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Section 144 of the Income-tax Act, 1961 - Best assessment - Assessment year 1994-95 Tribunal was not right in treating appellant as an AOP as against claim of status of firm, when return filed, though belated, had been entertained and assessment had been completed under section 143(3) and when Assessing Officer had not proceeded to pass an ex parte order as contemplated under section 144 [In favour of assessee] A notice under section 143 was issued and served on the assessee as the assessee had failed to file the return. In response to the notice issued under section 143(2) the assessee along with the accountant of the assessee appeared and produced the books of account and other details. The same were verified. The assessee had claimed interest on capital of Rs. 99,974 and remuneration to partners of Rs. 1,10,000. These claims were disallowed as the status of the firm was taken as an association of persons under section 184(5) on the ground that there was default committed by the assessee as mentioned in section 144. The assessee contended that it should have been assessed in the status of firm only since it had complied with the notice under sections 148, 143(2) and the assessment had also been completed under section 143(3). Held that, a Division Bench of the instant court held in its order dated 20-2-2004, [ITA No. 4 of 2004] that the Assessing Officer had not proceeded to pass a best assessment under section 144 which he ought to have done if there was any failure as mentioned in section 144. The fact that the Assessing Officer did not do so clearly led to an inference that there was no failure as mentioned in section 144. When it was not possible to comply with a provision, it was not possible to say that there is 'failure to comply with a provision'. In these circumstances no question of law arose and the Tribunal was not right in treating the appellant as an AOP as against the claim of firm, when the return filed, though belated, had been entertained and the assessment had been completed under section 143(3) and when the Assessing Officer had not proceeded to pass an ex parte order as contemplated under section 144. CASE REFERRED TO CIT v. Smt. P. K.…

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