Yesterday we wrote an article on my experience of E-filing of Tax audit report and received a very interesting question – Is there any need to file tax audit report u/s 44AD? I have analyzed the case and framed the following opinion:-
1. A proviso is added to rule 12(2) w.e.f. 01/04/2013 and the same is reproduced as under:-
Provided that where an assessee is required to furnish a report of audit under section 44AB, 92E and 115JB, he shall furnish the same electronically.
It is clear from the reading of the above that for the all the audits conducted u/s 44AB, the audit report is required to be filed electronically.
2. The audit conducted for the dealers covered by “u/s 44AD” who are not showing the required profit, is also conducted under section 44AB and it is evident from the provisions contained in section 44AB (d):-
Carrying on business shall, if the profit and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be profit and gains of his business and his income exceeds the maximum amount which is not chargeable to income tax in any previous year
Get his accounts of such previous year audited by accountant before the specified date and furnished by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.
3. Section 44AD is a presumptive taxation and the provisions of audit are contained in section 44AB hence all such audits are conducted under section 44AB . No audit is conducted under section 44AD though it is provided in section 44AD that in certain circumstances the assessee has to maintain Books of accounts and get the accounts audit u/s 44AB.
4. Further the return form ITR-4 even in case of assessee covered under section 44AD requires the date of furnishing the audit report and this is a new feature which has been added in the form ITR-4 simultaneously with the addition in the rule 12(2) as mentioned above. If you try to generate the XML file even in case of assessee covered by section 44AD then it will show “error” sign. Though logically it is not very important but it certainly supports the opinion of the authors.
This is our opinion about E-filing of audit report in case of dealers covered under section 44AD who are not showing the required profit. There may be other opinion in this respect but why this confusion is created is being discussed below.
WHY THERE IS A CONFUSION
The Limit of Tax audit per practicing chartered accountant is 45 but the audits conducted for the dealers who are covered under section 44AD are not covered by this limit and there is a confusion when the Chartered accountant upload his 46th report there will be a automatic message that “ you are exceeding the Limit of 45” So if the CA is uploading the reports for the dealers covered under section 44AD he will face the same problem.
I think this is a unnecessary controversy because the Limit is fixed by the ICAI and not by the Government and further if there will be a mechanism then it will also take care of the audits of the dealers covered under section 44AD automatically considering the turnover of the assessee.
CA Sudhir Halakhandi – CA Abhas Halakhandi
“Halakhandi”, Laxmi Market, Beawar-305901(RAJ)
Cell- 9828067256, E-Mail – sudhir@halakhandi.Com