FOURTH INCOME TAX OFFICER Vs. KARIMIA TRUST

JUDGEMENT

(1.) 25th October, 1985. The Revenue is aggrieved at whose instance these four appeals for the asst. yrs. 1969-70, 1970-71, 1971-72 and 1972-73 have been filed. According to the Revenue, the CIT(A) in disposing of the appeal filed by the assessee had made erroneous findings.

(2.) One of the issues raised in all these appeals is regarding the nature of the assessment made by the ITO. The ITO had made the assessments apparently under S. 144. According to the ITO, the assessee had defaulted in producing the books of accounts maintained by him for these years and, therefore, he invoked the provisions contained under S. 144 for making the assessments. According to the assessee, the ITO was misdirected in making the assessments under S. 144. The assessment made under S. 144 was an instance of erroneous finding and the assessment should be considered as having been made only under S. 143(3). The assessee no doubt maintained the books of accounts for the year but at the time when the books of accounts were called during the assessment proceedings under S. 147 for which notices were served for all these years, books of accounts maintained for these years had been lost or destroyed in riot which had affected the peace of the city in the year 1979. In April, 1979, Jamshedpur was the scene of a severe communal riot which had compelled the trustee to leave the city to another place for safety. The building where the books of accounts for the years were stored had been used by the authorities as refugee camp where some of the destitutes driven from their homes were accommodated. To support his claim, the Trustee S. M. Shafiq, filed an affidavit duly sworned before an Executive Magistrate, Jamshedpur. The ITO without bringing any material to show that the assessee had made a false claim that the books of accounts for all these years have been lost during the riot and without examining the trustee whose affidavit was filed reached a finding that the assessee had failed to produce books. This in finding in his view entitled him to make the assessment under S. 144 of the IT Act. The assessee challenged the assessment under S. 144 on the ground that on the facts and circumstances, the ITO was not justified in making the assessment under S. 144 when he has not been able to prove that the assessee had defaulted in producing the books of accounts. In fact, the assessments could be considered only as those made under S. 143(3). The CIT(A) moved by the plea of the assessee held that the assessment made by the ITO on the facts and circumstances of the case could not be considered as made under S. 144. The ITO had not brought any material to show that the assessee had defaulted in producing the books of accounts. The assessee had already explained that the books of accounts had been lost in the course of the severest communal riot which had taken place in April, 1979. Without dislodging this plea, the ITO was not entitled according to CIT(A) to hold that the assessee had defaulted in producing the books of accounts which entitled him to make the assessment ex parte. On the facts and circumstances of the case, the assessments should be considered as made under S. 143(3). The assessee had already furnished copies of the audited account together with returns filed by him, in compliance of the notices issued under S. 147. Revenue felt aggrieved and has raised this issue in appeal before the Tribunal.

(3.) According to the Standing counsel, Mr. Rajgarhia, the assessee was not justified in raising an issue regarding the validity of the assessments made under S. 144 without taking recourse to the procedure prescribed in S. 146 for having the assessments reopened. A perusal of S. 246 showed that cl. (d) of sub-s. (1) provided a specific remedy by way of appeal in respect of the assessment made under S. 144. He was, therefore, not entitled to raise this issue in an appeal against the quantum assessment. The CIT(A) misdirected himself in entertaining the appeal on this issue. The learned counsel for the assessee, Mr. N. P. Poddar, on the other hand controverted the plea of Revenue. He submitted that the assessee had not challenged the validity of the assessments made under S. 144. Besides he had not sought the assessment to be reopened and, therefore, it was not necessary to take recourse to the remedy provided under S. 146 of the IT Act. For that reason it was not necessary for the assessee to file an appeal under cl. (d) of sub-s. (1) of S. 246.