A person professional income gross receipts rs:28 lacs in f.y. 20-21.but profit declared 50% rs:14 lacs sec 44ada provision in it returns filed.
Question:
1. A person accounting records maintained compulsory or not compulsory.
2. If accounting records maintained ledger book or day book or cash book.
Answer: Tushant January 6, 2022 Answer:
Section 44AA of the Income-tax Act, 1961 prescribes the requirement to maintain books of accounts.
Now, Section 44ADA states that "Notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession"."
Section 44AA prescribes that every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board shall keep and maintain such books of account and other documents in accordance with the provisions of this Act.
Rule 6F prsecribes that the following books of account shall be required to be maintained :
(i) a cash book;
(ii) a journal, if the accounts are maintained according to the mercantile system of accounting;
(iii) a ledger;
(iv) carbon copies of bills, whether machine numbered or otherwise serially numbered;
(v) original bills wherever issued to the person and receipts in respect of expenditure incurred by the person.
However the same have to be maintained if the gross receipts are more than Rs. 1.5 lakh in three preceding years.
Accordingly, every professional has to maintain books of accounts even if the said professional is being covered under the provisions of section 44ADA.
However, it may be pertinent to note that, Income Tax Department has provided the said information via FAQ's in regards to the matter concerned :
Maintenance of books of account if a person opts for presumptive taxation scheme of section 44ADA
In case of a person engaged in a specified profession as referred in section 44AA(1) and opts for presumptive taxation scheme of section 44ADA, the provision of section 44AA relating to maintenance of books of account will not apply. In other words, if a person opt for the provisions of section 44ADA and declares income @ 50% of the gross receipts, then he is not required to maintain the books of account in respect of specified profession
