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TMI Blog1982 (4) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... as, in respect of receipts cash method was followed, in respect of outgoings or expenditure mercantile method was followed. The ITO concluded that by the said method, correct income of the assessee could not be deduced. The ITO proceeded to take into account cash receipts amounting to Rs. 1,30,409 and as regards expenditure, the ITO adopted the figure of Rs. 1,36,409 as expenditure, in place of the figure of Rs. 1,89,528 as worked out by the assessee according to mercantile method. Thus, in the assessment, a figure of Rs. 53,119 came to be added by way of adjustment. 4. The assessee carried the matter in appeal to the AAC. The AAC relied on the Tribunal's order in the assessee's case relating to the assessment year 1976-77 and reduced the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the instant case, inasmuch as, if the mixed system as followed by the assessee is considered, the correct income of the assessee for the previous year under consideration cannot be deduced. Learned departmental representative emphasised that the finding regarding non-deductibility of the correct income, as aforesaid, is inherently essentially a finding of fact and that in that regard the Tribunal's finding relating to a subsequent assessment year is no bar. The Tribunal's judgment was also commented upon by the learned departmental representative to the effect that the aspect that the accounts would get evened out over a number of years, even in a case where receipts are shown on cash basis and expenditure is shown on mercantile basis, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtors in which the receipts were recorded as cash paid, without any sort of allocation between principal and interest and subsequently, if and when allocation was made an entry in respect of the interest portion of the receipt was not made, the ITO was, under the circumstances, fully entitled under the proviso to section 13 of the Indian Income-tax Act, 1922 to make the computation that he made. 8. In Dhakeswar Prasad Narain Singh v. CIT [1936] 4 ITR 71 (Pat.) again cited on the assessee's side, it appears that the three Hon'ble Judges, who constituted the Bench, gave separate judgments. We are unable to discern from the said judgment any proposition which could be of aid to the assessee in a case like the instant case. 9. On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the method of accounting followed by the assessee, even though that method was followed by the assessee in subsequent years as well. The revenue succeeds. The ITO's finding is restored. The AAC's finding is reversed. 13. Appeal is allowed. Per Shri V. Dongzathang, Accountant Member --- On the facts of the case, I fully agree with my learned brother. The assessee-firm, in this case, is not a mere consultancy firm but carrying out treatment of indoor patients. In such a case, the bills raised by the assessee would include cost of medicines purchased in cash or credit. As such, mixed system of accounting as adopted by the assessee cannot deduce the correct income. Cases of professionals like lawyers, chartered accountants and doctors, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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