Maintaining Books Of Accounts

Query) I am carrying on a business of selling books. For the financial year ending March 31, 2014, I am expecting a turnover of Rs 6200000, which will be record sales for me. However, as I am a one-man show, I have not maintained the books of accounts except for bills raised by me. Hitherto, I have not been filing my return of income as I did not have any taxable income.

I may have to file my return of income for this financial year, and I am worried as to how I should file my returns as I do not have any books of accounts. It has been suggested to me that I should get my books of accounts duly audited. I do not know what I should do. Please advise me.

- D N Nayak

You have not to worry as the provisions of Section 44AD of the Income Tax Act, 1961, as amended by Finance Act No. 2 of 2009 and further amended by Finance Act, 2012, will come to your aid. The relevant extracts of the said section are given below:

44AD (1) Notwithstanding anything to the contrary contained in Sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.

(2) Any deduction allowable under the provisions of Sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed.

(3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

(4) The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business.

(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of Section 44AA and get them audited and furnish a report of such audit as required under Section 44AB.

For the purposes of this section,

(a) “Eligible assessee” means,

1. An individual, Hindu undivided family or a partnership firm, who is a resident, but not a limited liability partnership firm as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009); and
2. Who has not claimed deduction under any of the Sections 10A, 10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C. - Deductions in respect of certain incomes” in the relevant assessment year;

(b) “Eligible business” means,

1. Any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE; and 
2. Whose total turnover or gross receipts in the previous year does not exceed an amount of Rs 1 crore.

You fall within the definition of an eligible assessee and eligible business. Hence, you can take the benefit of presumptive tax as long as your turnover does not exceed Rs 1 crore. The only factor you must consider is that you will have to show a net profit of Rs 496000 before claiming deductions under Chapter VIA, viz. 80C, 80D, 80G, etc. You need not maintain any books of accounts or get the books audited.