Q. Is there any penalty associated if I do not maintain accounts properly?

Agam Gupta March 30, 2016 800 Views

Books of accounts are considered as a basis to estimate any business. All the government authorities would accept your books if they were properly maintained and audited by a Chartered Accountant. If you don’t maintain it properly, then government authorities will reject your books of accounts (as per section 145 of Income Tax, Act 1961) and they will assess your profits according to their best judgement. Their best judgement could be anything. They could estimate a very high profit and tax you accordingly.
It is like a chain, if you don’t maintain proper books, Chartered Accountant will give you a disclaimer, based on that government will not trust your books, and hence, they will be compelled to calculate the tax, Interest and penalty according to their wish.
So, it is very much important to maintain the books of accounts in a most professional manner.