Ao asking to provide balance sheet anf p&l account when assessee did not maintained books

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Santosh Nalawade (Querist)
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31 December 2015 my client was trading sand. his turnover is 23 lakhs. but he did not maintained books. Can AO ask for balance sheet even sec 44ad is applicable to assessee. what should I do, provide tentitive balance sheet or not..? please guide.

Ankur Singhal

Ankur Singhal (Expert)
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31 December 2015 NO need to provide the tentative balance sheet and P&L.
reply him that the assessee has opted section 44AD hence no books of accounts maintained.
When you reply the same, the AO will ask for the justification of the sales/turnover disclosed.

Santosh Nalawade

Santosh Nalawade (Querist)
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31 December 2015 OK. I replied him that books are not maintained and assessee is covered under sec. 44 ad. but he is demanding bank statement and balance sheet. what should I do. is it proper to provide bank account or not.

Ankur Singhal

Ankur Singhal (Expert)
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31 December 2015 As I mentioned you above he will demand the proofs for the justification of the turnover.
The bank account entries on receipt side will form turnover, you should check it out.
Also he may demand the sale bills.
If he wants the balance sheet, then ask him that you can provide him the tentative balance sheet only.

Santosh Nalawade

Santosh Nalawade (Querist)
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31 December 2015 ok sir. shall I mention the word "tentative" on the face of balance sheet. Because I think he will ask justification for capital amount on the basis of that balance sheet. then it will be difficult to provide details for capital account balance

Ankur Singhal

Ankur Singhal (Expert)
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31 December 2015 Dear
I think in your case the client was doing business from his saving bank account.and the saving bank account represents transaction above Rs.10 lakhs.

Ankur Singhal

Ankur Singhal (Expert)
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31 December 2015 Provide him balance sheet at last till then try to persue him not to demand balance sheet.

Santosh Nalawade

Santosh Nalawade (Querist)
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31 December 2015 yes. he was doing business transactions from saving bank account.

Ankur Singhal

Ankur Singhal (Expert)
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31 December 2015 Yes then only you get the income tax notice
In this now you have to justify your transactions in saving account.

Ankur Singhal

Ankur Singhal (Expert)
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31 December 2015 Also recommend your client to not to do such practice again.

Santosh Nalawade

Santosh Nalawade (Querist)
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31 December 2015 ok. is it possible for ao to ask justification for other items in tentative balance sheet e.g. capital, trade receivables etc??? please clarify

Ankur Singhal

Ankur Singhal (Expert)
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31 December 2015 No No
He will ask only for turnover justification only.

Santosh Nalawade

Santosh Nalawade (Querist)
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31 December 2015 ok. thank you ankur sir.

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