Ranjit Singh v. ITO - Section 44AD presumptive income vs. actual loss

The ITAT Chandigarh Bench held that where an assessee has opted for presumptive taxation under Section 44AD and declares income at 8%/6% of turnover, the Assessing Officer cannot question the actual profitability or conduct scrutiny to determine actual income. Once the assessee opts in and declares the prescribed percentage, the option is final and no further inquiry into actual expenses or profits is permissible for that year. However, if the assessee wants to declare lower income than the prescribed percentage, he must maintain books of accounts and get them audited under Section 44AB - the presumptive scheme is then not applicable.

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