01 January 2013
Hello Friends, I wanted to know the accounting treatment in case of a Raid / search seizure. For eg. a person discloses an income of 1 crore for previous years (say 2007-08, 08-09, 09-10) after raid and accordingly has to pay 40 lakhs as tax, interest and penalty. How should this be treated in the books of account for Current year.
01 January 2013
If a person discloses an income of Rs.1 crore on raid / search cases, either he might have created the corresponding assets or have the sources of income. Entries for Assets can be passed if same are created. If sources of income are ascertainable, same can be treated as his Capital employed. In case of Tax payment, it shall be treated as Drawings in his books of accounts.
01 January 2013
As far as assets and income are concerned, same can be appropriated to respective years in books of accounts based on evidence and facts, documents etc.,
Income tax payment may first account as revenue expenditure by debiting to profit & loss account and same can be disallowed while filing ITR.
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