|Question And Answer|
|Subject:||IMPLICATION OF DIFFRENCE IN CERTIFICATE OF STOCK|
|Answered by:||Advocate Shashi Ashok Bekal|
|Tags:||difference in certificate, Rejection of books of account|
|Date:||September 23, 2022|
Assessee is company engaged in the business of infrastructure development. The company is enjoying the credit facilities from the Bank against stock and debtors. on the basis of unaudited books of accounts the auditors of the company have provided the certificate about the Stock, Debtors and Sale as on 31st march . Said certificate is given by generating UDIN on 11th April . After audit it is found that the amount of stock which was given to the Bank on 11 th April was incorrect was much less than actual stock. The management and internal auditor has given the explanation that WIP of one project was remained to be consider in certificate issued on 11 th April (which was on the basis of unaudited books of accounts) . Statutory Auditor has given the said explanation in his report (CARO)under Companies Act 2013. Due to this error the net profit of the co is increased substantially. Assessing officer has issued a showcase on the ground of this reason that books of accounts are not genuine by resorting to provisions of sec. 145(3) as estimating the net profit of the company by applying 10% of sale as against the net profit of 2.33% disclosed by the co and also intimating the ICAI for taking the action against the Auditor who has given two certificates as on 31st March one on the basis of unaudited books and another on the basis of audited books of accounts . Is the action of AO is justified and what is remedy with assessee co .
Merely because books of accounts have been rejected by the Ld. AO, it does not allow the Ld. AO to calculate profits on adhoc basis, the same has to be reasonable. The Assesse will have to demonstrate the correctness of their net profits before the higher authorities. Proceedings with ICAI are separate from assessment proceedings. The ICAI has to follow the due process of law , merely on the basis of information form the AO the ICAI may not take action the Auditor
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