Krsnaa Diagnostics – what is the diagnosis?

If any cash or bullion is found in the premises, it is seized, including in any bank lockers. Apart from that, there is no immediate monetary loss. Business will continue as usual. The undisclosed income is not the actual amount that will have to be paid by the assessee. The assessment will be completed by 31.03.2024 after which the actual demand of tax will be sent to the assessee. Assessee can deposit 20% of the demand and go in appeal which can take several years. If the assessee does appeal, no penalty will be levied till the disposal of appeals-first before the Commissioner (Appeals) and after that the ITAT if the assessee loses the first appeal. If the assessee does not get relief after these two appeal stages, penalty will be levied. The assessee can again appeal the penalty levied after depositing 20% of the penalty amount. The assessee can also go in further appeal before the High Court and Supreme Court against the assessment and penalty orders. That can take years to decades. The total tax+interest+penalty can even be higher than the total undisclosed income found & finally upheld after all the appeal processes.

Since the company is B2G, it probably had to bribe Govt people to win the tenders and get it’s payments release in time. That bribe money was off the books and thus, was paid through unaccounted business income which is being talked about in the media. Most B2G companies, especially those dealing with states and local authorities do this since their tender wins and payment release is all in the hands of Govt officials.