Bona fide change in accounting method upheld where cash basis was adopted after delayed commission receipts and large outstanding dues.

A change from the mercantile system to the cash system was accepted as bona fide where the assessee had consistently followed mercantile accounting earlier, then shifted because commission income was credited after a time gap and substantial outstanding dues meant tax was being paid on amounts not actually received. The subsequent use of the cash system was followed consistently, supporting the genuineness of the change. The Revenue's challenge failed because the accounting change was found to be bona fide.

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Issues: Whether the change in the method of accounting from the mercantile system to the cash system was a bona fide change.

Analysis: The assessee had consistently followed the mercantile system till the relevant assessment year and thereafter shifted to the cash system on the explanation that commission income was credited after a time gap and outstanding dues remained substantial, causing tax to be paid on amounts not actually received. The accounting change was found acceptable and was followed consistently thereafter.

Conclusion: The change in the method of accounting was held to be bona fide, and the Revenue's challenge failed.

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