kollipara sundaraiah asked 7 days ago
sir,
A small business person sec 44 ad provision yearly income rs:4.80 lacs declared in itr returns f.y. 24-25 but purchase of gold jewellery value rs:6 lacs f.y. 24-25
Question:
f.y. 24-25 selection of scrunity provision applicable compulsory as per it act.
Manish answered 6 days ago
Question – Will a person declaring income under Section 44AD with ₹4.8 lakhs in FY 2024-25 face compulsory income tax scrutiny if they purchase gold jewellery worth ₹6 lakhs in the same financial year?
A person declaring income under Section 44AD with turnover/income of ₹4.8 lakhs in FY 2024-25 will not automatically face compulsory income tax scrutiny merely because they purchased gold jewellery worth ₹6 lakhs in the same year.
Key Points:
- Section 44AD allows presumptive taxation for eligible businesses. Declaring ₹4.8 lakhs under this section is valid if turnover conditions are met.
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CBDT Scrutiny Selection Guidelines (latest for 2024-25) specify that scrutiny is generally triggered by:
- Information mismatch with Annual Information Statement (AIS)/SFT.
- Large cash deposits, high-value property/jewellery/foreign transactions not in line with declared income profile.
- Purchase of jewellery above ₹2 lakhs in cash must be reported by jewellers to the Income Tax Department under Rule 114E (SFT reporting). If the purchase is through banking channels (cheque/NEFT/card), it usually does not attract scrutiny automatically.
- If source of funds (like savings, loans, disclosed income, family funds) is explainable, no compulsory scrutiny will arise.
Conclusion:
The jewellery purchase of ₹6 lakhs alone does not make scrutiny compulsory. However, if paid in cash beyond reporting limits or if it seems disproportionate to declared income, it may get flagged for limited scrutiny.