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Q. > Please Help: income tax
one firm of an individual is audited u/s 44ab and he has receipt of 20 lacs in other firm, whether the second firm is liable to audit or it can be covered u/s 44 AD as he is contractor in which the receipt is 20 lacs
answered Sep 23, 2011 by Ashish Karundia , New Delhi
Dear Anil,
In your case, the second firm will be liable for tax audit, only if the second firm claims the profits to be less than 8% of the turnover i.e. less than Rs.1,60,000 [ Refer section 44AB(d) read with Section 44AD(1)of Income Tax Act, 1961].
Hope this answers your query.
answered Sep 26, 2011 by Ashish Karundia , New Delhi
Dear Vipin,
Here, if Anil is talking about sole properietorship firm then thereis no question of other firm liable to tax audit because the same would have already been covered in the AUDITED Firm (i.e. jiska tax audit ho chuka hai.)
Further, as you righly said that tax audit is person based then please note that here a person can be a partner in two firms also, then in such case the tax audit creteria has to be seen seprately.
Hope this suffice.
Experts Panelist
Comments
CA.VIRAL JANI
23-Sep-2011 , 05:34:48 pmDear Mr. Anil, as per the section 44 AB if Total turnover exceed 60 lacs person is liable to Audit.In case of Individual always it require to consider his total turnover for verify whether he/She cover under Tax audit or not.So Individual it self is liable to tax audit and hence all his business cover under Tax audit. Further if any Business is cover under Presumptive basis of income than it is require to disclosed in for 3CD Clause 10.
CA VIPIN GARG
26-Sep-2011 , 08:48:50 amYes I do agree with Viral Ji because you need to consider the total turnover of all the firms of the individual because the liability of tax audit is person based and not business based.. I mean you cannot deny the liability of tax audit by just opening another firm by another name of the same individual. Hope you got the answer you were looking, Have a nice day Anil Jiiiiiiiii
CA.VIRAL JANI
26-Sep-2011 , 05:31:41 pmDear all, as per the section 44 AB if Total turnover exceed 60 Lacs person is liable to Tax Audit. In case of Individual always it requires to consider his total turnover for verify whether he/ She cover under Tax audit or not. However while calculating total turnover the turnovers of the firm covered under presumptive basis are not to be considered. So whether Tax audit is become applicable or not it depend on whether the person choose for presumptive basis of income or normal basis. If he/ She chooses for Normal business Individual itself is liable to tax audit and hence all his business cover under Tax audit. But if he/she choose for presumptive Income only his first business cover under Tax audit subject to requirement of 8% of profit as said by CA. Ashish. Further if any Business is cover under Presumptive basis of income than it is require to disclosed in for 3CD Clause 10. Example: In case of Individual 1. Firm A Turnover 60 Lacs Firm B Turnover 15 Lacs Total Turnover 75 Lacs Both firm Cover under Tax audit if presumptive basis of taxation not chosen. 2. Firm A Turnover 60 Lacs Firm B Turnover 15 Lacs (chosen for presumptive tax) Total Turnover 60 Lacs (For Calculation of Tax audit) Only First firm is liable to Tax audit 3. Firm A Turnover 40 Lacs Firm B Turnover 25 Lacs Total Turnover 65 Lacs Both firm Cover under Tax audit if presumptive basis of taxation not chosen. 4. Firm A Turnover 40 Lacs Firm B Turnover 25 Lacs (chosen for presumptive tax) Total Turnover 65 Lacs (For Calculation of Tax audit) No liability of Tax audit arise. Hope this clear doubt of all.