Law: Income Tax Act, 1922

Section: 23(4)

Section 144 of the Income-tax Act, 1961 [Corresponding to section 23(4) of the Indian Income-tax Act, 1922] - Best assessment - Assessment year 1950-51 to 1952-53 - Whether best assessment made on basis of a comparable case, which was neither put to assessee nor assessee was given an opportunity to explain same, cannot be said to be in accordance with principles of natural justice - Held, yes FACTS The assessee was an AOP doing abkari contract. The ITO rejected the return submitted by the assessee and added to the income-returned by him in all three years because the accounts produced by the assessee were not found to be reliable by the ITO made best assessment. In appeal to the AAC the assessee did not dispute the correctness of the decision of the ITO that his account books were not reliable. He merely contended that the estimate of the yield of toddy made by the ITO was grossly excessive. In support of that contention he relied on the certificate given by the Excise Superintendent, according to which the average yield of toddy in a toddy tree in the locality in question was about 90 seers per tree. On the basis of -that certificate the AAC substantially accepted the case of the assessee. On appeal, the Tribunal set aside the order of the AAC and substantially restored the order of the ITO. It was observed that the ITO had correctly adopted generally 120 seers of toddy as yield per tree with slight variations there of for some of the years for certain specific areas on the basis of production shown by another tapper in the same locality. HELD The order of the Tribunal did not show that the comparable case was put to the assessee and that he was given an opportunity to have his say on the matter. At any rate, this court, in calling for a reference under section 66(2) of the 1922 Act, proceeded on the basis that the comparable case had not been put to the assessee. If an assessing authority wants to make a best assessment on the basis of a comparable case, that case has to be put to the assessee and the assessee should be given an opportunity to give his explanation as regards the same. In this case, the Court did not go into the question whether there was any…

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