Whether tax audit is required when opting for section 44AD and simultaneously reporting separate commission income in P&L?

[Dipika Shetye]

I am an individual carrying on business and proposing to declare income under section 44AD.

My turnover/gross receipts during the year are approximately Rs. 1.37 crore. Cash receipts as well as cash payments exceed 5% of total receipts/payments. However, I am declaring presumptive income higher than the prescribed 6%/8% under section 44AD.

In addition, I have commission income of around Rs. 4 lakh, which I am showing separately in the Profit & Loss Account and not under the presumptive scheme.

While validating the return, the ITR utility is giving an error stating that since turnover is more than Rs. 1 crore and cash receipts/payments exceed 5%, tax audit under section 44AB is applicable.

Pls Guide me as per Income Tax Act. Whether tax audit is required

AI Summary

Tax audit applicability for presumptive business income with separate commission receipts requires examination of turnover and cash-transaction conditions.
Tax audit applicability is raised for a business opting for presumptive taxation where turnover is approximately Rs. 1.37 crore and cash receipts and payments exceed 5% of the respective totals. Presumptive income is declared above the prescribed rate, while commission income is separately reported outside the presumptive scheme. Return validation indicates tax audit applicability based on turnover and cash-transaction conditions.