Law:

Section:

Section 144, read with section 147, of the Income-tax Act, 1961 - Best assessment - Whether a best assessment applying provisions of section 144 can be made when provisions of section 147 have been invoked and assessee has failed to respond to a notice under section 148 - Held, yes Words and phrases - The phrase 'so far as may be' occurring in section 148 of the Income-tax Act, 1961 Facts The partners of the assessee-firm were the directors of a private company. Raids were conducted in August/September 1963, upon the premises of that company and various documents were seized. Upon examination thereof, notices under section 148 were issued by the ITO to the asssssee seeking to reassess it for the assessment years 1950-51 to 1957-58. The assessee failed to respond to the notices under section 148. On 26-3-1970 the ITO made reassessments for those assessment years under section 147 read with section 144. On appeal, the Tribunal upheld the ITO's order. On reference, the assessee contended that the words 'so far as may be' in section 148 exclude the applicability of the provisions of section 144 to an assessment made under section 147. Under section 144 the ITO is entitled to estimate income on such material as is available and even if no material is available. Under section 147, however, there has to be some material and if the assessee does not respond to a notice under section 148 only an adverse inference can be drawn thereon. Held A best assessment applying the provisions of section 144 can be made when the provisions of section 147 have been invoked and the assessee has failed to respond to a notice under section 148. A best assessment under section 144 has to be made upon such material as is available. Section 147 predicates the existence of some material. Where an assessee does not respond to a notice under section 148 the taxing authority is obliged to determine the assessee's income as best as he can, based on that material. There is no real difference between the manner in which the taxing authority reaches its conclusions under the provisions of section 144 and of section 147. Both are assessments made to its best . It is as open to the assessee to argue…

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