M/S KRISHNA ICE FACTORY AND COLD STORAGE vs. INCOME TAX OFFICER

This appeal has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh dated 27.2.2009 in I.T.A. No.59/Chandi/2008 proposing to raise following substantial questions of law:- “i) Whether in the facts, and circumstances of the case, the case appellant fell within clause 2(q) of the guidelines for the scrutiny of the cases and could the case be selected for scrutiny? ii) Whether in the facts, and circumstances of the case, the findings of the Tribunal that from the returns and documents filed it was not clear that the amount distributed among the partners was of sale proceed of factory land is not perverse? iii) Whether in the facts, and circumstances of the case, the assessment under Section 143 (3) could have been done in violation of the guidelines issued by the CBDT? iv) Whether in the facts, and circumstances of the case, the matter could have been remanded to A.O. for allowing an opportunity to cross examine the Revenue official when the evidence being relied upon the Department was no evidence in the eyes of law?

Case of the assessee was taken up for scrutiny, as per Clause 2(q) of the CBDT guidelines i.e. introduction of fresh capital exceeding `10 lacs. The Assessing Officer, accordingly, made assessment, making addition to the declared income of the assessee. The CIT(A) remanded the matter for fresh assessment by giving further opportunity to the assessee on the quantum of addition. The Tribunal modified the order of the CIT(A) with regard to valuation and left the matter open to be decided again by the Assessing Officer. Cross-objection of the assessee against finding on the issue of applicability of guidelines for scrutiny was rejected by holding that at the time of picking up of the return in scrutiny, the Assessing Officer prima facie formed the requisite opinion of introduction of capital exceeding `10 lacs. Even if on subsequent examination of books of account, the quantum of capital introduced was not shown to be of that extent, the scrutiny assessment could not be set aside.

We have heard learned counsel for the assessee.

Only plea which has been now raised is that the view taken by the Tribunal was perverse and mere prima facie view of introduction of capital exceeding `10 lacs was not sufficient. It was further submitted that there was no basis for forming such a prima facie opinion.

We are unable to accept the submission. At the stage of selection of case in scrutiny, final view about merits cannot be taken and it is only prima facie opinion on the basis of which decision to take a case in scrutiny is taken. In view of finding concurrently recorded by the CIT(A) and the Tribunal that case of the assessee was picked up for scrutiny in accordance with the applicable instructions, no substantial question of law arises.

The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE November 22, 2010 (AJAY KUMAR MITTAL) ashwani JUDGE 3