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S. 115JB: Dept’s grievance that if amount is not credited to P&L A/c, accounts are not correctly prepared as per Schedule VI to the Companies Act, 1956 and adjustment to book profits can be made is not acceptable if auditors and ROC have not found fault

CIT vs. Forever Diamonds Pvt. Ltd (Bombay High Court)

 
COURT:
CORAM:
SECTION(S):
   
DATE: August 12, 2015 (Date of pronouncement)
DATE: August 22, 2015 (Date of publication)
AY: 2004-05
   
S. 115JB: Dept’s grievance that if amount is not credited to P&L A/c, accounts are not correctly prepared as per Schedule VI to the Companies Act, 1956 and adjustment to book profits can be made is not acceptable if auditors and ROC have not found fault with A/cs

The observations of the Apex Court in Apollo Tyres Ltd. v/s CIT 255 ITR 273 concludes the issue by holding that the Assessing Officer does not have power to embark upon the fresh enquiry with regard to the entries made in the books of accounts of the Company when the accounts of an assessee Company is prepared in terms of Part II Schedule VI of the Companies Act scrutinized and certified by the statutory auditors, approved by the Company in general meeting and thereafter filed before the Registrar of Companies who has a statutory obligation also to examine and be satisfied that the accounts of the company are maintained in accordance with the requirements of the Companies Act. If the grievance of the revenue is to be accepted, then the conclusiveness of accounts prepared and audited in terms of Section 115JB of the Companies Act would be set at naught. This without successfully impeaching the Auditor’s certificate or without the Registrar of Companies holding that the accounts have not been prepared in accordance with the provisions of the Companies Act. There is no distinction between s. 115JA and 115JB and the principles laid down in Apollo Tyres applies to s. 115JB as well (CIT vs. Akshay Textiles Trading And Agencies P. Ltd. (304 ITR 401) and CIT vs. Adbhut Trading Co. P. Ltd. (338 ITR 94) followed)

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