Law:

Section:

Section 146 of the Income-tax Act, 1961 [Corresponding to section 27 of the Indian Income-tax Act, 1922] - Reopening of assessment at instance of assessee - A notice under section 22(4) was served upon assessee - He produced books of accounts pursuant to said notice except branch at 'G', and contended that no separate books were maintained at branch 'G' - Therefore, ITO made best assessment - Both Commissioner and Tribunal did not consider above plea of assessee on ground that no application had been made by assessee under section 27 - Whether application under section 27 was not a condition precedent to raising of present contention - Held, yes - Whether, therefore, it was incumbent on AAC to decide whether contention of assessee that books of account did not exist was well founded or not - Held, yes FACTS The assessee was a HUF and admittedly it had business at various places. In the relevant assessment years, a notice under section 22(4) of the 1922 Act was served upon the assessee. He produced his books of account, which did not include any book of account from branch 'G'. The ITO after holding that the account books of branch 'G' had been suppressed, assessed the tax under section 23(4) of the Act on a best assessment. The assessee had stated before the ITO that no separate books were maintained at 'G'. On appeal, both Commissioner and the Tribunal did not consider the plea raised by assessee on the ground that the assessee had not made an application as required by section 27 of the Act. On reference : HELD Section 27 does not contemplate a situation in which the assessee says that no books of account were maintained separately at a branch office and the ITO holds on evidence before him or otherwise, that such books of account must have been maintained. Where such a finding was given by the ITO, the words of section 27 are inapposite, and no application could really be made for a de novo assessment. The wording of the section was clear enough, and it allows a de novo inquiry into the assessment on proof of one of the four circumstances mentioned in that section. The present context of facts did not fit in with any of those four circumstances, and…

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