Method of Accounting - Section 145 - Income Tax - Ready Reckoner - Income Tax

Method of Accounting - Section 145 Income chargeable under the head profits and gains of business or profession or Income from other sources shall be computed in accordance with either cash or accrual system of accounting regularly employed by the assessee. The Central Government may notify in the Official Gazette from time to time income computation and disclosure standards to be followed by any class of assessees or in respect of any class of income. Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in section 145(1) has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under section 145(2), the Assessing Officer may make an assessment in the manner provided in section 144 . Notes:- The assessee can adopt cash system for one business and accrual system for another business. Similarly, the assessee can adopt cash system for one source of income under the head Income from other sources and accrual system for another source under the same head.