TMI Blog2008 (9) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been earned by the assessee by cultivating the said land, growing crops thereon and selling the agricultural produce. To support this claim, the assessee produced certain J. Forms before the AO in proceedings under s. 144 of the IT Act. Along therewith, the assessee furnished his and his father's affidavits. No other evidence was produced. 4. The AO issued letters to the commission agents of the assessee, through whom the assessee had allegedly sold his stated agricultural produce. They were asked to confirm having issued the J. Forms to the assessee and the sale of the crops. They were also asked to furnish copy of account. They supplied the copy of the assessee's account along with confirmation of issuance of the J. Forms. However, they certified that no crop was sold by the assessee during financial years 2003-04 and 2005-06, or thereafter. 5. The AO held, inter alia, that the assessee had remained non-co-operative throughout; that the assessee neither had any land holding in his name, nor had furnished any proof of the alleged sale of agricultural produce; that the J Forms submitted by the assessee were not relevant to the period under consideration; that the affidavits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n alleged fact; that in the absence of any evidence whatsoever to prove agricultural income, the affidavits filed by the assessee were rightly treated by the AO as just self-serving evidence not worth relying on; that as evident from the observations of the AO in the assessment order, the attitude of the assessee had throughout been non-co-operative; that such attitude was the very reason for framing a best judgment assessment under s. 144 of the Act; that the learned CIT(A) has, in these undeniable facts, rightly confirmed the assessment order; and that the assessee's appeal, carrying no force or merit, is liable to be rejected. The learned Departmental Representative has thus requested that the appeal filed by the assessee be ordered to be dismissed. 9. We have heard both the parties and have carefully perused the record. Sec. 144 of the Act, under which the assessment was framed, runs as follows: "144. Best judgment assessment.-(1) If any person- (a) fails to make the return required under sub-s. (1) of s. 139 and has not made a return or a revised return under sub-s. (4) or sub-s. (5) of that section, or (b) fails to comply with all the terms of a notice issued under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on behalf of the assessee before the AO on 15th Dec., 2006, the AO wrote letters to the commission agents for confirmation of issuance of the J Forms and sale of crops and copy of account. The commission agents, on 22nd Dec., 2006, inter alia, certified that no crop was sold by the assessee through them in financial years 2003-04 and 2005-06, or thereafter. 11. The assessee's contention is that the aforesaid evidence of the commission agents was received by the AO on 22nd Dec., 2006 at the back of the assessee and that the assessee was never confronted with it. This denial of opportunity to the assessee is, as per the assessee, an infraction of the principles of natural justice. According to the assessee, he has illegally been condemned unheard and the assessment has been framed in violation of the law by using evidence to decide against the assessee, which evidence could not have been so used under the law. 12. The phraseology, syntax and language used/employed by the legislature in s. 144, as quoted hereinabove, are amply clear. As per this section, inter alia, if a person fails to comply with the terms of a notice under s. 143(2), the AO, after taking into account all rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a tentative decision or proposal to determine the total income at a certain amount on the basis of the material gathered by him and in s. 142(3), there is no express denial of the well established common law right of natural justice to the assessee. The assessee is, well entitled to show cause in this regard. Similarly, even in making an assessment under s. 144, opportunity of being heard has to be given to the assessee. That section which imposes the statutory duty on the AO to observe the principles of natural justice in the case of every assessment under s. 143 cannot be construed to enjoin or authorise violation of that principle in the case of a best judgment assessment under s. 144. It is inherent in the very nature of an assessment under s. 144-which is a quasi judicial act and which is to be done after forming the best judgment-that the assessee should be given an opportunity of being heard in respect of any material gathered by the AO. What s. 144 requires the AO to do in the case of a defaulting assessee is to make an assessment of his total income to the best of the AO's judgment, after taking into account all relevant material which he has gathered. An assessment to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered opinion, is purposive and purposeful. The above-said reference to s. 144 in s. 142(3) does not at all detract from the well considered substitution in s. 144. Also, it cannot be gainsaid that the said content of s. 142(3) did not affect the pre-substitution provisions of s. 144, as held in Dhanalakshmi Pictures. 17. In view of the above discussion, we hold that the assessee is rightly aggrieved of the AO not having confronted him with the evidence gathered at his back and used in framing the impugned assessment. It has been well settled by the Privy Counsel way back in 1937, in CIT vs. Laxminarain Badridas (1937) 5 ITR 170 (PC) and reiterated in CIT vs. Segu Buchiah Setty (1970) 77 ITR 539 (SC) (in 1970) and in Prabhat Mills Stores Co. Ltd. vs. CIT (1966) 59 ITR 197 (Cal) (in 1964), that the provisions of s. 144 are mandatory. That being so, an assessment made in violation of the provisions of s. 144 is liable to be set aside. 18. Accordingly, we hereby set aside the assessment order. The assessment is restored to the file of the AO to be framed de novo after affording due opportunity of being heard to the assessee by way of confronting him with the evidence gathered b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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