I have received a notice from IT department for having filed defective return for AY 2016-17. The notice says: Error Code 86 As per Section 44AD(6) of the Income Tax Act, 1961, the provisions of Sec.44AD are not applicable to – (1) persons carrying on professions that are referred to in Sec.44AA(1), (2) persons earning income in the nature of commission or brokerage, and (3) persons carrying on any agency business.As seen from the return of income filed, the nature of business code mentioned is which falls in the categories mentioned above. Hence, the provisions of Sec.44AD are not applicable, in your case. Possible resolution: As the provisions of Section 44AD are not applicable, in your case, the claim of computing profits and gains of business on presumptive basis, under this special provision is not allowable. Hence, the above defect has to be corrected by way of computing the profits and gains of business under the normal provisions and not under Sec.44AD and offering the same. I am a salaried employee and sometimes I work as a consultant also and the organizations pay me after deducting 10% TDS. I used to file ITR 4s and show my consultant income in that. For all previous year the return was processed but for this year they have sent the notice. Please let me know what am I missing.
Hii..
You have to file ITR 4 instead of ITR 4S , because you have consultancy income which treated as Professional Income and not fall under 44AD,thus main your income and expenditure account and balance sheet and fill ITR 4 form under Section 139(9)
Hi,
Prima facie, it looks like Under "Nature of Business" you have entered a Business which is not eligible for Sec 44AD benefit.
Request you to kindly E-mail the ITR 4S and the Notice u/s 139(9) to my e-mail ID pradeep@capradeepbhat.com so that I can help you better.
As yours is a professional income, it is not covered u/s 44AD, which is applicable to business income only. You need to offer the income u/s 44ADA, if your profession is covered u/s 44AA(1). Other wise, you need to file the details of your turnover, gross profit, expenses and net profit and rectify the return.
Sir from next time if you are salaried , declare the consultancy income in other sources and not in business.
You need to fill the items mentioned in form under Profit & Loss Account - No accounts case. You mention the Gross receipts from consultancy, under gross profits shown the same amount of Receipts, Expenses (difference between the Gross Receipts and the Profit you have declared in your It Returns) if any.
In Balance Sheet also you need to compulsorily mention the 4 items mentioned in No accounts case. You can put some small amount in case of confusion.
you have to file ITR 4 in place of ITR 4S.
for your consultant business you have to prepare income and expenditure account and details of income & Expenditure provide in profit & Loss Account.
Hello Sir,
This is because you have selected a wrong code. You cannot file ITR - 4s with it but will need to file ITR - 4 and fill in your profit and loss and Balance Sheet details.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Dear Sir,
Professional income was not eligible for presumptive taxation till FY 2015-16. Hence, you should have filed ITR 4 instead of ITR4S.
Please feel free to call/ revert in case of any doubts
Thanks and Regards
Abhishek Dugar
CA CS B.Com
