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Does assessee coming under tax audit

Renuka (Accountant) (107 Points)

20 January 2014

Hi,

There is a contractor who’s turnover is 95 lakhs according his Bank statement & Sales bills for A.Y.13-14, but according to his 26AS it is crossed 1.13 crore, that because some builders have paid TDS to him without any bill.

As per information available he has filled all his previous returns on time according to sales,

He has already filled his original and then revised his return for A.Y.13-14 (Revised for More Profit)

My question is, does the assessee required to do tax audit for said A.Y?

Your valuable suggestions are highly appreciated.

Regards

Renu

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4 Replies

Amit Agrawal (Chartered Accountant) (75 Points)
Replied 20 January 2014

Audit was Compulsory . The assessee may now face penalty for concealment of income also in addition to penalty for not getting books of accounts audited.

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yes, audit was compulsory. As because given turnover as per sec. 26A is crossed rs. 1 crore. Therefore, assessee may be liable for penalty upto rs. 150000

CA. Praveen (Chartered Accountant) (119 Points)
Replied 21 January 2014

Hi Renu,

We follow accrual system of accouting so looking out of bank statement has no relevance.

W.r.t Form 26AS, if your client has taken credit of TDS then he is legal bound to have tax audit (since it will become part.

As you mentioned, your client has filed his ROI due in time he can revise the ROI any number before expiry of 2 years from the end of FY or before completion of Assessment (Earliest among two above).

Penalty will be levied u/s 271B, However on interpretation of this section we can conclude as;

Its discretionary power upon Assessing Officer to impose penalty, as the word used
in the section is 'may' .

Besides above, section 273B provides that notwithstaning anything contained in section 271B no penalty shall be imposed on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there "was reasonable cause" for the said failure.

So Penal provision u/s 271B is not automatic. Therefore i belive you can substatiate the AO with your valid reason.

Dont be worry, go ahead with tax audit procedure.

Seniors are pleased to comment.

Renuka (Accountant) (107 Points)
Replied 22 January 2014

Thanks for your early and valuable inputs,

As I have discussed this matter with one of our senior most advocate (he is academically CA,CS,CWA LLM & MBA Finance & Practicing as Tax Advocate/Consultant since 20 years) according to him, still the assessee can revised his return as per his books of accounts, if there is more TDS on his 26AS and there is no proof of the bill/payment issued/received by him then he can directly approach those people/company who all are issued/paid TDS to him for correction.

He can do Tax Audit,

When he is confirmed there is no such transavctions over the period on which he as received excess TDS, then he can simply write a letter to his ITO stating all detail and it will be taken care by the department.

Or he can file his revised return without audit, as he has not crossed the bracket.

I need your inputs on this.