XYZ & Co., a partnership firm engaged in trading of electronic goods, furnished the following information: Particulars ₹ (i) Total turnover of…

As per section 44AB, every person carrying on business or profession is required to get his accounts audited before the "specified date” by a Chartered Accountant, if the total sales, turnover or gross receipts in business exceeds 1crore in any previous year. However, tax audit is not required in case of such person carrying on business whose total sales, turnover or gross receipts in business ≤ 10crore in the relevant previous year (P.Y.), if:- - aggregate cash receipts including amount received for sales, turnover, gross receipts in the relevant previous year ≤ 5% of such receipts; and - aggregate cash payments including amount incurred for expenditure in the relevant P.Y. ≤ 5% of such payments or In this case, the turnover of XYZ & Co. exceeds 1crore but does not exceed 10crore. Accordingly, it has to be seen whether cash receipts exceed 5% of aggregate receipts and cash payments exceed 5% of aggregate payments, to determine whether tax audit is compulsory. In this case, the percentage of cash receipts of 19lakhs to aggregate receipts of 456lakhs is 4.16% and the percentage of cash payments to aggregate payments is 1.597%. Since the cash payments and cash receipts made during the year do not exceed 5% of aggregate payments and aggregate receipts, respectively, the firm is not required to get its accounts audited under section 44AB and not required to furnish audit report before the specified date.