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Issues: Assessment years 1962-63 and 1963-64 - Best judgment assessments under section 144(b) of the Income-tax Act, 1961 - Notice under section 143(2) not served - Violation of principles of natural justice.
Summary: The High Court of GAUHATI addressed a case involving Lalchand Todi, an assessee partnered in Tinsukia Flour Mill, for the assessment years 1962-63 and 1963-64. The assessee, due to a mob attack, was unable to produce account books as requested under section 142(1) of the Income-tax Act. Subsequently, best judgment assessments were made under section 144(b) without issuing a notice under section 143(2). The court was tasked with determining whether these assessments were legally valid and if the assessee was entitled to further notice under section 143(2). The court considered the argument that the absence of a notice under section 143(2) violated the principles of natural justice, specifically the right to be heard (audi alteram partem). It was contended that the Income-tax Officer cannot pass an assessment order without hearing the assessee, even in cases where account books were unavailable. Reference was made to a previous court decision emphasizing the application of natural justice principles in similar situations. In analyzing the case, the court held that the Income-tax Officer must provide a notice under section 143(2) before finalizing an assessment order, as the principle of audi alteram partem operates in all circumstances. The court ruled in favor of the assessee, stating that the assessment without proper notice was invalid. Consequently, the second question regarding the challenge to the best judgment assessment did not require an answer. In conclusion, the court answered the first question in the negative, in favor of the assessee, and against the Revenue. The assessee was awarded costs of Rs. 250.
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