1982 (8) TMI 34 - HC - Income Tax

Summary

Issues:
- Whether the assessee should be given an opportunity of being heard under section 142(3) before making an assessment under section 144 of the Income-tax Act, 1961?

Detailed Analysis:
The case involved assessments for the years 1967-68, 1968-69, and 1969-70, where the assessee failed to comply with notices under section 142(1) of the Income-tax Act, 1961, resulting in assessments under section 144. The Assessing Officer (AO) estimated the assessee's income based on various discrepancies and non-compliance by the assessee. The Appellate Assistant Commissioner (AAC) set aside the assessments, citing lack of opportunity for the assessee to be heard and rejecting the AO's actions. The Department appealed to the Tribunal, arguing that under section 144 assessments, the assessee was not entitled to a hearing or information as mentioned by the AAC. The Tribunal referred to relevant case laws and held that the assessee should be given an opportunity to be heard before adverse inferences are drawn. The Tribunal also noted that the provisions of section 146 did not apply to the circumstances of the case. Consequently, the Tribunal dismissed the departmental appeals.

The High Court was tasked with deciding whether the assessee should be given an opportunity to be heard under section 142(3) before assessments under section 144. The Court disagreed with the Tribunal's conclusion, stating that the clear language of the relevant sections did not support the assessee's right to a hearing before a section 144 assessment. The Court highlighted that the Tribunal's decision contradicted the explicit provisions of the Income-tax Act, 1961. As a result, the Court ruled in favor of the Revenue, indicating that the assessee was not entitled to a hearing under section 142(3) before a section 144 assessment.

In conclusion, the High Court's judgment clarified that the assessee was not entitled to an opportunity to be heard under section 142(3) before a best judgment assessment under section 144 of the Income-tax Act, 1961. The Court's decision favored the Revenue, emphasizing the statutory provisions and dismissing the Tribunal's interpretation. Each party was ordered to bear its own costs, and both judges, Sabyasachi Mukharji J. and Suhas Chandra Sen J., concurred with the judgment.