Sec 44ad taxation & books

you can not show different amount of the profit in the financial statments of the same entity in same year, if you show less profit ( although higher than 8%) to save tax and higher profit in bank to show better profitability it is not a tax planning its tax evasion and yes in your language its absurd.

the books of accounts should show the same amount of profit as shown in income tax return.

Thanks sir. Also With regard to the same section, what will haapen when a person filing under 44AD, who is supposed to have deducted TDS, has not done so, what will happen to the disallowance part?

If an Assessee adopts Sec.44AD then disalloance under sec.40(a)(ia) can not be made. i.e not applicable. Refer CIT vs Surendra Paul case law decided by Honorable Punjab & Huryana High Court.

Section 44AD is mainly for those assesses that would not have a Balance sheet, P& L Account and other accounting records except Bank statements. The Firm should have declared 20L profit and paid tax properly. Now It will be improper to manipulate the accounts and bring the profit exactly to 8% also there will be a problem in carry forward of balances to the next year as no balances will tally.

Even if  income is declared under section 44AD, stating 8% profit , Preparation of B/S, P&L is required for other Acts like MVAT, Service Tax, etc. so it is my suggesion to shown actual income &