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1.2 That, the Id. CIT(A) has further erred in conforming the addition of Rs. 1,37,53,473/- made by ld. AO by completely brushing aside the fact that assessee is regularly maintaining books of accounts on "Cash method of accounting" (which are also subject to audit), as against which some of his clients follow "Mercantile method of accounting", which has resulted in deviation in receipts as per books and as per Form 26AS. Appellant prays that the receipts declared by assessee are in consonance with method of accounting regularly followed, thus addition so confirmed deserves to be deleted.

Paras Kuhad vs. ACIT 5.3 The appellant contested that he is an individual lawyer following cash method of accounting for preparation of books of accounts and offers income to tax on receipt basis, i.e. as and when the income is received. This is a consistent accepted method of accounting by the Income Tax Department and has been assessed as such in previous years also. The appellant further submitted that deductor clients being mostly corporate deduct and deposit TDS on accrual basis i.e. as and when the invoice is received by them or the expenses is entered in their books of accounts as per the provisions of Section 194J of the Act. However, there are clients who have deducted TDS but have not made payment to the assessee. Due to the same, since, assessee has not received the income during FY 2016-17, the assessee has not shown the income in FY 2016-17 following its accepted method of accounting and have carried forward the income and corresponding TDS to future year.

"Brief facts of the case are that assessee is an individual and is a Senior Advocate representing his clients before the hon'ble Supreme Court of India as well as before various high courts and had also worked as Additional Solicitor General of India till May 2014. The Appellant earns income from his legal profession and from investments made out of own funds. The assessee maintains regular books of accounts following cash method of accounting, which are duly audited by qualified chartered accountant. This fact has also been acknowledged by the ld. AO as it is a matter of record that the assessee follows cash method of accounting in preceding years as well as in subsequent years where such method was duly accepted by the revenue authorities even in the proceedings concluded u/s 143(3) in some of the years. For the period under consideration i.e. Assessment year 2017-18, the assessee has filed his return of income u/s 139(1) of the Act on 28th October 2017 while declaring taxable income of Rs. 6,12,66,320/- (APB 01-07) which was subsequently revised on 30th September 2018 filed u/s 139(5) of the Act at Rs. 6,19,02,760/- (APB - 08-14).

As stated above, assesse maintains books on Cash system of accounting, (which is a recognised method of accounting), as has been mentioned at clause 13(a) to the Tax Audit report (APB 26). Your honours would appreciate that as per cash system of accounting, only the cash receipts/ receipts actually credited into the Paras Kuhad vs. ACIT bank account are treated as the gross receipts for the purpose of revenue recognition. In order to substantiate income so declared, all the necessary details were furnished by assessee, which were simply brushed aside by ld.AO as well as ld. CIT(A). It is submitted that basically difference amount as has been added ld.AO arose due to the fact that assesse follows 'cash method of accounting' whereas some of his clients, majorly corporate clients, follow "Mercantile method of accounting". As the clients following mercantile system deduct TDS on accrual basis, whereas assesse offers income on Receipt basis, the same is bound to result into difference between receipts as per books and as per Form 26AS.