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Arpit Pachisia (CA)     09 January 2014

Income tax

sir,

one of my client in my office during FY 11-12 having CC limit from industrialised bank for Rs 150 lacs. my client purchase goods against this limit from his suppliers worth Rs 100 lacs. the goods supplied by the suppliers was totally spoiled/ cannot be used, just to show the banker he sold the goods to different parties and debited their accounts by issuing debit bills. since the goods are totally spoiled and all debtors were fake debtors, for sometimes the bank was satisfied as debtors were standing in the books of accounts, infact their was no debtors.in the mean time his file was in scrutiny in the income tax depatrment. now i wish to ask you whether the A.O can make addition of these debtors while finalising the scrutiny assessment.



 1 Replies

Mihir

Mihir (Wealth Manager)     09 January 2014

Supplying material worth 100 lacs will be decided on the basis of a contract. Why did the company did not take action against the supplier for delivering spoiled material ?  

In case the AO demands confirmation from these fake debtors, then the company could get into a big problem. And even the bank will probably won't keep quiet after discovering about these fake debtors in your balance sheet. 


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