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TMI Blog1984 (6) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... t is stated that the partner concerned could return to the city only on 19-11-1982 when the appeal was signed and it was filed on 20-11-1982, there being a delay of one day. In the circumstances, we condone the delay and admit the appeal. 2. The assessment year involved is 1979-80. The assessment made was under the provisions of section 144 of the Income-tax Act, 1961 ('the Act') on 28-1-1982. The tenor of the assessment order is to the effect that throughout the assessee did not choose to produce books of account and that only a feeble attempt was made by the representative of the assessee to be present on one occasion without books and, hence, it was that a best judgment assessment was resorted to. The assessment order was served on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that the case was fixed under section 143(2) of the Act on 12-11-1981 and was thereafter adjourned to 21-12-1981 and on 21-12-1981 Shri B. Narasinga Rao was present on behalf of the assessee and there was a requirement that the balance sheet should be filed as well as particulars should be furnished in respect of payments in excess of Rs. 2,500 and some particulars had to be given regarding purchases, wages, etc. The hearing was adjourned to 24-12-1981. There is a letter filed by the assessee which is on record and which is dated 19-1-1982 and which is referred to in the assessment order. The letter categorically states there, were no squared up credits, no cash borrowals and particulars of purchases over Rs. 2,500 were furnished. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of Chagla, CJ. and Tendolkar, J. as laying down the correct law in regard to the scope of the power of the Appellate Assistant Commissioner. The learned Judges further noticed that whereas prior to 1939 the only manner in which the best judgment assessment under section 23(4) could be questioned was by filing an application under section 27, after the amendments of the Income-tax Act in 1939, a best judgment assessment could also be questioned by preferring an appeal against it under section 30. They further observed that the rejection of the appeal against the order refusing to reopen the best judgment assessment was 'far from saying that the Appellate Assistant Commissioner cannot thereafter consider the merits of the assessment on ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh to point out that the observations are not to be understood, as it was suggested by the learned counsel for the revenue at one stage that they should be, as confining the Appellate Assistant Commissioner's power of interference only to cases where he finds that the Income-tax Officer has acted without material or arbitrarily or capriciously. In the very observations extracted by us, the learned Judges have made it clear that the Appellate Assistant Commissioner can act if he finds that 'the basis of the assessment is not valid or the assessment itself is not sustainable'. The only limitation according to the learned Judges, is that the appellate power against a best judgment assessment should not be so exercised as to render meaningless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r best judgment assessment and not so as to nullify the provisions of section 146 and the appeal provided under section 246(d). That is the extent and that is the limitation." Keeping in view the aforesaid observations, we consider that the proper order to be passed would be one setting aside the quantum of income as computed and directing the ITO to recompute the total income having due regard to the books of account maintained by the assessee as well as other documents which the assessee may produce as also any evidence which the ITO may require. Of course, since the assessment under section 144 stands, what the ITO would make would be only a recomputation of the income in a proper and fair manner and to the best of his judgment and hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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