TMI Blog1994 (11) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... but only did so after a notice under section 148 had been issued on 18-11-1987 and served on the assessee on 3-12-1987. The further relevant facts of the case are that up to the assessment year 198485 the assessee had been maintaining its books of account on the mercantile basis, but during the assessment year under consideration had changed the method from mercantile to cash and filed the return on the changed basis. It is also an accepted fact that in the course of the assessment proceedings, the Income-tax Officer rejected the changed method on the ground that it had been done with a view " to avoid incidence of tax on interest receivable on accrual basis ". The Income-tax Officer further noted that the funds had been invested in the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same figure of loss ; (iii) On the basis of the audited accounts the assessee was under the bonafide belief that the return need not be filed and the rejection of the changed method of accounting was a later event which was not contemplated by the assessee ; and (iv) That the same income which had been taxed in the assessment year under appeal had been included in the taxable income of the assessee in assessment year 1988-89. 4. The learned counsel also sought to draw a parallel between the present case and that of another connected trust, namely, Jama Bhagat Public Charitable Trust which according to him had already been adjudicated upon by the Tribunal deciding in the ultimate analysis that penalty under section 271(1)(a) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal as directed by us accepting that the Tribunal had been pleased to hold that the change in the method of accounting was not a bonafide one, but contending that this should not have effect on the penalty proceedings as the question of filing the return was to be seen in the light of the circumstances as existed at the relevant point of time and not subsequently. He reiterated reliance on the decision in the case of Jama Bhagat Public Charitable Trust. 6. I have considered the rival submissions and have also perused the material on record, to which my attention was invited during the course of the hearing. The decisions cited at the bar have also been duly considered. I may, at the outset, mention that the three decisions relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue authorities are seen to be quite proper and correct. No proper reason was shown, on behalf of the assessee, that there was any mistake in the orders. It was not shown that the assessee's approach was bona fide. The mention, by the learned counsel, of assessment orders for other assessment years where cash system of accounting was said to have not been disturbed, cannot help the assessee because assessments up to assessment year 1988-89 were framed, without proper application of mind, under section 143(1) of the Act and for the assessment year 1990-91 there was no occasion for such discussion as no such issue was there before the Assessing Officer as the income shown was nil. The ratios in the cases of Reform Flour Mills (P.) Ltd. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings have been initiated. Then again there is no finding of the Tribunal in that case to the effect that the switching over from one system to another was not bona fide, whereas in the present case, the Tribunal has recorded such a finding while deciding the quantum appeal. The Tribunal has also gone on to say that the change-over was made with a view to avoid the payment of legitimate taxes. In the final analysis, I have no option, but to observe that the decisions of the various High Courts relied upon by the learned counsel do not come to his aid and to the same effect would be my observations in respect of the decision of the Tribunal in the case of the connected trust. 8. The natural consequence of the aforesaid discussion leads m ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
