05 October 2012
What are the grounds for scrutiny?My question is that in my case if closing stock valuation method changed from MRP valuation to Cost valuation & profit percentage decline compared to last year? & whether profit percentage matters in case of Srutiny ?how to comply with procedure of srutini?
06 October 2012
As per guidelines issued by CBDT 3-5% cases can be taken for scrutiny.AO do not need any reasons to believe to start the scrutiny. He can do so to ensure that assessee- # has not understated the income # has not computed excessive loss # has not underpaid the tax in any manner.
Yes the case can come into scrutiny in case of reduction of gross profit ratio.
06 October 2012
For starting the scrutiny assessment u/s 143(3), AO will first issue a notice u/s 143(2) requiring the assessee either to attend in person or to produce any documents and evidences in relation to such return. And remember that such notice is valid only if issued within 6 months from the end of fy in which return is filed. Just produce all the evidences to the satisfaction of AO.
06 October 2012
Thank you sir. please tell me that sir is there any chance to change the accounting after filing of return of income u/s 139(1). what are the consequences of these act?is it necessary to give explanation for revised return of tax audit case?what is that explanation?
06 October 2012
U/S 145 an assessee can change the method of accounting employed by him provided that the change is for a bonafide reason and the changed method is consistently followed. But such option can't be availed for a period for which a return of income has been filed. If you change the accounting method after the filing of return, then AO gets the right to reject the books of accounts and complete the assessment to the best of his judgement u/s 144.
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