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Sir, can net profit of business man can be shown 1%?

Ashim kr Ray (social service) (1685 Points)

23 June 2017

Sir, Can net profit of businessman can be shown 1% or below in Audit file.Dealing in recharge card distributor.

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CA Hariprasad Nayak (Chartered Accountant) (221 Points)
Replied 23 June 2017

Absolutely Yes! Why not? As long as the books are maintained and audited, there is no bar in declaring a low profit; even a loss. However, if the client has transactions majorly with the related parties, there might be further scrutiny- especially by the Income tax department.

Regards,

CA Hariprasad Nayak

+91 9481 227 467

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Ashim kr Ray (social service) (1685 Points)
Replied 23 June 2017

Sir, chances of scrutiny is there means.

CA Hariprasad Nayak (Chartered Accountant) (221 Points)
Replied 23 June 2017

Scrutiny assessment is based on the parameters/ criteria CBDT sets for every year (known as CASS reasons). Generally high refunds, higher loss, high transactions with related parties are the reasons for the scrutiny so far (for earlier years). I do not know if the trend is here to stay or not.