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📌 Powers of AO under Section 145(3), Income Tax Act, 1961 , Reject Books of Account If , unverifiable or bogus expenses

powers of the Assessing Officer (AO) under Section 145(3) of the Income Tax Act, 1961 in a clear way. 📌 Powers of AO under Section 145(3), Income Tax Act, 1961 1. Scope of Section 145 Section 145(1): Income chargeable under “Profits & Gains of Business/Profession” or “Income from Other Sources” shall be computed in accordance with: Cash or Mercantile system of accounting regularly employed by the assessee , and ICDS (Income Computation & Disclosure Standards) notified by CBDT. Section 145(2): CBDT can notify accounting standards for compliance. Section 145(3): If AO is not satisfied with the correctness/completeness of accounts, or with accounting method/standards, he may reject the books . 2. Powers Vested in AO u/s 145(3) The AO has the power to: a. Examine Books of Account Scrutinize purchase/sale invoices, stock register, vouchers, ledgers, bank statements. Verify compliance with notified accounting standards (ICDS). b. Reject Boo...
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safely discharge the burden of proof under Income Tax & GST laws.

comprehensive checklist that a small/medium business in India should maintain to safely discharge the burden of proof under Income Tax & GST laws . The department does not have to prove that the expense is false — it’s the assessee who must prove that it is genuine . ⚖️ Judicial Support CIT v. Calcutta Agency Ltd. (1951) – The Supreme Court held that the onus is on the assessee to prove the claim of expenditure. 📑 Checklist of Documents to Justify Expenses 1. Purchases & Raw Materials Tax Invoices from suppliers (with GSTIN, HSN/SAC, description). E-way bills for movement of goods (if applicable). Goods receipt notes, delivery challans. Payment proof → bank transfer/cheque/UPI records. Supplier agreements / purchase orders. 2. Sales & Revenue Sales tax invoices with GSTIN. E-way bills for dispatch. Customer agreements / work orders. Proof of receipt of payment (bank statement, UPI, etc.). 3. Labour & Wages Wage regist...
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partner remuneration under the Indian Income Tax Act for Assessment Year (AY) 2026-27, i.e., the financial year 2025-26:

partner remuneration under the Indian Income Tax Act for Assessment Year (AY) 2026-27 , i.e., the financial year 2025-26: 1. Remuneration Limits Under Section 40(b) – New Higher Ceiling Effective April 1, 2025 (FY 2025-26; applicable for AY 2026-27): The allowable deduction for remuneration paid to working partners has doubled . Revised limits under Section 40(b) : On the first ₹6,00,000 of book profit (or in case of loss): higher of ₹3,00,000 or 90% of book profit. On the rest of the book profit : 60% of book profit. Previously , this limit was: On the first ₹3,00,000: ₹1,50,000 or 90% of book profit (whichever higher) On the balance: 60% of book profit. 2. Introduction of Section 194T – Mandatory TDS on Partner Payments Also effective April 1, 2025 : A new section, Section 194T , mandates 10% TDS on payments to partners when total annual payments exceed ₹20,000 . Applies to payments like salary/remuneration, commission, bonus, interest . ...
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തൃശൂരിലെ ആവർത്തിച്ചുള്ള റെയ്ഡുകളും നേരത്തെ നടന്ന ഓപ്പറേഷൻ ടോറെ ഡെൽ ഓറോയും (ഒക്ടോബർ 2024) ഒരു പാറ്റേണിനെ സൂചിപ്പിക്കുന്നുവെന്ന് ജിഎസ്ടി ഉദ്യോഗസ്ഥർ ഊന്നിപ്പറയുന്നു:

  തൃശൂർ ജ്വല്ലറി ഹബ്ബിൽ നടന്ന റെയ്ഡുകൾ ജിഎസ്ടി ഒഴിവാക്കലിൻ്റെ അപകടസാധ്യതകളും സുരക്ഷാ രീതികളും ഉയർത്തിക്കാട്ടുന്നു. തൃശൂർ, കേരളം – ഓഗസ്റ്റ് 2025: കേരളത്തിന്റെ സ്വർണ്ണ തലസ്ഥാനം എന്നറിയപ്പെടുന്ന തൃശൂർ, 16 ആഭരണ വ്യാപാരികളുമായി ബന്ധപ്പെട്ട 42 സ്ഥലങ്ങൾ ലക്ഷ്യമിട്ട് സംസ്ഥാന ജിഎസ്ടി ഇന്റലിജൻസ് ആൻഡ് എൻഫോഴ്‌സ്‌മെന്റ് വിംഗ് ഓപ്പറേഷൻ ആർക്കൻസ്റ്റോൺ നടത്തിയപ്പോൾ ഒരു വലിയ എൻഫോഴ്‌സ്‌മെന്റ് നടപടിക്ക് സാക്ഷ്യം വഹിച്ചു. ഈ റെയ്ഡിൽ 100 ​​കോടി രൂപയുടെ വിൽപ്പന അടിച്ചമർത്തൽ കണ്ടെത്തി, കണക്കിൽ പെടാത്ത 36 കിലോഗ്രാം സ്വർണ്ണം പിടിച്ചെടുത്തു , നികുതിയും പിഴയും ആയി 2 കോടിയിലധികം രൂപ കണ്ടെടുത്തു. നികുതി ബാധ്യതകൾ കുറയ്ക്കുന്നതിന് വിൽപ്പന അണ്ടർ-റിപ്പോർട്ട് ചെയ്യൽ, സ്റ്റോക്ക് രജിസ്റ്ററുകളിൽ കൃത്രിമം കാണിക്കൽ, വ്യാജ ഇൻവോയ്‌സുകൾ നൽകൽ തുടങ്ങിയ രീതികൾ ഉപയോഗിക്കുന്ന ജ്വല്ലറി മേഖലയിൽ ജിഎസ്ടി വെട്ടിപ്പ് തുടരുന്ന പ്രശ്‌നത്തിലേക്ക് ഈ പ്രവർത്തനം അടിവരയിടുന്നു . ജിഎസ്ടി ഒഴിവാക്കലിലെ അപകടകരമായ രീതികൾ മനസ്സിലാക്കൽ വിൽപ്പനയുടെ വ്യവസ്ഥാപിത അടിച്ചമർത്തൽ യഥാർത്ഥ വിൽപ്പനയേക്കാൾ മനഃപൂർവ്വം കുറഞ്ഞ വിൽപ്പന രേഖപ്പെടുത്തൽ. ...
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business loss (non-speculative) can be set off against capital gains (both short-term and long-term), subject to restrictions under Section 71

business loss (non-speculative) can be set off against capital gains (both short-term and long-term), subject to restrictions under Section 71 : ✅ Allowed Business loss (other than speculative loss) can be set off against income under any head (except salary). So, if you have a business loss and a taxable capital gain, you can adjust the loss against that gain. 📌 Example: Business loss = ₹4,00,000 LTCG (u/s 112A) = ₹3,00,000 ➡ Net taxable income = ₹(4,00,000 – 3,00,000) = ₹1,00,000 (loss carried forward if return filed in time). ❌ Not Allowed Speculative business loss → can be set off only against speculative business income (not capital gains). Loss from specified business u/s 35AD → only against specified business income. Capital loss → cannot be set off against business income (only against capital gains). 👉 So the direction is: Business Loss → Capital Gain ✅ Capital Loss → Business Income ❌
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Whether rebate u/s 87A is available against tax payable on short-term capital gains (STCG) u/s 111A under the new regime u/s 115BAC(1A).

 the ruling you are referring to was delivered by the SMC Bench of ITAT, Ahmedabad . 📌 Case: Jayshreeben Jayantibhai Palsana vs. ITO 📌 Bench: ITAT Ahmedabad – SMC Bench 📌 Date of Order: 12 August 2025 (some references mention 13 August 2025, but 12 Aug 2025 is the official pronouncement date) 📌 Issue: Whether rebate u/s 87A is available against tax payable on short-term capital gains (STCG) u/s 111A under the new regime u/s 115BAC(1A) . 📌 Finding: The Bench held that Sec. 87A, as applicable for AY 2024–25, does not exclude STCG u/s 111A ; hence, if the total income ≤ ₹7 lakh , rebate is allowable.
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How Auditors Detect / Trap Cash Siphoning : red flagging and documenting evidence

!! Academic Purpose only 🔎 How Auditors Detect / Trap Cash Siphoning 1. Related-Party Transactions (Sec. 40A(2), AS-18 / Ind AS-24) Check disclosures in notes to accounts for related-party names. Verify pricing : Compare payments to related parties vs. market rates. Audit Trail : Match invoices with actual delivery/benefit received. Trap : If related parties are paid more than fair value (inflated expenses), auditor questions management & reports under CARO/Tax Audit (Form 3CD, Clause 23/31). 2. Inflated Expenses Analytical procedures : Compare expense ratios (advertising, consultancy, repairs) vs. past years/industry average. Vouching : Verify supporting bills, contracts, and third-party confirmations. Cash flow check : Expense shown in P&L but no matching service/goods delivered. Trap : Fake vendors or repetitive round invoices without actual service. 3. Round-Tripping of Funds Bank reconciliation : Unusual high-value transactions flowing...
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