- (1.) THE assessee has approached this Court by way of filing the present appeal against the order dt. 11th Aug., 2005 passed by the Income -tax Appellate Tribunal, Amritsar Bench : SMC, Amritsar (for short 'the Tribunal'), in ITA No. 161/Asr/2005, dt. 11th Aug., 2005 for the asst. yr. 2002 -03, raising the following substantial questions of law : (i) Whether the instructions issued by the CBDT under Section 119 of the IT Act are binding upon the IT authorities ? (ii) If the answer to the question No. 1 is negative whether the IT authorities at the time of assessment can travel beyond reasons recorded at the time of scrutiny and the reasons can be withheld from the assessee ? (iii) Whether, in the facts and circumstances of the case, the appellant -assessee is entitled to be granted the benefit under Section 80P(2)(a)(vi) of the IT Act and that too in view of the benefits granted for the last more than one decade ? (iv) Whether on the employment of some outside labour, the co -operative society is to be deprived of the exemptions of the whole of the amount of profits and gains and income of the collective disposal of the labour of its members ? (v) Whether the impugned assessment of the net profits and gains of the assesses and the assessment @ 6 per cent is ultra vires of principles of natural justice and legal, justified and in order in the facts and circumstances of the case ? (vi) Whether it is mandatory upon the IT authorities to decide the contentions/submissions advanced before them ? (vii) Whether the whole approach of the learned IT authorities below in deciding the case against the appellant -assessee suffers from perversity and is based upon assumptions and presumptions and surmises and conjectures ? (viii) Whether the provision for deduction/exemptions is to be interpreted liberally in favour of assessee ? (ix) Whether discriminatory and unfair treatment is being met out to the appellant -society ?
(2.) THE assessee co -operative labour society filed return of income for the asst. yr. 2002 -03 on 25th June, 2002 declaring its income as nil. The same was processed under Section 143(1) of the IT Act, 1961 (for short 'the Act'), as per the returned income. The case of the assessee was selected for scrutiny and accordingly, statutory notices under Sections 142(1) and 143(2) of the Act were issued in time. Process for scrutiny was initiated with prior approval of the CIT, as is evident from the facts recorded in the order of assessment. On test checking of cash book for part of the year it was found that the assessee had introduced cash receipts ranging from Rs. 30,000 to Rs. 2 lacs in the cash book. The assessee failed to explain the nature or source of amount so introduced in the cash book. It was further found that substantial amounts of cash were withdrawn from the bank on different dates and it was shown to have been utilized on the same day but without there being any evidence in the form of bills/vouchers, etc. to support the same. No stock register of the material purchased and utilization thereof was found to have been maintained. Seeing the totality of the circumstances and finding that the books of account maintained by the assessee did not reflect true and fair state of affairs of the assessee, the provision of Section 145 of the Act was invoked and books of account were rejected.
(3.) EVEN the claim of the assessee for exemption under Section 80P(2)(a)(vi) of the Act was also found to be false as no supporting material was produced before the assessing authority and since the books of account of the assessee had been rejected, an estimate of net profit vis -a -vis the turnover of the assessee was made at 8 per cent.;