Tax Audit

This query is : Resolved

Ajay (Querist)
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03 September 2010 if a person (Say X) is running a branch of a company (Say Levis)
1. as per Agreement Company will provide stock, and billing is done on Online basis.
2. as per agreement its Consignment Sale
3. Mr.X is registed in Sale Tax Dept.
4. Mr.X only receive Commission on sale and interest on deposit.

5. Now if sale Exceed 40 (or 60)Lakh..
is Mr.X is liable to Tax Audit.

it may be noted that.
1.It is consignment Sale as per Agreement and Mr.X is Selling as per Sale Tax
2. But There in no Purchase as such. nor even Closing Stock

Do Reply with provisions

Ravi Shankar

Ravi Shankar (Expert)
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04 September 2010 In my opinion, Mr X is not required to get his books of account audited u/s 44-AB as the sales are actually captured in the books of the Principal.
Mr. X is registered with the Sales Tax Department since that Act includes an agent also in the definition of a 'dealer'. i.e., the agent here complies with the sales tax law as an agent of his principal.
Further, as the invoices are raised online (I presume that the portal where the agent registers the sales belongs to the principal, as you query is silent in that regard), you have a strong case in your favour!
The agent can merely show his commission based on the TDS certificate from the principal and file his IT return.

Maninder Jain

Maninder Jain (Expert)
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11 September 2010 Under the sales of goods Act, the sales done by consignee on behalf of consigner is considered as sales of Consigned.

So the Tax audit on consignee is not applicable UNLESS his commision income exceeds 40(or 60) lacs

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