section 44AD

[sunil mehta]

A) Section 44AD(5) of Itax act says that if eligible assessee claims to have income lower than 8% of gross T/O AND his TOTAL INCOME EXCEED basic exemption limit then he shall keep books of a/cs u/s 44AA and get them audited u/s 44AB.

B)From the above that means if eligible assessee (a PROPRIETORY FIRM )having T/o less than 1 cr and showing income <8% AND his TOTAL INCOME is BELOW basic exemption limit then it is not mandatory to keep bks u/s 44AA and get them audited u/s 44AB .

Query:-

1)Is contention in (B) correct ?If 'NO' then WHY ?

2)If the IT return of the above firm is selected in scrutiny then whether ITO can ask for books,records (business related transactions enquiry ) ?

3)Can penalty be levied on the proprietor u/s 271B for not getting the books audited ?

4) In case of 'Eligible Assessee' under clause 'B' above , the I.Tax return of that proprietor be filed in Form 4S or in form 4 (assuming that assessee has only business income )

AI Summary

Presumptive taxation compliance may trigger mandatory books and audit if total income exceeds the basic exemption threshold. Section 44AD requires that an eligible assessee who declares income below the presumptive benchmark and whose total income exceeds the basic exemption threshold must maintain books of account and have them audited; if the total income remains below the basic exemption threshold, those statutory bookkeeping and audit obligations do not apply on their face. The text raises consequential questions about scrutiny powers, record production, penalty exposure for non-audit, and the correct return form for a proprietary assessee with only business income.