Payments exceeding >20,000- Re
This query is : Resolved
12 March 2008
Thanks everybody replying to my earlier query.
Yes in cash payments exceeding Rs.20,000/- technically/theoratically sec 40A(3) will apply where profit is calculated U/ss 44AD/ 44AE/ 44AF also. But how far it has teeth for an AO, as in such instances assesse can always claim that he has already taken such payments > 20,000, into account and while calculating the Profit and rate of Profit he/she has already adjusted the impact of non-allowable expenses u/s.40A(3).
CA Sampat Jain's reply/suggestion and citation[(CIT v. Banwari Lal Banshidhar [1998] 229 ITR 229 (All)] is also important.
Yes in cash payments exceeding Rs.20,000/- technically/theoratically sec 40A(3) will apply where profit is calculated U/ss 44AD/ 44AE/ 44AF also. But how far it has teeth for an AO, as in such instances assesse can always claim that he has already taken such payments > 20,000, into account and while calculating the Profit and rate of Profit he/she has already adjusted the impact of non-allowable expenses u/s.40A(3).
CA Sampat Jain's reply/suggestion and citation[(CIT v. Banwari Lal Banshidhar [1998] 229 ITR 229 (All)] is also important.
CA J M Pattanayak
(Expert)
12 March 2008
It is the responsibility of the CA who signs the Tax audit report. And once the books are taken up for scrutiny that time it will create problem for the auditor for non performing his duty and for the management for not reporting such payments.
12 March 2008
THERE IS NO TAX AUDIT REPORT UNLESS AND UNTIL ASSESSEE CLAIMS LOWER INCOME
12 March 2008
UNDER SEC 44AE/AD/AF,IF ASSESSEE OFFERS THE PROFIT % PRESCRIBED FOR TAX PURPOSES, NO NEED FOR TAX AUDIT REPORT.
IF AND WHEN LOWER INCOME IS CLAIMED, TAX AUDIT REPORT IS A REQUIREMENT,AND THE SAME WILL COME UNDER SCRUTINY OF A.O.
ONLY THEN CAN THE ARGUMENT OF CLIENT THAT IMPACT OF NON ALLOW, EXP. ALREADY CONSIDERED CAN BE VERIFIED.
R.V.RAO
IF AND WHEN LOWER INCOME IS CLAIMED, TAX AUDIT REPORT IS A REQUIREMENT,AND THE SAME WILL COME UNDER SCRUTINY OF A.O.
ONLY THEN CAN THE ARGUMENT OF CLIENT THAT IMPACT OF NON ALLOW, EXP. ALREADY CONSIDERED CAN BE VERIFIED.
R.V.RAO
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