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TMI Blog2015 (1) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... ding effect, on others - it may disturb the entire edifies of accountancy and may prove to be disastrous for an assessee - whenever the power u/s 154 is exercised, it should be done in such a way that no violence is done to the order of assessment passed in respect of different years. The Companies Act provides a detailed mechanism of verification of accounts and there are also statutory auditors under that Act scrutinise them - nobody pointed out any defect in the exercise undertaken by the respondent – in Apollo Tyres Ltd. Versus Commissioner of Income Tax [2002 (5) TMI 5 - SUPREME Court], the Supreme Court explained the power of the Assessing Authority under the I.T. Act vis-a-vis the accounts maintained under the Companies Act, in the context of Section 115J – it has been held that while computing the income u/s 115J has only the power of examining whether the books of account are certifies by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act - the AO thereafter has the limited power of making increases and reductions as provided for in the Explanation to the section – the AO does not have the jurisdiction to go b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1997-98 adding the amount of ₹ 5.37 Crores as income for that assessment year. On the same day, he passed an order in exercise of power under Section 154 of the I.T. Act, rectifying the order of assessment for the year 1996-97 to the extent of removing the sum of ₹ 5.37 Crores from the purview of the assessment of that year. The respondent filed an appeal before the Commissioner of Income Tax (Appeals), feeling aggrieved by the order of assessment, dated 29.03.2000. The Commissioner dismissed the appeal, through order, dated 27.02.2001. Feeling aggrieved by that, the respondent filed the I.T.A., raising the following questions of law: 1. Whether the Appellate Tribunal is justified in holding that the profit and loss account prepared by the assessee and certified by a Chartered Accountant even in violation of accounting standards, is binding on the Revenue in the context of determining the book profit U/s. 115JA(6) of the I.T.Act? 2. Whether the Appellate Tribunal is justified in not holding that the benefit of waiver of interest as part of acceptance of OTS proposal by the financial institutions accrues to the assessee on acceptance and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 5.37 Crores deserves to be treated as capital receipt was only in the context of the accounts maintained under the Companies Act, and it has nothing to do with the assessment to be made under the I.T. Act. Learned counsel submits that the view taken by the Tribunal accords with the judgment of the Honble Supreme Court in Apollo Tyres Ltd. v. Commissioner of Income Tax, Kochi AIR 2002 SC 2131. The entire discussion undertaken by the Assessing Officer, the Commissioner and the Tribunal was about connecting the waived interest of ₹ 5.37 Crores to the profit and loss accounts maintained under the Companies Act, in the context of Section 115JA of the I.T. Act. It is too well-known that where an assessee is a company incorporated under the Companies Act, and it maintains separate books of account as required under the said Act, the income of the company under the I.T. Act, can be treated as only 30%, of the one reflected in the books of account, in case the income that is arrived at under the I.T. Act is less than that figure. This naturally encourages or introduces the assessee to ensure that the income assessed under the I.T. Act, referable to a particular year, is less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of it can be selectively lifted and in the name of rectification, the mater be left at that. It cannot be keenly said that the filing of return is a comprehensive exercise and that in turn is proceeded by a fairly extensive accounting process. An assessee bestows its attention in respect of each and every amount and once a comprehensive return is filed, taking away of one facet would have its own cascading effect, on others. In a given case it may disturb the entire edifies of accountancy and may prove to be disastrous for an assessee. Therefore, whenever the power under Section 154 of the I.T. Act is exercised, it should be done in such a way that no violence is done to the order of assessment passed in respect of different years. The manner in which the Assessing Officer has used such a power under Section 154 of the I.T. Act, in the instant case is evident from the fact that he has chosen that device, just to pick up the amount of ₹ 5.37 Crores from the previous assessment year, and to put it in the subsequent assessment year, without even recording any findings as to whether the process has gone wrong at all. The passing of orders of assessment for the year 1996-97 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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