Law:

Section:

Section 144 of the Income-tax Act, 1961 [Corresponding to section 23(4) of the Indian Income-tax Act, 1922] - Best assessment - Assessment year 1946-47 - Whether definite material need not necessarily be in form of legal evidence but there must be something which at first stage should be brought to notice of assessee and if Income-tax Officer in default of any response from assessee adds something, more additional material also should appear in order - Held, yes - On failure of assessee to file return, assessment was made ex parte - While making said assessment, ITO added to income of assessee income from rice-mill in which his adult son was partner on ground that son was benamidar or assessee - No information was conveyed to assessee as to material on which ITO had come to conclusion that son was benamidar of assessee - Whether on facts, ITO was not justified in adding income of assessee's son to income of assessee - Held, yes FACTS The assessee was a dealer in paddy and rice at two places. As there had been default in submitting the return, the ITO made a best assessment under section 23(4) of the 1922 Act. In addition to the income from the business directly carried on by the assessee the ITO included the income from a rice mill which he treated as the income of the assessee, although ostensibly the partner of the firm carrying on that business was an adult son of his. The Tribunal upheld the addition only on the ground that the assessee had been asked to show cause why the income received by his son from the rice mill should not be treated as his own income and he failed to show any cause in his reply to show cause notice. On reference: HELD In the facts and circumstances of the case, the addition was not supported by proper or indeed any evidence. It is true that the Income-tax Officer is not by law bound to disclose to the assessee on what information he proposed to add a particular item of income. Although the strict letter of the law might not require it but natural justice at best requires that before charging any person with financial liability he should be informed of the material on which the charge was going to be imposed and given an opportunity…

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