Income tax query

Question BankCategory: Income TaxIncome tax query
Kollipara sundaraiah asked 1 year ago

One of a sec 44ada professional income I.t. return filed assess income tax return filed in f.y.19-20.
But assess mistake cash loan to  wife bank account  transfer rs:3 lacs through on bank mode.if assess above transactions mistake gift transaction treatment in books and I.t. returns Rs:3 lacs capital account debited.assess balance sheet not uploaded in I.t return filed.
Assess above mistake transactions how to adjustment producer in f.y.2020-2021 or f.y.19-20.
2.assess how to adjustment accounting entries passed in books above transactions.

1 Answers
Aditya answered 1 year ago

Points from your question:-

  1. Assessee filed ITR for FY 19-20 as per section 44ADA being a professional.
  2. Assessee has given a loan of 3 lakh to his wife through bank transfer but this transaction is shown as gift in the books of accounts of assessee. 
  3. For the above transaction assessee debited capital account. But balance sheet is not filed in his ITR as ITR is filed as per provision of section 44ADA.

Now rectification of above transaction can be done as follows:-
First of all, rectify the accounting entry in your books of accounts by
Loans to Mrs. XYZ. Dr. 
To capital account 
If the money given to wife is gift and all income earned by wife by investing this money, is to be clubbed with income of husband as per provisions of income tax act. But this money is given as loan, hence no clubbing is required. (If your accounting software permits entry in back date and you have not filed your balance sheet with any authority then you can post this entry on 31-3-2020, but if your accounting software does not permit entry in past date or you have submitted your balance sheet with any other authority then this entry can be be posted in current date and add footnote the balance sheet of FY 19-20 about this)
Assessee has not filed balance sheet with ITR, ITR of FY 19-20 is filed as per provisions of section 44ADA, hence taxation is not affected being the sum given to wife is loan. Hence you need not revise your ITR. But if this transaction affect your income (due to clubbing done in FY 19-20) then you need to revise your ITR before 31-3-2021.
Please note that you may have to show to the AO the transaction is not a gift or sum given without consideration but it is a proper loan given for interest, otherwise income earned by wife from this sum of money will be clubbed with the income of assessee. 

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