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2015 (1) TMI 198 - HC - Income TaxPreparation of P&L Account in violation of AS or not for determination of book profits u/s 115JA(6) - Benefit of waiver of interest as part of acceptance of OTS proposal by the financial institutions accrues to the assessee on acceptance and not on mere initiation or not - Waived interest of ₹ 5.37 Crores to the profit and loss accounts maintained under the Companies Act connected in the context of Section 115JA - Held that:- The Tribunal has undertaken fairly extensive discussion - one of the views expressed by it was that though Section 154 empowers an AO to rectify the orders of assessment, it cannot be exercised in such a way that one facet of it can be selectively lifted and in the name of rectification, the mater be left at that - It cannot be keenly said that the filing of return is a comprehensive exercise and that in turn is proceeded by a fairly extensive accounting process - an assessee bestows its attention in respect of each and every amount and once a comprehensive return is filed, taking away of one facet would have its own cascading effect, on others - it may disturb the entire edifies of accountancy and may prove to be disastrous for an assessee - whenever the power u/s 154 is exercised, it should be done in such a way that no violence is done to the order of assessment passed in respect of different years. The Companies Act provides a detailed mechanism of verification of accounts and there are also statutory auditors under that Act scrutinise them - nobody pointed out any defect in the exercise undertaken by the respondent – in Apollo Tyres Ltd. Versus Commissioner of Income Tax [2002 (5) TMI 5 - SUPREME Court], the Supreme Court explained the power of the Assessing Authority under the I.T. Act vis-a-vis the accounts maintained under the Companies Act, in the context of Section 115J – it has been held that while computing the income u/s 115J has only the power of examining whether the books of account are certifies by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act - the AO thereafter has the limited power of making increases and reductions as provided for in the Explanation to the section – the AO does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J – thus, the Tribunal rightly held that the accounts referable to Section 115J of the I.T. Act must be taken on their face value and once it becomes clear that the income of an assessee determined is less than 30% of the book profits reflected in the books of account maintained under the Companies Act, the tax leviable would be only 30% - Decided against revenue.
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