For audit

Others 315 views 2 replies

SUBHASH MISHRA

ADVOCATE

101 Points Posted on 04 August 2016

Respected Sir, One of my client is a broker (Adhatiya) and deals in Onion and other agricultural products. He was purchasing products from farmers and selling it to fruits and vegetable merchants on same rates therefore there is no any gross profit or loss during the year. Beside this he was charging 6% commission, Mandi tax and coolie charges from buyers. Mandi tax and coolie charges were paid with same amount. As total sales / turnover for F.Y. 2014-15 is 4,24,98,000/- and return was flied without getting books audited. Now case is opened for complete scrutiny. Now my questions are as under – 1. When the assessee is not getting any profit except his commission, then whether he should be treated as Kuccha Aadhatia or Pakka Aadhatia ? 2. Assessee was liable for audit of his books of accounts ? If no, then any clarification is available by the CBDT or Department or any case law available. Please guide me.

Replies (2)

kanagaraj

CHARTERED ACCOUNTANT

793 Points Posted on 05 August 2016

SINCE SECTION 44 AB STATES IF THE GROSS RECEIPTS EXCEEDS CERTAIN LIMIT THE ACCOUNTS NEEDS TO BE AUDITED. SINCE YOUR GROSS RECEIPTS ARE >1 CRORE YOUR ACCOUNTS OUGHT TO BE AUDITED OTHERWISE PENAL PROVISONS ATTRACT

Shubham Gupta

Business Consultants

2077 Points Posted on 05 August 2016

first you should not have shown income from trading , but should have shown commission income since client is goint agent job and is not charging any margin during sale.(considering no invoice was raised to buyer other than commission charges)

During your scrutiny proceding you can state that you have shown actual profit only , and income was shown from trading in place of to be shown under commission income.And it was an honest mistake and request to drop penalty.