INCOME TAX ACT, 1961

Section 144

Assessment - Best judgment assessment - Conditions precedent -

The assessee filed return of income On notice having been received in this case, assessee produced books of account and other documents like DEMAT account statement, Broker's Notes, etc., to substantiate his claim of exempt income in the form of LTCG. AO observed that assessee had not shown true and correct nature of its income in its books of account. However, assessee failed to produce any evidence/documents which will contradict the findings emerged out of survey actions and from statements recorded of various penny stock operators by various income-tax authorities. Under such circumstances, he was compelled to hold an opinion that, except the books of account, DEMAT statements and broker's notes, assessee was not having any other evidence/document in his possessions, to disprove circumstantial evidences and findings emerged out of investigations by various income-tax authorities. Assessment should therefore, be completed under section 144 on the basis of information available with the AO received from various sources. CIT(A) confirmed order of AO and held that LTCG was bogus claim and as such he added the same under section 68 read with section 144. Held: Out of three pre-conditions for invoking the provisions of section 144, in the present case, none of these three conditions was existing because the assessee had filed the return of income as well as complied with the notice issued by the AO under section 142(1). Only requirement of notice issued by the AO under section 142(1) on 13-1-2017 was that assessee should attend along with the books of account on 24-1-2017 and this was not the case of the AO that the assessee had not appeared before him along with the books of account. In the facts of present case as discussed, judgment of Calcutta High Court was squarely applicable. In the present case, conditions precedent for the assumption of jurisdiction under section 144 were not present and assessment order passed by the AO under section 144 was therefore, deserves to be struck down and Tribunal struck down the same in all these four years.

Followed:Mohini Debi Malpani v. ITO & Anr. (1970) 77 ITR 674 (Cal) : 1970 TaxPub(DT) 0055 (Cal-HC).

REFERRED : Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) : 1995 TaxPub(DT) 1173 (SC), CIT v. Arvinda Raju (TN) (1979) 120 ITR 46 (SC) : 1979 TaxPub(DT) 1091 (SC), Mcdowell & Co. Ltd. (1985) 154 ITR 148 (SC) : 1985 TaxPub(DT) 1186 (SC) and ITO v. Luxmi Prasad Goenka (1977) 110 ITR 674 (Cal-HC) : 1977 TaxPub(DT) 0252 (Cal-HC).

FAVOUR : In assessee's favour.

A.Y. : 2012-13 to 2015-16

INCOME TAX ACT, 1961

Section147 Section 148

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