Law: Income Tax Act, 1961

Section: 274

Law: Income Tax Act, 1961

Section: 274

Section 144, read with sections 139(4) and 274, of the Income-tax Act, 1961 - Best assessment - Assessment year 1963-64 - Assessee-firm had attempted to file voluntary return on 23-11-1963 against notice issued under section 142 - ITO did not allow assessee to file returns necessitating unusual step on part of assessee to dispatch same by registered post on same day - However, ITO passed best assessment order on very same day and issued penalty notice upon assessee - Whether since there was no reason for unusual and undue haste in serving assessment order on very evening on which assessment order purported to have been passed, it could be said that ITO was anxious to forestall any attempt on part of assessee to file voluntary returns under section 139(4), and, therefore, impugned assessment order and penalty notice were liable to be quashed - Held, yes FACTS The assessee-firm consisted of five partners. For the assessment year 1963-64, the ITO issued a notice under section 142(1) upon the assessee-firm for the production of the accounts on 18-11-1963. The date fixed was a restricted holiday and on that day an application for a short adjournment was moved by the assessee as their accountant had gone home for Diwali. Subsequently the application dated 18-11-1963, was allowed only to the extent of adjournment of one day, i.e., to 19-11-1963. The case of the assessee was that no intimation of the adjourned date was given and the case was not fixed for 19-11-1963. Therefore, on 23-11-1963, a return of the firm along with five returns of the partners were sent through the accountant. However the ITO refused to receive those returns. Thereupon, the same afternoon at 3 p.m. the assessee by registered post acknowledgement due, dispatched the aforesaid returns, five on behalf of the partners and one on behalf of the firm. On the very same day, the ITO passed the assessment order and issued, penalty notice under section 274 and cancelled registration of the assessee-firm. On writ : HELD The notice of demand and the assessment order were admittedly served on the assessee on 23-11-1963, at 7.30 p.m. and the six voluntary returns were undoubtedly dispatched at 3.p.m. by…

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