sec 44AB requirement for below one crore turnover.

[giri gattupalli]

respected sir,

1. one of my client is a partnership firm

2. during AY 2025-26 turnover two crores and got audited under sec 44AB.

3. during AY 2026-27 turnover is 44 lakhs and as per books net profit is 56,000 only. and business also closed.

4. being a partnership firm filing of ITR is mandatory.

5. please suggest whether audit under sec 44AB required to declare actual profit that is 56,000.

please discuss....

[Sanjeev Agarwal]

If the firm wants to file AY 2026-27 declaring actual book profit of Rs. 56,000 on turnover of Rs. 44 lakh, I would recommend getting the accounts audited under section 44AB and filing the return accordingly.

The argument that "turnover is only Rs. 44 lakh, therefore no 44AB audit" is incomplete, because it overlooks the low-profit declaration trigger under section 44AB(e) read with section 44AD.

Risk classification: Strong, subject to verifying the firm's section 44AD history and the exact nature/composition of the Rs. 44 lakh receipts.

AI Summary

Tax audit applicability for a partnership firm with reduced turnover and low actual profit after business closure.
Tax audit applicability under section 44AB is considered for a partnership firm with turnover of 44 lakhs, book profit of 56,000, and discontinued business operations. The issue is whether audit is required for filing its mandatory income-tax return and declaring actual book profit, after its accounts had been audited in the preceding assessment year when turnover was two crores.