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D.R. Puttanna Vs. Commissioner of Income-tax, Mysore - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberIncome-tax Referred Case No. 4 of 1972
Judge
Reported in[1974]96ITR333(KAR); [1974]96ITR333(Karn)
ActsIncome Tax Act, 1961 - Sections 139, 139(2), 142(1), 143 and 144; Income Tax Act, 1922 - Sections 23(4)
AppellantD.R. Puttanna
RespondentCommissioner of Income-tax, Mysore
Appellant AdvocateA.V. Albal, Adv.
Respondent AdvocateS.R. Rajasekhara Murthy, Adv.
Excerpt:
.....is justified. - 3. section 144 of the act reads thus :if any person -(a) fails to make the return required by any notice given under sub-section (2) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or (b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142, or (c) having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143, the income-tax officer, after taking into account all relevant material which the income-tax officer has gathered, shall make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment...........?'2. the assessee is a hindu undivided family and the assessment relates to the year 1963-64. the income-tax officer served on the assessee a notice under section 139(2) of the act on may 10, 1963, calling upon it to submit the return for year 1963-64. in response to the said notice, the assessee did not submit any return nor did it apply for extension of time. the income-tax officer made an order of assessment on february 29, 1964, under section 144 of the act by which he determined the total income of the assessee at rs. 52,520. on appeal by the assessee to the appellate assistant commissioner of income-tax, the said income was reduced to rs. 40,270. in the second appeal before the tribunal, the only ground urged by the assessee was that no assessment under section 144 of the act.....
Judgment:

Govinda Bhat, J.

1. The Income-tax Appellate Tribunal, Bangalore Bench, under section 256(1) of the Income-tax Act, 1961, has referred the following question for the opinion of this court :

'Whether, on the facts and in the circumstances of the case, it has been rightly held that no notice under section 142(1) was necessary to complete the assessment under section 144 ?'

2. The assessee is a Hindu undivided family and the assessment relates to the year 1963-64. The Income-tax Officer served on the assessee a notice under section 139(2) of the Act on May 10, 1963, calling upon it to submit the return for year 1963-64. In response to the said notice, the assessee did not submit any return nor did it apply for extension of time. The Income-tax Officer made an order of assessment on February 29, 1964, under section 144 of the Act by which he determined the total income of the assessee at Rs. 52,520. On appeal by the assessee to the Appellate Assistant Commissioner of Income-tax, the said income was reduced to Rs. 40,270. In the second appeal before the Tribunal, the only ground urged by the assessee was that no assessment under section 144 of the Act could have been made without service of a notice under section 142(1) of the Act, that contention was rejected. Hence, This reference.

3. Section 144 of the Act reads thus :

'If any person -

(a) fails to make the return required by any notice given under sub-section (2) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or

(b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142, or

(c) having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143,

the Income-tax Officer, after taking into account all relevant material which the Income-tax Officer has gathered, shall make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment.'

4. The conditions precedent for making a best judgment assessment under section 144 have been prescribed by clauses (a), (b) and (c) of section 144. The said conditions are alternative and are not cumulative as is evident from the word 'or' occurring after clauses (a) and (b). The corresponding section under the 1922 Act is section 23(4). The Supreme Court in Commissioner of Income-tax v. Segu Buchiah Setty AAXD, has held that the conditions are alternative and not cumulative. In view of the said decision, it is conclusive under the 1961 act also. It was however, argued by Sri Albal, learned counsel for the assessee, that there is a change in the language of section 142(1) and the word 'may' occurring in sub-section (1) of section 142 has to be read as 'shall' and mandatory. We are unable to accept the said contention of the learned counsel. It is relevant to state that it is not the argument of Sri Albal that clauses (a), (b) and (c) of section 144 are not alternative conditions, but cumulative. In our opinion, the Tribunal was right in the view it has taken that notice under section 142(1) of the Act was discretionary and the non-issue of a notice under the said sub-section does not render the Income-tax Officer incompetent to make an order under section 144 of the Act. In that view, we answer the question referred in the affirmative and against the assessee. Reference is answered accordingly. The assessee should pay the costs of the department. Advocate's fee Rs. 100.


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