Need assistance

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PRITI

ACCOUNTANT

24 Points Joined January 2011

With regard to srcrutiny assessment,08-09, ITO want the clarification and verfivation of the opening balaces of the sundry creditors and liability of job workers. Since factory of client was set on fire in year which scrutiny asst was on. and no records are available. client have given complete verfication from party in respect to creditors and only job workers amounting 117910 could not be verified since all of them was small below job workers which could not be verfied due to poor address and partculars

ITO have passed order stataing that opening balances OF JOB WORKERS are bogus and added to income and tax demand of4.35 lakh. kindly assist me finding case laws wrt verfication of opening balances are not within power of ITO. site some case law please.

Replies (3)

CA Sandeep Kumar

Audit Assistant

804 Points Joined May 2009

Why does ITO need opening balances? You would have filed previous year return right? it will contain closing balances, which is opening balance of current year, so even if u prevent him, he can get it from IT records.

kishore choudhury

article asst.

114 Points Joined November 2008

I am accepting with the reply given by Mr.Sunny.

ITO is only having the powers to ask for checking the Opening Balance with Books of accounts,if he is having any doubt on the books of accounts of the client,he cannot ask for only checking the opening balance as in the previous year return he can check the balance.

Here in the case given by you ,if the ITO is asking for checking only opening balance than you can give himn a request to veriufy the last year books of accounts.if he wants to check the opening balnces withe earlier records that u have to prepare the memorandum books of accounts and submitt it to the ITO with reason,why ur submitting this memorandum books of accounts .

if ur having any arguements regarding this,please Reply.

Thanks

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

Originally posted by : PRITI
	an assessee's factory is set on fire. ITO wants to verify the opening balances. suggest some case laws in favour of assesssee ahat ITO has no such powers