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TMI Blog2012 (9) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... see stating that the return was not accompanied by the audited balance sheet and profit and loss account and sought an explanation from the assessee as to various discrepancies noticed in the books of accounts by 14.12.1988. This letter was served on the same date. The assessee requested a month's time for furnishing the details. The assessee was granted time up to 27-12-1988. Subsequently, the assessee filed another letter on 27-12-1988 requesting time up to the end of February 1989. The assessee later filed another letter on 10-01-1989 requesting time up to 15-02- 1989 on which date it said it would submit the reply to the letter issued on 07- 12-1988. On 06-02-1989, a representative of the assessee appeared and requested time up to 13-02-1989, which was granted. As the assessee had not furnished any information even after giving of three months time and as the assessing officer felt that the assessment was getting barred by limitation by 31-03-1989 vide order dated 20-03-1989, he completed the assessment based on the information available on record to the best of his judgment under S.144 of the Act. He made various additions on account of the discrepancies as per the provisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o filed is not accompanied by the audited balance sheet and profit and loss account and sought an explanation from the assessee as to why the return should not be treated as invalid return apart from pointing out other discrepancies therein and asked the assessee to give information and explanation by 14-12-1988 and that the assessee did not reply to it and kept on seeking extension of time. He therefore he held that the assessing authority should have treated the return of income filed by the assessee as an invalid return as per Section 139(9) of the Act and the provisions of the Act would then apply as if the assessee had failed to furnish the return. He held that the assessing authority ought to have served a notice under Section 139 (2) or as the case may be under Section 148 as mandated by the above CBDT circular before proceeding under s.144 of the Act. He further held that as no notice under Section 139 (2) or S.148 was issued to the assessee before the completion of the assessment under Section 144 and the return of income filed by the assessee under Section 139 (1) was defective return, the completion of assessment under Section 144 was bad in law and accordingly the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e maximum amount which is not chargeable to income tax. At that relevant time (i.e in 1986-87), there was sub-section (2) in Section 139 which provided as follows: "S.139(2) : In the case of any person who, in the Income Tax Officer's opinion is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the Income Tax Officer may, before the end of the relevant assessment year, serve a notice upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed .." This sub-section (2) in S.139 was omitted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 01-04-1989. But since the subject matter of the present case is the assessment made on 20.3.1989 for assessment year 1986-87 , we have to consider the effect of sub-section (2) of S.139 and it cannot be ignored. 8. Section 144 of the Act provides for best judgment assessment of tax by an assessing officer. For the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as an "invalid return" and provisions of the Act would apply "as if the assessee had filed to furnish the return"), S.139(2) (as it stood then) (which entitled the assessing officer to issue notice to the assessee to file a return when he is of the opinion that the assessee has taxable income) and S.144 (1) (a) (as it then stood) of the Act. One has to interpret a statute by giving effect to every provision thereof and in a manner which does not render any provision otiose. Therefore, in our opinion, the said circular is not contrary to the provisions of the Act and it correctly guides the assessing officer as to what is to be done before proceeding to make best judgment assessment when a return filed suomoto by the assessee is found defective. Moreover, the circular is beneficial to the assessee as it provides him a further opportunity to give his correct income details after his earlier return is found to be defective (as he can give them atleast after receiving the notice U/S.139(2)). 12. It is settled law that said circulars which are issued under Section 119 by the Central Board of Direct Taxes have to be followed and observed by the authorities and other persons emp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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