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

Is a Proprietorship with Turnover Under 1 Crore Required to Maintain Books and Audit Under Sections 44AA and 44AB? A query was raised regarding Section 44AD of the Income Tax Act. It was questioned whether a proprietorship with a turnover under 1 crore, showing income below 8%, and total income below the basic exemption limit is required to maintain books under Section 44AA and get audited under Section 44AB. The inquiry also addressed if, during scrutiny, the Income Tax Officer can request business transaction records and whether penalties under Section 271B apply for not auditing books. Additionally, it was asked whether the tax return should be filed using Form 4S or Form 4, assuming only business income is involved.