Amendment of section 44AB.
19. In section 44AB of the Income-tax Act, with effect from the 1st day of April, 2011,—
(a) in clause (c),—
(i) for the words, figures and letters "section 44AD or section 44AE or section 44AF", the word, figures and letters "section 44AE" shall be substituted;
(ii) for the words "previous year," occurring at the end, the words "previous year; or" shall be substituted;
(b) after clause (c), the following clause shall be inserted, namely:—
"(d) carrying on the business shall, if the profits 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 the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,".
Notes on Clauses:
Clause 19 of the Bill seeks to amend section 44AB of the Incometax Act relating to the audit of accounts of certain persons carrying on business or profession.
Under the existing provisions contained in the said section it is obligatory for a person carrying on business to get his accounts audited before the "specified date" by an accountant, if the total sales, turnover or gross receipts in business for the previous year or years exceeds forty lakh rupees. A person carrying on profession will also have to get his accounts audited before the said date if his gross receipts in profession for the previous year or years exceeds or exceed ten lakh rupees. Such persons will also be required to obtain before the specified date a report of the audit in the prescribed form. These requirements will apply only in relation to the accounts for the previous year or years relevant to any assessment year commencing on 1st April, 1985 or any subsequent assessment year. In cases where the accounts of a person are required to be audited by or under any other law, it will suffice if the person gets his accounts audited under such other law before the specified date and also obtains before the said date the report of audit in the prescribed form, in addition to the report of audit required under such other law. The expression "accountant", for the purposes of this provision, will have the same meaning as in the Explanation below sub-section (2) of section 288 of the Incometax Act. The expression "specified date", in relation to the accounts of the assessee of the previous year means the 30th day of September of the assessment year.
The proposed amendment seeks to provide that in the case of an assessee, who is covered under the new proposed section 44AD vide clause 20, the audit of books of account is required if he claims that the profits and gains from the business are lower than the profits and gains computed in accordance with the provisions of sub-section (1) of section 44AD and if his income exceeds the maximum amount which is not chargeable to income-tax. This amendment will take effect from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years.
