2013 (12) TMI 724 - HC - Income Tax

Change in accounting period for maintaining uniformity - Held that - The period of three months from March to June, was shown by the assessee and proper tax has been paid - This is merely an adjustment of the accounting system for maintaining uniformity in the accounting system permissible as per the guidelines issued by the Institute of Chartered Accountant - After examining the entire material, the Tribunal observed that there is no escapement of tax - Decided in favour of assessee.

Summary

Issues:
Appeals filed under Section 260A of the Income Tax Appeal, 1961 against judgments and orders of the Income Tax Appellate Tribunal for various assessment years.

Analysis:
The appeals were filed by the Department challenging judgments related to relief claimed by the assessee in respect of sales returned, questioning the accounting methods adopted and the validity of the relief granted by the ITAT. The substantial questions of law revolved around the justification for dismissing Departmental appeals, allowing further relief in sales returned, and the bonafide nature of the accounting methods. The Department contended that the assessee's accounting period adjustments were not acceptable, leading to discrepancies in income calculations. The Department emphasized the rejection of the assessee's explanations by the Assessing Officer based on the extended previous year due to accounting changes. The Department argued against the allowance of sales return receipts for the period beyond the accounting year ending on 31st March, 1989.

The assessee, represented by learned counsel, justified the orders of the Tribunal, emphasizing the proper payment of taxes during the adjusted accounting period. The assessee's position was that the adjustments made were for maintaining uniformity in the accounting system, following guidelines issued by the Institute of Chartered Accountants. The Tribunal, being the final fact-finding authority, considered the absence of tax evasion and the technical nature of the issue. The Tribunal cited relevant case laws to support its decision and concluded that no tax escapement occurred due to the accounting adjustments made by the assessee.

After hearing both parties and examining the records, the Court found that the adjustments made by the assessee for the three-month period were permissible and did not lead to any tax evasion. The Tribunal's detailed discussion and acknowledgment of no tax escapement supported the decision to sustain the impugned orders. The Court held that the issue was technical in nature and aimed at maintaining uniformity in the accounting system. Consequently, all appeals filed by the Department were dismissed, with the substantial questions of law being decided in favor of the assessee and against the revenue.