Query on 44ad income - notice u.143(1) for 194j tds mismatch

1320 views 4 replies

prahlad swarup

Legal

16 Points Joined May 2018

Hi,

I have a few queries regarding my filing of AY17-18 returns.

I have filed via presumptive income 44AD scheme. However last week I recieved notice under 143 section that there is inconsistency in amount shown under 44ADA against Form 26AS.

I run a HR consultancy firm and have over 10 employees working for my firm. We provide both staffing , training and HR administration services. Usually when some clients (corporate/companies) pay my invoices, they deduct charges of TDS under section 194J under technical consulting.

But the noticed recieved, it is asking to match 26 AS under 44ADA which is professional. How should I file the return for my business under 44AD? Also for 44ADA, My income is not coming under professional head listed under selected list of professionals. As I am running a consulting business, its not a profession.

- If 44ADA is the only option, it cannot be used by me as the limit is up to Rs 50L, and my firm gross income is above that by few lakhs. In that case, what is the other option? Also, I have not maintained full book of records such as travels, trainings, etc. Or conducted any audit of accounts. Is it possible to do audit for Ay 17-18 now? Otherwise will it be OK to file without these documents under regular IT return (non-presumptive)? And is there any fine?

- One more thing I am not clear on, last year I have filed under same 44AD.And it was fine. But now I am getting a notice. Is there a change in the law for the past year?

Thanks.

Replies (4)

Sundararajan S

Final Student of ICAI

1764 Points Joined December 2015

Mr. Prahlad the issue faced by you will be faced by many. Your views regarding filing u/s 44AD is correct. See 44ADA is applicable only for professionals covered u/s 44AA(1). However many fail to understand this. Good many CAs are not aware of this. And 194J is actually applicable only for people u/s 44AA (1). But in practice there is one proverb, if we don't know whether to deduct or not it is better to deduct TDS. and if there is a confusion as to 1% or 10% it is better to deduct 10%.

prahlad swarup

Legal

16 Points Joined May 2018

Originally posted by : Sundararajan S
	Mr. Prahlad the issue faced by you will be faced by many. Your views regarding filing u/s 44AD is correct. See 44ADA is applicable only for professionals covered u/s 44AA(1). However many fail to understand this. Good many CAs are not aware of this. And 194J is actually applicable only for people u/s 44AA (1). But in practice there is one proverb, if we don't know whether to deduct or not it is better to deduct TDS. and if there is a confusion as to 1% or 10% it is better to deduct 10%.

Dear Sir,

Thanks for your reply.

In the notice, there is an option to disagree with the claim of 44ADA. If my view of business is right, is that the option I should choose? I hope that "disagreeing" is not considered as a bad thing by itself...