1. Consequences of declaring lower profit –
a. Required to get books of accounts audited u/s. 44AB.
b. Compulsory maintenance of Books of Accounts u/s. 44AA
1. In case assessee declaring profit lower than 8% of Tunrover/Gross Receipts due date for filing of Return will be 30th Sept, since Books of Accounts are required to be audited u/s. 44AB.
2. If an assessee is not required to file his Income Tax Return u/s. 139(1), he is not required to audit his Books of Accounts u/s. 44AB even if he has declared profit below 8% of Gross Turnover u/s. 44AB. An Individual/ HUF is not mandatorily required to file his/its Income Tax Return if his/it’s income (without claiming deduction u/s. 10A, 10B, 10BA, 80C TO 80U) does not exceed the amount of basic slab. (which is Rs.160000/- for A. Y. 2011-12). Thus Individual/HUF having no other income & turnover below Rs.20 lacs (160000/8 *100) will not be covered u/s.44AD.
3. Individual/HUF declaring profit @ 8% of Sales/Turnover/ Gross Receipt or more can file their Income Tax Return is New ITR -4S (sugam). Purpose seems to be that SUGAM Returns will not be taken up for scrutiny assessment.
4. Penalty for Non-maintenance of Books of Accounts u/s. 271A is Rs.25000/-.
5. Penalty for failure to audit Books of Accounts u/s. 44AB or Failure file Audit Report is 0.5% of Sales/Gross Turnover/ Receipt (Maximum is Rs.1,50,000/- but practically 0.5% of Rs.60/- lacs is Rs.30000/-).
6. While calculating Gross turnover/ Gross Receipts limit u/s. 44AB, Gross Turnover/ Receipts of business covered u/s. 44AD & 44AE shall be excluded.