Sec 44ab audit aspects

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 March 2017 Dear Seniors,
Assume if i have done the audit of
ABC Limited as per sec 44AB. One of the vendor of ABC limited is say ABZ trading company however as per vendor statement the DR balance is 70000 whereas as per the audited books of ABC limited the ABZ trading company CR balance is 3680. The management of ABC limited has accept that the vendor statement is correct. Pls clarify :- in such difference weather Income tax deptt. Can object or not.

In my opinion income tax varify the record of income and expenses Hence they may not object for mismatched balance?

Please share yours valuable inputs.

Regds
Subhi Goyal

CA DHAVAL MISTRY

CA DHAVAL MISTRY (Expert)
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13 March 2017 In case if the case is selected for scrutiny, income tax officer has power to call any information which he deems fit and feels that something is wrong with that transaction/balance/expenditure. ITO can ask you to provide the cross confirmation from the vendor/supplier. Even he has right to issue notice u/s 133 of the act, directly to the vendor/supplier and if the vendor/supplier provide the details which is not matching with records provided by you, in that case, you have to justify the reason of such difference to the satisfaction of ITO. In case if you fail to provide detail to the satisfaction of ITO, ITO can disallow any expenditure or add to the income as unexplained income. So, be careful before providing any wrong information. If there is difference in balance of vendor and supplier, in that case better to prepare a reconciliation statement showing the reason of differences with supporting evidences.

Querist : Anonymous

Querist : Anonymous (Querist)

14 March 2017 Dear Dhaval sir,
In the books of vendor if vendor has not
Consider the purchase. Hence income tax officer may not object on difference raising
due to not considering the purchase because the vendor has also not taken the
exemption of purchase in income tax.
Therefore vendor has to pay more tax