Kerala H.C : The ITO did not reject the books of the assessee

Counsel Appeared

P.K.R. Menon & N.R.K. Nair, for the Revenue : G. Sivarajan, for the Assessee

T. L. VISWANATHA IYER, J.:

We are satisfied that the questions of law raised by the petitioner do arise for consideration out of the order of the Tribunal. The ITO had set out the reasons why he rejected the accounts of the assessee and estimated the income. Particularly, he has referred to the reasons why he was estimating the sale, production and labour charges. He also gave the basis for the estimation of the income with reference to the income which the assessee had derived in the subsequent assessment year. The Tribunal does not appear to have adverted to the various aspects which the ITO has relied on. We are, therefore, satisfied that there are questions of law arising for consideration. The questions raised by the petitioner in paragraph 7 of the original petition truly reflect the controversy between the parties. They have to be referred to this Court for opinion.

2. We, therefore, allow this original petition. We direct the Tribunal, Cochin Bench, to draw up a statement of the case and refer the following questions of law for the opinion of this Court under section 256(2) of the IT Act, 1961.

“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in finding that the ITO did not reject the books of the assessee ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in finding that the income of Rs. 1,12,906 determined by the ITO in the first instance has only to be taken as the reasonable business income of the assessee for this assessment year?”

[Citation:193 ITR 178]