Best judgment assessment. - Income Tax - 244/CBDT

INSTRUCTION NO. 244/CBDT Dated: December 4, 1970 Section(s) Referred: 144 ,41(1) Statute: Income - Tax Act, 1961 Reference is invited to the decision of the Supreme Court in the case of Tirunelvelli Motor Bus service company vs. CIT, Madras reported in 78 ITR. The Supreme Court held that when assessment u/s.23(4) is completed without mentioning that the allowance at the total income the subsequent remission or cessation thereof cannot be treated as the income u/s.10(2A). The board have decided that the ITOs while computing the income of an assessee in an assessment made u/s.144 of the I.T.Act should be very careful in ascertaining on the basis of information available on record the nature of the expenses claimed by the assessee. In case the total income is estimated on an adhoc basis a clear mention should be made in the assessment order as under: The total income has been determined after taking into account: i) The expenses claimed in P L account at Rs. ii) Depreciation on assets at Rs. iii) Development rebate allowance at Rs. This would obviate the difficulty in bringing to tax u/s.41(1) in a subsequent assessment year the remission or cessation of the trading liability or loss. This procedure would also enable the ITO to tax the balancing change u/s.41(2) as also to withdraw development rebate allowed earlier u/s.155(5) of the I.T.Act. 2. These instructions may be brought to the notice of all the ITOs in your charge.