Work certified wrongly stated as sales.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2014 One of my client is construction company and he prepared his contract account for 2012-13, in which he stated work certified as sales..Now in the current financial year (i.e. 2013-14) he realize his mistake and want to change his sales into work certified, which done previously..he can do so. if yes then what kind of disclosure may be made in his notes of account..

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
Follow

25 September 2014 then better book rectification entries in the form of journal.

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2014 journal is pass away, i wanna know that their is any system exist for moving sales entries into work certified, which is already filed with RoC, income tax etc..and which is also not identified by previous auditor as well as directors of the company..
If yes, then being auditor, what kinds of disclosure is being made in his report regarding this..

please suggest please..

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

26 September 2014 you can get the auditor to issue revised audit report. then revise the tax return. for revising MCA submissions, contact regional MCA office as there is no provision for revision of Form 23AC and 23ACA

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2014 But Sir, How to revised income tax return as they are filed bileted by the company and as per section 139(5) the return within due date u/s 139(1) is revised by any assessee and whereas the assessment order u/s 143(1) is come out since last two month..

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

03 August 2025 Here's a summary and guidance on your query regarding the wrongly stated "work certified" as "sales" and the related filings:

Issue:
Client (construction co.) wrongly recorded work certified as sales in FY 2012-13 contract account.

They want to correct this in FY 2013-14 after realizing the mistake.

The accounts, Income Tax Return (ITR), and ROC filings for FY 2012-13 are already done.

Auditor and directors did not identify this earlier.

Seeking correct procedure to revise this and auditor’s disclosures.

Suggested Procedure:
Accounting Treatment:

Pass rectification journal entries in current books (FY 2013-14) to move the amount from sales to work certified.

This corrects the ledger balances going forward without disturbing the already filed financial statements.

Income Tax Return Revision:

Since the Assessment Order u/s 143(1) is already issued, section 139(5) allows filing of a revised return only before completion of assessment.

Once assessment is complete, you cannot file a revised return unless:

You file an appeal against the assessment order, or

You file a rectification request u/s 154 for any mistake apparent from records.

Alternatively, disclose and adjust in the next year’s return if correction is immaterial.

ROC Filing:

ROC filings (Form 23AC/23ACA) cannot be revised.

Contact the Regional ROC office for guidance or write a letter explaining the situation.

Consider disclosing the error and rectification in the next Annual Return and Financial Statements.

Auditor’s Report:

Auditor should issue a qualified or explanatory paragraph if material.

Disclose nature of error, its impact, and that rectification entries have been passed in current year.

If correction is not material, an emphasis of matter paragraph may suffice.

Notes to Accounts:

Disclose the nature of the error.

State that the previous year’s figures were misstated and have been rectified by adjusting entries in the current year.

Mention any impact on financials, if material.

Summary of disclosures:
Auditor’s report: Notes about material prior period errors and how they are rectified.

Notes to accounts: Details of error and rectification.

Tax returns: Revised if possible; else disclose in next year or file rectification.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now