TMI Blog1985 (4) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the Income-tax Officer called upon the assessee by a notice under section 142(1) of the Income-tax Act (hereinafter referred to as " the Act "), to produce certain books of account. These books of account had been seized by the sales tax authorities who had made assessment under the Sales Tax Act on the basis of entries in those books. From the books seized, the sales tax authorities formed the conclusion that the assessee had done substantial clandestine business which had not been disclosed in the regular books of account. The assessee did not produce the required books of account. The stand of the assessee was that those books of account were not available, as they had been lost by theft. The plea of the assessee was that he receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer. The matter was thereafter agitated before the Appellate Tribunal. The assessee tried to show that there was no wilful default oil his part and that he bad not failed to produce the books of account called for out of any ulterior purpose. The Appellate Tribunal recorded its finding in the following terms: " We have considered the fact and the arguments of the learned representatives of both the sides. The fact that there was default on the part of the assessee in so far as he did not produce the books as required by the Income-tax Officer cannot be denied." The above was a categorical finding, explicit in terms, that there was default on the part of the assessee. Having recorded the above finding, the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to establish the loss of the books, the assessments on the whole have been confined to the materials which were either available to the Department or made available by the assessee." I regret, the entire approach of the Tribunal to the vital question was entirely wrong. The fact that the assessments had been done more or less on the materials supplied by the assessee is entirely irrelevant. The fact that assessments had been done on the basis of the assessment orders passed by the sales tax authorities also was hardly relevant. And lastly, the fact that a best judgment assessment had been done was also, hardly relevant for deciding whether the benefit of registration should be denied to the assessee or not. Since the books and docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also must be held to be mandatory. That must be so because section 186(2) refers to section 144 of the Act. Section 144 contemplates several situations. The first clause lays down that a best judgment assessment may be done if an assessee failed to make the return by any notice given under section 139(2) or under sub-section (4) or (5) of section 139. The second situation where a best judgment assessment may be resorted to is where the assessee fails to comply with the terms of a notice issued under section 142(1), i.e., where the assessee fails to produce such accounts or documents as the Income-tax Officer may require. The third situation falling for best judgment assessment is where the assessee fails to comply with the terms of a notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed in his wilful default. In the instant case, the unambiguous finding of the Tribunal recorded in paragraph 12 was that there was default on the part of the assessee. The further finding was that there was no substance in the plea put forth by the assessee that books of account have been lost by theft. From these two findings, the conclusion is inescapable that there was wilful default on the part of the assessee. Those being the findings, in the instant case, the authorities were bound to cancel the registration of the assessee-firm for the assessment years in question. The observation of the Tribunal in paragraph 15 of its order gives an inkling that the Tribunal was conscious of the fact that this was an apt case where benefit of r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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