TMI Blog2014 (8) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has to return the amount of advances – the system of accounting of the assessee was followed by the assessee for the last 35 years i.e. from the year of its inception and all along has been accepted by the department - there is nothing wrong on the part of the assessee in not considering the amount representing work advances as income accruing or arising to it until a regular bill for work done is submitted and accepted by its clients - the order of the CIT(A) is correct in accepting the method of accounting followed regularly for the last 35 years – there was no reason to interfere in the order of the CIT(A) – Decided against Revenue. - ITA No. 3036/Mum/2013 - - - Dated:- 30-7-2014 - Shri Vijay Pal Rao And Shri Rajendra,J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Accordingly the Assessing Officer held that the assessee was not maintaining accounts on mercantile basis. The assessee contended before the Assessing Officer that the similar issue has been decided by this Tribunal in assessee s own case for the A.Y. 2005-06. The Assessing Officer did not accept the contention of the assessee and expressed his views that the order of this Tribunal in assessee s own case is not applicable because the facts were not put up to the Tribunal in the correct perspective. Accordingly the Assessing Officer held that the assessee is following such system of accounting which neither mercantile nor cash and, therefore, it is not permissible u/s 145 of the Income Tax Act. Consequently, the Assessing Officer rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in section 144. 4.1 Under sub section (1) it is mandatory that income under the head business is to be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Section 145(3) of Act provides for assessment in the manner prescribed in Section 144 of the Act, where the assessing officer is not satisfied about the correctness or completeness of the accounts of the assessee or where either the method of accounting provided in sub-Section (1) or the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in its own case for the earlier years. Non receipt of replies from the parties to whom notice uls 133(6) of the Act were served cannot amount to incomplete or incorrect accounts. The assessing officer was at liberty to summon any or all of them in case he wanted to verify the genuineness of the transactions made with them by the appellant. No such course of action was, however, adopted by the assessing officer. Failure of the appellant's creditors to reply notices issued u 1 s 133 (6) of the Act, could not have been a ground for rejecting the accounts under Section 145(3) of the Act. In his order, thea ssessing office heavily relied on the fact that no closing stock was shown by the assessee in its books of account. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt decisions that what is to be determined by the officer in exercise of his power is a question of fact, i.e. whether or not income chargeable under the act can properly be deduced from the books of account and he must decide the question with reference to the relevant material and in accordance with the correct principles. In the instant case, it can be seen that assessing officer failed to appreciate the method of accounting regularly followed by the appellant and accepted by the Hon. Tribunal in its own case. Further, assessing officer failed to appreciate the fact that appellant had valued closing stock in the form of 'work in progress' and therefore erred in coming to the conclusion that closing stock was valued at NIL by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears i.e. from the year of its inception and all along has been accepted by the department. In these facts of the case we hold that there is nothing wrong on the part of the assessee in not considering the amount of ₹ 1.48 crores representing work advances as income accruing or arising to it until a regular bill for work done is submitted and accepted by its clients. In this view of the matter we hold the order of the CIT(A) is correct in accepting the method of accounting followed regularly for the last 35 years and in deleting the addition made by Assessing Officer and accordingly the grounds of appeal of the revenue are dismissed. 5. The Assessing Officer has also passed a giving effect order dated 20th June 2008. Following the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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