Originally posted by : rama krishnan |
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44ADA. [1] Notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who is engaged in a profession referred to in sub-section [1] of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession".definitely it's under reporting of income. as per the section, you should declare minimum 50% of your total receipts even if your net profit from the profession is below 50% if you want to avoid audit of your accounts. but if your net profit is more than 50% of total receipts then you have to declare only that amount as your total income or else it will be considered under reporting of income |
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You are missing the point...look at those above higlighted words in RED ... when some thing is optional (OR) and "Deemed" then as per law the authority will have to consider this "deemed" income as final taxable income for taxation purpose ..... Presumptive taxation is totally a different assesment process ... as per normal assesment process , to arrive at net taxable final income of an assesse the formula to follow is (GROSS INCOME - EXPENSES ) - deductions (if any) = net taxable income..BUT presumptive taxation provisions are " Special provisions " where a specific percentage of Gross income is to be considered as final net taxable income for taxation purpose ...
This new special provision of presumptive taxation for professionals was added to IT act last year (A.Y 17-18) after " Justice Easwar committee "recommended this in its report , though the recommended percentage was around 33% but Government finally adopted 50% rate as minimum specified rate of presumption .
And what courts have to say on this , below is the excerpt from one of case (Allahabad High Court -- The Commissioner Of Income Tax-I, ... vs Shri Nitin Soni)relating to presumptive taxation scheme (though its regarding 44AE which is another presumptive section but still applicable to all presumptive sections ) ::: -
It is not in dispute that the assessee has got eight trucks. It was also not disputed by the learned standing counsel for the department that the provisions of Section 44AE of the Act are applicable. Emphasis was laid by him that the additions made in the hands of the assessee was justified as the assessee has income more than that which is calculated as per Section 44AE of the Act. It is difficult to accept the aforesaid submission of the learned standing counsel. The very purpose and idea of enactment of such provision like Section 44AE of the Act is to provide hassle free proceedings. Such provisions are made just to complete the assessment without further probing provided the conditions laid down in such enactments are fulfilled. The presumptive income, which may be less or more, is taxable. Such an assessee is not required to maintain any account books. This being so, even if, its actual income in a given case, is more than income calculated as per sub-section (2) of Section 44AE, cannot be taxed.
and in another paragraph of the judgement the High court observed ::: -
Resultantly, the addition made by the Assessing Officer due to increase in the capital cannot be taxed under Section 56 of the Act as income from other sources as the accretion, if any, in the capital is relatable to profit from transport business of the assessee
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