ENTRIES OF GOODS IN TRANSIT

Sir,

Mr X Sold the goods worth Rs 100000/- to Mr B on dt 29.03.2022 but Mr B did not received the goods till 10th Apr il-2022.

Now we have passed the Journal entries in Books as  on 31.03.2022 per detail given below

Goods in Transit Dr  - 100000/-

   To Mr X                                                100000/-

Now the question is this Our C  A  says this entry is wrong, but if we dont book the goods in transit how the balance will tallies as on 31.03.2022 if we get the notice from Income tax Depptt. and the balance does not tallies will deptt add the Rs,100000/- in profit.

My question is this if our case is choosen for scrutiny and balance does not tallies than can deptt make addition 

Replies (2)
Quick Summary
This discussion addresses the correct accounting treatment for goods sold but not yet received by the buyer as of the financial year-end. The user has booked a 'Goods in Transit' entry, but their CA deems it incorrect. The core concern is how to reconcile year-end balances and avoid potential additions to profit by the tax department during scrutiny if the goods aren't accounted for properly.

What alternative your CA suggests, for the goods which you are going to get payment for?

 

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