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TMI Blog2021 (2) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... ( in short 'Act'). 2. Heard Mr.N.V.Balaji, learned counsel for the petitioner and Mrs.Hema Muralikrishnan, learned Senior Standing Counsel for the respondents. 3. Five issues have been identified for re-assessment. Upon instructions from the Assessing Authority, learned Senior Standing Counsel would fairly state that issues at 1 and 5 are not seriously pressed. 4. As far as Issue No.1 is concerned, income from storage of stem cells have been offered to tax in the Vivad se Vishwas Scheme and as such, the question of re-assessment in regard to such incomes does not arise. 5. As far as Issue No.5 in relation to the payment of tax on Provident Fund and ESI contributions is concerned, the issue stands covered by a decision of this Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position that the petitioner has been following a consistent method of accounting over the years and has been recognising income following a uniform system. The accounts of the petitioner would reveal the receipt of processing fee in advance and recognition of the amount quantified in that year in relation to deliveries is that have taken place within the financial year in question as income. The remaining fee is carried over to the subsequent financial year. Assessments for previous and later years following this consistent method of accounting have been accepted. The details in relation to the entirety of the processing fee received and the component recognised as income in this year are also available. 9. The Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) is attracted to the facts of the present case. Under the mercantile system of accounting, what is due is brought into credit before it is actually received; it brings into debit an expenditure for which a legal liability has been incurred before it is actually disbursed. (see judgment of this Court in the case of United Commercial Bank v. CIT reported in 240 ITR 355). Therefore, the accounting method followed by an assessee continuously for a given period of time needs to be presumed to be correct till the AO comes to the conclusion for reasons to be given that the system does not reflect true and correct profits. As stated, there is no finding given by the AO on the correctness of the accounting standard followed by the assessee(s) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure to disclose fully and truly all material facts necessary for his assessment for that year." It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material, and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assesses, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assesses, or discovered by him on the basis of the facts disclosed, or otherwise - the assessing authority has to draw inferences as regards certain oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are relevant, amount to "omission to disclose fully and truly and truly all material facts necessary for his assessment." Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessor's duty to disclose all of them - including particular entries in account books, particular portions of documents, and documents, and other evidence, which could have been discovered by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee - to tell the assessing authority what inferences, whether of facts or law, should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences - whether of facts or law - he would draw from the primary facts. 16. Applying this judgment to the facts of the present case, the petitioner has made a disclosure of i) revenue from all income streams including processing fee ii) the portion of processing fee recognised as income for the purpose of taxation and (iii) balance is carried over to the subsequent year. It is true that there is no note in the financials or in the audited report expla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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