COMMISSIONER OF INCOME-TAX Vs. MULTI SYSTEM SECURITIES P. LTD
LAWS(DLH)-2007-5-292
HIGH COURT OF DELHI
Decided on May 15,2007

COMMISSIONER OF INCOME -TAX Appellant
VERSUS
Multi System Securities P. Ltd Respondents

JUDGEMENT

- (1.) THE Revenue is aggrieved by an order dated August 31, 2006, passed by the Income -tax Appellate Tribunal, Delhi Bench 'I' in I.T.A. No. 4739/Del/04 relevant to the assessment year 2001 -02.
(2.) THE assessee was following a mercantile system of accounting. There was some discrepancy between the bills raised and the payments received and this was explained by the assessee on the ground that it was maintaining a running account in respect of its clients. Details filed by the assessee showed that it had raised bills for wages of Rs. 1,90,06,470 and it had received a total amount of Rs. 2,38,23,964 from various parties. The assessee was maintaining an opening balance in respect of its customers and explained that some amounts were still to be recovered and the receipts included amounts received towards balances which were outstanding at the end of the preceding year. The Assessing Officer was not satisfied with this explanation and added a sum of Rs. 18,49,727 as undisclosed receipts of the assessee.
(3.) IN appeal, the Commissioner of Income -tax (Appeals) was satisfied with the accounts and the chart of details furnished by the assessee. It was held that in view of the mercantile system followed by the assessee, there would always be some outstanding bills which were yet to be paid by its customers and excess receipts represented payments towards such outstanding balances. This view of the Commissioner (Appeals) was accepted by the Tribunal by noting that it is not an uncommon phenomenon that there is a discrepancy of this kind in the accounts.;


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