SUPREME COURT OF INDIA

Commissioner of Income-tax, New Delhi

v.

Realest Builders & Services Ltd.

S. H. KAPADIA AND B. SUDERSHAN REDDY, JJ.

CIVIL APPEAL NOS. 3378 AND 3379 OF 2008

May 7, 2008

Section 145 of the Income-tax Act, 1961 - Method of accounting - System of accounting - Whether in cases where department wants to tax an assessee on ground of the liability arising in a particular year, it should always ascertain method of accounting followed by assessee in past and whether change in method of accounting was warranted on ground that profits are being under estimated under impugned method of accounting -Held, yes -Whether if Assessing Officer comes to conclusion that there is under estimation of profits, he must give facts and figures in that regard and demonstrate to Court that impugned method of accounting adopted by assessee results in under estimation of profits and is, therefore, rejected, otherwise, presumption would be that entire exercise is revenue neutral.

CASE REVIEW:

Decision of the High Court of Delhi affirmed. [Para 6]