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Tuesday, 10 December 2013

Procedure for Voluntary Disclosure of Tax Deficiency u/s 87(6) of the DVAT Act 2004.

 DVAT amendment Act 2013 dated 28/03/2013 wef 01/04/2013 inserted section 87(6) this sub-section gives AUTOMATIC MITIGATION (Reduction) of 80% penalty u/s 86 if:

          ·         A person liable to pay penalty
          ·         Voluntarily discloses IN WRITING
What
– Existence of tax deficiency
When
– During the course of proceeding u/s 60 ie. Survey etc.
Condition for mitigation
·         Pay such tax deficiency
·         within 3 working days of
·         Conclusion of the proceeding u/s 60.
Then
·         80% penalty against the
·         admitted and paid tax
·         shall be mitigated/Reduced AUTOMATICALLY

     Now, govt. has issued Circular No. 28 of 2013-14 dtd. 03/10/2013 which prescribes the procedure for      this voluntary disclosure u/s 87(6) discussed above, which is as follows:-
 
          1.      Admit the amount of cash variation, Stock variation and other discrepancies during the course of proceedings u/s 60.
   
          2.       Show the admitted amount as un-vouched/ unaccounted, retail cash sale,
·          for one or more tax periods
·         prior to the tax period during which proceeding u/s 60 is being carried out.
         
          3.       Make payment of the admitted tax within 3 working days of the conclusion of proceeding u/s 60.

          4.       Dealer can pass an accounting entry:
·         Cash a/c               Dr.          ………….
            To Sales A/c.                      ………….
(Being un-vouched/ unaccounted retail cash sale effected during the tax period from……. to……)

         5.       File Revised returns U/s 28 for earlier tax periods in which un-vouched/ unaccounted sale is admitted.

·      Now, once the A.O. (Enforcement) is satisfied with the revised return,
·     there shall be no need for DEFAULT ASSESSMENT of the dealer consequent to survey.