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TMI Blog2013 (1) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration declaring a total income of Rs.71.63 lakhs and the AO completed the assessment by accepting the income returned. However, the AO passed a cryptic order without making any discussion on any of the issues. On the examination of assessment record, the Ld CIT noticed that the AO did not examine about the change made in the method of valuation of "rejected castings" during the year under consideration. In the earlier years, the assessee had valued the stock of "rejected castings" at "material cost plus 12.5% towards overheads" in the case of Alloy Steel. In the case of stainless steel, the stock was valued at "material cost plus 17.5% towards overheads". However, during the year under consideration, the assessee value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned issue and after affording the assessee adequate opportunity of being heard. Aggrieved, the assessee is in appeal before us. 4. The Ld Counsel for the assessee submitted that the assessee is legally entitled to change its accounting policy and such change would have impact on the profitability only in the year of change. Such changes are normally made either to align with globally accepted practices or to align with the reality of the business. He further submitted that the Accounting standard-I issued by the Government u/s 145(2) of the Act give statutory recognition to the changes made in the accounting policies. The Ld A.R drew our attention to the following paragraph from the Accounting standard I issued u/s 145 of the Act. &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing case law:- (a) CIT Vs. Honda siel power products Ltd (333 ITR 547)(Delhi) (b) CIT and Another Vs. Gokuldas Exports (333 ITR 214)(Kar) (c) CIT Vs. Leisure wear exports Ltd (341 ITR 166)(Delhi) (d) CIT Vs. Rajiv Agnihotri (332 ITR 608)(P & H) (e) CIT Vs. Sunbeam Auto Ltd (332 ITR 167)(Delhi) . 5. On the contrary, the Ld D.R submitted that the assessee is legally entitled to change its accounting policy on any of the issue, but it is the duty of the assessing officer to examine the said change in order to ascertain its impact on the total income. The Ld D.R further submitted that the duty of the assessing officer is to determine the corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision "cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer" and "it is only when an order is erroneous that the section will be attracted". The Supreme Court held that an incorrect assumption of fact or an incorrect application of law will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression "prejudicial to the interests of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposition of law that the revision could be possible only if both the conditions viz., (a) order should be erroneous and (b) it should be prejudicial to the interests of the revenue are satisfied. 7. In the case of M/s Muthoot Bankers (referred supra), this tribunal found that the view entertained by Ld CIT in that case was not sustainable in law. In that case, the assessee had been calculating the interest payable on partner's current account on a scientific basis, i.e., under product method and the Ld CIT had taken a view that the interest should have been calculated on the average of opening and closing balance. Hence the Tribunal set aside the order of Ld CIT, since the said view was sustainable in law. 8. In the instant case, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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