I have an one doubt regarding the accounting entry, the case is as follow,
In the income tax survey in manufacturing concern.. they have found followings:- 1. unexplained cash found Rs. 9,50,000/- 2. Under valuation of Finished good closing stock Rs. 1,50,000/-
My query is what is the accounting treatment for above two cases..
09 April 2012
(1) This discrepancy arises due to difference in physical cash available and balance as per Books of Accounts. Excess cash may be due to cash sales yet to be recorded, assessee’s personal money lying in business premises, recovery from debtors, advances received or other receipts remaining to be recorded for the past few days, money received for safe keeping. Generally such excess cash, being unexplained, is treated as additional income. (2)One needs to consider the accounting treatment of such excess stock, implications of provisions of section 40A(3) as such excess stock could represent purchases in cash out of undisclosed income and implications of section 69C with regard to disallowance of unexplained expenditure. Reasons for excess stock may be due to calculation of lower GP rate than as per records, certain purchases for which deliveries are received but bills are not received, certain sales are made but delivery is not dispatched. Certain materials received for job work or on sale or return basis, Certain stock which is obsolete which may be overvalued by the authorities, goods received on consignment, difference in valuation.
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