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139(9) notice from CPC

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I have received notice from CPC after filing my income tax return with folowing messasge:

Tax Payer has claimed loss under the head “Profits and gains of Business or Profession”/No account Case section(Part B) of Profit & Loss A/c; however, he has not filled the Part A – Balance Sheet and Part A – Profit and Loss Account and has not got the books of account audited.

Do i need to get my books audited? Whethe i have to feed b/s and p/l account in ITR froms?

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Tax Payer has claimed loss under the head “Profits and gains of Business or Profession”/No account Case section(Part B) of Profit & Loss A/c; however, he has not filled the Part A – Balance Sheet and Part A – Profit and Loss Account and has not got the books of account audited.

Assessee has claimed loss under the head profit and gains of business or profession, however he has to fill Balance sheet and Profit and Loss account. Incase assessees falls under section 44AD/44AE/44ADA, assessee also has to get his books of account audited if the income offered is less than the prescribed limits as per the provisions of the Income Tax Act.

1.  Audit u/s 44AD is not required if the income in case of Individual / HUF is below the basic exemption limit.

2.As a result of loss, section 44AD is not applicable in such cases.  However, then provision of section 44AA is applicable which requires compulsory maintenance of books of accounts in case of turnover or income is above certain specified limit. In short, the balance sheet and P & L account may be requied to be given in majority of the cases.

Section 44AA of the Income Tax Act reads as under:

Maintenance of accounts by certain persons carrying on profession or business.

44AA. (1) 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 in the Official Gazette shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.

(2) Every person carrying on business or profession [not being a profession referred to in sub-section (1)] shall,—

(i) if his income from business or profession exceeds one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds ten lakh rupees in any one of the three years immediately preceding the previous year; or

(ii) where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed ten lakh rupees, during such previous year; or

(iii) where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AE or section 44BB or section 44BBB, as the case may be, and the assessee has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, during such previous year; or

(iv) where the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,

keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act:

Provided that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words “one lakh twenty thousand rupees”, the words “two lakh fifty thousand rupees” had been substituted :

Provided further that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words “ten lakh rupees”, the words “twenty-five lakh rupees” had been substituted.

(3) The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe, by rules, the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contained therein and the form and the manner in which and the place at which they shall be kept and maintained

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