ITR balance sheet

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 July 2010 A person's income was below tax slab for last 5 years. So there was neither any tax liablity nor her he filed any return. However, the person has accumulated 7.5 lacs in this 5 years and this money he is holding cash.

This year too he has not filed any return any the tax liablity is zero. The source of income is miscellaenos income.

This person is starting a sole trading co. with this 7.5 lacs as opening balance ( capital a/c)

Can a person without any problem /question from ITO start his sole trading co with this 7.5 lacs?

can the ITO question this person regarding this 7.5 lacs and penalise him ? what formalities and steps the person should take right now immeidately in order to be in position to answer the ITO regarding this 7.5 lacs Rs.

How should the person prepare his balance sheet?

CA. Anoop Gadia

CA. Anoop Gadia (Expert)
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23 July 2010 he should prepare the past 5 years balance sheets for safeguard.
but there is a problem with cash component may arise.

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Querist : Anonymous

Querist : Anonymous (Querist)

23 July 2010 Thank you sir.
Is there any solution for the problem related to cash component ?

If he files ITR with opening balance of capital a/c as 7 lacs {6.5 lacs investment and 50k as cash in hand}
and show a income of 145k with a drawing of 45k, net c/f to capital a/c being 1 lac.... will it be fine or there can be scrutiny or other problems just like u said cash component problem.

Can the ITO question about the opening balance of 7 lac ? can he seek details of investment shown ?

Please tell me the ideal solution.....

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CA. Anoop Gadia

CA. Anoop Gadia (Expert)
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24 July 2010 in itr you can show 6.5 lac as investments loan and advance to other and 50 to 60 thousand as cash

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Querist : Anonymous

Querist : Anonymous (Querist)

24 July 2010 Dear Sir,
Thank you very much.
If I file returns as per your instruction,will there be any chances of scrutiny and in case if there is a scrutiny how should I represent and explain my case. If the ITO seeks details about of the loans , advances and investments how should I explain him facts ?
Incase if the ITO is not satisfied with my reply how much penalty he can pay and what actiosn Ican take inorder to avoid any penalty?
I will be filing returns myself so please tell me which ITR form I should use and whats the process for filing returns. Most important thing, what income should I show :)

Thank you very very much once again....GOD bless you and your family.

CA. Anoop Gadia

CA. Anoop Gadia (Expert)
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25 July 2010 i this case the probability of scrutiny is 5% ok and for safeguard you prepare 5 yr. B/S in advance.

Querist : Anonymous

Querist : Anonymous (Querist)

25 July 2010 Thank you once again sir foryour kind support.

Sir,please tell me which ITR form no I should use , and what is the source of income I should show, and how shold I efile my ITR.

Do I need previous years return also....never filed in last 5 years...

further what investments and advances I should show....??

CA. Anoop Gadia

CA. Anoop Gadia (Expert)
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25 July 2010 FOR BUSINESS YOU FILE ITR-4.

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