How Proper Computation and Representation Saved My Client 19 Lakh Rupees in Taxes and Penalties: A Case Study


As a tax professional, I recently handled a case that resulted in saving my client a significant amount of money – almost 19 lakh rupees – in taxes and penalties. This success was not achieved through any magic or smart moves, but rather through proper computation and representation of data. In this article, I will share the story behind this case and explain how having the right expertise and representation can help individuals avoid unnecessary taxes and penalties, especially in cases of high-pitched assessments by income tax officers.

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Story of the Case:


In the financial year 2015-16, one of my clients made a substantial profit of approximately 45 lakh rupees from stock trading. However, due to a subsequent loss of nearly 35 to 40 lakh rupees in the following year, he failed to file his income tax return for that financial year. It was not until 2021-22 that he received a notice from the income tax department reminding him of his tax obligation and calling upon him to file his return and represent his case.

At this point, my client approached a local tax preparer, who is not a chartered accountant but was trained to file income tax returns. This is a common practice among many individuals who seek assistance from non-professionals or rely on online information for filing their taxes. However, it often results in errors and can lead to high-pitched assessments by the income tax department, resulting in hefty taxes and penalties.

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Proper Computation and Representation:

Upon reviewing the case, I realized that there were errors in the computation of income and losses, and the representation of data was inadequate. I meticulously recalculated the income and losses, considering all relevant provisions of the income tax law, and prepared a comprehensive representation to present before the appeal commissioner. This included proper documentation and supporting evidence to substantiate my client’s claims and arguments.

Appeal and Relief:

With a well-prepared appeal and representation, we presented the case before the appeal commissioner, highlighting the errors in the previous computation and representation. The appeal commissioner carefully reviewed the case and accepted our arguments, providing relief to my client by reducing the tax liability and penalty by almost 19 lakh rupees. This was a significant victory for my client, as it saved him a substantial amount of money that he would have otherwise paid in taxes and penalties.

Importance of Expertise and Representation:

This case study highlights the importance of having the right expertise and representation when dealing with income tax matters. Many individuals often make the mistake of relying on non-professionals or incomplete information, which can result in incorrect calculations, inadequate representation, and unnecessary taxes and penalties. Hiring a qualified tax professional, such as a chartered accountant, can help individuals navigate the complex income tax laws, ensure proper computation of income and losses, and provide comprehensive representation in case of appeals or disputes with the income tax department.


In conclusion, the success of this case study demonstrates the significant impact of proper computation and representation in saving taxes and penalties for individuals. It emphasizes the importance of seeking expert advice from qualified professionals when dealing with income tax matters and not solely relying on non-professionals or online information. With the right expertise and representation, individuals can avoid unnecessary tax liabilities and penalties, and ensure compliance with income tax laws.

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