Mr. Pradeep started his interior decoration profession in 2023. His total income receipts for the F.Y. 2024-25 are 65 lakhs. The details of receipts…

As per section 44AB, every person, inter alia, carrying on profession is required to get his accounts audited before the “specified date” by an accountant, if total sales, turnover or gross receipts in profession exceeds 50lakh in any previous year. However, a person who declares profits and gains for the previous year as per section 44ADA is not required to get his account audited. As per section 44ADA, resident individual or resident partnership firm (but not LLP) engaged in any profession specified u/s 4AA (1) , such as legal, medical, engineering, architectural profession or profession of accountancy or technical consultancy or interior decoration or other notified whose gross receipt ≤ 50lakhs in the P.Y. (where aggregate cash receipt does not exceed 5% of total gross receipts, higher threshold limit of 75lakhs applicable) can declare 50% of total gross receipts or a sum higher than the aforesaid sum claimed to have been earned by the assessee. For this purpose, the receipt of amount or aggregate of amounts by a cheque drawn on a bank or by a bank draft, which is not account payee, would be deemed to be the receipt in cash. In the present case, since Mr. Pradeep is carrying on the profession of interior decoration, he is eligible for the presumptive taxation under section 44ADA. In this case, the turnover of Mr. Pradeep exceeds 50lakhs but does not exceed 75lakhs. Accordingly, it has to be seen whether cash receipts exceed 5% of aggregate receipts to determine whether tax audit is compulsory. During the P.Y. 2024-25, his cash receipts are - 1,12,000 plus - 1,22,800 totaling - 2,34,800, which is 3.61% of total receipts of 65,00,000. Since his cash receipts during the P.Y. 2024-25, does not exceed 5% of aggregate receipts, he is not required to get the accounts audited under section 44AB. Hence, the contention of Mr. Pradeep is correct he can opt for presumptive taxation under section 44ADA and he is not required to get his accounts audited.