TMI BlogAddition of unaccounted supplies in the ReturnsX X X X Extracts X X X X X X X X Extracts X X X X ..... My client s POB was visited by DGGI staff. After the search is over they asked to pay 5 lakh towards unaccounted sales/supplies verbally and accordingly DRC-03 was filed. Though this is all without authority of law the dealer do not want to contest any litigation neither apply for refund. We have also received closer report from the DGGI office on the basis of voluntary payments. How to show this turnover in GST returns? As tax is already paid through DRC-03 how to offset the additional liability? How to show all this in GSTR-9 and 9C ? Can we file returns with regular turnover as per books without adding this turnover as this is fictitious turnover? We have not incorporated this turnover in books of accounts. - Reply By Sadanand Bulbule - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Reply = Dear Sir Admittedly Rs. 5 Lakh tax is paid happily on the fictitious turnover!! What was the urgency to get the case closed? Is your client not hiding the full truth? It is a case of lose small for the big . Personally I feel, this is not in good taste both on your client and the concerned authority as well. It is smelling odour. So I refrain from further comments. - Reply By Ganeshan Kalyani - The Reply = If you show this income in GST return then auditor will ask for the entries in the books of account. And if you account it in books then Income tax will be payable. In my view, since you accept the findings of the DGGI you have show it in books and offer the turnover for income tax as well. GST is already paid by you. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this turnover is not identifiable I guess so it will be shown as B2C. Recipient won't be able to take ITC. Consider the above points and take decision wisely. - Reply By KASTURI SETHI - The Reply = Sh. Rajan Atrawalker Ji, I agree with the views of Sh. Sadanand Bulbule, Sir in all respects. I further opine as under :- (i) Tax stands paid. It is already on the records of the department. (ii) Voluntary payment of tax on such turnover implies that your client has admitted the evasion of GST. (iii) You cannot term this transaction as fictitious turnover now , especially, keeping in view of confession of the evasion of tax. (iv) The entries of this turnover and payment of tax are to be made in the books of account. There is no other way-out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (v) These figures are to be shown in all the GST returns otherwise there will be mismatch of figures . (vi) The period involved is missing in your query. - Reply By KASTURI SETHI - The Reply = How to show entries in the books of accounts and all GST returns is a cake walk for Chartered Accountant. So it is better to consult C.A. with all facts and docs. - Reply By Shilpi Jain - The Reply = Please also note that accepting this turnover now would lead to initiation of proceedings under Income tax as well. So paying 5L is not the end of all. It maybe the beginning of future misery. Suggest that you approach a good consultant with all truthful facts and then see what could be the way out - Reply By KASTURI SETHI - The Reply = (i) Income Tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd penalty leviable under the Income Tax Act have to be paid. It is better to pay due Income Tax and imposable penalty on his own i.e. without any letter or notice from the Income Tax Department. (ii) Now the party cannot withdraw his statement recorded by the DGGI Officers. - Reply By Padmanathan Kollengode - The Reply = Consider this as purely for academic purpose discussion: A. From income tax point of view: If this so called fictitious turnover on which he has now paid tax is brought into books of accounts he tends to: 1. Have source for the same (business income) and does not run risk of getting taxed under section 115BBE as undisclosed income. 2. Claim expenditure (if any) against the said Turnover or pay tax on profit at % (in case h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is under 44AD ). Otherwise, the chances of entire turnover getting taxed is high, which will have to be litigated. 3. Chances saving himself in penal proceeding is also more. B. From GST point of view : In my considerate view, if you are liable to GSTR-9C , show this as unreconciled turnover and give details of DRC in the column for reasons If you are liable to only GSTR-9 , show it in table 4 and there will be difference in table 9. In case of any query being raised in future, give suitable explanation. This is assuming that the period shown in DRC-03 is 23-24. In case, it is past period, one needs to relook the strategies. - Reply By Rajan Atrawalkar - The Reply = Yes, I want to show the turnover in the books of accounts, the question i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s how? If I add it in books of accounts, then I will have to include it in GSTR-3B then how can I offset it against DRC-03 ? It cannot be, and I have to offset it again from cash or credit ledger means paying double tax. In another case of my client, recently, his goods vehicle was intercepted by GST officials. They asked to deposit tax at Rs. 8000 through DRC-03 towards some undervaluation or such other reasons. Now the client cannot run to the location of the vehicle and argue with the officer. So, to buy peace of mind , dealer pays such tax. Now, the turnover is already in the regular books of accounts of which tax invoices are issued. Now while filing current return he will have to offset all his tax payable again through cash/ credit l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edgers. Dealer says, he will not pay tax again on those sales/ supplies for which he has paid through DRC-03 . Tax recovered on supplies by GST officials through DRC-03 is a big dilemma for the tax practitioners. Any solutions? - Reply By Padmanathan Kollengode - The Reply = Regarding your original query, what is the period for which DGGI has probed and which is the period entered in DRC-03 ? - Reply By Rajan Atrawalkar - The Reply = Padmanathan Kollengode , the period is ending March 2024. The turnover can be added in current period till November. - Reply By Padmanathan Kollengode - The Reply = Rajan Atrawalkar Sir, You can include the said Turnover in books of 23-24. The turnover need not be reported in GSTR-1 or GSTR-3B again. There will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a difference between the Turnover as per accounts and Turnover as per the GSTR-3B / GSTR-9 . This reconciliation difference maybe disclosed in GSTR-9C as being payment through DRC-03 . - Reply By Rajan Atrawalkar - The Reply = Thanks Padmanathan Kollengode for perfect solution to the problem. I appreciate your depth of knowledge in the subject. - Reply By KASTURI SETHI - The Reply = Sh.Padmanathan Kollengode Ji, The solution of the problem by you up to the querist's satisfaction is really highly appreciable. It is attributed to your insight, talent and hard work. - Addition of unaccounted supplies in the Returns - Query Started By: - Rajan Atrawalkar Dated:- 2-5-2024 Last Replied Date:- 7-5-2024 Goods and Services Tax - GST - Got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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