Sumit (Director) (30 Points)
16 December 2010Auditor has by mistake not mentioned payments to related persons in his Audit Report.
Assessing oficer has questioned assessee why these amounts should be added back to his income on this ground?
Is assessee responsible and liable to pay tax for such mistake in audit report? Genuineness of payments is not questioned by AO.
Max Payne
(employed)
(2574 Points)
Replied 17 December 2010
Hi
In audit report, disclosure of payments to parties covered u/s 40A(2) is required.
It is actually AO's discretion whether to disallow any expenditure which he feels as excess or disproportionate during the regular assessment.
To be on the safer side, we disallow the payments during our self assessment.
So just explain that to AO that voluntarily you have offered the payments as income, please make the deletion if the disallowance is not required.
But query will come why the auditor did not disclose these payments in his report. Hope that the same has been disclosed adequately in the financial statements and books of account.
CAclubindia
