COMMISSIONER OF INCOME TAX Vs. RAJASTHAN FINANCIAL CORPORATION NO 1

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred the following question arising out of its order dated April 23, 1981, in respect of the assessment year 1977-78 under Section 256(1) of the Income-tax Act :

(2.) THE facts of the case as found by the Tribunal are that there was a footnote in the printed report of the directors disclosing that the accumulated interest accrued on amounts decreed or under litigation amounting to Rs. 21,43,395 had not been taken into consideration for the purpose of arriving at the income. This amount included a sum of Rs. 9,85,821 relating to the assessment year 1977-78. THE Income-tax Officer did not include the amount of Rs. 9,85,821 in the income of the assessee while passing the assessment order.

(3.) IF the assessee has continued with the system of accountancy which is a recognised one and has consistently been followed and even accepted by the Revenue and has not been found lacking in bona fides, the power under Section 263 cannot be exercised.