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TMI Blog2005 (1) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... rk its profit/loss for the relevant assessment year because of extraneous circum-stances and this was done before the completion of the assessment. In the circumstances, the revised return ought not to have been ignored as invalid, ignoring the appellant's right to change its accounting system which is bona fide, realistic and true perspective. (ii)That the Appellate Authority failed to appreciate that the adoption of cash basis accounting in place of mercantile system of accounting being a question of law, there can be no estoppels against the Appellant on this point, at any time. (iii)That the Appellate Authority ought to have appreciated the true circumstances under which the appellant had to advance Rs. 72,35,000 to the Promoters of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mvent the crisis on the ground of commercial expediency. The Assessing Officer opined that the interest receipts have to be assessed on accrual basis and found the explanation of the assessee not satisfactory and disallowed the interest of Rs. 22,27,489 and completed the assessment. The assessee carried the same in appeal before the first appellate authority where the assessment was set aside and remitted back to the assessing authority. Now the assessee is in further appeal before the Tribunal. 3. At the time of hearing nobody was present on behalf of the assessee and Shri Lakshminarayana, learned representative was present on behalf of the revenue. In nutshell, the learned DR supported the orders of the authorities below and argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt resulting pre-mature withdrawal by the depositors in group branches. As the assessee was having sufficient funds, the board of directors of the assessee company resolved to help the sister concerns with the help of available surplus funds exempted from interest. The Assessing Officer opined that the assessee filed belated return on 2-7-1991 disclosing an income of Rs. 1,50,210 and issued notice under section 148. A revised return was subsequently filed on 17-2-1992 claiming a loss of Rs. 57,34,870. The Assessing Officer opined that the same is invalid return and added Rs. 22,27,489 to the income of the assessee on the ground that there is a diversion of funds to the sister concerns. On the other hand, the learned first appellate authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the change of method of accounting is the discretion of the assessee and not of the department unless and until some mala fide is established by the department or the bona fide of the assessee is doubted. It is the assessee who is to see the business expediency and not the revenue. The assessee is dealing in a peculiar nature of business; sometimes it may incur losses also. The judicial pronouncement in the case of Juggilal Kamlapat Bankers v. CIT [1975] 101 ITR 40 (All.) and the Circular No. 491, dated 30-6-1987 (166 ITR/St 149) is very much clear. The claim for switch over from mercantile system to cash system without any valid and convincing reasons cannot be denied to the assessee. Each assessment year is independent and has to be se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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