The tax department is politically motivated. You could’ve declared everything perfect and If I(as a AO) want to mess with you, I can. I have power and the law is ambiguous and I can issue SCN and file cases.
it’s not under declared, it’s never computed. It’s just claimed at 6%/50% of turnover. If the point of 44AD is reducing compliance, you don’t have to go into the nitty gritty details of profit calculations, just turnover calculations. You don’t even have to look at anything else.
I believe it says nothing. The current turnover calculations comes from ICAI Guidance note on Sec 44. It’s still just a guidance. I don’t think it’s even the right way to do that. I think if you want you can calculate turnover any other way. For example, in strategies like iron condors, one leg will always have positive and negative value. I think it should be calculated as a whole by summing up positive and negative to arrive at turnover of one leg and not the absolute sum. It’s because it was never the intent of trader to make loss in two parts of the same leg. That’s just my opinion. Anyway, I haven’t heard any cases in “Fno turnover calculations”. So, either AO never questioned it or it never went to court. Just as your view here, I don’t think there’s anything illegal if a person calculates turnover this way either - with the risk that if the highest court were to strike down your way, you might have to pay extra. It’s hard, but if you’re afraid of tax legal complications, you’ll never make money.