Tax Audit U/S44AB

My friend, your opinion is right...

second firm wont be liable for tax on mandatory basis.

I am not agree with u all . As per Section 44AB it is celarly mentioned that if the Turnover of the person is more than 40 Lacs than it is liable for tax audit.

as per act individual is the person no matter he is making turnover in two or more firms. it will all be clubbed in one status in which he is making sale.

however if one of the status would be changed than your contention was must be correct.

So , in my opinion both the firm will come under the tax audit purview.

with professional regards

CA Mukesh Agrawal

mukeshairon @ gmail.com

mukeshairon @ live.com

09935417049

CA Mukesh Agrawal sir is correct.............

See the belowmentioned link.....  for more confirmation.......

/forum/pls-guide-regd-tax-audit-43495.asp

Regards

K.Ilayaraja

ya sure definately provision of sec 44AB will attract to both the firm as it is individual an u cant bifurcate individual on his business basis....or on name of his firm .......if here same question was asked for the partenship firm where 2 partnership having same partner then it would be not applicable for 2nd firm ...........but in individual case he have to consider sec44AB as u will file only one return for one individual not two.........think doubt is clear ..... 

agree with ca mukseh sir ............n furthere comments r also welcome for the same issue

Please find :

Sec. 2(7) "assessee" means a person by whom any tax or any other sum of money is payable under this Act, and includes-

Sec.2(31) "person" includes-

(i) an individual,

(ii) a Hindu undivided family,

(iii) a company,

(iv) a firm,

(v) an association of persons or a body of individuals, whether incorporated or not,

(vi) a local authority, and

(vii) every artificial juridical person, not falling within any of the preceding sub-clauses;

Section 44AB:

A person carrying on business, if the total sales, turnover or gross receipt in business for the accounting year or years relevant to the assessment year exceed or exceeds Rs. 40 lakh.

In case of individual tax is lavied on his total income not the entity wise

In case of firm and company legal entity of firm and entity is different.

In this way we can say assessee > person> individual. That’s why we have to check the applicability if Section 44AB on the basis of total revenue

Plese revert ir more clarification is required

Regards,

Rahul Gupta

9958073300

rahulgutpacacs @ yahoo.co.in

Tax audit U/s 44AB is done on the total revenue earned by a person irrespective of how many entity he has. So we can't split the revenue by entity wise as we file only one return for one Individual.

So both the firm will mandatory for Tax Audit u/s 44AB

Regards,

Nitin Kumar Agrawal

all businesses (firm) collectively take into consideration while seeking for tax audit applicability.

hence both the firms will come under the purview of tax audit.

yes......... Friends explanation given by MR. MUKESH is Awesome and correct too..

As Per 44AB ,The Assess having turnour Exceeds 40 Lakhs ,he is laible for tax Audit,if the Assess have more than one business ,if turnour of all business exceeds Rs 40 Lakhs then Tax Audit is Compulsory for all business

both the firms are liable for tax audit

I agree with CA Mukesh Agarwal. Here an Individual is making combined Gross receipts of 67 lac. All the businesses which are under proprietorship (in individual category) are combined to arrive the TO figure for 44AB qualification.

In ITR 4 also, u cannot bifurcate figures of 2 or more businesses. U have to feed the consolidated figure of all businesses. For eg if a person is running two prop concerns and his TO is 30lac & 20 lac respectively, U'll be entering Rs. 50 lac as TO and if u'll submit ur ITR with this TO and say that ur return is not subject to tax audit u/s 44AB, u'll be attracting penalty provisions.

For this we will have to first analyse the sec 44AB

As per Sec 44AB

A person carrying on business, if the total sales, turnover or gross receipt in business for the accounting year or years relevant to the assessment year exceed or exceeds Rs. 40 lakh.is requeired to get his accounts audited from Chartered Accountant.

Person Includes

Sec. 2(7) "assessee" means a person by whom any tax or any other sum of money is payable under this Act, and includes-

Sec.2(31) "person" includes-

(i) an individual,

(ii) a Hindu undivided family,

(iii) a company,

(iv) a firm,

(v) an association of persons or a body of individuals, whether incorporated or not,

(vi) a local authority, and

(vii) every artificial juridical person, not falling within any of the preceding sub-clauses;

means tax audit is to be done of person and not of perticular business.

therefor it is clear that for all the business of a person one tax audit report will be issued by CA if turnover of the all the business taken togather of a person exceeds Rs.40 lacs during relavant financial year.