31 July 2007
If one exaggerates his profit by appreciating the closing stock value, Does it amount to any contravention of Income Tax Act and if the case would come under scrutiny, what is the maximum consequence of it ? Whether any justification can be given.
31 July 2007
There is no loss to the department as such.. if it comes for scrutiny and if he wants to value it in proper way.. he can assess and give a refund u/s 143(3). Since there is no loss to the government i think there will not be any consequence against the Assessee.
But one thing If you strictly read the provisions, Over valuation is also a contravention, even though it is generating more revenue to dept.
But, If A.O scrutinises in such a way that there is some fraud involved.(Bcoz window dressing amounts to fraud and it's needed to be avoided as per AAS4)
So, If you read the provisions carefully, I think, there is some scope for penalzing.
01 August 2007
Exaggeration of closing stock in one year means overvalution of opening stock in next year .To that extent there is concealment of income in the next year .Penalty for concealment may come in the next year .
CAclubindia
