Sec 36 – Period of retention of accounts

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Sec 36 – Period of retention of accounts 2017-04-14T14:44:56+00:00

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  • Ashish BadalaCA Ashish Badala
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    #1478 |

    Every registered person required to keep and maintain books of account or other records in accordance with the provisions of sub-section (1) of section 35 shall retain them until the expiry of seventy-two months from the due date of furnishing of annual return for the year pertaining to such accounts and records:
    Provided that a registered person, who is a party to an appeal or revision or any other proceedings before any Appellate Authority or Revisional Authority or Appellate Tribunal or court, whether filed by him or by the Commissioner, or is under investigation for an offence under Chapter XIX, shall retain the books of account and other records pertaining to the subject matter of such appeal or revision or proceedings or investigation for a period of one year after final disposal of such appeal or revision or proceedings or investigation, or for the period specified above, whichever is later.

    Priya MadrechaPriya Madrecha
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    36.1. Introduction
    This section provides for the period up to which records and accounts must be retained by the assessee.
    36.2. Analysis
    1.    Every assessee shall retain the books of accounts and other records until the expiry of seventy-two months (6 years) from the due date for filing of Annual Return for the year pertaining to such accounts and records. If the annual returns for the FY 2017-18 are filed on say 30.11.2018, even then, the books of account and other records are to be maintained till 31.12.2024.
    This time period is more than the time limit prescribed in section 62(1) for issuance of order of assessment i.e. 5 years from the due date for filing of annual return or date of erroneous refund (as applicable) in cases of fraud, wilful mis-statement, suppression of facts, etc.]
    2.    In case an appeal or revision or any other proceeding is pending before any Appellate Authority or Revisional Authority or Appellate Tribunal or Court, or in case the assessee is under investigation for an offence under Chapter XIX, the assessee shall retain the books of account and other records pertaining to the subject matter of such appeal or revision or proceeding or investigation for a period of one year after final disposal of such appeal or revision or proceeding, or for the period specified records u/s 35(1, whichever is later.
    36.3. Comparative Review
    •    Rule 5(3) of Service Tax Rules, 1994 provides that all records shall be preserved for a period of five years immediately after the financial year to which such records pertain.
    •    Chapter 6 of the CBEC’s Central Excise Manual obligates every assessee to maintain the records for a period of five years immediately after the financial year to which such records pertain.
    •    Different State VAT laws prescribe different time periods for maintenance of records. However, many States prescribed a period of five years.
    •    Where the proceedings are pending in appeal, revision etc., the records are generally maintained till the proceedings are finally concluded, though this is not specifically stipulated in the present laws. In fact, the books and records are required to be maintained till the time frame for revision proceedings stand open and are not barred by limitation of period.
    36.4.    Related provisions
    Section or Rule     Description
    Section 2(107)     Taxable Person
    Section 35     Books of account
    Section 44(1)     Annual return
    36.5.    FAQ
    Q1.      Is there any time limit for the retention of the books of account or other records u/s 36?
    Ans.  Yes, such records shall be normally retained until the expiry of seventy-two months from the due date for filing of Annual Return for the year pertaining to such accounts and records.
    Q2.  Is a separate time limit for maintenance of records specified where an assessee is involved in any litigation?
    Ans.  In case an assessee is a party to an appeal or revision or any other proceeding before any Appellate Authority or Revisional Authority or Appellate Tribunal or Court, (as an appellant or a respondent), or where he is under investigation for an offence under Chapter XIX, then he shall retain the books of account and other records pertaining to the subject matter of such appeal or revision or proceeding or investigation for a period of one year after final disposal of such appeal or revision or proceeding, or for the period specified records u/s 35(1), whichever is later.
    36.6. MCQ
    Q1.  The time limit for up keep and maintenance of the books of account or other records u/s 36 is?
    (a)    seventy-two months from the date of filing of Annual Return or due date of filing the Annual Return, whichever is earlier.
    (b)    forty-Eight months from the last date of filing of Annual Return Place.
    (c)    seventy-two months from the due date of filing of Annual Return.
    (d)    None of the above.
    Ans. (c) seventy-two months from the due date of filing of Annual Return
    Q2.  In case, the assessee is a party to an appeal or revision or any other proceeding before any Appellate Authority or Appellate Tribunal or Court, (as an appellant or a respondent), then the time limit for retaining the records shall be ___
    (a)    Upto the final disposal of such appeal or revision or proceeding.
    (b)    One year after final disposal of such appeal or revision or proceeding, or for the period specified records u/s 35(1) 53, whichever is earlier.
    (c)    Six months after final disposal of such appeal or revision or proceeding, or for the period specified records u/s 47(1), whichever is later.
    (d)    One year after final disposal of such appeal or revision or proceeding, or for the period specified records u/s 35(1), whichever is later.
    Ans. (d) One year after final disposal of such appeal or revision or proceeding, or for the period specified records u/s 35(1) 53, whichever is later.

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