One of my clients hai reported bank guarantee under head of 21 g of 3cd report which related to contingent liabilities
We have received notice under section 143(1)
Department raised demand of tax
As department included the bank guarantee in profit and loss account
Calculated tax
Summary: A bank guarantee is a contingent liability, not income. The tax department’s demand likely stems from a technical error where they mistakenly treated the disclosure in Clause 21(g) of the tax audit report as taxable income. You should file a rectification request under Section 154 clarifying that this was a disclosure of a liability and not a P&L credit.
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