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TMI Blog1973 (8) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... 65, showing an income of Rs. 570. It may be mentioned here that the assessee carries on business in the manufacture and sale of ruffal and silk. In the return which was signed by the assessee, his mother, Mst. Shobawati, was shown as the proprietor of the business. Notice under section 143(2) of the Income-tax Act (hereinafter to be referred to as " the Act ") was issued to the assessee on January 19, 1968, fixing the date of hearing for January 29, 1968. On several dates the Income-tax Officer examined the case of the assessee and in the course of his examination found that the cash credits in the books of the assessee during the period January 1, 1962, to March 31, 1963, stood as follows : Rs. Triloki Nath Tiku 8,500 Dr. Amar Nath Tiku 7,000 Shambu Nath 2,500 Rattan Lal Tiku 3,500 (the assessee) --------------------- Total 21,500 --------------------- Before, however, the Income-tax Officer could complete the assessment, the assessee filed a fresh return on March 25, 1968, under section 139(5) of the Act and in his revised return declared his income as Rs. 727. The Income-tax Officer after examining the books produced by the assessee and other materials assessed him on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus : "143. (1) Where a return has been made under section 139 and the Income-tax Officer is satisfied without requiring the presence of the assessee or the production by him of any evidence that the return is correct and complete, he shall assess the total income or loss of the assessee, and shall determine the sum payable by him or refundable to him on the basis of such return. (2) Where a return has been made under section 139 but the Income-tax Officer is not satisfied without requiring the presence of the assessee or the production of evidence that the return is correct and complete, he shall serve on the assessee a notice requiring him, on a date to be therein specified, either to attend at the Income-tax Officer's office or to produce, or to cause to be there produced, any evidence on which the assessee may rely in support of the return. " A perusal of this section clearly shows that it lays down the procedure to be adopted by the Income-tax Officer in two different contingencies. Sub-section (1) contemplates cases where the Income-tax Officer does not doubt the correctness of the return or the materials produced before him by the assessee and accepts the return, in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 was incorrect or incomplete, he was bound to issue a valid notice under section 23(2), and as this mandatory notice was not issued, the officer could not proceed to make the best judgment assessment on failure of compliance with notice under section 22(4), because if a valid notice had been issued under section 23(2), the assessee might have removed the suspicions of the officer and might have satisfied him that his return was correct and complete, and it would be a great hardship if a best judgment assessment was made under section 23(4) because of a non-compliance with the notice to produce accounts when such accounts were in reality not necessary for the purpose of checking the return. There is some force in this contention.. . . . . The phraseology of section 23(2) suggests that under the circumstances of the present case a valid notice under section 23(2) was imperative, but the phraseology of section 23(4) suggests that perhaps the Income-tax Officer could proceed to make a best judgment assessment because of the failure to comply with all the terms of a notice issued under section 22(4). Our answer to the second question is that, although the issue of a valid notice unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any appellate court and the A.A C. has passed a perfectly legal order in directing the Income-tax Officer to issue notice to the assessee before making an assessment because he was not satisfied regarding the correctness of the assessee's return. We do not see how this order prejudices the assessee : in fact the order is in favour of the assessee rather than against him. The A.A.C. had ample jurisdiction either to call for a report or to give directions to the Income-tax Officer to comply with the requirements of law. In the instant case the assessee had no doubt filed his return and his accounts showed certain transactions which were not clear and understandable and, therefore, it would have been a wrong exercise of discretion on the part of the A.A.C. to annul the assessment altogether and thus deprive the revenue of an opportunity to reassess the assessee after hearing him. As the learned A.A.C. thought that the mandatory provisions of law had not been followed by the Income-tax Officer, he rightly set aside the assessment and remanded the case to him directing him to comply with the mandatory statutory requirements. Mr. A. N. Raina, learned counsel for the assessee, then su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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