How to show income in case of no bills record.

Internal Audit 500 views 1 replies

Hi there, I have a very small business of shoes and i have 7 employees to whom i pay 225000 two lac twenty five thousand every month, i borrow money from my relatives and friends and spend all the amount in promotion of shoes (still paying this much of amount in expections to make it a big brand) and the way i spend money is simple- i send my employees to do road show kinda things and to make them promote it through roadside canop (small counter on roadside) that is the reason i do not have any income proof, if any one from income tax department asks for this money then what should i say, and they will ask me to give them proper bills and others things to justify this spenditure, my relatives and friends do not allow me to disclose this to income tax department, can i tell them that i havent earn even a single penny till yet and spending by pl or some other way, plz help me by replying it plz plz. Thnx manoj but can i do it every month, like can i show them that i am receiving a gift every month, In addition to this My earnings are 15000*12= 180000.00 per annum and expenditures 225000*12= 2700000.00 per annum. In this situation can i show 8% presumtion profit, and if i do it how would i manage to show them the expenditures.

Replies (1)

 Dear Ziya 

Firstly i may advice  you to maintain proper bills or vouchers if you are filling your returns to Income tax dept. (Both for revenue as well as for expenditures)

Secondly you should plan everythng in a manner that your cash and bank should never show negative balances in books of accounts. 

As you wrote that you have taken money from relatives and utilised it for business promotion and you dnt want to show its effects in business So what you can do is ... 

Treat it as a Gift from your Five relative (each gifted you less than 50000/-) and just take its effect in your capital a/c in your books of a/c. Corresponding make entries for the Business promotion expenses in you profit and loss a/c.

I hope, it will help You :)


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