DEVSONS PVT LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) These appeals relate to the assessment year 1995-96 and was admitted to hearing on 20th March, 2006 when the following substantial questions of law were framed for consideration: -ITA No. 367/2004 "1. Whether the Income-tax Appellate Tribunal was right in law in holding that there was, in the facts and circumstances of the case, a change in the method of accounting introduced by the Assessee without any justifiable reasons?

(2.) Whether finding recorded by the ITAT that there was no evidence regarding payment of 36,17,980/- by the Assessee to the sub-contractor in connection with the execution of the garbage collection work is perverse?

(3.) In first appeal, the Commissioner of Income Tax (Appeals) deleted the addition of 35,39,631/- and found that the Appellant had been maintaining the accounts of income receivable from JMC on the basis of the bills submitted and approved by JMC after making various deductions as per the contract. This system of accounting had been regularly followed by the Appellant and accepted by the Department since 1990. The CIT(A) also observed that there was a dispute between the Appellant and the JMC on account of the non-determination of the amounts due to the Appellant and on the writ petition of the Appellant such matter had gone up to the Rajasthan High Court, which eventually was decided against the Appellant. On facts, the CIT(A) found that on an accrual basis the Appellant had actually overstated rather than understated its income for the period under consideration.