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The Commissioner of Income Tax, Central-1, Mumbai Versus M/s Forever Diamonds Pvt. Ltd.

2015 (8) TMI 772 - BOMBAY HIGH COURT

AO power to recast the profit and loss account - Whether ITAT was correct in holding that the AO has no power to recast the profit and loss account even when the same is, according to him, not correctly prepared in accordance with Schedule VI to the Companies Act, 1956 ? - Held that:- Issue stands settled by the decision of the Apex Court in Apollo Tyres Ltd. (2002 (5) TMI 5 - SUPREME Court ) wherein held Assessing Officer has to accept the authenticity of the accounts with reference to the prov .....

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empower the Assessing Officer to embark upon a fresh enquiry in regard to the entries made in the books of account of the company. Also see Adbhut Trading (2011 (7) TMI 716 - Bombay High Court) - the question as proposed does not give rise to any substantial question of law. - Decided against revenue. - Income Tax Appeal No. 1609 of 2013 - Dated:- 12-8-2015 - M. S. Sanklecha And N. M. Jamdar, JJ. For the Petitioner : Mr P C Chhotary For the Respondent : Mr Atul Jasani ORDER P. C. This appeal by .....

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orrectly prepared in accordance with Schedule VI to the Companies Act, 1956 ? 3. The grievance of the revenue is that, when according to the Assessing Officer the accounts as prepared and as audited are manifestly in conflict with the manner in which the accounts have to be prepared under the Companies Act, then it is open to the Assessing Officer to recast the accounts for the purposes of Section 115JB of the Act. The Tribunal, by the impugned order negatived the revenue's contention by rel .....

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ance with the Companies Act. The Assessing Officer, thereafter, has the limited power of making increases and reductions as provided for in the Explanation to section 115J. The Assessing Officer does not have the jurisdiction to go behind the net profits shown in the profit and loss account except to the extent provided in the Explanation. The use of the words "in accordance with the provision of Parts II and III of Schedule VI to the Companies Act" in section 115J was made for the lim .....

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er to be filed before the Registrar of Companies who has a statutory obligation also to examine and be satisfied that the accounts of the company are maintained in accordance with the requirements of the Companies Act. Subsection (1A) of section 115J does not empower the Assessing Officer to embark upon a fresh enquiry in regard to the entries made in the books of account of the company." The aforesaid observations of the Apex Court concludes the issue by holding that the Assessing Officer .....

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ccordance with the requirements of the Companies Act. Thus, the issue is no longer res integra. Moreover, if the grievance of the revenue is to be accepted, then the conclusiveness of accounts prepared and audited in terms of Section 115JB of the Companies Act would be set at naught. This without successfully impeaching the Auditor's certificate or without the Registrar of Companies holding that the accounts have not been prepared in accordance with the provisions of the Companies Act. 4. Mr .....

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