Penalty u/s 271(1)(c)

 

The Assessee incurred repairs & maintenance expense of Rs. 120000 in 2004-05 & 2005-06 totaling Rs. 240000. By mistake he does not debit the expenses in P/L, rather debits the party’s A/c. In 2006-07 he realizes his mistake & corrects the same.
The AO says that u have concealed your income & I will levy penalty u/s 271(1)(c) 300%.
 
N.B.: Please also give relevant case laws in the reply.
Replies (1)

well the AO is right , if hes assessing 2006-07 . if you had realised your mistake , i think returns for previous years should be revised . you cannot debit a prior period expense in current year .

That amount was lying as an advance paid in a party's a/c . it cannot be written off as repairs suddenly after realising the mistake in the current year .

i think praying for penalty is the best option or revise your return (06-07) since the assessment is not over and resubmit that as bad debts instead of repairs . the burden to prove that its not bad debts would lie on the AO . It can be vaguely claimed as bad debts cos the money is not recoverable .

please remember that ignorance of accounting entries / transcations can never be an excuse for law followers.

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