1 itxa5590-10 sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.5590 OF 2010 The Commissioner of Income Tax-13, Mumbai ..Appellant. V/s. Smt. Poonam Ashok Gupta ..Respondent. Mr. Suresh Kumar for the appellant. Ms. Usha Dalal for the respondent. CORAM : J.P. DEVADHAR AND K.K. TATED, JJ. DATED : 17TH OCTOBER, 2011 P.C. :- 1. Whether the ITAT was justified in confirming the order of CIT(A) holding that the change in the method of accounting from mercantile system to cash system was a bonafide change, is the question raised in this appeal. 2. The assessment year involved herein is AY 2005-06. 3. The assessee is engaged in the business of commission agency in the field of steel products. The assessee was following the 2 itxa5590-10 mercantile system of accounting till AY 2004-05. The assessee thereafter changed the accounting system from mercantile system to cash system from 2005-06. The explanation given by the assessee was that there was always a gap between raising the debit note for commission and actual receipt of commission by cheque from the party. The outstanding dues were always huge and hence the assessee had to pay tax on amount which is not received. Therefore, the assessee chose to change the system of accounting from mercantile system to cash system. The ITAT has found that the explanation put forth by the assessee was acceptable and admittedly the cash system has been followed consistently thereafter. In these circumstances, no fault can be found with the decision of the ITAT. Accordingly, the appeal is dismissed with no order as to costs. (K.K. TATED, J.) (J.P. DEVADHAR, J.)