Tuesday, March 11, 2014

Survey party's promise of non-selection of case in scrutiny won't invalidates cases selected as per set norms

Even where petitioner disclosed additional income on assurance of survey party that his case would not be taken-up for scrutiny; Assessing Officer was still empowered to select petitioner’s case for scrutiny assessment.
a)  Pursuant to survey carried out by Income-tax department, the statement of petitioner had been recorded in which he had disclosed additional income;
b)  The petitioner contended that he had signed said statement after an assurance had been given by survey party that his return of income would not be taken-up for scrutiny;
c)  Subsequently, the petitioner was served with notice under section 143(2) informing him that his case was selected for scrutiny assessment. In the instant writ, the petitioner had challenged the legality and validity of scrutiny assessment.
The High Court held as under:
1)  The Assessing Officer is empowered to select a particular case for scrutiny assessment in view of guidelines fixed for selection of cases for income tax scrutiny;
2)  The Assessing Officer recorded reasons for selection of petitioner's case, sought approval of approving authority, who approved selection and, thereafter, assigned case for assessment;

3)  Thus, the requisite procedure was followed which was necessary before issuing notices under sections 143(2) and 142(1). Hence, the petition was to be dismissed. – Ajay v. Dy.CIT [2014] 42 taxmann.com 210 (Bombay)