There are no specific Sections Dealing with Prior Period Items, either as Allowable (Sec 30 to 37) or as Disallowed (Sec 40, 40A)
Except Sec 37 in all the other sections Allowable expenses are clearly defined and same in Sec 40, 40A, 43B everything clearly defined of what to Disallow. Exhaustive we can say
If we wish to take Sec 37 shelter, there also in order to claim the expenses should be incurred during the year and it should be pertain to current previous year
Even Sec 41 Deemed profits chargeable to tax also does not talk about unrecorded incomes of erliar years
So, in my view if we go for strict interpretation of Law the only option available for us is to revise the return of erliar years. I have enough grounds to proove this
Say for example I forgot to show My Interest income in Last year return (FY 10-11) and my total income excluding Interest is 1, 55,000 and my Interest income 25,000, so accordingly I paid nothing towards tax as below exemption limit (1,60,000)
As I'm one of the true taxpayer in India, now I decided to show the Interest earned last year in this year return.
This year also I got 1,55,000 other income and Last year interest 25,000, so on total 1,80,000 I'm ready to pay tax. To my luck exemption limit increased to 1,80,000 for male buddies this year, so No tax
Do you agree with above ??
So, you have to Revise the return for errors and omissions though shown as prior period Items. As tax laws are changed every year which may benefit either Assessee or Dept
But you can consider the materiality Concept here, if the amounts are too small (depends on your transactions) you can consider the same in current year, no body is there to oppose you. I do the same for a few of my companies.