1987 (1) TMI 7 - HC - Income Tax

Summary

Issues:
1. Interpretation of section 146 of the Income-tax Act in relation to best judgment assessment under section 144.
2. Application of section 146 when an assessment is completed under section 144 for non-compliance with section 142(2A) directions.

Analysis:
The judgment in this case revolves around the interpretation of section 146 of the Income-tax Act concerning best judgment assessments completed under section 144. The assessment in question involved two sets of defaults by the assessee: failure to file a return and comply with notices under section 142(1), and failure to comply with directions under section 142(2A). The Appellate Tribunal accepted the assessee's explanation under section 146 for the defaults related to section 142(1) but did not address non-compliance with section 142(2A. The petitioner argued that section 146 does not apply when best judgment assessment is based on non-compliance with section 142(2A) directions, as section 146 does not mention section 142(2A).

The Court rejected the petitioner's argument, emphasizing that section 146 can be invoked in all cases where an assessment is completed under section 144. To cancel an assessment under section 144, the assessee must prove to the Income-tax Officer that the defaults mentioned in section 146 were due to reasonable cause. The Court clarified that the absence of a specific reference to section 142(2A) in section 146 does not prevent an assessee from invoking section 146 if they can demonstrate reasonable cause for the defaults.

Furthermore, the Court dismissed the contention that interpreting section 146 in this manner would render section 142(2A) and related defaults irrelevant, stating that an assessee can still utilize section 146 if they meet the conditions specified therein. The judgment highlights that the Tribunal's decision aligns with the clear language of the section, and the absence of a reference to section 142(2A) in section 146 does not favor the Revenue. Consequently, the petition was dismissed, with no order as to costs.