INCOME TAX
INSTRUCTION NO. 5252/1995
Dated: March 8, 1995
Section(s) Referred: 44AA
Statute: Income - Tax Act, 1961
Section 44AA of the I.T. Act, 1961 contains provisions relating to maintenance of books of accounts by persons engaged in the business or profession. Also, u/s. 44AA(3) read with Rule 6F of the I.T. Rules, 1962, certain books of accounts have been notified.
2. It is possible that, taking advantage of the fact that nowhere either in the I.T. Act or in the Rules it has been specifically mentioned that the books shall be kept in the traditional from in bound volumes, certain unscrupulous taxpayers may keep their accounts in loose sheets with the sole motive of subsequent manipulation to reduce their tax liabilities. While, with the advent of computers to a large extent in the industry and the business, accounts may be kept in loose computer-sheets on a daily basis and bound periodically, caution must be exercised on the possible tax evasion through maintenance of accounts otherwise in loose sheets.
3. The Board desires that, at the time of surveys u/s. 133A or searches u/s.132 of the Act, this aspect should be borne in mind and if it is found that the books of accounts are maintained in loose sheets solely with the motive of subsequent manipulation and consequent tax evasion suitable deterrent action should be taken both levy of penalty u/s.271(1)(c) read with Explanation 5 thereto and also by launching prosecution u/s. 276C(1) read with Explanation thereto for wilful attempt to evade tax.
F.No. 225/57/95-ITA.II