By this appeal Department challenges order dt 13th Feb. 1984 by which AAC deleted addition on account of interest. It is opposed by assessee. assessee, individual, advanced certain loan to M/s. Bilas Singh & Co. and M/s. Ojha Bros. For assessment year under consideration assessee showed interest income of Rs. 5,948 in respect of loan given to M/s. Bilas Singh & Co. But from statement of loan account of said concern i t appeared that interest of Rs. 43,644 was credited to account of assessee with firm. "Since interest is receivable on due basis", entire amount was included by ITO in assessment. assessee did not include any interest income in respect of loan given to M/s. Ojha Bros. So ITO was of opinion that "the assessee is liable to assessment, in respect o f interest due whether or not actually received" and as such estimated interest income at Rs. 7,200 @ 12 per cent p.a. Being aggrieved, assessee preferred appeal before AAC. It was argued before AAC that assessee s system of accounting for interest was cash system of accounting which was regularly employed by him. AAC verified truth of this contention from record and on examination of assessment record for asst. yrs. 1978-79 and 1979-80 found that for these two years interest income was assessed to tax on basis of receipt and not on accrual. So he held that only amount of Rs. 5,948 actually received by assessee from M/s. Bilas Singh & Co. should be assessed to tax. In respect of interest on loan given to M/s. Ojha Bros. AAC accepted firm's contention that he is liable to be assessed to tax only when he received interest from firm. As such he deleted this amount of Rs. 7,200 estimated as interest by ITO. departmental representative contended that question of cash method of accounting does not arise as no account is maintained by assessee. It was also contended that onus is on assessee to show that he was all along being charged to tax on receipt basis. He contended that AAC was not justified in deleting interest added by ITO. contention was opposed by authorised representative for assessee. He argued that assessee all along disclosed interest income on receipt basis and that assessment orders for asst. yr. 1978-79 and 1979-80 go to prove this. In support of his contention that there was nothing wrong in assessee's system of disclosing interest income on receipt basis he relied on decision in case of Juggilal Kamlapat Bankers vs. CIT (1982) 29 CTR (Cal) 8: (1975) 101 ITR 40 (All) and snow White Food Products Co. Ltd vs. CIT W.B. II (1983) 141 ITR 861 (Cal). We have carefully considered submission of authorised representative for parties and examined materials on record, fact and circumstances of case and also decision cited before us. On such examination we are of opinion that assessee is entitled to adopt cash system in respect of certain income and it he does so he cannot be assessed on accrual basis. From his examination of assessment orders for asst. yrs. 1978-79 and 1979-80, AAC satisfied himself that assessee really had been assessed on receipt basis in respect of interest income. contention of departmental representative that this was new evidence cannot be accepted because admittedly assessment order are part of record when assessee was being taxed on receipt basis in preceding years, we do not think that ITO was entitled to reject receipt basis and take recourse to mercantile basis for purpose of taxing interest income. On careful consideration of totality of circumstances we are of opinion that AAC was justified in deleting interest added by ITO on accrual basis. As such impugned order does not warrant any interference. As such appeal is dismissed. *** INCOME TAX OFFICER v. PURNENDU KUMAR OJHA