BALIAH K Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference made under s. 66(2) of the Indian IT Act, 1922, by the Tribunal, Madras Bench, in pursuance of the orders of this Court. It arises from I.T. As. Nos. 895, 896 and 897 of 1954-55 on the file of the Tribunal in question. The questions of law referred for our opinion are :

(2.) THE assessee is an AOP doing abkari contract in Sadam of Gulbarga District which was formerly a part of the old Hyderabad State and now a part of the Mysore State. In this case we are concerned with the assessment of the assessee for the asst. yrs. 1950-51, 1951-52 and 1952-53. THE ITO rejected the return submitted by the assessee and added to the income returned by him a sum of Rs. 86,386 for the asst. yr. 1950-51, Rs. 75,000 for the year 1951-52 and Rs. 46,100 for the year 1952-53. THE accounts produced by the assessee were not found to be reliable by the ITO and so he had recourse to best judgment assessment.

(3.) THE order of the Tribunal does not show that the comparable case was put to the assessee and that he was given an opportunity to have his say on the matter. At any rate, this Court, in calling for a reference under s. 66(2), proceeded on the basis that the comparable case had not been put to the assessee. That being so, the question for our decision is whether the best judgment assessment made on the basis of a comparable case not put to the assessee and the assessee given an opportunity to explain the same, is in accordance with the principles of natural justice. In Dhakeshwari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 Mehr Chand Mahajan C.J. observed thus at page 782 :