COMMISSIONER OF INCOME TAX Vs. PATEL BROKERS

JUDGEMENT

(1.) THE Revenue, by this application under S. 256(2) of the IT Act, has prayed that the Tribunal, Jaipur Bench, Jaipur may be directed to state the case and refer the following question of law for the opinion of the High Court :

(2.) THE assessee-firm is a commission agent. For the asst. yr. 1990-91 the assessee filed the return for the income of Rs. 83,256. The ITO, Chittorgarh, while assessing the assessee, made an addition of Rs. 80,317 in the Commission Account as well as Rs. 40,115 as the undisclosed income in the shape of debtors. Dissatisfied with the order passed by the ITO, Chittorgarh, the assessee preferred an appeal before the CIT(A), Jodhpur. The CIT(A), Jodhpur, affirmed the addition of Rs. 80,317 made in the Commission Account but, however, deleted the amount of Rs. 40,115 regarding the undisclosed income in the shape of debtors.

(3.) THE Tribunal deleted the addition made by the assessing authority as affirmed by the CIT(A), Jodhpur on the ground that the authorities below have failed to appreciate how accounts have to be maintained on cash basis. The Tribunal further observed that the lower authorities have not pointed out any circumstance where cash receipts have not been accounted for by the assessee. The Tribunal, also, observed that a subsidiary or a memorandum book maintained by the assessee as memorandum ledger would not convert the cash system to mercantile system and according to this system this amount received in the year, even pertains to the earlier year, shall be treated as the assessee's income. The Tribunal, while allowing the appeal, observed as under :