Case Study for my Client

Originally posted by : Radha
	One of my client lost  some bills /Salary  slips  for  2005  earnings   . Now his  case is picked  for scruitny in 2010 . Can he be  ordered to pay   for  2005   stuff  if he fails to produce  bills/salary slips for 2005  earnings ..

as the salary is supported by form 16, so no additional documents required when form 16 is submitted with return,  regarding other incomes, the same is added only, so its taxable whether documents produced or not. 

Actually ..He is an employer  not employee .. and he did not maintain  salary(paid) proof  for some of his employee . Now some employee  has left his organisation ..So the exact question is if case is fixed in 2010  and he fails to maintain /prove  expense  he did in 2005  (as income tax  might ask him to produce accounts for past six years). Will he have to pay tax/penality  for that earning .. OR scruitny notices are valid for only past year expenses

Thanks

Originally posted by : U S Sharma
	Originally posted by : Radha One of my client lost  some bills /Salary  slips  for  2005  earnings   . Now his  case is picked  for scruitny in 2010 . Can he be  ordered to pay   for  2005   stuff  if he fails to produce  bills/salary slips for 2005  earnings .. as the salary is supported by form 16, so no additional documents required when form 16 is submitted with return,  regarding other incomes, the same is added only, so its taxable whether documents produced or not.

2005 scrutiny is time barred. How come in your case it is still going on?

anyways he can show the proof of TDS deducted and remitted against the salary paid, and provide bank statements to substantiate the payment made.

as an employer he might have lost the registers, but the return was filed with P/L account and balance sheet, and for no of employees and their approximate payout, there are many alternatives, viz ESIC/Provident fund / Professional Tax on employees records, where from you can establish the same easily.