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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 ..... ake further proceedings on the footing that the assessee had failed to furnish the return & could not have proceeded to make ex parte assessment u/s 144 without serving notice u/s 139 (2) or as the case may be u/s 148 - against revenue. - I.T.T.A.No.34 of 2000 - - - Dated:- 21-8-2012 - SRI JUSTICE GODA RAGHURAM, SRI JUSTICE M.S.RAMACHANDRA RAO, JJ. Counsel for Appellant: Sri S.R.Ashok Senior Standing Counsel for Respondent: Sri V.Srinivas JUDGMENT M.S.Ramachandra Rao, J. This appeal is filed under Section 260 A of the Income Tax Act, 1961 (hereinafter referred to as the "Act") by the Revenue challenging the order dated 24-04-2000 in I.T.A.No.1699/Hyd/95 (Hyderabad 'A' Bench). 2. The facts giving rise in filing of this appeal are as under: (a) The respondent/assessee filed its return of income for the assessment year 1986-1987 on 30-06-1986 admitting a loss of Rs.16,27,167/-. Notice under Section 143 (2) of the Act was issued fixing the date of hearing on 01-11-1988. There was no response to this notice. A detailed letter was issued by the Assistant Commissioner of Income Tax, Central Circle-III, Hyderabad (the assessing officer) on 07-12-1988 to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 144 of the Act by the assessment officer is not in accordance with law and deserves to be annulled. He relied on a circular No.281, dated 22-09-1980 issued by the C.B.D.T. Para 27-4 (VI), sub-clause (VI) of which provided as under: "Where there is a default in rectifying the defect intimated by the ITO., the return of income has to be treated as an invalid return and further proceedings shall have to be taken on the footing that the assessee had failed to furnish the return. Thus in a case where the return is furnished voluntarily under Section 139 (1), the ITO cannot proceed to make ex-parte assessment under Section 144 without serving a notice under Section 139 (2) or as the case may be, under Section 148. Where, however, a defective return was filed in response to a notice under Section 139 (2) or Section 148, the ITO, may straightaway proceed to complete the assessment ex-parte under Section 144 or issue a notice under Section 142 (1)." He noticed that the assessee had suo-moto filed a return under Section 139(1) of the Act on 30.6.1986 claiming a loss of Rs.16,27,167/- , that the appropriate authority by letter dated 07-12-1988 had informed the assessee that the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, contended that the C.I.T. (Appeals) and the I.T.A.T. were wrong in annulling the assessment made by the assessing officer. He also contended that the above circular might be binding on the assessing officer but it was not binding on the C.I.T. (Appeals) or on the I.T.A.T. He also contended that the said circular was contrary to the provisions of the Act and therefore the orders of the I.T.A.T. confirming the order of the C.I.T. (Appeals) deserves to be set aside. 5. Per contra, Sri V.Srinivas, learned counsel for the respondent/assessee, contended that the circular of C.B.D.T. is binding on the assessing officers and as the said circular was not contrary to any provisions of the Act, the assessing officer ought to have followed it and the C.I.T. (Appeals) and the I.T.A.T. did not commit any error in relying on the said circular and in setting aside the order of the assessing officer. 6. We have considered the submissions of the counsel for the appellant and the respondent. 7. The assessment which is subject matter of this appeal is for the assessment year 1986-87. Section 139 (1) of the Act provides for filing of a return by an assessee if his total income during the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 144 (1)(c) provided that a best judgment assessment can be made by the assessing officer if the assessee having made a return, failed to comply with all the terms of a notice issued under Section 143 (2) of the Act. 10. Sri S.R.Ashok, submits that in the present case, since a notice under Section 143 (2) of the Act has been issued by the assessment officer, the circular of the C.B.D.T. had no application and the best judgment assessment can be made invoking S.144 (1) (c) of the Act. We do not agree with this submission. 11. No doubt Section 144 (1) (c) provides for a situation where a best judgment assessment can be made when the assessee having made a return fails to comply with all the terms of a notice issued under Section 143 (2). But the interplay between S.144(1) (a) and S.144 (1) (c) and the proper course of action to be followed by an assessing officer before making a best judgment assessment where a return filed is defective is set out by the above circular . Accepting the contention of the Revenue would mean that one has to ignore s.139(9) (which states that where a return is filed and defects therein are intimated to the assessee and he does not rectify them ..... X X X X Extracts X X X X X X X X Extracts X X X X
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