Law:

Section:

Section 144, read with section 69 of the Income-tax Act, 1961 - Best assessment - Assessment year 1969-70 - Whether in course of making assessment under section 144, any material collected by ITO can be used against an assessee only after giving him an opportunity of being heard - Held, yes - Whether, it is clear from provisions of section 69 also that before amount of undisclosed investment is included in total income of an assessee, he is entitled to an opportunity to explain it - Held, yes FACTS Section 144 was resorted to since the petitioner did not file a return of the total income; and he did not also respond to the notices issued to him by the respondent. The order of assessment stated, among other things, that during the relevant accounting year the petitioner had constructed a building whose estimated cost came to Rs. 40,000. The respondent estimated the petitioner's professional income for the year at Rs. 25,000; and he estimated the balance of Rs. 15,000 to be the income from other sources. The instant petition had been filed to quash the said order of assessment on the ground that the addition of Rs. 15,000 from other sources was made without giving the petitioner an opportunity for being heard. HELD What section 144 requires the ITO to do in the case of defaulting assessee is to make an assessment of his total income to the best of , after taking into account all relevant materials which the ITO has gathered. An assessment to the best of is a quasi-judicial process, and it has to be based on the materials gathered. Any quasi-judicial process requires an opportunity for being heard before decision. The decision can be arrived at best, or as correctly as possible, only if the assessee is given an opportunity to say why on the materials gathered by the ITO, the income should not be assessed in the manner proposed to be done by him. There is no express denial of this well-established common law right in section 142(3). Sub-section (3) of section 142 deals with a stage before the ITO comes to a tentative decision or proposal to determine the total income at a certain amount on the basis of the materials gathered by the ITO. Those materials can be used…

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