44AD - Exemption from maintaining books under 44AA

[VENKAT S]

Can a person claim exemption from maintaining books of account under Sec 44AA(2)(i) by filing his return under 44AD of the Act? Under which provision/circular/instruction can the assessee claim such benefit?

[Nandan Khambete]

Dear Mr.Venkat,

Yes, an eligible assessee can claim exemption from maintaining Books of account if other conditions of Section 44AD are met.

Please see extract of 44AD(5) which says :

(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.]

Now, Section 44AD(4) is reproduced below :

[(4) Where an eligible assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1).

Hence, on Joint reading of sub section 4 & 5 above, if other conditions of 44AD are not complied ,only then the assessee is required to maintain Books of accounts.

Trust the above explanation clears the doubt.

Regards,

CA Nandan Khambete

AI Summary

Presumptive taxation under section 44AD can exempt eligible taxpayers from books keeping unless income exceeds taxable threshold. An assessee adopting Presumptive Taxation under section 44AD may be exempt from maintaining books of account under section 44AA(2)(i) if eligible and compliant with 44AD; however, if total income exceeds the maximum non-taxable amount subsection 44AD(5) requires books and audit under section 44AB, and failure to follow the presumptive provisions in any of the five succeeding assessment years invokes the five-year disqualification under subsection 44AD(4).