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Case study for CA final students - Section 139(5)

sandeep Gupta (Director) (63 Points)

14 April 2009

An assessee furnished a return disclosing profits of Rs.59,990 on the basis of his books of accounts maintained on mercantile system of accounting. Since substantial amount of receipts could not be realized, he changed the accounting system to cash system and filed a revised return showing a profit of Rs.19,050. Can assessee file a revised return u/s 139(5) in the given case

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5 Replies

Ashish M (Chartered Accountant) (2731 Points)
Replied 14 April 2009

The above case attracts the provisions of Sec.139(5) read with Sec.145..........

Sec.139(5) says the assessee can file a revised return if he discovers "any omission or wrong statement therein".......in the above case there is no wrong statement and it is just that the assessee is not able to reliase the adequate amount of sales.that is otherwise became due.........................

also Sec.145 says that assessee shall have to compute PGBP of business in accordance with the system of accounting" regularly employed by him."

this filters down to conclude that the assessee can't on its own wayword choose to prepare accoutns........he has to follow the same accounting method which he regularly employs............

In this regard. Accounting standards also provides that the accounting system may be changed if it presents the financial statement in better manner..................non reliasation of reciepts doesn't tarnish the picture so as to change the whole system of accounting...........

IN my view, filing a revised return by changing the accouiting system so as to decrease the profit may amount to its understatement...........pls wait for more views from this forum.........

Arpit Gupta (Chartered Accountant ) (95 Points)
Replied 14 April 2009

sec. 145 states that the assessee has to prepare its accounts according to the method rgularily employed by him

since the assessee is following the mercantile basis hence he is not supposed to change its basis of accounting at the end of year only for the purpose of understating its profit

Arpit Gupta (Chartered Accountant ) (95 Points)
Replied 14 April 2009

sec. 145 states that the assessee has to prepare its accounts according to the method rgularily employed by him

since the assessee is following the mercantile basis hence he is not supposed to change its basis of accounting at the end of year only for the purpose of understating its profit