Brief of the case:
The Hon’ble Delhi High Court in the case of CIT vs. Om Prakash Khaitan held that In the absence of change in system of accounting consistently followed by the assessee and accepted by the department, the department cannot take different stand for the subsequent years. Such change in stand if allowed would create confusing situation as far as assessee is concerned
Facts of the case:
- The assessee proprietor of the solicitors firm has been preparing his firm’s account account as per the cash system of the accounting. The advances received from the clients are recorded as in a separate ledger in the name of the client and all the expenses incurred in relation to the provision of service to clients are charged to the same account.
- At the end of the year, credit balances in the accounts are transferred to the P&L A/c in respect of the clients whose cases got settled. In case of clients whose cases are pending, the credit balances are carried forward as Sundry Creditors.
- The AO made an addition of Rs. 10,78,01,478/- representing the credit balances outstanding in the clients accounting relating to unsettled cases. The CIT (A) and ITAT decide the matter in the favour of assessee. Department preferred an appeal before the Hon’ble High Court.
Contention of the Revenue:
Paid content
Become a Basic or Premium Member, or log in if you are already a Basic or Premium member.
