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TMI Blog2025 (1) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... me must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity".
Bench also that the Association filed an appeal before the Ld CIT(Appeals) against the order passed by the AO, where ld. CIT(A) allowed the appeal in the favor of the Association by holding at last the order that "It appears that the A.O. has not perused the above documentary evidences filed by the appellant at various stages and the computation of income and the financials of the appellant which would be available in the assessment record and after giving the appeal effect of order of CIT(A) which has also been confirmed by the Hon'ble ITAT, has made the order u/s. 154 withdrawing the appeal effect/making addition of Rs. 2,30,26,342/- without an iota of verification or application of mind about the issue and the facts involved". Thus, we feels that there is no ambiguity in the order of the ld. CIT(A) and we do not incline to interfere in the order of the ld CIT(A). Hence, the appeal of the Revenue is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... n of its disallowance naturally does not arise. The AO may verify the same and subject to the same the disallowance is deleted and Ground No appeal is allowed. 8.2.3 In further appeal by Revenue before Hon'ble ITAT, vide order dated 21.06.2022, Hon'ble ITAT has upheld the order of the CIT(A) and the order of the Hon'ble ITAT is as under: Ground no, 3 relates to adopting accrual system of accounting and not the payment system of accounting as the Trust/AOP/Society/Institution exempted under the IT Act is not employed to adopt accrual system of accounting. 14. The brief facts of the case are that during the course of scrutiny assessment proceedings, the AO noticed that in the Balance Sheet the assessee has shown provision for expenses of Rs. 2,30,26,342/-. As per the AD, the provisions are not allowable and thus the assessee was required to furnish the details of the provisions made as well as justification for the claim. The AO held that for claiming any expenditure it should have been incurred and provisions are not the expenditure Incurred. It is an estimate for the expenses to be incurred in subsequent period. In absence of details furnished by the assessee, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income and Expenditure account is only claimed as revenue application. The Ld. CIT (A) has already given the opportunity to the AO and if any separate claim is there, he may so examine. Hence the ground of the revenue does not survive. It is, therefore, requested that the ground no. 3 of the revenue shall be dismissed. 17. We have heard the rival contentions, perused the material available on record and it is noted that the method of accounting shall be cash or mercantile as per section 145(1) of the Income Tax Act 1961, as consistently followed is allowed. Regarding the provision of expenses, it is noted that the same is provided and adjusted from year to year and the amount shown in the Balance Sheet is the closing balance at the end of the year. Regarding the separate claim, if any, the Id. CIT (A) has already given opportunity to the AO in this matter. Accordingly, the Ground no. 3 of revenue is dismissed. 8.2.4 However, subsequently, the A.O. vide order u/s. 154 has withdrawn and added back the provision of expenses of Rs. 2,30,26,342/- in the order which is under challenge and on perusal of the above order it is seen that the A.O. has rectified and again made the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 303/- was worked out as amount applied to charitable purpose. This includes total expenditure as income and expenditure account of Rs. 23,11,86,505/-, total addition to fixed assets of Rs. 1,34,98,309/- (68,56,602/- + 66,41,707) less depreciation of Rs. 1,84,45,511/- to arrive at the figure of Rs. 22,62,39,303/-. From the above, it is apparent that the amount of Rs. 2,30,26,342/- is not included in the amount considered as applied during the year for the computation purpose as has been the contention of the appellant right from the assessment proceedings. And therefore, the question of its disallowance or adding back the provisions of expenses as income does not arise. It appears that the A.O. has not perused the above documentary evidences filed by the appellant at various stages and the computation of income and the financials of the appellant which would be available in the assessment record and after giving the appeal effect of order of CIT(A) which has also been confirmed by the Hon'ble ITAT, has made the order u/s. 154 withdrawing the appeal effect/making addition of Rs. 2,30,26,342/- without an iota of verification or application of mind about the issue and the facts Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Honourable ITAT. Has it been question of any mistake, the same could have been raised before the Honourable ITAT through the representative of the Department standing before the Honourable Tribunal. Here, it is important to mention two issues in the impugned order, one is about the view of the ld AO that "that for claiming any expenditure, it should have been incurred and provisions are not the expenditure incurred" and the other issue mentioned is that, "Furthermore, in the absence of the details it cannot be examined whether the assessee has incurred any expenditure for which provision has been made or not." Firstly, the learned assessing officer had completely changed his opinion from observing double claim of expenditure to making interpretation that the provisions should have not been allowed to the appellant. While in the order dated 24.01.2022, giving effect of the order of Learned CIT (Appeals)/ITAT, the Ld AO has already re-assessed the total income of the appellant observing that there is no double claim as also being directed by the Ld CIT(Appeals). While, at the time of rectification under section 154 of the Income Tax Act, 1961, it was mentioned that the expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has erred in adopting the accrual and not the payment system of accounting as the trust/AOP/society/institution exempted under the income tax act is not employed to adopt accrual system of accounting". Here, we would like to mention that the Department was convinced that there is no any separate claim and therefore the Department raised ground of appeal before the Honourable Jaipur Bench of ITAT on the basis that the assessee has erred in adopting the accrual system of accounting instead of the cash system. The Department contested this ground before the honourable Jaipur Bench of ITAT (represented through the Commissioner of Income Tax as D/R),where it was held that, "17. We have heard the rival contentions, perused the material available on record and it is noted that the method of accounting shall be cash or mercantile as per section 145(1) of the Income Tax Act 1961, as consistently followed is allowed. Regarding the provision of expenses, it is noted that the same is provided and adjusted from year to year and the amount shown in the Balance Sheet is the closing balance at the end of the year. Regarding the separate claim, if any, the ld. CIT (A) has already given oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 & 2013-14 15-66 5. Reply u/s 154 as per notice dated 20-04-2023 for the A.Y. 2012-13 dated 03-05-2023 67-71 6. Power of Attorney 72 2.5 We have heard the parties and perused the materials available on record. Brief facts of the case are that the return of income for the assessment year 2012-13 declaring total income of Rs. Nil was filed on 30-09-2012 by the assessee which was processed u/s 143(3) of the Act at the returned income. It is noted that the case of the assessee was selected for scrutiny and notice u/s 143(2) of the Act was issued pm 20-09-2013 by the ITO, Ward 2(3), Jaipur which was served upon the assessee in time. Conclusively, the ld. AR of the assessee filed/ produced the records before the AO which were put to test checked and the case was discussed by the AO with ld. AR of the assessee. In this case, the AO during scrutiny assessment proceedings perused the balance sheet of the assessee in which it is noticed that the assessee had shown provision for expenses of Rs. 2,30,26,342/-. According to the AO, the provisions are not allowable who vide show cause notice issued on 13-03-2015 asked the assessee to furnish details of the provisions made as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ottery Works Co. Ltd Vs ITO [ 1977] 106 ITR 1wherein at page 10 highest court noted that "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity". The Bench also that the Association filed an appeal before the Ld CIT(Appeals) against the order passed by the AO, where ld. CIT(A) allowed the appeal in the favor of the Association by holding at last para 8.2.6 on page 10 of the order that "It appears that the A.O. has not perused the above documentary evidences filed by the appellant at various stages and the computation of income and the financials of the appellant which would be available in the assessment record and after giving the appeal effect of order of CIT(A) which has also been confirmed by the Hon'ble ITAT, has made the order u/s. 154 withdrawing the appeal effect/making addition of Rs. 2,30,26,342/- without an iota of verification or application of mind about the issue and the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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