Double taxation of accrued income barred where the same interest had already been assessed on accrual basis.

Income already assessed on accrual basis in earlier years could not be taxed again on receipt basis in assessment year 1962-63 merely because the assessee kept no regular books. The Court applied the rule that, where the revenue has adopted one permissible basis of assessment for the same income, it cannot switch to another basis later to tax that income twice. Section 145 did not justify the change on these facts, as the Income-tax Officer had not proceeded under section 144 and had altered the basis only for revenue convenience. Explanation 2 to section 5 was also read as preventing double inclusion of the same income on both accrual and receipt bases.

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Issues: Whether interest which had already been assessed on accrual basis in earlier assessment years could be brought to tax again on receipt basis in the assessment year 1962-63 when the assessee did not maintain regular accounts.

Analysis: The assessee had no regular books of account and the department had, for earlier years, assessed the mortgage interest on accrual basis. The Court applied the principle that once the taxing authority has adopted one permissible basis of assessment in relation to the same income, it cannot, merely because receipt has later occurred, switch to a different basis so as to tax the same income again. The Court also noted that section 145 of the Income-tax Act, 1961 did not authorise such a change of basis in the facts of the case, because the Income-tax Officer had not proceeded under section 144 and had instead altered the method only to suit revenue interests. Further, the Court referred to Explanation 2 to section 5 of the Income-tax Act, 1961 as recognising that income included on accrual basis is not to be included again on receipt basis.

Conclusion: The question was answered in the negative. The interest could not be taxed again on receipt basis in assessment year 1962-63, and the decision was in favour of the assessee.

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