Where the assessee neither offered its income on accrual basis nor claimed deduction of the entire amount of expenses on due basis, it cannot be said that it followed mercantile system of accounting in true sense and therefore, the books were rightly rejected under proviso to S. 145(1) (AY. 1987-88 to 1992-93)
Sahara India Ltd. v. ACIT (2018) 168 ITD 1/ 164 DTR 49 / 192 TTJ 655 (TM) (Luck.) (Trib.)
S. 145 : Method of accounting – Assessee followed mercantile system of accounting – Certain percentage of expenses were debited in the year and the balance was deferred – Also, certain percentage of income was booked in the year and balance was deferred for a period of 12 years – Held, the accounts were liable to be rejected.