What is presumptive taxation scheme? Who can opt for presumptive taxation?

[Sundaraiah_Kollipara]

sir,
Assessee is in retail trade with turnover of Rs.200 lakhs. It is 100% cash business and deposits cash from sales into the bank. He offers 8% of turnover as income ( Rs. 16 lakhs) u/s 44AD of the Act. In the bank account there is closing balance of Rs.60 lakhs . The assessee uses the Rs.45 lakhs to purchase a plot of land.

The assessee opines that since he has offered 8% as income as required u/s 44AD the IT department cannot question the excess money of Rs.44 lakhs (60 – 16) standing in bank account and free to utilise to purchase the plot of land . Is the stand of the assessee correct?. What are the implications ?

[Surbhi_Pal]

Hi @Sundaraiah_Kollipara,

If you are opting for section 44AD, you can declare a fixed percentage of your turnover as profit. It is assumed that the assessee is unable to maintain proper books of accounts and hence has opted for 44AD.

However, in case a scrutiny arises you should be able to justify the source of these funds.