TMI Blog2016 (7) TMI 1687X X X X Extracts X X X X X X X X Extracts X X X X ..... hat necessary details were duly submitted before the Assessing officer that all of the expenses are supported by proper vouchers and supporting evidence. It is not the case of the AO that any short coming has been noted in the vouchers. This is also not the case that any distortion in profit has been observed as compared to preceding year in view of the above said expenditure. In these circumstances, in our considered opinion, the Revenue has no cogent reason why the prior period expenses claimed by the assessee which have been consistently so claimed and allowed by the Department in earlier years should be disallowed in the current year. The case laws referred by assessee above duly support the above proposition. In this regard we may gainfully refer to the Hon'ble Delhi High Court decision in the case of CIT Vs. Jagjit Industries Limited [ 2010 (9) TMI 58 - DELHI HIGH COURT] held that if a particular accounting system has been followed and accepted and there is no acceptable reason to differ with the same, the doctrine of consistency would come into play. The said accounting system has been followed for a number of years and there is no proof that there has been any mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which do not pertain to the year under consideration are disallowed and addition of Rs. 40589627/- is made to the income of the assessee on this account. (ii) In addition to the above referred prior period expenses debited directly in the P L account during the year, the assessee has also made the claim of prior period expenditures in the Procurement of Wheat, Paddy and Bajra accounts from which net surplus or deficit has been taken to the P L account, The details of Prior Period Expenses so claimed are as under :- Expenditure claimed under Prior period Adjustment account of Wheat Rs. 56834748/- Expenditure claimed under Prior period Adjustment account of Paddy Rs. 178322/- Expenditure claimed under Prior period Adjustment account of Bajra Rs. 2174/- Total Rs. 57015244/- When questioned in this regard, the response of the assessee has been that liability to pay these expenses has arisen during the year. The contention of the assessee is not accepted as the assessee is following mercantile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subsequent years and the Assessing officer had been allowing the same. The said accounting practice has been consistently followed by the assessee and accepted by the Department. He submitted that since the assessee is a vast organization, the expenses when not reported or identified up to the close of the year are subsequently booked as prior period expenses. Since there is no change in the facts and circumstances, Ld. Counsel submitted that the consistent system of accounting followed by the assessee cannot be departed from. In support of this proposition, Ld. counsel placed reliance upon the following case laws:- i) Hon'ble Delhi High Court in the case of CIT Vs. Jagatjit Industries Limited ITA No. 848/2010 vide Order dated 6.8.2010 ii) Order of Hon'ble Gujarat High Court in the case of Saurashtra Cement Chemical Industries Ltd v CIT (1995) 213 ITR 523. iii) ITAT Ranchi Bench decision in the case of M/s Heavy Engineering Corpn Ltd, Ranchi v DCIT, Ranchi in ITA N. 28/Ran/2015 vide order dated 10.3.2016 iv) ITAT, Ranchi Bench decision in the case of DCIT Vs. Mecon Ltd, Ranchi in ITA No. 315/Ran/2014 vide order dated 4.3.2016. 8. Per contra, Ld. DR sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e maintained on whims and fancies. The Ld. Counsel submitted that these case laws and the doctrine of consistency cannot be allowed in this case. 10. We have considered the rival submissions. We find that Assessing officer has made disallowance by observing that for the prior period expenses cannot be allowed as assessee is following mercantile system of accounting and that the assessee has not submitted any basis for determination as to when they crystallized. In this regard, we find that it is the contention of the assessee that assessee is a public sector undertaking and is a vast organization. The expenses when not reported or identified up to the close of the year are subsequently booked under prior period expenses. This system of accounting of the assessee has been regularly accepted by the Department in the past. There is no change in the facts and circumstances of the case. It has also been submitted that necessary details were duly submitted before the Assessing officer that all of the expenses are supported by proper vouchers and supporting evidence. It is not the case of the Assessing officer that any short coming has been noted in the vouchers. This is also not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial year. It has also come as a matter of fact that the assessee has branch offices throughout the country. The assessee has been debiting the expenditure spill over to the subsequent years and the assessing officer had been allowing the same. The said accounting practice has been consistently followed by the assessee and accepted by the department. If a particular accounting system has been followed and accepted and there is no acceptable reason to differ with the same, the doctrine of consistency would come into play. The said accounting system has been followed for a number of years and there is no proof that there has been any material change in the activities of the assessee as compared to the earlier years. Nothing has been brought on record to show that there has been distortion of profit or the books of account did not reflect the correct picture in the absence of any reason whatsoever, there was no warrant or justification to depart from the previous accounting system which was accepted by the department in respect of the previous years. Similarly, we find that Coordinate Bench of ITAT, in the case of DCIT Vs. Heavy Engineering Corporation Ltd, Ranchi in ITA No. 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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