Best Judgment Assessment - Section 144 - Income Tax - Ready Reckoner - Income Tax

Best Judgment Assessment - Section 144 The assessing Officer, taking into all relevant material which he has gathered, is under an obligation to make an assessment of the total income or loss to the best of his judgment and determine the tax payable by the assessee. In case of any one of the following 4 defaults, AO shall make an assessment to the best of his judgement knowledge 1. Failure to furnish ROI u/s 139(1) and not files u/s 139(4) or u/s 139(5) or Fails to make return Updated return u/s 138(8A) [Amendment made by FA, 2022 ] 2. Failure to comply with all the terms of a notice issued u/s 142(1) . 3. Failure to comply with the direction issued u/s 142(2A) for getting the account audited. [Special Audit] 4. Failure to comply with all the terms of a notice issued u/s 143(2) . [Scrutiny Notice] Notes: The best judgment assessment can only be made after issuing a show cause notice, giving the assessee an opportunity of being heard u/s 144 . [No opportunity of being heard given to assess if he fails to comply with notice u/s 142(1) ]. No refund can be granted u/s 144 Assessment u/s 143(3) 144 should be completed within 9 months from the end of Relevant Assessment Year. Where Best Judgment Assessment is done, AO determines the income to the best of his judgment, Judgment of the AO cannot be arbitrary and has to be based on some evidence, AO cannot do adhoc addition. As per Sec 145(3) - Where the AO is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in section 145(1) has not been regularly followed by the assessee, or income has not been computed in accordance with the ICDS, the AO may make an assessment in the manner provided in section 144 .