Income Tax Department must accept Audited Accounts: SC

The Supreme Court has said the Income-Tax Department has to accept the authenticity of the accounts maintained in accordance with the provisions of the Companies Act and certified by the auditors. The Assessing Officer cannot go beyond the net profit shown in the profit and loss account, except to examine whether the books of accounts were duly certified by the authorities and properly maintained, the court said. A bench comprising Justice S H Kapadia and Justice B S Reddy said: "The AO (assessing officer) has to accept the authenticity of the accounts maintained in accordance with the provisions of Part II and Part III of Schedule VI to the Companies Act, which are certified by the auditors and pressed by the company in the general meeting." "The AO has only the power of examining whether the books of accounts are duly certified by the authorities under the Companies Act and whether such books have been properly maintained in accordance with the Companies Act. The AO does not have the jurisdiction to go beyond the net profit shown in the profit and loss account except to the extent provided in the explanation (appended to Section 115J of the Income-Tax Act)," it said.
Source: The Economic Times