Books of Accounts

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 December 2010 Case: There is a corporate assessee whose case is selected for scrutiny for the AY 07-08.
The AO has raised a demand of Rs. 28,00,000 and rejected books of accounts u/s 145(3) on the basis of incompleteness or incorrectness of accounts.

Now, as the company has not done any business from the last 3 years none of its officers or employees are available and the books of account are also not available...
the company has more than 60 branches therefore it is not possible to write its books again.
However we could find the audited BS of company for the y/e 31.03.2007 (AY 07-08) and we have filed the same to the AO.

Can the audited BS be referred to say that the books were made by the company but they are lost...
if not, what are the remedies available to the assessee to get the demand deleted.

CA. BHAVIK DILIPBHAI MEHTA

CA. BHAVIK DILIPBHAI MEHTA (Expert)
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16 December 2010 I would like to give you few suggestions:

1) Since the assessee is a company & you have found audited BS of the comapny for the year 31/3/07 you can contact the auditor of the company at that point of time & request him to provide the trial balance of the company.

2) Has the auditor of the company at that point of time qualified the audit report in any sense or has he given adverse opinion in relation to the books of accounts.

The balance sheet cannot be said to be the books of accounts & you cannot use it as a shield. However if the auditor's report is available which is a clear of qualificiations/adverse opinions then only it can be presumed that the books were correct. However it is a primary requirement to maintain the books of accounts for atleast a period of 6 A.Y. which the said company has failed to do so.

Best of luck for the assessment.

Querist : Anonymous

Querist : Anonymous (Querist)

20 December 2010 bhavik sir... thanks for the suggestions...

nieither the audit report is qualified nor the Trial Balance is available with the auditors...

can audit report be used as a shield???...

others views are also invited
thanks in advance....

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