TULSILAL MANILAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Jaipur Bench, Jaipur, has referred the following two questions of law, arising out of its order dt. 15th Nov., 1976, to this Court for its opinion :

(2.) THE assessee, M/s. Tulsilal Manilal, is a registered firm. THE assessee filed its return under s. 139 of the IT Act, 1961, and in pursuance of a notice issued by the ITO under s. 142(1) r/w s. 143 (3), the assessee appeared on some of the dates fixed before the ITO and produced some documents, including its books of account. However, on 17th Jan., 1974, the assessee did not appear, although the authorised representative of the assessee attended the office of the ITO and submitted that the assessee could not appear nor could he produce his books of account on that date. THE ITO thought that the assessee was deliberately withholding his books of account and as such he decided to proceed to make an assessment to the best of his judgment, in accordance with the provisions of s. 144(c) of the Act. One of the questions considered by the ITO related to the income of the assessee from the business of sale and purchase of silver ornaments and bullion. THE ITO made an addition of Rs. 4,000 in round figure in the silver trading account of the assessee by his assessment order dt. 21st April, 1974. THE assessee filed an application under s. 146 before the ITO for reopening the assessment made under s. 144. However, the application was rejected by the ITO who refused to reopen the best judgment assessment.

(3.) A similar question was raised before their Lordships of the Punjab High Court in Brij Mohan Rameshwar Dass vs. CIT (1953) 23 ITR 31 (Punj) : TC7R.264. In that case, the assessee failed to comply with the notice issued under ss. 22(2) and 22(4) of the Indian IT Act, 1922. A best judgment assessment was made by the ITO under s. 23(4). The assessee filed an application under s. 27 for reopening the assessment which was dismissed. Then appeals were preferred against the order refusing to reopen the assessment under s. 27 as also against the order of assessment passed under s. 23(4). The AAC dismissed the appeal against the refusal to reopen the assessment, while in the appeal against the assessment order made under s. 23(4), the AAC remanded the case to the ITO for further enquiry limited to certain matters. The ITO was directed to recompute the income of the assessee on the basis of further enquiries as well as the assessee's accounts. Further appeals to the Tribunal were dismissed. The question was referred to the High Court. It may be observed that the provisions of s. 23(4) of the Indian IT Act, 1922, correspond to the provisions of s. 144 of the IT Act, 1961, and the provisions of s. 27 of the 1922 Act are similar to the provisions of s. 146 of the 1961 Act, relating to the reopening of the assessment. Moreover, s. 31 of the 1922 Act corresponds to s. 251 of the 1961 Act. Learned Chief Justice of the Punjab High Court, while deciding the aforesaid case, observed as under :