AMIT BAJAJ ADVOCATE

Section 69 of Income Tax Act deals with the cases of unexplained investments which have been made by the assessee but not accounted for in his books of accounts if any maintained and for which no satisfactory explanation is offered by the assessee.

I have seen some cases where higher stock than actual is declared by assesses to their bankers for availing more credit and at the time of assessment u/s 143(3) of Income Tax Act such assesses face difficulties to explain such higher stock declared to their bankers, if the assessing officer summons such stock statements from the bankers for the purpose of making assessment.

The Excise and Taxation Department, Government of Punjab has amended rule 21 of Punjab VAT rules to add sub rule 2-A in the said rule to provide for that ITC shall be allowed to a taxable person to the extent of tax payable on the resale value of goods or sale value of manufactured/processed goods where such goods are sold below the purchase price in case of resale or cost price in case of manufactured/processed goods. The balance ITC shall be reversed.

Implications of the ammendment: The implications that follow from this amendment are that now if a person sells goods below the purchase price in case of traded goods and below the cost price in case of manufactured goods then the resultant excess ITC that will arise due to loss that arises will have to be reversed. In other words ITC will be available only upto the sale or resale value of the goods in question.

For registration under the Punjab VAT Act 2005 one of the requirement u/s 25(1) is furnishing of security for securing the payment of tax under PVAT Act 2005. This requirement is compulsory as per the wording of section 25(1) of PVAT Act 2005 which runs as under: