accounting treatment, assesment of income declared on survey

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Querist : Anonymous

Querist : Anonymous (Querist)

07 July 2011 a survey was held in partnership firm engagged in transportation service.during the survey assesing officer declared an income of 400000 and asked to pay tax on the same income for the F.Y.2010-2011.now while finalising the audit report what should be the accounting treatment of income declared on survey.the auditor does not want give the impact on cash or other asset.please give ur valuable suggestion for this problem and suggest appropriate way to record the transaction.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 July 2011 Need not book the amount in subsequent years account. If it is accounted, penalty provisions under section 271(1)(c) will attract.

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Querist : Anonymous

Querist : Anonymous (Querist)

07 July 2011 but sir A.O. has asked to declare the income and same has been recorded in p&l and this is creating difference of 400000 in balance sheet and i would also like to mention that tax on above said income @ 30% has been paid.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 July 2011 Declaration is for assessment purpose. Need not book the declared amount for accounting purpose.

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Querist : Anonymous

Querist : Anonymous (Querist)

07 July 2011 that means sir we dont need to credit 400000(income declared on survey)in p&l or partners capital a/c and then it will not create difference in balance sheet... m i right sir ?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 July 2011 Yes that is what I mean.

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