Unrecorded stock

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147 Points Posted on 05 December 2020
please experts advice me in below situation:

1. i am filing my return u/s 44ad
2. my stock as on 31.03.2019 was Rs. 10 lakhs as per book and itr ( not preparing account stock wise)
3. now during year i came to know that due to software errors my stock was wrongly shown as Rs. 10 lakhs but actual it was Rs. 15 lakhs as in 01.05.2019.
4. my itr for f.y. 2019-20 is pending,

how to book closing stock with Rs. 15 lakhs and if i do so my profit in book will increase but i m filing return u/s 44ad , if i do so my income as per PNL and itr will not match and if i do so whether it can be valid .?

kindly help me in this critical situation.
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On 05 December 2020 at 22:46 Report
Replies (7)
Quick Summary
A user discovered their closing stock for FY 2018-19 was undervalued by £5 lakhs due to a software error. They filed their return under Section 44AD and are now unsure how to correct this error in their FY 2019-20 return without impacting their previous filing. Experts advise rectifying the accounting error first, suggesting adjustments to purchases or a journal entry in the current year, though revising the prior year's return is also mentioned as the most authentic solution.

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My grammar is 💯 good I
7306 Points Posted on 06 December 2020

I understand your tax concern, but the accounting concerns advises faithful representation of all transactions. So, it is mandatory that one has to rectify errors first and deal with tax consequences later. 

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On 06 December 2020 at 11:05
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147 Points Posted on 06 December 2020
Thank you for your kind reply
but how to add stock in this f.y 2019-20
i m maintaining account without inventory and whether can do as by debiting purchase
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On 06 December 2020 at 11:15
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My grammar is 💯 good I
7306 Points Posted on 06 December 2020

Hi if your using a book keeping software, it is difficult to explain because sometimes, adjustment journals will be raised in different ways for different software's eg., tally vs oracle Etc. Purchases are debited, your correct, and increasing the value in purchases book along with tax or passing a adjustment journal will do the job. 

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On 06 December 2020 at 12:15
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147 Points Posted on 06 December 2020
Thank you very much
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On 06 December 2020 at 13:19
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118 Points Posted on 09 December 2020
Do u mean to say u need to change stock value in FY 18-19???
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On 09 December 2020 at 08:57
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147 Points Posted on 09 December 2020
Actually yes but i cant be possible now so effect is to be given in f.y. 2019-20.
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On 09 December 2020 at 08:59
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118 Points Posted on 11 December 2020
Best and authentic way is to revise ur 18-19 return
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On 11 December 2020 at 10:29

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