Hello Friends,
I have a query regarding Income Tax. I filed a Income Tax return of Partnership Firm for the AY 2011-12 on 01/08/2011 (on due date, as 31st July 2011 was a Sunday) . The firm is not under Tax Audit. I revised the return on 23/03/2012. Later I received a notice dated 23/01/2013 under section 143(1) which shows a demand of Rs. 8 Lacs. In the AY 2011-12 the firm has losses of 35 lacs. On scrutiny of the case, I found that my assistant made 2 mistakes in filing the return.
Firstly, the turnover of the firm is 18 lacs, and thus is liable to maintain the books of accounts. But the return shows that they are not liable to maintain books of accounts (U/s 44AA).
Secondly, the Schedule BP of ITR V is as Follow
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A. Profit And Gains of Business & Profession. 1. Profit Before Tax -3500000 2. NP from Speculative Business 0 3. Inc./receipts considered under any other head 0 4. Profit or Loss included in (1), which is referred to in sec. 44AD/44AE/44AF/44BB ) -3500000 5. Income credited to Pnl account (Exempt) 0 6. Balance (1-2-3-4-5) 0 7. Expenses Debited to Pnl A/c (of any other head) 0 8. Expenses Debited to Pnl A/c (of Exempt Income) 0 9. Total (7+8) 0 10. Adjusted Profit or Loss (6+9) 0 11. Depreciation Debited to Pnl account included in 9 2300000 12. Dep. Allowable under Inc. Tax Act 2300000 13. Profit and loss after Adjustment of Dep. 0 |
Now, as in point No. 4 it resembles that the loss of Rs 35 lacs is under sec 44AD/44AE…… (Though it is not possible), and in point 11 it says dep. Of Rs 23lacs is debited to the same and As per the act dep. is not allowed as an expense in sec 44AD/44AE…… The department has taken Rs 23 lacs income (Disallowed Expense considered as Income) and computed the tax liability of Rs 8 lacs accordingly.
It is very clear that the tax liability does not exist, but what is the remedy available for us. We cannot revise the return U/s 139(5) nor can we file 154 (because it is not a mistake apparent from record).
What is the option available?
How can we rectify this!!!!
CAclubindia
