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133(6)

GAURAV AGARWAL (CA FINAL) (76 Points)

22 September 2009

hey guys ,one of my client has been called by an AO ,whereby he asked him to give details about his sundry creditors so that AO can cross verify it with the same creditors u/s 133(6).So as the creditors are fake my client is not willing to give the details of the same.So my query is,how to save my client from this condition.

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2 Replies

Sunil (Trader) (2611 Points)
Replied 22 September 2009

Has your client categorically told you that the creditors are cooked up. If you have audited the books, how come you have not taken balance confirmations at time of auditing?

Now you give the list to the AO and if he is not able to verify them face an addition to the income. I think amount is large as AOs normally ask you to give list with addresses of those with whom you have done transactions beyond a certain amount both sales and purchases.

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Rajeev (www.rkmco.com) (985 Points)
Replied 28 September 2009

i believe 133(6) can only be exercised by taking a prior approval from the commissioner or by the commissioner himself , if no proceedings are pending ., if proceedings are pending AO can issue summons u/s 133(6)

Anyways , information should be provided by you , otherwise it will be a malafide intent . Explain the client the consequences .

sec 132 is sumwhat similar in terms of applicability to sec 147 , and 133(6) is sumwhat similar in terms of applicability to sec 148 .

It should be noted that to prove that your intention is bonafide , information should be provided as asked . Dont sign any documents ( covering letters etc ) in response to summons u/s 133(6) , ask your client to sign it and make him explain all the relevant provisions .

I hope your notes in tax audit report includes that "closing balance of creditors cannot be confirmed as the ......"

Any non submission or wrong submission may lead to sec 272(A) (penalty ), sec 277 ( prosecution ) ..so think twice before you challenge his summons , obviously since this procedure is quasi judicial , show cause will be issued prior to that .