Urgent 44ad

section 44AA(2) says if we carry on business or profession, we have to maintain all the books and records which enable A.O to compute *total income*.

44AD(5) says, if 44AD(4) applicable I.e. claiming profits below specified % and if total income exceeds BEL, then books specified under 44AA(2) shall be maintained and audit should be done.

for example, there is a person who has income from pgbp and capital gains in the same assessment year. And opted 44AD for pgbp and claimed cost of improvement of Rs. 9 lakhs incurred in F.y 2001-2002.

Now my doubt is, if A.O asks documents or proofs for such COI in scrutiny. Can we say we are not required to maintain books or any documents which enable A.O to compute *total income* as per section 44AA(2) r.w 44AD.

reasoning:

section 44AA mandated a person carrying on business or profession to maintain all the records from which we can arrive at total income and not only income from business. in the same way, if he opted section 44AD, he is exempted from maintaining all the records as specified under 44AA. so, in my case, my total income represents profits from business and capital gains. following above analogy. if I opted 44AD, I need not to maintain the records or accounts relating to my total income and it is not limited to income from pgbp.....

share me your view...
Replies (2)
Quick Summary
This discussion delves into the record-keeping obligations under Section 44AD of the Income Tax Act. It clarifies that while Section 44AD offers presumptive taxation benefits, it doesn't entirely exempt assessees from maintaining books of account. Specifically, if the total income exceeds the basic exemption limit and Section 44AD(4) is invoked, assessees may still be required to maintain books as per Section 44AA(2) and undergo an audit. The query highlights a scenario involving income from business (under 44AD) and capital gains, questioning the need for documentation for capital gains-related expenses when opting for 44AD. The consensus leans towards the necessity of providing documentation when requested by the Assessing Officer, especially for expenses like 'cost of improvement'.

Cost of improvement is separate things. Hence, the assessee  get the notice u/s 142(1) then assessee need to furnish its details. 

Have you read the provision...

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