A division Bench of Madras High Court held that unlike Best Judgment Assessment, the conclusions arrived at in Scrutiny Assessment must be definite.
The ratio was laid by the Bench comprising Justice T.S.Sivagnanam and Justice R.N.Manjula while disposing off the writ petition filed by a Tamil Nadu based dealer, S.R. Paramasivam, challenging the Scrutiny Assessment order of the Assessing Officer (AO) whereby the department had alleged sale of cement bags for a price lesser than the purchase price. Though during the course of proceedings before assessing authority, the Petitioner had submitted accounts, purchase and sales bill, but the AO had declined to consider holding that except 7 purchase and sales bills produced, all others revealed that the sale price quoted waslesser than the purchase price. The petitioner was also not granted the opportunity of personal hearing, as the department alleged that he had not sought for the same.
Remanding back the matter to the AO for reconsideration, the Court observed that “The Assessing Officer cannot state that he need not call for other bills and even it is called for, except for the 7 bills, which were purchased by the appellant, all other bills will reflect lower sale price than the purchase price. This may not be a right approach while completing the assessment for the purpose of levying tax.” The Court further held that as distinct from Best Judgment Assessment, the Assessing Officer must come to a definite conclusion in case of Scrutiny Assessment. The Court also directed that the Petitioner be given an opportunity of personal hearing, after which a speaking order shall be passed, preferably within 60 days from the completion of such hearing.
Furthermore, it was observed that as regards cases are pending before a court for a long time, it is unfair to drive away the petitioner in the pretext of alternative remedy. The observation was made while considering the propriety of an earlier order of the same Court whereby the petition was rejected on ground of availability of alternative remedy, ignoring the fact that the matter was pending for as long as five years.
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